Tag Archives: custom software

Reducing Custom Software Development Costs

Filed in:Custom Software | Problem-Solving | Solutions, , ,

Custom and semi-custom software can solve problems off-the-shelf solutions just can’t do. The reason is obvious: off-the-shelf software is meant to appeal to broad audience while custom solutions are tailored for a specific set of solutions.

The downside of custom software solutions is cost. While off-the-shelf software effectively spreads the cost over a large user base, custom code has a targeted scope. Companies must balance the cost savings of going with a pre-packaged program plus consider the additional cost of swivel chair and manual processes required to make up for its lack of features. This incremental cost of making up for the lack of functionality of a canned software package may far outweigh any savings in the software itself. It could end up costing your company more in the long run.

To help overcome the initial development costs of a custom or semi-custom software solution, companies should consider a transaction-based or pay-per-use model. These pricing models are becoming widely embraced, particularly by those with low volume needs or those whose usage fluctuates in and out of peak periods.

While every pricing model has different impacts, a pay per transaction model has compelling advantages:

  • Cost of initial development
  • The amount you pay is tied to the number of transactions placed, and ideally, the revenue being made
  • The system provider is equally invested in the success of the system
  • No need to manage user licenses

Obviously, there are things to consider when pursuing a transaction-based model, such as:

  • The amount paid over time could end up costing a lot more than a traditional licensing model
  • The incremental cost can become a financial burden if other operational costs are not in line with revenues

If your company’s transactions are tied positively to revenues, then the transaction model likely makes sense. It also reduces the exposure should transaction levels not achieve anticipated results.

If revenue and transactional volume are not positively related, you may have larger problems than a transactional model can solve.

Obviously, not all software providers offer a pay per transaction pricing model. At WDS, we pride ourselves on providing the exact solution our clients require. This includes pricing our solutions in a way that helps our customers achieve their operational and financial goals. That could be transaction-based pricing, perpetual licensing, or a hybrid of both that enables manageable startup costs and balance flexibility with predictability. The important thing is that we partner with our clients to achieve mutually beneficial goals.

If your company is facing challenging software and support costs, a transactional model may be the way to go.

Beware of Bloated Custom Software and Its Inherent Problems

Filed in:Problem-Solving | Security | Solutions,

Many software companies have come and gone trying to provide custom software and semi-custom software. A successful software provider that delivers custom software is typically staring with 80% of the solution in a base system, and then has a team of design engineers, system architects, project managers, and developers to tweak that base system into a “client-specific” solution that fits the operation like a glove. This “semi-custom” solution approach requires a complete and absolute “Problem-Solving Mindset and Culture.” A canned solution provider hires marketing teams, sales teams, and packaging teams….and builds their business primarily by working to deliver the same solution in as many instances as possible. “Development” is rare, if ever, and usually is only provided as a market-wide system upgrade. The interval for these updates is usually every one or two years. Customer requests for changes are typically added to a wish list of sorts from all current clients, and the requests that the software provider deems “justified” will then be scheduled and added to the queue for the next released upgrade.

Conversely, a semi-custom solution provider (like WDS), responds immediately to customer requests. Within days a team is assigned to the request to deliver a Level of Effort (LOE) estimate, create the specification, and spin up the solution in QA for testing, sign off, and then move to production. This results in the quick elimination of the pain point or bottleneck for the client, the immediate realization of the additional efficiencies expected from the change, and an immediate realization of the ROI that justified the requested modification.

The benefits of a semi-custom solution provider are significant for the client. The software is designed to “specifically” address their unique needs and requirements, and as the system and its benefits become an integral part of the operation, the ROI is dropping dollars to the company bottom line, and in most cases, those saving are reinvested in additional custom modules or functions, that then exponentially increase the savings delivered by the system.

Bloatware, Months of Configuring and Training:

One other observation about canned solutions is that most canned software companies try to build in as many hooks and switches into their software to try to solve all possible scenarios or client requirements. Unfortunately, this creates bloatware, with screens, logic, and data that individual customers will never use or need. The negative impact is at many levels. First, the sheer complexity of the configuration screens can take months to get right (if ever), training user on the complex interrelationships between modules in use and modules turned off create confusion on user interface screens, and the client pays at least a percentage for modules they will never use, and in the end, most clients will only using 25% of the complete solution for which they paid.

Trusted Advisor/Consultant:

The semi-custom solution is a far better approach, because the overall cost for the system is gauged on only the modules the client needs, and can be implemented quickly. A software company that commits to this problem-solving model is agile and responsive, their entire team is typically always in the solve problems mode and becomes a trusted advisor/consultant team as much as a software provider. Responsible companies will be willing to say no to customer requests if there are forces or prerequisites that might decrease the probability of a successful implementation and use. For example, a responsible problem-solving company will understand the inner workings between departments I an organization, and how the different departments and teams may or may not help with the success of the solution. And that is not to imply a negative approach by some of the internal team (although this does happen), but staff size, company policies (or habits), and departmental turnover rates can make it difficult for the solution to deliver 100% potential. As such, a “responsible” organization will ask the proper questions, will “learn” everything possible about the client’s operation and teams, and will see early on, any challenges that will jeopardize the solution. At WDS we take a brutally honest approach to these conversations, and challenge both sides to explain and acknowledge these issues and whether they can be overcome.