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Understanding the Value of Custom Software Development

Properly appreciating the value of software can be difficult. When you purchase a shiny new car, you get a full feast of the senses. The new paint glistening, the curvature of the car, the comfortable seats and that new car smell tells you instinctively that your new pair of wheels is a thing of value. But whilst a vehicle is a depreciating asset, software is a living, breathing investment from which you’ll receive benefits for years to come. Understanding the costs that come with custom software development is an important part of the decision making process.

Let’s be frank. The number on the quote can come as a shock. BUT - you need to remember that this is an investment and that the value you are going to get from well-built, well-considered and well-tested software will far outweigh the initial costs. It’s all about lifetime Return on Investment (ROI). Otherwise, why do businesses invest at all?

If you are not getting a positive ROI from your software there are 2 potential issues at play:

  1. You don’t properly understand the value you’re getting from it or,
  2. The wrong thing was built

Let’s investigate.


What returns should you expect from your custom software?

We have worked on thousands of software projects for a large number of very successful ISPs. In our experience and in the case of automation, you should expect any and all of the below returns:

  • Reduced costs: Manual tasks, given that they are performed one-at-a-time and at a slower rate than an automated task, will cost more. Automation allows you to accomplish more by utilising fewer resources.
  • Improved efficiency: Process automation reduces the time it takes to achieve a task, the effort required to undertake it and the cost of completing it successfully.
  • Quicker time-to-market: Workflow automation allows you to define and streamline business processes, resulting in an ability to deliver products to the market at a quicker rate.
  • Improved customer experience: Information availability, standardisation and automation of communication and the addition of self-management/self-help options for your customers all help towards an enhanced customer experience. For example: Did your Project Manager (PM) send your new customer the service desk contact information? It’s something the PM needs to remember to do, rather than something that’s done automatically. 

For more about the benefits of automation, click here.


How to maximise your returns by ensuring the right solution is built

To maximise the value you get for your investment, and to minimise financial wastage, it is imperative that you view yourself as a partner, rather than as a purchaser. You need to remain involved in the development process. By ensuring that the development team continually receives your input and feedback, you are empowering them to understand your business and implement your software solution with features that are useful to you and work as you intended.

Most software development teams in today’s industry utilise Agile development methods such as Scrum, which put your financial investment to work incrementally by providing valuable iterations of your software at regular intervals (less than a month at a time).

This means that, rather than paying a large sum upfront for a product you may only see in months or years, you have the opportunity to provide iterative feedback, ensuring a gradually improving design of the Mona Lisa is created, as per your requirements, well before Da Vinci delivers the final masterpiece.

So, what are software development costs comprised of?

  • Time. Developing good and resilient software is a complex process.
    Software applications have a way of making extremely complex processes look as simple as, literally, clicking a button. But every button click is the culmination of needs analysis, business understanding, software development, design, testing, demonstration and delivery.

    It takes time to build robust, reliable and GOOD software. The time it takes is totally dependent on your requirements, the size of the project, the complexities involved and the size of the team.

    Punchline: Doing it well and right takes time.
  • Skills and experience. Developing quality software requires a group of highly-skilled individuals with specific experience.
    All around the world, software engineers are among the most in-demand workers. In South Africa, Software Developers earn on average between 300 and 700 thousand rand per year, or above, depending on experience. Consider then, that a software project often requires an entire team of multiple Software Developers, as well as Project Managers, Business Analysts, Testers, and Designers. Therefore, the staffing costs alone for software projects cost millions of Rands per year, excluding all of the other infrastructural and administrative costs of running a business.

    Punchline: Good skills are valuable.


Is the investment in custom software worth it?

The fact that you’re reading this suggests you already have a problem that you know software can solve. Not only can business automation through software greatly improve your time to market, but it can also greatly reduce your operating costs and improve your customer experience.

The benefits of automation on your bottom line are likely to far outweigh the cost, but you must also consider the cost of prolonging the existing processes. Convoluted, manual business processes are not only slow, but they tend to be difficult to learn. When this is the case, replacing a senior or knowledgeable employee who resigns is much more difficult to do. There are also many things that software can do better than people, like work 24/7/365, or reliably produce an accurate invoice every single month (even on Christmas Eve).

Undoubtedly, there are other variables to consider besides money. But if you know that software is a necessary solution for your business, understanding the reasons for, and benefits of, the financial investment is necessary.

Software may not feel like an attractive new car, but nothing will drive your business better!


Download | The Executive's Guide to Software Project Management

The Importance of Customer Involvement in Software Projects
The Next Big Thing in the Age of the Machine, is People

About Author

Wade Profe
Wade Profe

I drink a copious quantity of cappuccinos and have an issue with vegetables. Also I'm a software tester who writes blogs.

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