Why your software project overrun the budget
Despite having estimated the project cost beforehand, it does not guarantee things will go well. Acknowledging the potential downturn can help you quickly navigate it, reduce the software development costs once it arise above budget and have a backup plan.
Some reasons why your project cost more than the given budget:
- Undefined scope: happens when the scope is not agreed upon and discussed in detail at the beginning. Many software vendors rush through it to quickly close the deal, get the client’s requirements and go on with their assumption. Meanwhile, working with an in-house team gives you more control. But many think they can change along the way, so it doesn’t matter to plan ahead, which will inevitably fail.
- The lack of proper planning: This step identifies resource allocation and management. Without a clear plan, you won’t know where the milestones are and the progress of your project. This loss of control will lead to cost overrun. The worst scenario is that you don’t know which part caused it. There is simply no management here.
- Foggy communication: Over-communicating, under-communicating, and micro-management between the outsourcer and the outsourced are the problems. This can be solved with clear, concise communication between parties.
- No thorough testing: Low-level testing is cheaper than high-level testing. This doesn’t mean you should skip them or only choose the most affordable model. The key is to adopt it for the right use cases, and you might consider using many types at once. Many projects have cost overruns because of a lack of testing during development, and they have to fix it after launch or deployment.
Factor & hidden cost that might strangle your budget
Hidden cost is unexpected. No matter how much planning you do, there’s always something that raises your bill. Of course, due to their nature, it’s hard to name all of them, but here are a few factors and hidden costs to keep in mind while doing software development cost optimization.
- Project’s complexity: The number of features, screens, and possible integrations can press the development phase to go longer and require extensive developers, which increases the overall costs.
- UX/UI requirements: Every app developer wants their app to have an outstanding UX/UI experience to drive higher user engagement, decrease drop rates, and boost potential sales. The costs of hiring, designing, and paying for digital components eventually add up and put a weight on the overall cost.
- Designated platforms and frameworks: When designing their application, many businesses would like to make it compatible with as many operating systems as possible to reach a broader range of customers. Therefore, they must pay more to refine those apps to fit into different systems.
- Integration & migration: Like humans, software takes time to click with each other. Ultimately, integrating with legacy software is more complex and expensive than SaaS, which can alter the final cost. At the same time, it will require additional testing or coding to refine the connection between 2 apps.
- Team Choices: You can either go for the in-house or outsourcing option. Of course, these two will have different categories, pros and cons, and price ranges. You can choose the team of your liking if it meets your needs.
- Learn more on How To Correctly Estimate Your Project Price
How to reduce your software development costs
The average cost overrun of software project is 27%. How can we write off software development costs?
1. The first and foremost: Plan with clarity
Create a SMART goal (Specific, measurable, achievable, relevant & time-based) for your project by researching the market, your competition offers, your ideal customer’s needs, whether there are any niche problems you can solve, financial limitations, and many more.
This makes sure you know what you want and need. It limits any changes during development.
A tactic for effective planning is impact mapping. This method focuses on deliverables and how they impact the result by asking Why the solution is needed, Who needs it, What it solves, & How it works. This will prevent developers from getting lost due to wrong assumptions or over-engineering.
Impact mapping usually takes the form of a mind map, showing different dimensions of a product milestone plan. Product managers and technical leaders should write down all the ideas, group them into categories, and prioritize from the goals to impacts.
By identifying a clear scope, your team can avoid the wrong turn and keep the development costs in budget.
2. Consider an outsourced team in a low-cost region (ODC)
If having an in-house team outweighs your budget, consider hiring an outsourced team. You can create a high-quality program without overspending and hire talents from regions with lower cost.
Hiring outsourcing teams can lessen the burden of high development costs. Specialists from the outsourced team can carry out the same number of tasks as your in-house development team would do, but at a more affordable cost.
