If you are going to grow your contracting business and manage it well, you will find yourself investing in software in the next few years and having to determine what you should pay and what kind of performance you can expect.
For more information on this, watch our video: “The Value of Business Management Software”
If you will allow me, I want to help you become a high information buyer in the business management software world. What I tell you will save you the heartache (and long-term cost) of making a misinformed decision.
When it comes to software to run your landscape or snow business, are the choices the same? No, of course not. This is true for any business—and it is true for software, as well. In your business, what you provide the customer at the price you charge is a function of your costs, your quality and your service experience. You must charge enough to make a profit and, at the same time, remain competitive. You have no control over what the other guy charges, only what you must.
So, what is a potential customer to think when your proposed services and the other guy’s services “look” the same - after all, all contractors deliver the same services, right (NOTE: sarcasm alert)—yet the price is very different? If they conduct no further due diligence to understand why something that “looks” the same can be priced so differently, they will, most of the time, choose the lower price option.
And, as it has been said, they will get what they pay for—assuming you are charging as I outlined above. But that is little satisfaction, considering that you will continue to lose jobs to the other guy who promises the “same” service at a much lower price.
Low Information, High Expectation
What’s the problem here? The typical answer is, the customer does not understand the value of the higher priced proposal. This is obvious, but misses the more crucial points that (1) the potential customer is likely a “low information buyer", and (2) the salesman failed to connect the higher price with greater benefit (or more importantly, the lower price with higher risk) as most people purchase based on pain avoidance versus pleasure promised.
“Low information buyer": someone who purchases a product or service infrequently and, as a result, has little or no experience in making an informed decision by accurately comparing competing proposals.
This “low information” scenario reflects most software purchasing decision-making. What do I mean? I mean that most contractors will purchase business management software once in a lifetime—if they buy the right one—and therein lies the “rub.”
When all software looks the same, and when there is “low information,” price can become the primary selection criteria. This even despite the universal awareness that lower price usually equals greater risk and less than expected performance.
Most contractors are high information buyers when it comes to purchasing vehicles and equipment. The reason? It’s something they’ve done many times. They know that, although mowers, trucks or plows “look” the same, they are most definitely not the same. So, they are willing to pay more for lower risk and higher expected performance. This is a key concept: expected performance. In our minds, we approach every purchase with the expectation that we get what we pay for, whether electing the lower or higher priced option. We know what we are getting—or at least believe we do!
Expected performance is defined in the buyer’s mind by the factors that differentiate things that “look” the same. When buying a mower, for example, the factors that are differentiators likely include: brand name, durability, warranty, maintenance costs, etc. These are known and comparable factors with which a high information buyer is familiar.
But take that same high information equipment buyer and put them in the software purchasing and investment world, and they now become low information buyers with little information or experience in making solid comparisons.
Business Management Software: Expected Performance and Differentiators
Business management software is relatively new to the landscape and snow industries. Until recently, there were few choices when it came to fully integrated systems at a reasonable investment price. As a result, some companies still attempt to write their own software. This is not for the faint of heart and is very expensive in the long run.
Others have purchased a few applications like Quick Books and “woven” them together with spreadsheets and brute force in the form of administrative overhead staff to get the information and efficiencies they want. And still the expected performance was far less than what is needed to manage the business.
Now, due to the decreasing costs of data storage and mobile network premiums, as well as the ubiquity of mobile smart devices and “applications,” landscape and snow contractors can have a comprehensive software system they only dreamed about five short years ago … and at a price far less than custom software or the expense of over-staffing their administration departments.
The business management software purchase, done correctly, should literally be a once-in-a-lifetime experience for a contractor. And for that once-in-a-lifetime experience, it is possible and critical to be a high information buyer. Here’s what you need to know about expected performance and differentiators:
There are four essential factors in comparing options for your software investment:
Software PlatformArchitecture, integration and connections to other applications are very important.
- Architecture: Software written more than five years ago won’t be truly cloud-based and mobile. Why does this matter? Because the user interface is harder to use—it’s not intuitive—and the applications run slower on today’s smart devices. The result is, people don’t use the system. It causes too much frustration and slows them down.
