Why Software Development Is Worth the High Cost
Looking for great software solutions to suit your business needs and budget can be daunting, unless you look in the right places. Your business processes are unique, and you’re not yet sure about how new software will integrate with your existing systems. As you peel back the layers of what you really want your new platform to do, you will begin to realize the complexity of the project. There are quite a bit of details and you are concerned about the potential price tag. But you’re not alone.
Technology, software and hardware, is definitely big business these days. In fact, companies are expected to spend $3.5 trillion globally on tech alone this year including enterprise hardware, software services, and telecommunication services (Peterson, 2018). And you might be surprised that the smaller the company, the more they spend. “The average small company spends 6.9% of revenue on IT. Mid-sized companies spend 4.1%. Larger companies spent a miserly 3.2% of revenue” (CIO Magazine, 2018). And when it comes to spending, business applications are in first place representing 54% according to the Harvey Nash/KPMG CIO Survey. So, it looks like you are in good company. Of course, not all tech money is spent solely on software, but it still begs the question, “why does software development cost so much?”
The Human Factor
You might start by asking yourself why anything that delivers high-quality business solutions costs so much. In short, great teams produce great results. Whether it’s an amazing x-ray machine, catering truck, high-rise building, or anything else that satisfies a business need, you ultimately get what you pay for. Look around at the wonder of so many incredible projects that require the expertise of a qualified team. A lot goes into the design and development, especially when the project is custom ordered. Ideally, you want the project in the hands of a team that views it from different perspectives to be sure they get it right and help streamline the overall process. And although each software solution is different, fortunately most do not require hundreds of people working on the project. However, you can expect that “most products do need at least a small team of experienced engineers, designers and product people to produce an end product that is competitive and that will generate true business results” (Forbes, 2018). Multiply that small team by the hours that goes into your project, for example an app, and you’re looking at hours or more of labor—labor that only humans can perform. Writing code itself can be a very tedious process that requires understanding countless details. Unfortunately, computers by themselves are not able to accomplish this type of work since computers take such information literally.
Designed to increase productivity and meet important business goals, good software is an essential part to any successful business activity or process. I don’t think anyone would dispute the incredible value of software with the potential to increase productivity, ensure accuracy, solve problems, initiate change, and find opportunities. After all, that’s why you are researching your options. But like many businesses in your shoes, you are also looking for ways to be unique, be competitive, and at the same time reap a return on investment. But when you start adding up your list of unique requirements, you’re adding complexity to the project. And the more complex the issues, the higher the software costs. According to Robert Glass, author of Facts and Fallacies of Software Engineering, with every 25% increase in a problem’s complexity, you can expect a 100% of complexity in its solution.
Broken down, a programming algorithm, for example, is a very specific set of guidelines, which tells a computer what to do. Instructions provided can be very complex depending on the project (e.g. front-end development versus back end) and will require concise step-by-step procedures on how a particular problem will be solved or a how specifically a goal will be achieved. But algorithms are more than just a recipe. There are different types of algorithms, which are designed to make various calculations. And beyond these guidelines, how does the computer actually make decisions? A large amount of computer code is contained within logical or conditional statements and executed when a situation warrants it. You can imagine the intensity of allowing for every possible scenario when it arises! And then there are costs associated with the integration of new software with old systems or building an entire system from scratch requiring architectural design and planning. The more complex the project, the more costs are incurred.
Software development, like any other business investment, should not only yield potential for a better today, but have the flexibility for an even better tomorrow. Technology is so important, that for some organizations it represents a big slice of the spending pie. Take the United States Postal Service, for example, who has a unique way of doing things and is looking at their livelihood over the next ten years (through 2028). Their Information Technology and other capital projects are expected to total about $541 million. The Information Technology area alone is expected to average 98% of this budget to maintain the infrastructure and provide cyber-threat security. (Gao, 2018) This all takes a team of designers and developers whose expertise can deliver the project on time and budget.
Time is money but well worth the effort when the software solves problems, integrates with other systems, and even predicts the future. Powerful software solutions can convert your company’s complex problem into an amazing system that may help to save lives, save money, or is simply more efficient. It might reduce human err, increase safety, or consolidate tasks—all benefits of a well-designed software platform that’s tuned to your business processes. Add the ability to analyze with real-time data, and frankly, there’s no stopping you or your business.
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Anon (2018). Gao.gov. Retrieved 7 September 2018, from https://www.gao.gov/assets/700/692859.pdf
Anon (2018). Forbes.com. Retrieved 7 September 2018, from https://www.forbes.com/sites/theyec/2016/05/16/the-explanation-behind-the-high-costs-of-app-development/#1f05978f5d2a
Glass, R. L. (2002). Facts and fallacies of software engineering. Addison-Wesley Professional.
High, E. (2018). Enterprise software development costs are too high | PropertyCasualty360. PropertyCasualty360. Retrieved 7 September 2018, from https://www.propertycasualty360.com/2017/05/24/enterprise-software-development-costs-are-too-high/?slreturn=20180807153256
How Company Size Relates to IT Spending – CIO Magazine. (2018). SearchCIO. Retrieved 9 September 2018, from https://searchcio.techtarget.com/magazineContent/How-Company-Size-Relates-to-IT-Spending
Peterson, B. (2018). Companies will spend $3.5 trillion on tech this year — the price it would cost to buy Apple 4.5 times. Business Insider. Retrieved 9 September 2018, from https://www.businessinsider.com/worldwide-it-spending-2017-7
Supak, R., Klock, S., & Kennedy, C. (2017, 12). Software increases accuracy for intervention and stimulation. E & P, Retrieved from https://search.proquest.com/docview/1984356763?accountid=37892