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Six Tips for Startups to Reduce Their Software Product Development Costs

reduce software dev costs

Starting a business is fun, although it can be tempting to go for broke because you are confident that your product will be a huge success. However, according to CBInsights, of the top 20 reasons why startups fail, cash shortages come second on the list (29%), right after the lack of market demand (42%). How do you make sure your tech startup can save money and survive? Here are six tips for startups to reduce their software product development costs.

Building software that works on a tight budget is the biggest challenge most innovative startups are facing today. On average, every sixth project runs over budget by a whopping 200%.

Speaking about the main reasons for budget overruns, high costs of local tech talent, poor planning, lack of communication within the team, technical incompetence or unrealistic requirements top the list.

Is there a way to successfully build your startup product without losing all your money? Absolutely!

Here are some tips for managing product development expenses on a shoestring budget that I’d like to share with you.

Build a cost-effective product development team.

People are the most important part of any software development project. When you have experienced and motivated people with excellent technical and communication skills, you are halfway to deliver a successful product.

It takes time and money to build a development team that will deliver above your expectations. You need to find talented people, pay for onboarding, adaptation, and training, as well as equipment, workstations, software licenses, etc.

Also, if you are building a new team from scratch, it will take a while for people to get to know your business, technology, and the product they are developing.

If you work remotely, hire wisely. If you run a distributed software development team, you need to make sure you are hiring the right people for team roles, and you’re paying a fair price for them.

Tips for building a cost-effective yet highly qualified team

1. Consider building a smaller team first

The larger the team, the more difficult it is to manage it and bring it up to speed. The rule of thumb, according to Jeff Bezos, is – if you can’t feed your team with two large pizzas in a meeting, you’re in trouble.

Having too many people on your team means more disagreement, more communication gaps and issues, higher resistance to change, and ultimately lower productivity.

It is best if you build your core team before starting the project. If you constantly shuffle people in your team throughout the development process, you will most likely reduce the productivity and delay the progress of the project.

2. Distribute your team across several locations

In the world of globalization, it makes no sense to be bound by any physical boundaries. You need to stay cost-conscious and eliminate any spending unless it’s really crucial for your project success.

If you can’t attract or afford to hire a mature solutions architect within your home country, hire one overseas and integrate them into your in-house team smoothly with the help of video conferencing, project management tools, messengers, shared dashboards and team-building activities.

One of the leading fintech startups in the UK couldn’t find and hire the right skill sets locally (due to talent shortage and high rates) and it risked delaying product delivery and losing traction.

To solve this issue, the company hired a local tech consultancy with an R&D Center in Ukraine, Europe’s leading hub for outsourced software development, and the largest tech talent pool.

The consultancy helped them build a distributed software team across three locations: the UK, Spain, and Ukraine. DevOps, business analysis, and security functions stayed in the UK, while most developer roles (.Net, AngularJS), QA, solutions architect, and scrum master were hired in Ukraine and Spain.

Because Ukrainian and Spanish resources were way cheaper than those in the UK, the startup could save significant costs and build their MVP fast enough to attract £1 million from VC funds and private investors.

Many startups begin as a “one-man show” or as a team of two or three people. But as you elaborate on your MVP and build more features, you’ll need to scale your product and, thus, hire more employees to join your team.

Consider going remote

The Covid-19 pandemic has shown that we no longer need to rent an office space to build and deliver great products. In fact, more and more organizations all over the world are choosing to work entirely remotely.

By using remote teams and collaboration tools like Skype, Slack, and Trello, you can save tons of money by ditching the brick-and-mortar office space.

One study found that if a company allowed an employee to work from home half the time, it could save an average of $11,000 per employee per month.

Going remote also allows you to move to a less expensive part of the country to save costs or even to migrate to lower-cost yet resource-rich countries like Ukraine or Portugal.