- Integration: Not all software claiming to be fully integrated is actually fully integrated. True integration is automatic, clean and consistent across the entire software platform. This is important because you don’t want to enter and re-enter data. This simply perpetuates your existing situation. You want complete integration—not partial.
- Connections: Open API’s (look it up on the Internet) are the miracle of mobile cloud software. This is a feature built into today’s modern business management software that allows and facilitates data sharing between unrelated applications. This critical feature provides you with the power to enhance the software you purchase without expensive customization costs and makes your staff even more effective.
Deploying business management software is at least as important as the software platform, itself. The single biggest frustration expressed by software users is that they don’t use 100% of the system. Instead, they elect for many reasons – the most common being that the system is too “clunky”—to use only certain features and modules. This is not what you want when purchasing an integrated system. You want to use the whole system as demonstrated.
Deployment is the consultative process of installing the software correctly. Deployment can take 200 hours of consulting and training time (provided by the software company) to set the system up, integrate best practice business processes, and train your team to use it as it was designed. This is no simple task, and there are no shortcuts. Business management software can do almost anything you need, but it must be installed correctly from the start.
Allow me an analogy: Have you ever built your own home? If you have this experience on your resume, and you are still happily married, you have firsthand knowledge of what deployment feels like. Your dream home begins with the excitement of approving the first architectural drawings and pictures. Then construction begins—and you must make a million big and small decisions about material, finishes while addressing construction trade-offs that inevitably arise. Yet, if you persevere, the final product can actually be better than the original vision. But, you never forget the experience. This is how it is deploying software. When it is directed by professionals, the “construction” drama is removed and you get everything you want and more.
After deployment, you will require and want ongoing support and training. You want answers to questions as you learn to use your business management software. And, like most buyers, you want those answers quickly and accurately. The single biggest expense for any software company is product support: the people, website help, user manuals, training videos, educational webinars and client events designed to maximize your mastery of the system and return on investment.
A key consideration is the way that support is priced. Are support calls charged extra in addition to the system price? Today and tomorrow’s software will all be cloud-based. Software like Salesforce and NetSuite charge a monthly fee per user. This fee may or may not include customization fees or upgrade fees to make the system use-able for your people. You should know what to expect.
My point is that all business management software in the near future will be priced using a subscription model. You will pay your software partner based on usage—whether it is number of users, licenses or revenue volume. Purchasing software will be like buying utility services: you pay monthly based on usage. The days of paying a fixed, one-time price are over.
The reasons for that are: (1) rapid changes in mobile technology demands regular upgrades to your software, and (2) those new features that you want must be delivered easily and quickly without the drama of uninstalling and re-installing on your server. Software vendors must take this into consideration when pricing to hire the staff required to re-invest in keeping your system ahead of the obsolescence curve.
Your biggest risk in buying business management software is “legacy” risk. Legacy risk is what you incur when your software partner does not re-invest in new versions and services to keep you ahead of the curve. In other words, software gets old fast. Systems require regular enhancements and maintenance to deliver the performance you need. These enhancements and maintenance requirements are captured on a thing called the software company’s product roadmap.
The product roadmap is a list of features, fixes and functions that one day will make your experience better, assuring you that (1) the shiny new system you are buying today is still shiny five years from now, and that (2) it will scale up with your growth instead of constraining it. The only way to manage legacy risk is to understand the software company’s product roadmap and the resources they have dedicated to its execution. Subscription pricing must also take this “promise” into consideration—it is critical for making a solid comparison among higher and lower priced systems.
The Bottom Line
Almost all software “looks” good in a demo—seemingly looking the “same”—but the devil is in the details, as outlined above. You must look under the hood to do a solid comparison.
Almost every contractor has probably been “burned” in the past when purchasing vehicles and equipment. They paid for that decision in replacement, maintenance, and opportunity costs like non-operating downtime. As a certain Oil Filter Commercial more than 20 years ago intoned, “You can pay me now, or pay me later.” There is an eternal truth in that statement, just like “There’s no such thing as a free lunch!”