A Step-By-Step Guide To A Quick And Smart Budget Assessment
Is your business working at its greatest pace but you feel that there’s still something missing for it to develop its full potential? Are you representing a company that is already on the verge of taking the next step to its strategic development? Most business owners feel this way when the company has entered the stage when it needs customized software development to help it grow.
Luckily, it’s the best time of the year to plan out and budget smartly any software developments that are about to take place in the new year. Q4 is when business owners and managers sit down to map out any needs and necessities for the next planning period and come up together with a clear strategy on priorities, time schedule and last, but definitely not least – budget.
If you are in a similar stage, read on to find 4 simple tips on how to budget next year’s software projects in your company. Let’s dive in!
Custom software projects tend to seem like an ongoing and never-ending process. And, most of the time, they actually are. That is why, after realizing the need for a specific software solution and deciding to address it, it is crucial to
Define a MVP
MVP (a minimum viable product) is the best way to outline how the basic and most needed part of the custom software solution we need is going to look.
If sales are saying they need a lead pipeline management tool – ask them to come up with a full list of all functionalities and possibilities the perfect system would have. And then ask them to cut out everything that is not the first priority and leave only the very essential parts.
Yes, we know it sounds like a waste of time but this couldn’t be further away from the truth. It even saves time as it makes it easy to know what the actual must of a project is and what is a feature that is a nice-to-have only. And surprisingly, this is something that is usually not very obvious as we might think at the beginning of the process.
If you have the opportunity to include all stakeholders (potential direct users of the software and indirect parties as well), do so. It works even better as you get a broader perspective of why you need this software, what it could do more and how the company can benefit most successfully from its development.
And that was the easy part. Now after you have defined the MVP of each of the software projects you have decided to have custom developed in the next year, it’s time to
Compare the Before and After (Financially)
Take the process you are looking to optimize. Check whatever you currently have in place in the process and calculate how much money it costs you and how much time it takes. You remember that time is money, right? Do not neglect it here as it could make up a lot of your decision-making process.
Once you are aware of the costs you have associated with the current process, it's time to move on. Calculate what will change once you implement the newly developed software solution. You can expect to have both direct and indirect savings. All will come from different sources such as process improvement, customer experience, time cuts, etc. Everything counts and makes it easier to budget the development and make sure it will be worth it financially.
Having defined the right MVP and calculated the impact its development could have on a business process, a good next step is to continue by adding up the maintenance, support and repairs costs that will occur on a regular basis once the software is in use. So, wait no longer and
Calculate Maintenance Cost
A smart thing to do here is to discuss in detail with your software development provider. They will know what kind of maintenance a similar solution will be requiring. There could most probably be parts of it you could implement and perform successfully in-house. Usually, though, you should be ready to outsource parts of it to the development team or other support organization with certain expertise.
Being aware of these beforehand will give you a perspective of what you could expect when facing different issues with the software. Having this all ready and set will significantly lower the risk of you having an unsolvable problem and no experts to turn to.
After completing the above three steps, you should already have in front of you rough estimates of what you need, what it will give you and how you will maintain it. Most importantly, you should already know the numbers of the above points and be able to budget the cost, the main takeaways and the support and maintenance of the development.
All you need to do at this point in order to finalize the budgeting process successfully is
Add Between 50% and 100% on Top
As much as it could sound like a guessing game, this leverage will help you plan and cover any risks that are out of the scope of the initial software planning and development strategy. Firm sticking to a fixed price makes you very inflexible and any unexpected changes could worsen the quality of the development or even stop the project itself until further funds are allocated to it.
A final note from us is to:
- always keep a good communication flow with the custom software development company you have chosen to work with, and
- trust their expertise so you can ensure a successful and smoothly working solution answering the needs of your company and all of the stakeholders that will actually benefit from it.
Every business is trying to save money and cut unnecessary costs. And as expensive as major customized software developments could be, as vital it is for us to be well aware of where the money goes and what we get in their exchange.