Software Development

How to optimise software development costs in 5 steps?

date: 8 April 2021
reading time: 6 min

Optimising the costs of software development has always been important, but this has become especially true nowadays – when all the risks associated with sudden disruptions in the external environment are much higher than they were before.

But optimising your software development costs shouldn’t just mean cutting your IT budgets or putting your digital transformation on hold. Quite the contrary – you should accelerate the digitalisation of your business and try to foster innovation within your company, all the while simultaneously optimising your costs.

So, how can you wisely approach cost optimisation?

What are software development costs?

To start with, let’s understand some more about software development costs. What are they?

The costs associated with software development can vary widely, depending on your business model, the geographic location of the development team, and the level of expertise required.

They can be categorised as upfront costs such as development, design and testing, and ongoing costs such as maintenance, support and updates.

Additionally, you should also take into consideration any unforeseen challenges and changes in project scope that can impact your costs.

Factors that affect software development costs

There are many factors to consider when analysing software development budget.

Some of the key ones include:

  • project scope, scale and its complexity,

  • features and functionalities required,

  • chosen technology stack,

  • size and composition of the development team,

  • the geographical location of the software developers,

  • project timeline and deadlines,

  • customisation and the complexity of the features,

  • design requirements,

  • regulatory and safety compliance,

  • upgrades and scalability investments.

How can software development reduce costs? 5 steps

Let’s now look into how to reduce overall software development costs.

First and foremost, you need to determine how much software development is currently costing you. Include everything – from salaries to infrastructure. You should have some solid benchmarks in place to help you identify profitable opportunities and make smart comparisons later.

Only then will you be able to run the profound analysis needed to create a good plan. To do this you can use a free Total Cost of Ownership template.

That’s done, follow these five steps:

1. Assess your internal environment

Assessing your processes and resources will allow you to establish your current level of efficiency. Focus on your weakest links first – the bottlenecks that suppress software delivery.

They may be associated with a lack of automation, insufficient human resources, bad communication, outdated tools and technologies, counter-productive methodologies, etc. You need to have a clear view of the things you’re doing right, as well as of the things that need to be improved.

2. Analyse your connections and project costs

You are connected to a number of external service providers and partners, not to mention your own customers.

Some of your collaborations may not be as effective as you think, or you may be paying for subscriptions that you don’t need anymore. You could also be focusing on too many target groups while developing your software solutions, making it too extensive and complicated.

It’s important to identify all of the areas that generate needless expenditures to then tackle them and improve your costs.

3. Make a plan for cost optimisation

After you’ve finished with the first two steps, you’ll have a full picture of your situation, and you can start looking into cost-optimisation opportunities.

You’ll probably find some minor modifications that can be made immediately (like getting rid of unnecessary services that you are still paying for), while other improvements may take much more time and effort to find and implement (like adapting Agile methodologies, such as Scrum or Kanban, in your software development).

Of course, there are a few things to consider beforehand, such as:

  • Will the changes that you are going to make have an impact on your customers?

  • How long will the adaptation period take?

  • Will it affect any other areas of your business?

It’s important to analyse all of these factors, set your priorities and create a schedule or product development roadmap. Also, remember that big changes may require you to invest some time and money immediately in order to enjoy significant savings later on.

4. Execute your strategy

Once your plan is ready – it’s time for execution. So, make sure that your employees and all other stakeholders (not just your development team) are familiar with what you want to change – especially those who will directly experience the effects of the modifications.

First, assign responsibility for implementing particular changes, then proceed with the general implementation, taking it one step at a time.

Don’t rush with transformation – give yourselves some time buffers that will allow you to check on the progress of your plan and react whenever necessary. Ask for feedback and never underestimate any ideas.

5. Monitor your software costs

And last but not least – keep your fingers on the pulse and be sure to compare your results with the benchmarks that you set up earlier. Remember to stick to the metrics that are actually comparable. If at any point you observe that your plan needs modifications, adjust it to the current situation.

Priorities may change over time, and you could also find yourselves in a situation that was hard to predict in advance. A certain level of flexibility is definitely required here.

What is the best way to reduce software development costs?

One of the best ways to reduce costs is software development outsourcing. Today there are many great companies that can help you throughout the process. They are experienced in custom software development projects and will be able to guide you using solutions that worked for others.

Having an outsourcing software development partner may help you leverage a large pool of resources and save money in many different ways.

Leveraging agile methodologies for effective cost reduction in software development

Another aspect that can contribute to effective cost optimisation in your software projects is adopting agile methodologies.

Agile development promotes iterative development cycles and continuous delivery. By delivering smaller increments of functionality in short cycles, teams can gather feedback early and make adjustments, reducing the risk of costly errors in later stages.

Agile emphasises the importance of prioritising features based on business value. This allows teams to focus on delivering the most critical functionalities first, ensuring that resources are allocated to high-impact areas.

By leveraging Agile methodologies and principles in project management, organisations can create a more adaptable and cost-effective approach to software projects. Continuous collaboration, iterative development, and a focus on delivering value to your clients contribute to improved project outcomes and better cost optimisation.

Looking for a Software Development Company?
Looking for a Software Development Company?

Maximise ROI in software development process with the help of Future Processing

If you are thinking about reducing software development costs and maximising ROI, consider working with Future Processing. With a wealth of experience in working with companies at different stages of their digital transformation, our experts will gladly help you optimise your IT costs.

We believe in collaborative and transparent partnerships, in regular evaluation of the project outcomes and in continuous improvement. We will be happy to share our experience with you to help you reduce software development costs and achieve your goals!

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