Open Platform February 12, 2020

Brokers Guide: The Total Cost of Ownership of Real Estate Software

Brokers Guide The Total Cost of Ownership of Real Estate Software - Header - MoxiWorks

Georgia Perez, VP of Business Development and Product Evangelism  |  Feb.  12, 2020

It’s no secret when considering a software purchase for your business, price is top of mind. If you’re going to spend money on a resource, it has to deliver a certain amount of value, making it worth the expense. But, did you know by only considering price and anticipated value you could be setting yourself up for unforeseen costs? A software investment should always be considered in terms of the total cost of ownership, or TCO.

The 411 on TCO

Gartner defines TCO as “a comprehensive assessment of information technology costs across enterprise boundaries over time.” Price only takes into account the one-time or recurring subscription fees. TCO includes additional expenses that may not initially be apparent. Simply put, TCO is the aggregate of all costs–either direct or indirect–related to buying, implementing, and managing a software solution over its entire lifecycle.

According to TechnologyAdvice, TCO should be the ultimate driving force behind your purchasing decisions. According to TechnologyAdvice, a TCO analysis is vital “because it determines your ROI. Without a TCO analysis, software can surprisingly cost a business upwards of 5-8x the original purchase price. This difference in expenses can significantly affect a business, its ROI, and overall success and/or livelihood.”

Being able to understand how much software is going to cost your business over the long term will ultimately enable you to make a more confident purchase decision and achieve the strongest ROI.

In this guide, we’ll walk you through the various factors to consider when contemplating a software investment and the components that should go into a TCO analysis.

Searching for Software: Two Common Mistakes

It’s imperative to properly perform a TCO analysis to find the ideal technology platform. But, before diving into what should be considered, let’s start with two common mistakes so you know what to avoid.

  • Only Considering Hard Costs
    The first mistake a potential buyer often makes is only considering “hard costs,” such as set-up fees, annual or monthly subscription costs, and anticipated upgrade charges. Software license and subscription costs often amount to less than 10% of the total initial purchase.
  • Not Forecasting for Disruption
    The second mistake is not forecasting for disruption. Any software platform you choose is going to disrupt what you are currently doing so it’s important to not only prepare for that disruption time but also be on the lookout for a product that is going to be the least disruptive and most worth the disruption.

Being aware of these common mistakes and making a conscious effort to avoid them will set you up for success. Now, let’s dive into the components that should go into your TCO evaluation.

 

The TCO Analysis Guidebook

MoxiWorks Total Cost of Ownership Infographic

When performing a TCO analysis, consider the various possible costs in five parts:

When assessing software vendors, it’s critical to understand how each of their cost structures differs so you can ensure your vendor of choice is best for your business. Not all of the costs mentioned below will necessarily apply to your software purchase or specific vendor, but it’s important to be informed of all possibilities to find the software that will deliver the strongest return on your investment.

1. Acquisition Costs

Acquisition costs can be defined as the cost of acquiring the hardware and/or software needed to use the platform of choice. Think of acquisition costs as the one-time, yearly, or monthly price of the software itself. The SaaS pricing model typically includes a fixed one-time fee along with a recurring fee that varies with usage.

2. Implementation Costs

Implementation costs are those costs associated with set up according to your unique business requirements. These include:

  • Customization – Will you need the software to be customized in some way? That may require additional development costs. Take into consideration that some systems may be naturally more customizable than others and therefore more cost-effective.
  • User licenses – Many cloud-based SaaS offerings charge you based on a per-user license model. (Hint: Inquire about a bulk discount if it’s a system that will be widely used in your organization.)
  • Initial training – This can often be the biggest burden of the implementation costs. But, investing in training early on is a valuable way to ensure successful implementation and continued usage.
  • Data migration – If you’re transitioning from an older system, does the new vendor charge to transfer data? Be sure to ask what that process looks like and how much it costs. (Tip: you can often take care of it yourself at a much lower rate).

3. Operating Costs

These are the costs associated with keeping the software platform successfully running as your business grows. They include:

  • New user licenses – As your business grows you may need to purchase new software licenses down the road. Account for that potential in your TCO analysis.
  • Ongoing training – Ongoing training may also be required for existing users as a software system is updated or as those users want to increase their familiarity with the platform.
  • Upgrades – While not always the case, some vendors charge for version upgrades.
  • Administrative costs – Does your software of choice come with free support? Or, does the vendor charge you for support credits? Be sure to understand what that cost could look like overtime.

4. People/Resource Costs

  • Administrator/internal champion – Do you have someone in-house whose full-time job it will be to maintain, support, and promote the software? Or, will you need to hire a new employee to serve as the platform’s administrator?
  • Consulting – Some vendors provide consulting services at no extra cost for a few weeks or months after launch. Capitalize on this. However, in some cases, you may feel that your vendor isn’t providing enough resources, and in that case, you may have the added cost of hiring a consultant.

