Software as a service is becoming extremely viable in today’s business world, and many companies are looking to invest. The typical subscription-based business model that accompanies this software seems to be hit and generates massive amounts of revenue for successful software. However, despite a plethora of successful examples, investing in software isn’t a guaranteed success.
When investing your money, you should always be up-to-date on your research and know all the potential risks associated with investing in a product. That being said, most software as a service product has definite signs that usually mean great success and several red flags that signal you to stay far away. Here are some tips for evaluating software as a service platform for your company.
Cost of Entry
If you’re looking to invest in software for your company or develop your own, then you should first consider the cost of entry. How much would it cost to invest in or purchase software that your company can sell as its own? If you instead plan on developing the software internally, then how much will the development process cost?
Also, how much will it cost to distribute your software on various platforms and services? Different software will have different costs of entry depending on what industry they are involved in. For example, print shop software likely will have a much lower cost of entry than entertainment software that requires licensing and rights acquisitions. These are all things that you need to consider when evaluating software for your company.
Revenue Generation
One of the best things about distributing software as a service is the revenue it generates. Software as a service is typically packaged with a subscription-based business model, allowing you to collect monthly revenue from your users. Despite some massive successes with this business model, there still are some flops as well. Not all software can generate a lot of revenue, as the software needs to be useful and satisfy the wants and needs of consumers. When evaluating software platform for your company, you need to identify the potential revenue it can generate and compare it with the costs your company will incur.
Risk Involved
As with any business decision, when evaluating software platform for your company, you will need to identify the amount of risk involved. Some decisions are riskier than others, and sometimes these risks don’t pay off. However, typically the higher risk projects offer a much higher reward if pulled off successfully. When evaluating software platforms for your company, you should calculate the risks and compare them to the potential benefits to make the best decision possible.
Length of Product
Technology is constantly changing, and software is no exception. There have been many cases where a successful product was a flash in the pan and was replaced by newer software shortly after that. If you’re investing in the software you want to ensure that the software will be viable for customers for years down the line. This will allow you to retain your customer base and continue to collect revenue from your subscriptions. Before making any decisions on the software you should evaluate the lifecycle of the software and identify how long of a period you can use it to generate revenue.
