Understanding the cost of delivering features to clients is crucial in order to do a general return on investment (ROI) analysis. After all, in the world of software development, ROI isn’t necessarily measured on a monetary return for every Rand invested.
For some companies, improving business operation, internal efficiencies, or current customer satisfaction may be the main objective, rather than simply focusing on increased sales.
“However, when establishing ROI, a key factor is to ensure that the input cost for a particular project is predictable,” says Leon Coetzer, Chief Operating Officer of redPanda Software.
“Without predictability, you’re likely to encounter both unexpected costs, as well as disruption in business that may negatively affect your productivity.”
Predictability in IT and software development is tricky to achieve since organisations are made up of a vast ecosystem of software and systems.
“Companies are generally made up of departments that may include sales, logistics, warehousing, accounting, human resources, and those are just some of the systems,” Coetzer explains.
“As such, when you embark on a new project, you need to ensure that you understand up front what the impact of the project is going to be on each of these systems.”
Adding a new system to your business may seem isolated, but one seemingly small change could impact the entire ecosystem of your organisation.
“You may consider adding e-commerce in order to facilitate omni-channel buying in your business, but e-commerce is just the face of something that is a lot more complicated,” he adds.
“You’ll need the operational system to capture customer information when you make a sale, and if you are selling things on credit, then additional documentation will need to be collected and processed.
“Delivering the products is another consideration as this will impact on logistics, and you will also require warehousing in order to know exactly how much stock you have available to sell.
“If customers return the goods, you’ll need to process the returns and also consider how your contact centre will be impacted as a result.”
To be predictable, then, it is imperative to understand the impact down the line in each aspect of the business.
“To fully understand this, you need a lot of communication within the business – between stakeholders – to establish what needs to be achieved. You should also consider what the knock-on effects will be,” Coetzer says.
Once the ripple effect is clearly understood, the next step in terms of ROI is to consider whether you need to buy packaged software or opt for custom development instead.
“Each business has a unique selling proposition out in the market with processes and structures specific to each type of business,” Coetzer says.
“When you choose packaged software, you may find that to get it working in your environment, it needs extensive customisation, and this could potentially take years to rectify at massive cost.”
If you’ve bought a package from an international company, you also have the added problem of currency exchange issues, making your input costs unpredictable as the exchange rate fluctuates.
“Added to that is the fact that the necessary skills required to implement and maintain the package may not be available locally. This adds to the cost as you may have the added expense of flying in an expert from overseas,” adds Coetzer.
“Choosing customised software from a local company, such as redPanda Software, overcomes these challenges because you have Rand-based costing and local support.
“Furthermore, predictability is improved since we can fix the development timelines and the costs, while still keeping the scope flexible.”
This makes the ROI calculations easier – the software solution can be customised to drive the value, whether it is sales, efficiency or another measurement.
redPanda Software creates a close, long-term relationship with its clients, and provides all the necessary services end-to-end.
“We provide all the support you need, provide help desks, take care of releasing software, and will monitor the operational environment and act on anything that comes up,” Coetzer says.
“Yet the customer maintains full control. As such, we become an extension of your organisation, and you don’t have to change your business to suit the software solution. Our software solutions are customised to suit your business.”
This article was published in partnership with redPanda Software.