PEST Analysis

PEST analysis is a technique that can be used to evaluate the market that a piece of software is going into. They can be used to gain an understanding of the market and it help to understand the strengths and weaknesses of software in the global market. It can also help develop the software to better integrate into the market it is going into. It can better define the direction of the software. It is used in the pre-planning stages to gain an understanding of the market. It can be better to use this method before the SWOT analysis.

A SWOT is used to investigate internal and external factors whereas the PEST analysis mainly focused on external factors. PEST stands for:

  • Political
  • Economic
  • Social
  • Technological

As you can see when you look as these words that most of these are external factors to a business or product. Analyzing these factors can help you understand any obstructions in the way of your product.

Doing a Political analysis can highlight any political factors that may affect your product such as the local legislation of different markets. Not every country has the same laws or the same legislation. In some countries you may be able to carry out certain processes within your software without any involvement from any authorities but in other countries there may be legislation that affects how you must carry out these processes making them more restricted.

The Economic factors can be things such as tax. Understanding what tax law are can be vital to your businesses or even the product if it deal with selling products online. Current exchange rates may affect your profitability in the global market.

Social analysis might involve looking at consumer trends. Such as the rise of mobile gaming, this could mean that you start developing a mobile game that would appeal or closely matches what people are already playing on their mobile devices.

Technological factors may be obvious to those who are creating a software product but it is still worth doing a technological analysis. This could involve studying what language would be best to use based on knowledge of the language and cost of licences. Platform such as apple and Microsoft are very different and understanding which one you want to use is also a good idea to research or maybe branching out into another platform.

The PEST analysis has also been modified to include other factors these include Environmental and Legal which turn the word into PESTEL.

Environmental issues may affect how you run the business. Or the product could lead to certain environmental factors such as waste or pollution. The legal factors could and more likely would involve the use of personal data. Understanding how you use personal data is a legal factor. This should always be understood. Although there are other factors under the legal umbrella this one factor is a really big factor when creating a software product that uses people’s personal data.

The PEST analysis has also been modified again including the previous two to also include Ethical and Demo-Graphical, this also changes the word to STEEPLED.

Ethical issue are really prominent within software projects. It encompasses a whole new area that we as software programmers need to start looking into. We deal with a lot of personal data and other vital data pertaining to personal user, organisations and governments. Although not as important as the health profession who all abide by an oath to the patient, it is time we start thinking about how we see ourselves in the world that is becoming more focused on computers and technology and not abusing the trust we inherit from the user’s of our product.

Demographics are pretty easy to understand they include the people we are going to market the product for. This section uncovers the particulars such as age, wealth, gender and other factors which are used to put people into groups. Say one could be marketing a mobile app for android users or marketing a game to a certain age group.

Political

Government stability and likely changes
Bureaucracy
Tax policy (rates and incentives)
Freedom of press
Regulation/DE-regulation
Trade control
Import restrictions (quality and quantity)
Tariffs
Competition regulation
Consumer protection and e-commerce

Economical

Growth rates
Inflation rate
Interest rates
Exchange rates
Unemployment trends
Stage of business cycle
Trade flows and patterns
Level of consumers’ disposable income
Monetary policies
Stock market trends

Social

Health consciousness
Education level
Attitudes toward imported goods and services
Attitudes toward work, leisure, career and retirement
Attitudes toward product quality and customer service
Lifestyles
Buying habits
Religion and beliefs

Technological

Basic infrastructure level
Rate of technological change
Spending on research & development
Technology incentives
Legislation regarding technology
Technology level in your industry
Communication infrastructure
Access to newest technology
Internet infrastructure and penetration

Environmental

Weather
Climate change
Laws regulating environment pollution
Air and water pollution
Recycling
Waste management
Attitudes toward “green” or ecological products
Endangered species
Attitudes toward and support for renewable energy

Legal

Anti-trust law
Discrimination law
Copyright, patents / Intellectual property law
Consumer protection and e-commerce
Employment law
Health and safety law
Data Protection

Ethical

Ethical advertising and sales practices
Accepted accounting, management and marketing standards
Attitude towards counterfeiting and breaking patents
Ethical recruiting practices and employment standards (not using children to produce goods)

Demo-Graphical

Population growth rate
Immigration and emigration rates
Age distribution and life expectancy rates
Sex distribution
Average disposable income level
Social classes
Family size and structure
Minorities

Conclusion

In conclusion this a very good technique to use as you can see it cover a wide range of external factors regarding any software product and I feel that it should be used not just for businesses, but be put to use in our world of developing software.

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