5. Soft Costs

A key piece of TCO analysis is accounting for “soft costs.” These are often the most overlooked parts of an analysis as they’re not easily apparent. According to Gartner, these are the indirect costs of operation that often creep up outside a planned budget. “Soft costs are critical to the understanding of enterprise costs. They represent real expenses and ignoring soft costs will generally cause TCO strategies to fail.” Here are some soft costs to keep in mind:

  • Potential downtime – With cloud-based offerings, downtime is rarer than it used to be, but it’s still very possible. Consider the costs associated with not having the software and how its absence would affect your team’s productivity.
  • Migration costs – What happens if a better solution comes along that you feel compelled to leave your vendor of choice? Be sure to find out how difficult and costly it is to migrate away.
  • Potential disaster – What happens if your vendor goes out of business? Maybe they get acquired and can no longer service your chosen solution. It’s important to think of your vendor as more than just a technology platform. Like you, they’re a business. Do they have a strong management team? Are they well-funded? You should be confident in the vendor’s long-term sustainability before signing on the dotted line.

So, before you make a purchase decision and invest in a software platform, put together your own analysis using some of these factors. Taking the extra time to do a TCO analysis will help you truly understand the impact of your investment, ensuring that it’s on track to deliver strong ROI and lasting results.

Working at Moxi November 27, 2018

20 Questions: The Wonder Woman Leading our Sales

georgia perez, VP of business development at moxiworks headshot20 Questions with Georgia Perez, VP of Business Development and Product Evangelism at MoxiWorks

Our MoxiWorks Business Development Team is led by an insanely brilliant and vivacious women, Georgia Perez. With 10 years and counting as a Licensed Real Estate Broker and Manager, and more than 25 years in the land of tech, she couldn’t be a more perfect fit for her role. Her understanding of what it takes to be successful in the real estate world, combined with profound technical acumen, give her unique insights into the needs and challenges of our brokerage clients. She is a vital piece in the creation of our products and we can without a doubt say MoxiWorks wouldn’t be where it is today without her!

Want to find out more about Georgia? You’re in luck because we got her to sit down for a 20 questions session!

 

1. How long have you been at MoxiWorks?

Six plus years.

2. How many employees do you manage?

I have a team of 4 at the moment but am excited to announce we’ll be growing by several (so let me know if you know someone wonderful who should join us!).

3. What has been your favorite product and why?

That’s like asking a parent to pick their favorite child! MoxiPresent launched the company and is without question the “best in class” CMA and presentation platform in the industry (we were voted so by an independent review and not just our clients!). There is so much you can do with it; I still get excited about it every day. MoxiEngage is my favorite for accelerating our brokerage and agent’s business by huge leaps, by giving them the road map to success, and coaching them, and their company on how to get them to their goals. I wish I had had something like it when I was building my Real Estate career.

Recently, we’ve added MoxiTalent, and having been a manager – I never had such an outstanding system to help me in recruiting and retention, offering a plan developed by 20+ of the leading recruiters in the nation, combined with the data to track performance, and suggest best matches for your recruiting. Before MoxiTalent, I had to go get a giant data dump from the MLS, or other expensive data products, and then try to read the tea leaves on who to talk to; now, the system tells me who is a high match to my needs, and takes me step-by-step through a sophisticated recruiting plan, while also helping me “re-recruit” my existing agents every day. All of these products are mobile ready, so I can do my job from whatever device I am using in the moment.

SEE – it’s impossible to choose!

4. What makes you feel accomplished?

I’ll let you know when I get there, lol. Seriously, I am super hard on myself, and very driven; I don’t ever feel I have arrived – I just keep moving the goal out. That said, I feel amazing when I see our clients, and their agents truly succeed with us! Living up to our promises every day is a worthy accomplishment!

5. Window seat or aisle seat?

Window. Mostly because I don’t want people hitting me with their bags as they go down the aisle. I typically fly around 100,000 miles a year – so these things matter!

6. What’s your favorite thing about MoxiWorks?

It sounds so trite, but honestly, everything! I love our mission, our culture, and I work with some of the best and brightest people in the industry! I feel lucky everyday (even the hard days)!

7. How long have you held your real estate license?

10 years and counting!

georgia perez headshot disney8. What energizes you and brings you excitement?

Professionally: I love being in the field with our clients, or speaking at industry events, helping to shed light on what’s going on with technology, and firing up their businesses.
Personally: I am a Disney nut, so I get excited when I can step into a Disney park and have a little time in the “happiest place on earth!”

9. If you could be famous for anything, what would it be?

To be remembered for being a kind person, that helped others in their lifetime. I have a favorite song by Nicole Nordeman that says, “I want to leave a legacy. How will they remember me? Did I choose to love? Did I point to you enough?” I think that is more important than “fame.”

