How To Keep a Handle on Your Software Development Return on Investment

The Statistics of IT projects going over budget and over schedule are alarming. According to an exhaustive study of over 1400 IT projects from the Oxford University Said Business School, one in six projects cost overruns by about 200% . On average, the budget slippage is about 27%!

If you are on the market to contract software development services to bring to life this wonderful idea of yours, you might know already which features it will take for your project to start bringing in money. Ideally, you may want to have a say in what gets to be implemented first. In doing so, you could generate revenue, hence guaranteeing yourself a stream of income to finance the rest of your project.

So here are a few pointers to follow during software development to maximize your return on investment (ROI):

Prioritization

Only you the customer know your business. When developing using an Agile methodology, software developers will ask you to prioritize your “stories”. “Stories” or “user stories” are a common language description of a feature you want the software to have, a non formal requirement. For instance: “As an admin user, I want to be able to search my clients database by Zip Code”. Now if you are selling winter clothes for instance, you can imagine how being able to do so will enable you to reach out to cold areas potential buyers to rid yourself of costly inventories... Given that the amount of money you have to spend on the project is finite, and that the schedule may also have to abide by some deadline, you’d be happy to hear from the developers that you can prioritize the work to be done and therefore get the most bang for your buck!

Short Cycles

Another quality you may want from software development is the ability to release those money making features in a reliably fast fashion. In an Agile firm, professional developers work in short cycles. They release new features frequently, on a bi-weekly or even on a weekly basis. Time is money, so the sooner the feature is live, the better for your project overall ROI.

Communication

It might seem like stating the obvious, but software developers who value communication and feedback will help you in keeping a handle on your ROI. Before development, communication will ensure a better understanding of the features to be implemented. As development occurs, good communication guarantees that if a technological hurdle is encountered along the way, it will be tackled according to your expectations and for the benefit of your business. At delivery, communicating acceptance of deliverables as a trigger for payment says a lot about how you can stay in control of your investment.

Billing Model

Unless you have a large backlog of features and the need for devoted developers, a pay per hour model may not be the best for you. But in software development rarely will you find firms that let you pay for what you get. Using a point system, some development shops will enable you to pay as you receive functioning features. Because you are granted with the ability to prioritize the features based on how much income they can bring you, a point system billing will definitely ensure a maximized ROI.

To conclude, it’s hard to believe that one could tolerate as high a level of discrepancy in budget and schedule as IT projects have been proven to yield. But don’t despair, there is hope out there! By prioritizing features, getting deliverables in short cycles, communicating often, and being billed per requirement delivered, you can keep a handle on your ROI. I have seen customers line graph depicting dollars earned for dollars spent using the above, and the relationship takes the shape of an exponential growth.

Angelique Martin, CFO

Angelique Martin has worked with 8th Light since its inception and has been actively involved in the growth of the software craftsmanship community.