Whether you’re developing software applications, physical products, or growing your business through digital transformation, the associated costs can be high. The question is, how can you decrease the cost of development without it having a negative impact on quality?
All businesses look for cost savings, but only 43% of organizations actually achieve the cuts they set out to make in the first year of cost reduction. When you realize that planned reductions aren’t feasible, you end up going over your budget.
In this post, we’ll suggest 6 realistic tips for reducing development costs. These methods will bring significant savings without sacrificing the quality of your products and services.
Common Business Development Costs
Before you get started on business development, you have to make a realistic assessment of the likely costs and the impact any potential changes will have. Here are 4 of the most common development costs you’ll encounter.
Whatever size your business is right now, it’s essential that you plan for the future—and that means making sure the company and its activities are scalable. But building scalability into your projects can come with a high price tag.
For example, complex software projects will cost you more in terms of time, as well as the development of architecture, integrations, and security. You’ll need technology to develop your product at scale, especially if you plan to expand the business into new regions.
SaaS products require built-in scalability so you don’t get caught out by a sudden jump in user numbers, causing the app or software to slow down.
Free to use image sourced from Unsplash.
Infrastructure refers to the foundations of your company, including facilities and services. These will necessarily cost more money as the business develops, from paying for larger office premises to buying more computers, devices, and software.
One of the biggest costs is associated with on-premise computing systems as opposed to cloud-based platforms. If you want to run your system in-house, you’ll face a high upfront cost as well as the ongoing cost of maintenance. You’ll need your own servers and data center and the energy infrastructure to power it.
Of course, cloud systems still have a cost attached (usually a monthly subscription), but the vendor owns the infrastructure and takes care of all maintenance and upgrades for you.
3. Digital assets
Software counts as part of your infrastructure, so what do we mean by digital assets? Essentially, we’re talking about digital pieces of content, such as images, videos, and e-books. They’re assets because they’re of value to you as a business but also to your customers.
For example, if you use photos and online catalogs in your marketing campaigns, you’ll engage users and increase your revenue. Other digital assets include graphics and logos, and files and documents used to run the business, such as PDFs, Google Docs, and HTML files.
It costs money to develop and store these assets, so you have to consider their return on investment (ROI) and look for ways to reuse and revamp them where possible.
Opportunity costs are the costs of missing out on a potential benefit. It’s when you choose one area of investment instead of another, but you might have made more money from the road not taken. This happens when companies don’t properly consider the merits of all possible solutions or strategies.
For instance, let’s say you put off upgrading your software until next year—you could miss out on months of improved productivity with a new system. Or if you spent money on expensive packaging to boost your product’s appeal, you might make more revenue by developing new features instead.
It’s important to weigh up the costs and benefits of every business development option. Estimate the expected ROI for each one, and then the opportunity cost is simply the difference between these figures.
Free to use image sourced from Unsplash
6 Tips for Reducing Development Costs without Sacrificing Quality
So, we now know the main costs of development—here are 6 tried-and-true methods of reducing costs while maintaining the quality your business is known for.
1. Plan your budget with cost reduction in mind
Your cost reduction strategy should begin when you plan your budget. Start by evaluating current and expected expenses, and ask employees if they’ve spotted opportunities for reducing waste. Then, you can identify the most appropriate areas to make cuts.
Make sure you adapt your plan to fit your organization’s specific financial needs. For example, whether you follow a Discounted Cash Flow Analysis (DCF) model or subscription revenue accounting model will change how you calculate your revenue. So, this will also have to be taken into account when you consider your reduction strategy.
All too often, businesses do this the other way around—management allocates the budget and then departments make their plans. It’s better to consider what’s necessary for a development project before setting the budget, making it clear where the money will be going.
Keep quality in mind at all times. For instance, when you’re developing a new product, you can’t skimp on testing just to balance your budget.
2. Invest in team development and training
If your business is expanding, you’ll probably want to grow your team—but a more cost-effective way to handle increased demand is to help existing employees develop extra skills. This way, they can take on more responsibility, and you can improve your products without spending on new hires.
Whether it’s software developers, marketers, or accountants, a well-trained team works faster and makes fewer errors. Training and development are good for morale too. Don’t forget to train your teams to be good collaborators and communicators. Lack of communication can lead to misunderstandings and delays, which hamper your cost-cutting efforts.
3. Consider outsourcing
Of course, training takes time, and if your business development strategy involves world domination, you’re probably not going to have enough human resources in-house. An alternative option is to outsource certain aspects of the business, such as contact centers and software development.
This can be a money-saver, especially if you go offshore. The global IT market gives you access to specialists in regions such as Eastern Europe, where a lower cost of living enables outsourcing outfits to charge lower hourly rates.
The other advantage is that you can hire a whole team of specialists in your niche, with a range of diverse skill sets and experiences. You don’t need to search and interview each contractor or freelancer yourself nor do you need to provide work premises and equipment for them.
4. Streamline development processes
Streamlining your processes is a crucial part of the cost reduction strategy. It becomes even more important as you grow and take on more customers with ever-changing needs, which can cause your existing workflows to become messy.
To reduce costs but maintain quality, you need to lessen bottlenecks and inefficiencies. If some of your product’s features are almost never used by customers, ditch them. If you’re struggling to keep up with demand, consider a low-code platform that requires less training.
Streamlining also calls for the automation of as many routine tasks as possible. Project scheduling, software testing, and accounting are all candidates for this, which boosts productivity and reduces errors.
For example, automated accounts payable software helps you stay on top of cash flow, meaning you have more to spend on development. Whilst project scheduling tools help to automate your workflow, by prioritizing tasks and making sure projects stay on track.
5. Leverage existing solutions
If you’re trying to trim costs, there’s no point in spending unnecessarily. Although you may find you need some investment in new tech for your development activities, it’s worth evaluating what you already have.
Is there a system that works well? Could you integrate it with a newer tool to make better use of the data? Bringing separate systems and software together via an application integration means you don’t have to scrap your legacy systems all at once. It’ll help you avoid silos and time wasted on searching for information.
You may also be able to use existing tools and processes in different ways to meet changing demand. For example, finding a more efficient way to deliver the same level of service.
6. Explore cloud-based storage services
Cloud-based storage is a great way to save money while improving productivity and collaboration across teams. Like any cloud-based solution, your vendor owns and maintains the infrastructure, so you just pay a monthly subscription—and scale your storage space up or down as required.
You don’t need to store documents on your own machines (or in bulky filing cabinets), as everything is secure in the cloud. This means you can have smaller premises, or go fully remote as everyone can access the documents from anywhere. It’s also less likely that files will go astray or get duplicated.
As you develop your business, it’s vital to strike the right balance between quality and cost. By building cost reduction into your budget, you can factor in scalability, infrastructure, and digital assets—and weigh up opportunity costs.
Through upskilling, outsourcing, and automation, you’ll streamline the core elements of your business and find further opportunities to control and reduce costs.
Reducing development costs will benefit you and your customers, as you can focus your resources on more experimental and development projects.
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