What to keep in mind:
Outsourcing doesn’t change the nature of development work. You still need the same number of developers to complete the job. The staffing price is unlikely to differ, especially if you work with an agency within or near your region. The only part you can save is the recruiting, HR management, and employee retention budget.
Because of this, many opt for offshore development centers (ODC), hiring them far away from your region.
It’s not something new. And regions that provide affordable development, such as Asia, are always the top destination. For example, Vietnam has a 30% lower average hourly development rate, which can reduce software development cost. In addition to being more cost-effective, these countries have broad access to various technical talents.
3. Trim the fat on design
I know there’re lots of beautiful websites out there. You can easily get hyped and want to replicate them for your site—widgets here, 3D graphics there, or another interactive element to the side. There’s nothing wrong with making your website stand out and aesthetics. But is it worth it with your budget?
All these advanced designs will cost more money. Hence, one of the most feasible ways to reduce software development cost is to keep your design simple and straightforward.
From customer research, learn what will be most appealing to them. For example, if you aim for a young audience, a design with interactive and bold graphics might catch their attention. Meanwhile, in professional settings (B2B or SaaS), an easy-to-navigate and business-oriented look might be better.
The key is identifying which (usability, ease of use, responsiveness, or standout look) is more important to catch your ideal customer’s attention. Also, remember to avoid these 15 Bad UI Design Mistakes.
4. Adopt agile methodology
Agile methodology uses an iterative approach in which developers work in short cycles for rapid creation and constant revision. Teams can respond quickly to feedback and make changes during a sprint cycle.
Adopting an agile methodology will help avoid a massive financial disaster at the very end of a project. It’s because agile breaks down the projects into manageable chunks, hence mitigating risks and providing more focus. Aside from that, agile methodology improves collaboration, software quality, and customer satisfaction.
What to keep in mind:
Cost-saving is the side treat of agile development. It’s a decent development cost optimization strategy but doesn’t guarantee you can reduce the overall cost. Unexpected changes and hidden complexity can still arise, affecting your budget and timeline.
5. Switching to composable architecture
Using this design approach, developers will create components that can be reused to quickly assemble applications. Some compare it to the microservices approach to creating a tech stack.
How can this reduce software development cost?
- Encourage the reuse of code, intentionally saving time on development. Instead of rewriting every line of code, developers can now focus on the unique functionality of each application.
- Simplify maintaining and updating software since each modular component can be fixed and tested independently.
- Increased efficiency since developers can now split the project and work on smaller chunks, instead of a monolithic system. By refining each of them before moving on to the next, you can limit the risk of bugs and won’t affect the whole project if something happens.
One feasible example of reusable architecture is the low-code technology.
Low-code utilizes drag-and-drop code blocks to create apps quickly. These pre-written blocks can be reused for any application. Low code does not require experienced developers; even citizen developers and business users can join in, thus launching apps faster and saving more costs than traditional ways.
This amazing tool allows professional developers to focus on customization and the app’s core by cutting down time spent on simple ones.
6. Use modern tech that can fasten the work
Automate if possible
This doesn’t mean you must replace humans with computers, but let them do the tedious and mundane tasks. Automating can result in higher output and increased productivity. Production is done in a smaller timeframe, fewer working hours are spent, and costs are effectively reduced.
For example, you can automate quality testing from early on. This has been proven to save 50% of total resources, 30% of total effort, and 50% of the total cost. The initial investment for automating testing can be far more substantial, timewise and coding-wise. In the long run, these tests can be rerun as often as needed.
Besides, generative AI can be a lot of help
This recent technology can alleviate building costs and act as a developer assistant.
Also, generative AI can automate repetitive and time-consuming tasks, making the software development process more efficient. Code can be analyzed quickly, bugs and potential errors are detected sooner, and changes are suggested to improve efficiency.
You can use generative AI to optimize code quality, utilizing it to create scalable and innovative applications quickly. Visit our latest article to Learn more Examples of AI in Software Development & Top tools to use!