More and more startups are abandoning the hustle and bustle of metropolitan areas in favor of cheaper cities with populations between 20,000 and 100,000. As technology advances, nothing prevents you from running a successful technology company from a home office in, say, Leicester, UK (where I live and work).

Start with fewer features

Every feature you build will cost you money.

Before you release a full-fledged product, your startup won’t know what features will be important to your users. For instance, your team might spend a lot of time and money developing a feature only to find out later that your users find it useless.

The smarter choice is to build a solid MVP first with the most in-demand features only. Once your MVP is released, you can collect valuable feedback from users to find out exactly what features they like and want to see in your app. Then, as you attract more funds, you can build features that will further enhance your product.

Your goal should be to build and market a product with minimum features that can help you onboard the first paying customers and start making money or attracting new funds.

Start testing early

To avoid delivering a glitchy product to the market, you should start testing it early in the software development process. By doing regular tests throughout the development lifecycle, you will discover and fix issues before moving on to other parts of the project.

If bugs pile up and you get to the end of the development process, you will need to go back and rework it. Making changes takes time and money. It will also push the release date back. You will be left with a low-quality product, wasted money, and psychological stress.

There are ways to reduce defects, but there is no way you can catch them all.

That is why bug tracking is really an important step towards reducing your product development costs.

The worst thing you can do is build your software in such a way that your users cannot use it. If you want to change something after the release, brace yourself for overheads and additional payments. Poor project planning typically results in overblown budgets.

Early user acceptance testing (UAT) can be used to minimize development costs down the road. UAT should be done after unit testing and functional testing, but it can also be done during the prototyping phase. All you need to do is create test scenarios based on your user journey or personas and have an industry or customer experience expert run the tests.

This approach will also help you reduce turnaround time and identify defects that can be fixed promptly to avoid overheads.

The same refers to security: penetration testing should be embedded in your entire product development lifecycle as early as possible to avoid overheads at a post-release stage and unhappy clients.

One study found out that developers spent up to 50% of their time fixing bugs that could have been avoided earlier in the process. At the same time, the cost of fixing errors after development was up to 100 times higher.

Choose the right tech stack

Choosing a tech stack for your project development is similar to choosing a car to buy. As a future owner, you need to take into account the cost of your car maintenance after the purchase, as high maintenance costs will add up to your total cost of car ownership.

According to Colette Wyatt, CEO of a UK-based software house Evolve, the cost of technology you are going to use for your project will directly affect the cost of your product development. What tools will you use? What framework will you work with? How large is the available pool of developers skilled in this or that stack? These are questions you need to answer in the first place.

Choosing the wrong technology stack can be costly, and it may bring you the following problems:

  • A new stack will take additional time to accept, so your build time will be longer than expected;
  • Some of the latest tech stacks have frequent update cycles that will require frequent changes to keep the application running with the latest codebase;
  • You may have trouble finding experienced developers;
  • The technology stack can be hard to sustain.

Go to Cloud

If you’re a startup specialized in data analytics or data science, ignoring Cloud migration equals shooting in your own leg. Even if data isn’t your core business, you still should consider taking advantage of Cloud opportunities and streamline all of your data-intensive processes by migrating your eCommerce or customer analytics to Cloud.

Cloud computing can be extremely cost-effective for startups due to the increased productivity they gain. Deploying cloud-based software is significantly faster than a conventional setup.

While a typical company-wide installation takes weeks or months to complete, cloud software deployments can happen in hours. It means your employees will spend less time waiting and more time working.

What other benefits does Cloud-native architecture offer?

Greater flexibility

Cloud solutions are available on a pay-as-you-go basis. This format provides savings and flexibility in several ways. First of all, your startup doesn’t have to pay for software that isn’t in use. Unlike upfront licenses, in cloud computing, you typically pay per user. Plus, pay-as-you-go software can be canceled at any time, reducing the financial risk associated with any software that doesn’t work.

