Software Development Cost Optimization: Balancing Savings and Quality

Introduction

Whether your software development team is being outsourced or kept in-house, you’ll inevitably need to optimize software development costs. It would be perfect if it were performed without compromising quality. Because otherwise, it’s pointless.

Estimating accurate development costs may be as difficult as forecasting the weather. In the case of software development, the wrong cost evaluation can lead to huge budget overruns. Of course, cost savings can be even more problematic if you’re trying to keep high-quality standards. 

Cost optimization in software development – challenges 

For some, cutting costs may seem like a walk in the park but that’s very far from the truth. The process is a rather bumpy ride that may involve many challenges, like:

• unclear alignment to business strategy,
• difficulties in the resource planning and allocation,
• ensuring that cost-saving measures do not negatively affect the quality of the software being developed,
• managing project scope effectively to avoid escalating costs due to unplanned changes or feature creep,
• making sure that outsourced vendors work well with the internal team and that the communication between them is smooth.

When it comes to cost optimization in software development, it’s better not to grope in the dark but, instead, tread carefully and apply effective strategies for reducing software development costs without sacrificing quality. This is the only way to make informed decisions about cost optimization.

Key strategies for software development cost optimization

There are many cost-cutting measures and effective strategies for software development cost optimization to choose from. Some good practices include:

• proper planning and requirement gathering,
• maintaining good documentation,
• optimizing team and processes,
• focus on Agile development,
• outsourcing,
• prioritizing features using MVP,
• using the right tools and technologies,
• effective project scope management,
• planning for maintainability and scalability,
• leveraging cloud-based solutions and DevOps practices,
• implementing the CI/CD automating practice,
• prioritizing quality assurance.

If cost optimization in software development is something you think about seriously, you can try launching a Minimal Viable Product (MVP) first. Designing a basic version of your software will let you gather feedback and users’ general impressions upfront without spending too much time and money on full-scale development. But it’s better to start the evaluation phase even earlier on – by checking the market potential of the software that’s to propel the product or service you wish to launch. What can help you in the very beginning are, for instance, focus group surveys and SWOT analyses. By using them, you can find out if customers really need what you want to give them, and if they do, what are the desired functionalities and design, how much they are willing to pay for it, etc. 

Factors impacting the cost of software development

The final cost of software development is a very complex and multi-faceted issue. There are many factors that strongly impact it, including:

• project size, type, scope, and timeline,
• complexity of the created software,
• the number of core features,
• technologies and tools used,
• software target group,
• the Quality Assurance – or testing – phase,
• team location,
• team expertise,
• labor cost,
• engagement model (e.g. outsourcing or in-house teams).

As always, it all depends, however, clients should not expect to pay less than a few dozens of thousands of dollars per software development project from a renowned, trustworthy company. Of course, large projects can run into millions of dollars as well. Using open-source technologies can limit the overall cost of the project but, in general, the cost of licenses for using particular frameworks, libraries, systems, services, and third-party tools can be a significant one. And so can labor costs. 

Cost optimization in software development – primary pain points 

Cutting costs in software development – or making them more optimized – is something vital for anyone who wants to keep a competitive edge. The truth is, however, that very often, huge budgets are burned – due to poor management, ineffective processes, and misalignment of tech and business strategies. And reducing expenses without sacrificing quality is not an easy thing at all.Cost optimization in software development involves much effort and many challenges it’s good to be aware of. Some of the primary pain points include:

• controlling costs, 
• managing vendors, 
• communication issues,
• improper knowledge transfer,
• balancing quality with speed.

As a result, serious problems leading to substantial delays or even project failures may appear. And there are the hidden expenses that can give you even more headache...

Hidden costs in software development and how to address them

Hidden costs in software development are very common and they relate to surprisingly many areas. Of course, some costs are more obvious – and visible – than others. They cover, for example:

• recruitment and onboarding overheads,
• miscommunication or lack of transparency with vendors,
• the expense of managing failed projects or vendor transitions,
• production instability leading to delayed releases or customer churn,
• maintenance and support expenses, e.g. for bug fixing and security patches,
• unforseen issues.

Hidden costs can differ greatly, depending on the engagement model. For example, hiring software developers in-house is a long, complex, and costly process. Apart from the base salary, there are many additional costs you need to consider, including taxes, insurance, benefits, training, office equipment, furniture, rent, and administrative services. Those additional – and, in many cases, hidden – costs can even multiply the base salary of software developers by as much as 2.7, according to Joe Hadzima, a senior lecturer at MIT.In the case of outsourcing, the company doesn’t have to pay many of the indirect infrastructure costs. Using a vendor’s location and expertise can help you slash costs, also because it’s easier and faster to build a temporary team for your project with the software development company. And time is money. 

To prevent hidden costs and complete the software development cost optimization with success, it’s good to follow the right strategy and:

• communicate project requirements clearly,
• implement control processes and code reviews,
• focus on user-friendly solutions, features, and design,
• use knowledge management tools,
• set communication channels for all the parties involved.

The problem with hidden costs is that the burden they impose on every software development project is very real and very tangible. Hidden costs can make it way more expensive but, what’s even worse, they can undermine the entire project’s success. Longer time-to-market, missed market opportunities, and hiring processes that take months can all be in the cards when software development cost optimization is not performed correctly.

Cost reduction vs quality – what to pay attention to

Cost reduction in software development is something worth fighting for but, obviously, not at all cost. Compromising quality is not desirable but very likely when cost optimization is designed or executed poorly. So, what to pay attention to? How to balance savings and quality right?

If you want to avoid significant fixed costs, cut your operating costs, keep your company flexible, and the software efficient and reliable – consider choosing to outsource. There is a wide range of solutions to choose from that can suit various needs, budgets, and project types. In this case, experienced and full-fledged software developers are at your fingertips – contrary to the job market, where finding the right IT professional, especially representing a niche specialization, has become more and more difficult across many locations worldwide.

Spotting the right vendor will help you accelerate the development process, provided you choose it wisely. Just give yourself enough time to scan the market, meet all the engagement models available, as well as the advantages and disadvantages of both outsourcing the software development and keeping it in-house. 

<span class="colorbox1" es-test-element="box1"><p>Visit this article to learn how to manage outsourcing contracts effectively </p></span>

What can’t be compromised during the software development cost optimization, are security and compliance measures, performance and reliability, and making sure that only skilled and properly trained staff works on your project.

Software development cost optimization wrapped up

Software development cost optimization is not a piece of cake, especially if you want to balance cost savings with high-quality standards. What can make the process even more difficult, is the lack of access to specific technical expertise needed for certain projects. Balancing technological advancement with budget constraints is something that outsourcing can help you with. Instead of building the entire team for weeks or even months (hiring and onboarding phases), you can kickstart your project way faster – and enjoy prompt time-to-market.

Of course, you don’t want to end up with mediocre products that fail to meet end users’ needs and expectations. That’s why, you have to spend some time and money on researching the market and choosing the right strategies – to save much more resources in the long run. Cost optimization in software development is best when implemented from the very beginning of the project.

Software development cost optimization requires balancing savings and quality which can be a very demanding task. To make it successful, a full-fledged advisor, or a reliable software development partner, such as Brainhub, is needed. If you’re looking to scale your development efforts, considering switching vendors, or exploring outsourcing options, this is the right company to turn to.

‍Feeling the pressure to cut costs but don’t want to compromise the quality of software development? If you’re still facing challenges when trying to optimize your team and processes and can’t tackle the hidden costs in software development, contact Brainhub today.