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Evaluating the True Costs of Acquiring New Software: A Practical Example

written by: Profacgillies•edited by: Ronda Bowen•updated: 7/6/2011

In order to illustrate the issues around trying to assess the cost of updating or buying new software described in this series we shall use the checklist given in Part 2 to guide our decision making in considering how to update our word processor from Microsoft Word 2003.

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    Introduction

    This is the third part of a series of articles entitled “Open source and other licenses”. The purpose of this article is to help you consider the true cost of acquiring new software by using the checklist from the previous article to consider the true cost of updating software. The article applies the checklist to the issue of updating Word 2003. It considers the updating possibilities of Word 2007, Open Office Writer, (see http://www.brighthub.com/office/home/reviews/12084.aspx) and also Kingsoft Writer (see )

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    Direct costs

    1. What is the basic license cost?

    Open Office Writer is the cheapest option here, because it is free to buy being open source. Kingsoft Writer costs up to $69, and Microsoft Office Word 2007, can cost up to several hundred dollars.

    2. Are there additional costs for commercial use?

    Again, Open Office Writer is free in all circumstances. Kingsoft Writer offers the 2007 version for personal use for free, but commercial use is not an option without buying the full version. Cheaper licenses are available for Microsoft Office Word 2007 for educational and other non-commercial uses, but full commercial use requires a full commercial license

    3. Are there additional costs beyond a trial period?

    Both Kingsoft Writer and Microsoft Office Word 2007 are provided as a free trial, requiring payment of licence fee beyond 90 and100 days respectively.

    4. If you want to use it on more than one machine, is there additional costs?

    Both Kingsoft Writer and Microsoft Office Word 2007 require one licence per machine although site licences are available for small companies.

    5. Is your current hardware adequate? If not, how much will an upgrade cost?

    Kingsoft Office Writer is economical in its use of system resources; Word 2007 is the most resource intensive, Open Office 3.0 runs quite slowly, so may tempt the user to seek to upgrade.

    6. Do you need a training course, and or a book to help you with the new software, and how much will they cost?

    Kingsoft Office Writer is best here, because it is so like Microsoft Office Word 2003, and so the least likely to require expensive re-training. Users of Open Office will benefit from free documentation provided they are prepared to download material from the Internet. Microsoft Office Word 2007 has the widest range of material, though prices can be expensive.

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    Indirect costs

    1. Is it a simple and quick installation?

    None of these applications should be difficult to install, although users with a slow Internet connection might find it takes a while to download Open Office 3.0.

    2. How long will it take before you are back up to full speed?

    Kingsoft Office Writer is best here, because it is so like Microsoft Office Word 2003. It should slow you down hardly at all. Microsoft Office Word 2007 will take the longest because of its new interface and the problems in finding familiar functionality.

    3. How much would this lost time have been worth in terms of what you could have done?

    This depends upon the value of your time: but the more your time is worth, the greater the relative and absolute cost of upgrading to Microsoft Office Word 2007

    4. If you went on a course or read a book, how much would this time have been worth in terms of what you could have done otherwise?

    See my answer to the previous question.

    5. How much better will you be at making money with the new software?

    None of these applications represent a revolutionary change; it is difficult to see how any of them will dramatically improve your ability to make money.

    6. How long will it take you to recoup the money lost and make a profit on this upgrade?

    In the light of the answer to the previous question, I don’t think you ever will. Sorry!

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    Conclusions

    This analysis considers an upgrade process and supports the conclusions in the series of articles that considered this originally. If you are using Word 2003 already, the case for upgrade is not compelling. If you need a new word processor, then the higher direct and indirect costs of Microsoft Office Word 2007 seem to be unjustified. The lower direct costs of Open Office Writer compared to the full version of Kingsoft Office Writer will only be offset if the slightly less familiar design of the open source product will mean that the productivity loss exceeds the greater license cost of the Kingsoft product.