Home / Area Of Business And Affects On Investment: Software

area of business and affects on investment: software

When computers were first introduced, everyone was excited about the potential these machines presented. However, no one could really imagine how the software industry could just take over the entire world by storm. It was perhaps a little difficult to envisage then that software could replace human effort and achieve greater efficiency, allowing people to achieve more by working less.

Software are simply designed to ensure that the goals to create wealth are met with, the production output levels are improved, the quality of products is improved, the service delivery is improved, communication is channelised properly and that customer satisfaction is achieved completely.

When you come to think of it, the world has high expectations from technology. While the IT industry continues to face several challenges, the emergence of internet as a viable source of information and maintaining communication, as well as the advent of software to control the information received through the internet, has been an excellent stride forward in the technology sector.

Today, there are sophisticated IT tools and solutions for communication, all of which influence the perception of managers towards the software industry. This is critical in creating an investment proposal for a software company. If you are a software developer, looking for investment in your area of expertise, it is important to make your investor understand why information technology is important.

Why Information Technology?

The most important issue to address here is the felt needs for software in the market. In an era, where there are several enterprises which have already established themselves as the vanguards of the software revolution, is it possible for newer companies to thrive? The answer to this is innovation. If you see the history of information technology, you will find that software have had major impacts on the life cycles of various companies. Even small industry today are dependent on software and with the advent of Open Source Software, the entire gamut of the software industry has been rocked to the core. Here, interestingly, one does not account the various factors which make companies choose a particular software.

  1. Affordability – if your software is priced reasonably, there is a reasonable chance that a segment of population will want to use it.
  2. Usability – is your software of any use? How often would a user need it?
  3. Customizability – can your software be customized to suit the needs of enterprises?
  4. After Sale Service – what kind of service do you provide after your sales.

If you are able to capture the interest of your investor using these key points in your investment report, you will be able to clarify your business ideas and your expertise in realizing your goals. Since information technology is largely viewed as a solution provider for enterprises, all companies – small or large, invest in IT solutions for their enterprises. Information technology enables collaboration, sharing, documentation, record keeping and can also give support to various management functions, making tasks easier to perform through and through.

Investment Trends in Software Industry

The entire world is investing in technology. Not only is this true for venture capitalists, but also enterprises, which invest millions of pounds every year in organizations that come up with better software technology to manage the business of these enterprises. In 1999, the trend of investing in software technology began and more than 90% of venture capital funds began to be directed to software firms all over the world. Specialized hubs for software technology were created all over the world and the software needs of the world were met through a dedicated sector and workforce, working round the clock. However, unlike the consumer products industry, which is cyclical in nature and promises fair returns on investment through a stable growth of business, software industry can be quite volatile. Yet, for established players, who continue to extend and improve their services, the volatility of the economy does not affect the demand.

Establishing a Niche

When you are planning to get investment for your software venture, first establish yourself in a niche. The software market can be broadly divided into two – the consumer software and the enterprise software. Consumer software largely involves software on the web. This is the exciting stuff that all consumers use – be it search engines, social networking sites, photoblogging or others. Enterprise software on the other hand is big, but not as exciting. Enterprise software can include software that specifically aim at the larger technology setup, like in an industry or a big organization where several computers are served by single servers. Establishing a niche is important because this is the basis from which your strengths, opportunities and challenges will emerge. The life cycles of the two niches are different and so are the markets. The investment opportunities in the two niches will also, therefore, be different.

Investment Opportunities

No matter what kind of industry you are sourcing investment for, there is a need to dedicate an entire block of your proposal to the various investment opportunities in this sector. Once you have explained the investment opportunities, there is a better opportunity to explain your own investment needs in the context.

Discussing the scope of your own business is always acceptable when it comes to the investment opportunities. Always mention the details of your business and highlight each of the area where investment is required, with a projected growth chart for the proposed investment. It is important to note here that no matter which investors you approach, the first and foremost concern is always about the return on the investments made. In another section of your report, do present a historical context of investment made in the sector.

The focus here should be maintained on the return on investment for each of the investment opportunities that you present. With the return on investment, you can also elaborate on the time line that this return is expected to be made on.

When you have clarified these positions to the investor, there is a greater clarity on the role of the investor as well as the presumed expectations of the investor.