Insights

Improper Costing Techniques Could Be The Reason Your Software Development Projects Fail

Clients that need software built always want to know how much it will cost them, and a lot of times (at least as we have experienced at Intellectual Apps) they want to have this information before work begins. In order to get a “realistic” estimate of how much it will cost to build the piece of software, agencies would elicit the requirements and then based on that come up with an estimate of the cost. Client has a cost for getting their software built while the agency is happy they got the project. Great!

Work starts and in a couple of weeks (in some cases days), the client asks for some features to be included in the project. If a change request management process was put in place before the project started then that process kicks in to evaluate the impact of the change and its priority. Long story short, the client will always find a reason to have more features added and will expand the initial scope by several features. In my experience building software systems over the past 12 years, I have never seen a software development project start and end without the scope expanding. In essence, software development is an exploratory journey, things become clearer only after embarking on this journey. This is simply a fact of software development.

The issue with the scenario described above is that the agency hardly ever gets a corresponding expansion in the cost of the project (which determines their income). Since more features mean more time and effort, the agency simply suffers. One may argue that the change request process be tighter in an attempt to discourage clients from expanding the scope but this rarely works. There is a very high tendency for a client to take the features they are trying to introduce more seriously than all the others put together, refusing to let the scope of the project expand is like taking a sweet from a child, they become upset.

Fixed-cost-custom-software-development projects will always be plagued by expanding scope. Software development agencies generate revenue by offering professional time and effort, so the moment a project takes longer to complete with no corresponding payment for that extension, the agency looses.

It comes down to two things

  1. Clients want to know the cost of building software before the project starts so they know the total amount they will end up spending.
  2. It is also not the fault of the client that new requirements come up, it is simply the nature of custom software development.

So how should this be tackled?

From how I see it there are two options:

  1. Client gets a cost upfront but scope remains fixed (scope never stays fixed, trust me).
  2. Client is free to make what ever changes needed to the scope but pay for the time it takes to build it out.

Option 1 hardly works and leads to all sorts of problems. The waterfall approach is closely associated to this way of building software and the fact remains that it is very hard, near impossible to know and freeze all the requirements for any piece of software upfront.

Option 2 on the other hand is best suited to deal with the uncertainties of software development. It does require the client’s trust in the agency and without trust, it just won’t work. With this option the agency asks the client how much they are willing to “invest” in the software rather than how much it will “cost”. Simply using the word “invest” turns things around as this forms a foundation for the client and the agency to work as partners in exploring a software solution to the client’s problem.

Core to this option is the need for the agency to know their burn rate such that, the agency can easily determine how much it costs them to have a team working on a software solution for a short period of time (say a week, two or even a month). Even though the client is willing to invest x amount of money this approach helps in mitigating the financial risks associated with any software development project by requiring that payments be made for short periods of time to work on parts of the scope of the software. If everything works fine to the satifaction of the client, only then will the next set of requirements get dealt with. The client is free to make adjustments as they wish, as long as they can pay for the time spent by the agency.

Summary

Determining the cost of a software development project based on “perceived” requirements is more likely to lead to a project failure. The nature of custom software development is such that a lot of the requirements stated at the start of the project turn out to be incomplete, and once clients get a clearer picture of what they want (after work has started) they expect the project to accommodate such. If the cost of the project was determined based on the initial scope then it becomes very hard to convince the client to pay more.

Based on the fact that custom software development is actually a process of discovery and building, the cost of any project is best based on time. Software development agencies will need to know how much is needed to keep the team running for say a month and let the client invest funds into getting them to work for a defined period of time. Within this period of time, the agency works on whatever the client feels is of the highest priority to them.

Cost estimation techniques should not be confused with software development methodologies. For example a client can pay for 12 weeks worth of development time and the agency applies a waterfall software development methodology in developing the solution. Also note that certain approaches to building software work best with certain techniques for cost estimation. In my opinion, Agile software development methodology works best with cost estimates based on time.

Posted by Bulama Yusuf

Getting a Mobile App Will Keep You in Business, Here’s Why

It’s obvious. Fifteen years ago the saying was that if you don’t have your business online, you’re out of business. Businesses did all they could to make sure that they had presence online by having a company website. It’s obvious that the business climate has changed and today if your business is not connecting with customers via mobile then you are out of business or somewhere close to that.

To better understand this, we’ll continue by answering the following questions:
1. Why does your business need to go mobile?
2. What does going mobile mean for your business?
3. What steps can you take to get your business mobile?

Why does your business need to go mobile?

Simple answer: we are now deep into the post-pc era. Longer answer: well, your customers expect it and studies have shown how much time people spend on their devices doing virtually everything. One of the ways businesses ensure that they remain in business is by staying fresh in the minds of their existing customers and by being visible to potential customers. So when people do everything from their mobile devices it makes sense to have your business present in this new virtual world. Another reason why your business needs to go mobile is that you will get to generate and analyse lots of data and in turn use that for more informed business decisions that will ultimately give you an edge over the competition, but most importantly let you offer customers a better experience.

If you sell a product, imagine what this will mean for your business to be able to tell on which days you get the most sales and from which demographic the sales come from, and also being able to know if there are specific things outside of your business that trigger a spike in sales of a particular item so you can prepare for such scenarios. All these are just examples and more meaningful insights can be derived for your specific line of business.

What does going mobile mean for your business?

It means positioning your business in such a way that it responds to your customer’s mobile behaviour. The way people consume information on mobile devices is slightly different from how they do it with other sources of information. People are on the go, they want things fast, they have a short attention span and need the right information at the right time. For example, if all your business has online is a website, then that website needs to render correctly and fast on mobile devices.

What steps can you take to get your business mobile?

What your business needs in order to go mobile would depend on the type of business you have and what you want to achieve with your mobile strategy. Some steps you can take are:

1. Ensuring that your current website is responsive. What responsive simply means is the ability of your website to render and display well on different screen sizes.

2. Ensure as part of your mobile strategy to build and release new features with a mobile-first approach.

3. To take things further and in solidifying the interaction between your business and your customers, you can get a mobile app built to meet your specific requirements. If you seek a deeper and richer engagement with your customers then having a mobile app built for your business is the way to go.

4. Another thing you need to consider in going mobile is that it isn’t all about building this or building that, going mobile also has a lot to do with how you disseminate information to your audience. The information you put out there will be more useful to your customers if you consider the context within which they are most likely to consume that piece of information (stay tuned for a post giving more details on this).

5. If you are really serious about this, which we believe every business owner or stakeholder should be, then you can get a competent company to help you come up with a mobile strategy and chart a way to get your business from where it is today to where you need to be. You can start by talking to us.

Posted by Bulama Yusuf