Utilize open-source tools
Open-source software (OSS) is also recommended. The open-source technology is free to use with no payment for licensing fee and is on the leading edge of technology. Users can utilize OSS’s flexibility, freedom, cost-effectiveness, and accountability for long-term benefits.
7. Constant test along with development phase
Constant testing, or test-driven development approach, is another way to reduce software development costs while maintaining quality. The approach repeats short development cycles and turns requirements into specific tests. The program is then subsequently refined only to pass the newly created tests.
Using a test-driven approach well and constantly from an early stage helps start software development early, learning quickly from mistakes before it’s too late. It also detects problems that might cause delays or cost overruns.
8. Launch with essential-only features than upgrade it later
This approach can also be called the lean methodology. The job is to create a minimum viable product (MVP) with only key functions. Making the first working prototype of your solution in lean methodology allows you to show products to the target audience. MVP is an excellent way to test your idea in a real environment, collecting feedback and using it as insight for future improvement.
By launching what is essential, businesses can understand the market situation and when to launch applications with the most profit and little financial outlay in real time.
9. Build your maintenance loops with DevOps
DevOps helps developers work more efficiently during the development lifecycle. By implementing DevOps, developers can communicate more swiftly and know what to prioritize. DevOps usually includes Continuous Integration/Testing/Delivery (CI/CT/CD), microservices, automating processes, and constant monitoring, which optimize the development cost, cut short the delivery time, and ensure stability and performance.
At the same time, this strategy is great if you are looking for a way to reduce software maintenance cost as well.
10. Build with scalability and future-proof in mind
This option would initially cost you some significant investment, but further extensions would be much easier and faster. Building apps with scalability means building future-proof apps, and more profits can be made in the long term. Business leaders can adjust systems to predictable and unpredictable workloads, meet the constantly evolving needs of their users, and adjust to new markets.
However, being future-proof comes with a cost. It requires in-depth analysis, various research, and tests to get the technical basics. The building of a scalable, future-proof app architecture is also challenging. Making an app like this would require a stack of different units, various technologies, ready-to-use solutions, and custom-made ones.
11. Choose the right software development partner
Of course, the wrong one will cost you a dime to fix unusable software. Plus, you can’t take back all the wasted time and effort.
However, evaluating a partner is a challenging process. In many cases, you don’t really know the extent of their expertise until the project actually takes place. Our advice is not to rush through this. Many businesses have lost millions of dollars or ended up in court by working with the wrong partner.
Here’s some of our tips:
- Go for someone who has experiences with your industry, types of applications, and business size.
- Brand name doesn’t always guarantee high quality, and the low price can’t always lead to bad service. It would be best if you balanced price and quality.
- Find someone that also aligns with your business mindset and culture.
For more tips and details, read our guide on How to choose and evaluate your software development partner!
And our bonus, a few tips to IT cost optimization by Gartner!
How Synodus balance quality and cost for our clients
Having worked with businesses of many sizes, we noticed they all have the same questions regarding cost and end-result: Will this X amount of money be worth what I receive?
This is where Synodus focuses on:
- Offer a cost-effective technological solution, while ensuring it will reach the highest performance within the given budget.
- Adopt diverse outsourcing models, from dedicated team and project-based to staffing, so you can choose whatever best fits and levitate your financial constraints.
- Deploying a seamless development process with no fog of tech to clear out any potential risk.
Known as the fastest-growing development company in APAC, our team of 250+ mavericks are ready to deliver, with a recurring satisfaction rate of 88%. While you focus on growing your business, let us become your sidekick, taking care of product development and digital transformation.
Here’s what we can do together:
- Custom web, mobile app, software design and development
- Blockchain Development
- Development using low-code (PowerApps, Salesforces, Outsystem,…)
- Data Analytics
Supercharge your project and reduce software development cost with a friend like Synodus, as we have helped this client save his budget by 30%!
More related posts from Software Development blog you shouldn’t skip:
