How To Estimate The Value Of Developing Software
It can be challenging to determine how long will software development take or what functionality you will need. Especially if you don't have a lot of experience hiring developers and launching new platforms or applications. More than 80% of projects were completed over budget based on research. Also, 45% of new products' functionality is usually never used by the company.
Why does this happen? The reason is the failure in estimating the value of software. This article will guide you by assessing the software's quality and functionality. Amoniac OÜ will share its expertise and best recommendations to help you estimate development value for any type of software.
What Factors Affect The Value of Software
There is no fixed price for all types of software development. In most cases, the final budget depends on a variety of factors.
The most important components of value evaluation are:
- Software development;
- Software maintenance;
- Services and Infrastructure.
At the same time, you need to consider two types of value before estimating it. First - financial value (what profit can the software bring to a business). Another one is the reputational value (how it can influence customers' relationships or employees).
The value of the project is related to its aims. You need to define why it is essential to develop software and what benefits will it bring to your business. Every time you think about adding new requirements for software, check if this feature fits the project aim. This approach will help you save time and get more valuable products at the finish line.
Value Evaluation: Practical Solution
How to evaluate the worth of the whole project you will code and launch? There are no universal rules for all industries, but we have one helpful approach. Before starting the development, you need to define the following things:
- What are the goals of the project?
- What are the values of each goal?
- How can you evaluate the value of each goal?
- What is the priority of goals?
You may wonder, what is the best way to define the project aims? The easiest way is to make the aims achievable and build them on the company's values.
What To Consider In Estimating Software Value
Let's take a precise look at the main criteria to evaluate the worth of developed software. We would apply the income approach as the most essential principle in defending those criteria.
Here is the list of aspects you need to consider:
- Technical functionality of the product;
- Proper protection and data safety;
- The specificity of your industry;
- The expected turnover of software (and how much it can save money);
- Operational risks.
Every time you need to evaluate software development, you need to look at each aspect from this list. Besides, the evaluation can be more detailed, and we will briefly go through possible issues to include in the estimated cost.
The estimated cost is related to the nature and size of the software. There are four standard sizes of the project: small, medium, large, and enterprise. Each type requires other development skills, teams, and time. For example, 10-15 pages of code and 40+ pages will require different time and effort. For instance, it can take two weeks for soft modification or up to 12 months to launch new software for an enterprise.
Nature of Software
Another essential point is the type of development. It can be new software (platform, program, or application), modification, integration, or web development. Each type of work requires different efforts from the development team. To get the most accurate estimated value, you need to use this information with project size and complexity.
There are a lot of factors that can influence the final value of software. You can not predict everything that can happen. That is why it became impossible to nail down the final cost. It does not mean that the project will be run over budget every time, but it means that all possible circumstances should be included in the final estimation.
Team Size and Proficiency
The most important question is who will work on your project. Even a small project requires a minimum of three roles. When choosing the team, you need to research their previous project or even ask for recommendations from their previous clients. The value of software will depend on the proficiency of the team. It is always better to find developers with relevant experience. It will definitely save you time.
Estimating the value of software development can be a complicated process and include different approaches. The value of the final product depends on various factors, and not all of them are technical. It can also depend on the industry specificity, safety measures, or operational risks. This article defined different approaches to software value evaluation and pointed out the most critical technical issues for you to consider.
At the same time, there is no same rule for every situation. Each time you need to estimate the value you will go through each evaluation step. The best solution is to collaborate with a reliable and transparent IT company to get the most accurate value assessing and reduce risks.