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3 ways to cut your software development cost by 50%

Faced with economic crisis we all become more cost focused, whether we like it or not. It’s common knowledge that more and more companies are in for heavy cost cutting operations. On the other hand, we all know that we will have to invest as well. Without new developments there is no competitive advantage, which makes both today and the future insecure. Therefore, even today clever investments will be needed. So, what about investing for half the price? In this article I will describe three ways how you can decrease your software development cost up to 50% (or may be even more) without any loss of core functionalities.

Cut out the toys. Image credits: stock.xchng

Save by cutting out the toys

Recently, I have found an external source, the “Agile time to market sheet“, that proved a much longer existing feeling. Based on my personal experience I feel confident in saying that the functionalities requested for most software development projects are dramatically over-exaggerated. People always want to have everything, but in general, they tend to use about 50% of the functionalities provided to them. In fact, this means that about 50% of the requested features are so called ” nice-to-haves”or “democratic” agreements as a result of negotiations: “you will get that toy if I can get this one”. This means you can easily cut about 50% of not needed, but often requested, functionalities.

These “toys for boys” are often hardly used and extremely complex and therefore expensive to be realized. By getting rid of the “fancy toys” you can save a lot of money without touching the core functionality of the application. Hardly anybody will notice. That’s why you should ask twice whether a certain functionality is really needed.

Save through Agile development approach

Unfortunately, still most of the software projects follow the so called “waterfall” methodology. This means that we first specify our needs, then we select a company to develop the application and the software company builds the application. On many occasions, several months later, we realize that we did not get what we wanted. In my post Successful outsourcing needs client’s trust I already showed what can happen if client and software company do not understand each other.

To prevent this from coming, we prefer to use an Agile approach. In close cooperation, the client and software developers define the needs and in an itterative and interactive way they develop the requested software solution step by step. In a fixed time period new releases with new functionalities are available as a working application. Thanks to the interaction, the client can directly decide what functionality is really needed and he is able to set priorities for the development team. In this way, the focus is shifted on essential functionality rather than on “gizmos”, which will again save development costs. Please have a look at the article: “Why incremental development is better – An ROI perspective” ,which is really a valuable source of information.

Consider nearshoring or offshoring

A very important decision is whether you will “make-or-buy” the solution. Do you want to hire the developers yourself or will you decide to look for a software vendor? If you consider outsourcing the software development also consider looking for software providors in Eastern Europe, India and other nearshore and offshore destinations. By doing this you will be able to further reduce the cost.

Conlusion

In my opinion it is quite easy to reduce software development costs significantly and in the long run it will ensure that a lot more projects will still be attractive from the financial point of view. Besides it will enable companies to continue investing in these hard times.

On the other hand, you should also be aware that outsourcing, whether this is on-, near- or offshore, is not necessarily easy. Your organisation needs to be ready for it. Besides you will have to arrange proper demand management. If you don’t organise this in a good way, you will never get what you are looking for and you won´t be able to achieve the suggested cost reduction.

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Entrepreneur, co-founder & Managing Director of Goyello and Webmerce. Sociologist and electrotechnical engineer, a great combination that stimulates him to look for working solutions. Passionate about converting great ideas into new solutions. He is married and a proud father of 3 great sons. Participating in (and training for) triathlons to stay fit.