10. What keeps you at MoxiWorks?

It comes back to the people. It’s called “work” for a reason; when you can do it with people you enjoy and respect, and you are growing every day, it is so worth it. I also really believe in what we are doing for brokerages and their agents. Our systems really do work – so it can literally change the lives of our clients, by helping them make a great living, and achieve their goals! What’s not to love about that?!

11. Who is your favorite Disney character?

It’s like that favorite child question again! I love Mickey, always – but Tinkerbell is also a fav (though my hubbie would say that it is because her color is green, and it’s my favorite color)!

12. What is your most used emoji?

Smiley face for the rest of the world, but for my husband the heart eyes or the kissy one!

13. What was your first job?

Other than the typical babysitting I did as an early teen, my first formal job was at Prospero Mushroom Market in Santa Cruz, California. It was a vegetable market with a delicatessen and ice cream parlor. My job was the ice cream scooper and deli clerk. The owners were friends of our family, and it was a great first experience! My brothers best friend worked in the veggie market side and kept an eye on me (this was all before I was old enough to drive).

14. What interested you about MoxiWorks in the first place?

I felt this was meant for me. I had been in tech for more than 20 years, and for personal reasons changed my career to become a Realtor at Windermere Real Estate. Several years later, after building a successful RE biz, I learned they were launching an independent tech company, building real estate technology. It just seemed like my two careers came uniquely together! I have deep respect and understanding of the Real Estate Industry, and deep roots in the tech industry.

15. What do you do when you’re not working?

Sometimes it seems I am never not working; except for when I’m sleeping, (and even then, I think I dream of Moxi)! That said, my husband and I are actively involved in our church and social causes. On occasion, you can also find me at a Disney Park, and at least twice a year I run in Disney races, and also, when travel allows, dozens of other races throughout the year.

16. Did you choose this career path, or did it choose you?

It definitely chose me. I could never have foreseen that my strange hop from tech to real estate would have opened the door for a Real Estate Tech career.

17. What advice would you give to other real estate agents?

Seek help and push yourself outside of your comfort zone. The real estate business is wonderful but can be hard. Being self-employed is not for everyone, and if you have never run your own business, can get you out over your skis pretty quickly. As humans, we are naturally resistant to change, so even when we go take classes, attend a conference and get all jazzed up about new ideas – as soon as we have to implement, people tend to revert to “old habits” pretty quickly.

I read a blog from Seth Godin today (love him!), it said:

Just because you don’t understand it:

  • Doesn’t mean it isn’t true
  • Doesn’t mean it isn’t important
  • If we spend our days ignoring the things we don’t understand (because they must not be true and they must not be important) all we’re left with is explored territory with little chance of improvement

Allow yourself to feel uncomfortable, without allowing yourself to quit! It’s like going to the gym, and starting to work out for the first time. It may feel awkward (heck it might even make you sore for a bit!), but when you start to see results, it’s easier to build upon that success, and keep growing!

Keep in mind, the only one you hurt when you don’t seek to learn and implement great systems, is yourself. It’s your business, your income, and your life! Seek experts who can guide you on the right path.

18. How would you describe your management style?

Intense, but loving, lol. My role in the company is driving revenue. It’s not something one can afford to fail at; our clients, co-workers and investors are counting on me and my team. I take that commitment very seriously, and I do drive to results. That said, my philosophy is to be the “wind in the sails” of my team. All boats rise together, and we are a team (along with the rest of the Moxi team). I truly want better for my team than I want for myself. We work long hours together, so it’s great when we can genuinely enjoy, respect, and support one another.

19. What do you feel is the biggest barrier to agent tech adoption?

A few things:

  • Being overwhelmed! Self-employment is no joke, and agents are very busy taking care of their clients, while simultaneously needing to do everything required to build a consistent business, and take care of all of the things people who have a steady paycheck, vacation pay and benefits take for granted. Pausing long enough to learn anything new, can feel impossible to squeeze in.
  • Fear – fear of change, fear of the unknown, even fear of tech. Many agents look a lot like me (a middle-aged woman!), they tell themselves they won’t be able to figure it out. I know, at least with Moxi technology, you can’t break it! So, come on in, the water is fine. You don’t have to jump into the deep end, you can wade in, and gradually find your swim lane.
  • Disappointed expectations. Many think that tech, in and of itself, is the proverbial “eat all you want and stay slim pill.” The tech is going to do it all for you, and business will just magically pour in and happen. While technology can definitely automate a lot of functions, contribute to lead generation, and keep you focused on the right things, Real Estate is a relationship business, and there will still be work you must do to build genuine relationships. Our sphere is the greatest asset we have, and some focus and effort here will pay off in big ways – but it requires tech and work.

20. What is one of your 2019 goals for MoxiWorks?

Continued growth and continuing to be thought leaders in the industry – by helping to make the businesses and lives of our brokerages and agents better. I want to accomplish something so big, that we can celebrate with something crazy, like a company trip to Disney!

Want to chat with Georgia about your brokerage 2019 goals? No prob. She’s happy to chat with you!