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Software evaluation is a multidisciplinary activity that must be carried out from three interdependent perspectives: technical, legal and economic.
In this article:
Specialists are all too often prone to work in isolation, focusing on their own area of expertise without realizing the potential impact of other analyses on their work share.
As the development of a software, application or web platform requires the input of professionals with different skills, the same is true when performing our software evaluation service.
Collaboration between different professionals, which is not limited to mere information sharing, provides the client with a comprehensive technical and legal report that can lead to a realistic and reliable economic evaluation.
The interdisciplinary approach can be applied to any type of software, application, platform or website evaluation. Next, we take a look at the reasons why to have software evaluated.
There are several reasons why you may choose to have your software evaluated, including:
Whatever the purpose of the software evaluation, the economic appraisal (monetary value appraisal) should be the last to be performed as it is heavily influenced by the technical and legal evaluation.
Depending on the purpose for which the valuation is performed, some aspects may require dedicated analyses or validation by a Legal Auditor in the case of an Appraisal Report under Article 2465 of the Italian Civil Code that can be used for the contribution of goods and services to a company.
As a general rule, basic information about the software product in its three dimensions (technical, legal, and economic) is collected in the first phase.
We must consider that a software product comprises, in addition to the source code, all the documentation produced before, during and after its development.
As an example, we will need functional requirements analysis information and documents, technical analysis and solution documents that include architectural drawings of the software, and technical information on how and by whom the software was developed and how it is maintained and managed.
Some information will be qualitative, such as descriptions of the functionality and users involved, and some will be quantitative, such as the number of lines of source code written.
In the preliminary stage, technical-legal expertise is needed to assess aspects of intellectual property and its protection as well as compliance with privacy regulations, with respect to the security of user data. The support of a professional with economic expertise is also desirable.
The first information collection defines the scope of the intangible asset (software) being evaluated and its features. It also defines which intellectual property institutions are used or can be used for protection and who holds the ownership. Ceteris paribus, holding solid intellectual property titles increases the economic value of software.
Depending on the purpose of the software valuation or the elements emerging in the first part of the analysis, further investigation will be undertaken as appropriate. For example, it may be necessary to measure software quality by referring to ISO/IEC standards including ISO/IEC 25010:2011 (updated in 2017) and ISO/IEC 25023:2016 (updated in 2022).
For software dedicated to public administrations, Agid has produced the “Technical Guide to the Use of Metrics for Application Software Developed on behalf of Public Administrations” (https://www.agid.gov.it/sites/default/files/repository_files/guida_tecnica_metriche_software.pdf) in which it outlines software requirements and metrics and tools for assessing their quality.
Alternatively, it may turn out that other intellectual property institutions such as know-how have guided the development of the software. In this case, a dedicated follow-up is appropriate.
Once the first phase and any necessary additional investigation have been completed, it will be possible to move on to the phase of economic evaluation of the software product.
Different methodologies can be applied for the economic evaluation, which can lead to very different values depending on the characteristics of the software and the chosen method.
A conservative appraisal compares the values derived from different methodologies to arrive at the final valuation and cannot disregard the technical and legal evaluation.
It is important to note that protection activities should be planned prior to the implementation of the software through confidentiality agreements with employees or collaborators and the appropriate clauses within the contract for the supply of the software.
Registration of the software with the appropriate offices may sometimes be essential to achieve certain legal or tax benefits.
If flaws in the protection of intellectual property or its management are detected in the first phase of the assessment, they will be reported to the client and an assessment can be made of how to proceed and whether they can be rectified.