Custom software development is not as straightforward as it seems. Although there may be some similarities between software applications, each custom-developed software is a unique project.
A recent study by Harvard Business Review found that one in six IT projects has a cost overrun of 200%. Agile development can add even more challenges to budgeting and planning. It can be difficult to achieve standardisation and economies of scale in custom software development, but there are some common approaches that can help.
The COVID-19 pandemic sped up how industries use technology. For software development, the key challenge is adapting to 100% remote work and the cost-optimisation pressure that comes with an uncertain economy. After the pandemic, more and more companies are choosing to digitise their operations to improve operational efficiency and ensure business continuity.
Assuming that maintenance budgets remain constant, optimisation can allow organisations to expand their innovation portfolio, which in turn can help them maintain their competitive edge in the long term.
In this article, we’ll share important ways and practical approaches for reducing expenses in the current uncertain situation.
What Is IT Cost Optimisation
IT cost optimisation is the continuous process of identifying, evaluating, and reducing IT costs without sacrificing the quality or availability of IT services.
In simpler terms, it’s a systematic approach to managing IT spend that seeks to ensure that every cost is clear, allowing for improvements in how they are allocated. While some costs can be minimised, the main objective isn’t just to cut expenses. Cost optimisation involves reshaping and redirecting saved resources toward more valuable purposes or more effective methods.
Why Is Cost Optimisation So Important
Companies typically have two types of budgets: operating budgets and research and development (R&D) budgets.
- The Operating Budget covers the costs of running company operations, maintaining the company’s current status and position, paying staff, and other related expenses.
- The R&D Budget is used to fund research and development activities, such as developing new products and services and conducting market research.
Given the declining market conditions, investment priorities have drastically shifted. Investors might reduce or halt investments in R&D. Instead, they are showing more interest in companies that excel at efficiently managing their operational budgets, ensuring steady returns and safeguarding their assets.
While some companies might not rely on external investors, even internal stakeholders are becoming increasingly attentive to how effectively the operating budget is utilised. This is because a well-optimised operating budget sustains all company processes, the strength of its workforce, its market position, and even the resources set aside for research and development.
The Best Strategies to Reduce Software Development Costs
Effective planning and requirement gathering
When initiating a software project, effective planning based on realistic assumptions becomes critical for cost management. Practices like defining the project scope upfront help avoid unexpected expenses. Analysing project requirements thoroughly and early can also prevent problems and ensure a smooth start for a new software project.
Automation and continuous integration
Integrating automation and continuous processes increases productivity while lowering software development costs. Recognising and fixing problems early on has multiple benefits for your delivery process. Automated tests enhance bug detection and minimise downtime, avoiding resource and time inefficiency while keeping customers satisfied.
Infrastructure cost optimisation
Optimising infrastructure costs in your organisation reduces software expenses and helps your business expand. You can adjust your infrastructure and resources like storage or servers to fit each software project’s unique needs. Automation and monitoring tools help optimise costs, streamline processes, and reduce resource wastage.
Agile development and iterative approaches
Choosing a flexible software development approach like agile can optimise resource use and reduce waste. Methods like Scrum or Kanban focus on building and improving in cycles, spotting and fixing issues early. This dynamic approach of agile often leads to lower costs.
Using open-source software and existing technologies
High software licensing costs can be a burden. To cut overall expenses, consider harnessing free or low-cost open-source software. As long as compatibility and security aren’t compromised, expensive licensed products or building from scratch aren’t always necessary. Similarly, tapping into existing technologies can cut costs and delivery time, as long as it doesn’t hinder progress.
Outsourcing or offshoring development
When you lack certain expertise in-house and want to benefit from lower prices in other places, outsourcing or offshoring can be a better option. You can maintain quality while taking advantage of opportunities elsewhere, reducing the usual costs that come with full-time employees.
Code reuse and modularisation
Code reuse effectively trims software costs by allowing engineers to employ existing components or code modules. These are tried-and-true elements that ensure quality and speed while reducing resource consumption. Maintaining a well-organised database and adhering to coding standards are important for effective code reuse and modularisation that reduces costs.
Best Practices in Project Management
Adopting project management best practices ensures optimal results with minimal resource waste. Effective financial strategies begin with project planning, management, and tracking. This allows for timely adjustments and improvements throughout the project journey.
Quality Assurance and Testing
Automated testing and careful project monitoring can significantly impact the overall expenses of your software delivery. Strategies such as automated testing and continuous integration can catch defects early on, which can save money in the long run.
Launch Product with Important Features
When launching a new product, it is important to prioritise the features that will make it most useful to users. This keeps the design focused and could save up to 10% of the budget. Start with the basic functions and consider adding extra features based on user impact. Avoid costly, complex features that don’t add value to users.
Final thoughts
In these challenging times, making investments is tough and your first reaction is to often to cut costs wherever possible. While cutting costs hastily can improve a company’s immediate situation, it is not a panacea for all your problems, especially long-term ones.
Although cost optimisation requires an initial commitment of resources, its benefits are substantial and address basic issues. Cost optimisation involves more than just identifying and reducing unnecessary costs using only a handful of tools. It is a comprehensive process that requires execution and continuous improvement — setting the groundwork for the development of an effective framework of techniques and tools.
Reach out to us today to see how we can help minimise your software development costs and optimise your operations.