Finally, the initial cost of the Cloud is lower than on-prem solutions. For companies that need top-tier products but don’t have a lot of budgets, cloud solutions offer fantastic flexibility.

Save on hardware

For high-growth companies, new equipment can be cumbersome, expensive, and inconvenient. Cloud computing solves these issues thanks to resources that can be obtained quickly and easily. Moreover, you eliminate the cost of repairing or replacing equipment.

In addition to the purchase cost, external equipment reduces internal power costs and saves space. Large data centers can take up valuable office space and generate a lot of heat. Moving to cloud-based applications or storage can help maximize space and significantly reduce energy costs and utility bills.

Pay less with Cloud credits

One company boasts being able to reduce its AWS costs from $55k to $20k per month and accomplish more than $500k yearly savings.

To replicate their success, here’re some tips:

  • Applying for Cloud credits can reduce your annual development costs by as much as $100k (however, you need to check first if you’re eligible to apply).
  • Utilizing spot instances can save you up to 90% of costs;
  • Purchasing reserved instances in the Cloud marketplace can help save up to 75% of all Cloud expenses, etc.

Conclusion

Wrapping up, to reduce your software product development costs, you need to do the following:

  • Build a great team, either in-house or distributed across locations;
  • Start testing as early as possible;
  • Focus on the main features that will help you onboard first clients and monetize your solution fast;
  • Leverage Cloud computing.

A mix of the right people on the team, proper communication, the right tech stack, Cloud-native architecture, and a reliable tech partner is a significant prerequisite of successful product development.

Image Credit: Scott Graham

The post Six Tips for Startups to Reduce Their Software Product Development Costs appeared first on ReadWrite.

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How COVID-19 is Driving Us into a Cloud-Based Future

cloud-based future

With the advent of the COVID-19 global pandemic, many organizations have had to re-adjust the way they operate. Remote working is now a reality for large sections of the workforce. Remote collaboration through cloud-based platforms is an accepted part of most workdays. But the utility of cloud-based technology does not end there. Here is how COVID-19 is driving us into a cloud-based future.

A recent report indicates that in the next two years the cloud computing industry will grow at a compound annual growth rate of 12.5%. Already a strongly-emerging technology, cloud-based solutions are proving to be invaluable during a global health crisis where people can no longer work at a fixed site. The extent to which cloud-based technologies are driving us into the future are as follows:

Supporting Remote Work and the Freelance Economy

Continued productivity is vital as organizations shift to remote models of working. This is as important to corporate organizations as it is to schools and colleges. During COVID-19, many working and learning programs have continued with high levels of efficiency, thanks to highly-flexible, scalable, and efficient cloud-based solutions.

The seamlessness with which business has continued means that every responsible organization should have a cloud migration solution.

Demand for collaboration tools has seen unprecedented growth in platforms like Zoom and Slack. More entrenched office productivity tools such as Microsoft 365 also sees high demand. These tools are all cloud-based and their excellent conferencing, and productivity suites all enjoy the multiple benefits of the cloud.

When the pandemic eventually subsides, people will have to go back to work. But an increasing number of workers will not. The freelance economy has seen continued growth in recent years, with over 60 million Americans doing freelance work of some sort. Cloud computing is an invaluable tool that has allowed the freelance economy to take hold and thrive.

A boom in E-Commerce and the Fade of Brick and Mortar

As people have been stuck at home, the demand for e-commerce services has risen sharply. Retailers were already migrating away from brick and mortar into the online space before the global pandemic arrived.

Retail companies know that as e-commerce adoption rises, any cloud investment costs will be recouped through cloud cost reduction. This applies to cloud solutions also being responsible for overall reduced IT costs by obliterating the need for most traditional hardware such as servers.

The ways in which global supply chains have become embedded in e-commerce fulfillment points to an inevitable future internet of things. Service provider collaboration and integration happens at the level of the cloud between retailers and logistics service providers, resulting in a smooth and highly-efficient delivery system.

Through the robust scalability of the cloud and its forever switched-on nature, global supply chains can support the wants and whims of consumers everywhere. This has been shown during COVID-19, with online purchases spiking a staggering 146%, and supply chains barely breaking a sweat to deliver.

Growth of the Cloud in the Government Sector

Healthcare has come to prominence during the pandemic. It has benefited greatly from access to a scalable and secure cloud infrastructure. This has been necessary to manage patient information. With millions of people laid low by the virus, it has taken the need for efficient and accurate computing to a new level of importance.

The prominence of the cloud during the pandemic goes beyond patient records. Collaboration between various private and governmental agencies has risen to unprecedented levels. Virus development projects are being shared by many countries and institutions.

Additionally, virus contingency management information is being shared by nations across the world. All these efforts are underpinned by highly scalable and collaborative cloud-based tools.

It is for moments like these that governments were already moving towards a cloud-based future at great speed. Until recently, almost half of all government agencies in the US were actively using cloud services.

These agencies understand the power and versatility of private cloud networks, with benefits such as deep security and information sovereignty being crucial. Cloud adoption within government circles will only continue to rise.

Content Platforms Enjoying a Surge

Binge-consumption of TV and audio content has been a feature of the pandemic. Video-streaming services have reported a strong surge in new subscriptions since the enactment of lockdown orders in many countries.

Not to be outdone, music services and many podcasts and audiobook services have also reported large jumps in membership. The gaming industry has also reported large spikes in usage times. Support services such as mobile networks and internet service providers have benefited from these enforced behavior changes.

Cloud-Dependent Industries on the Rise

The SaaS segment was already a growth area, and its continued importance and growth potential has been revealed during COVID-19. Due to the many daily applications and tools driven by this service, the industry in its entirety is in the limelight.

Service desks, accounting packages, customer relationship management, human resource management, and enterprise resource planning all rely on the SaaS model. Infrastructure as a service, platform as a service, and desktop as a service are all part of the cloud family and are all showing continued growth.

The new model of remote working depends on the streamlined continuation of business-critical services such as human resource management. Cloud service providers have been able to remotely manage and secure underlying infrastructure, allowing organizations to continue to function within their constraints. This versatility has been perfect during the pandemic and will continue to be perfect for the business of the future.

Robust and Sustainable Is the Way of the Future

If anything, the virus has taught us the danger of having all your data tied to office sites and fixed hardware installations. There has always been the danger of data loss through disasters on site. Data loss has been mitigated by on-site security, but cloud services offer a better way.

The better way of cloud services is because hardware inevitably deteriorates, can be stolen, corrupted, or become obsolete. When your data is simply inaccessible, as it has been during the pandemic, a better solution must be found.

There is also the matter of sustainability. Large organizations can collect vast amounts of hardware to house their information. It is the responsible thing to do to cut down your environmental footprint by putting everything in the cloud.

There are also downstream issues like energy efficiency and reduced building usage. Other sustainability wins come with the reduced need for workers to commute to the place where the information is held. These wins have come into sharp focus during the virus as many measures have revealed a cleaner planet, even if just temporarily.

Conclusion

The global pandemic has revealed that cloud services will continue to provide strategic flexibility and scalability for a number of organizations. The virus response would likely have been a lot less effective in a time before cloud services.

It is totally imaginable that habits like social distancing would have been impossible to achieve if people needed to be on-site to manage and control business-critical systems.

At this moment in time, cloud services may heavily favor sectors which are useful during a pandemic, but future prospects are robust across all sectors. There are also no geographical boundaries, with cloud services projected to increase in adoption across the world.

New cloud technologies like cloud direct connect, where private networks can join the cloud, will allow more and more types of organizations and networks to take part. Cloud computing is truly taking center stage in driving us into the future.

The post How COVID-19 is Driving Us into a Cloud-Based Future appeared first on ReadWrite.