The Business Value of Software Development

As our businesses digitally transform and we rely on technology to run our operations, software development is becoming commonplace. However, one of the fundamental questions that companies ask when embarking on a new project is ‘how much will it cost?’. While this is, of course, a valid question, it often sidelines one of the more important ones: ‘what is the business value?’. After all, when it comes to software development, upfront costs are just one piece of the puzzle. There is also the value in solving user problems, gaining operational efficiencies and improving brand reputation to consider. When prioritising and making decisions during software development projects, business value should be paramount. 

Barriers to Investment in Software Development

Modern businesses depend on their IT systems and applications as one of their biggest assets, so it makes sense to invest. Software has the potential to make operational improvements, process improvements, and to help businesses gain new information and insights. However, when it comes to any business investment, there are a lot of priorities to factor in. It is the same three factors that, despite the obvious value, stand in the way of software development projects:

  • Cost – when budgets are tight, those holding the purse strings are often looking for rapid return on investment.
  • Time – duration of the project can mean that resources are potentially drawn away from day-to-day operations, during which time productivity may take a drop.
  • Resistance to change – it is human nature for people to want to stick with what they already know. 

To realise the benefits of software development, businesses need to be willing to engage in change. Moreover, strategic thinking is required. Companies need to look at the long term possibilities in terms of productivity, efficiency and the return on investment as a whole, not just the upfront cost. After all, technology is advancing at a rapid rate, and organisations need to keep up to stay competitive.

Key Ways to Justify the Investment

Trying to understand both the business and economic value of software development can seem challenging. However, a large part involves finding a way for all stakeholders to visualise value in a way that makes sense to them. The value should include aspects, including quantitative gains to the business, such as volume of users or hours saved, the business cost of delay and the economic value once deployed. 

Software development projects can bring business value in many ways, such as:

  • Increasing revenue
  • Improving brand reputation
  • Helping users solve core problems
  • Delivering customer value
  • Offering improved security
  • Creating clearer insights

The value should be measured throughout the software development process, serving as a metric for IT and the business to measure against. That way, business teams can track actual versus target values and make modifications to ensure that software development projects stay on track. Moreover, defining anticipated value works to align the IT and business teams and makes all parties more accountable for the end-result  

Owning Software Development From the Top Down

Software development is a complex process that involves technical and organisational issues, and how these are managed has an impact on the resulting software and its return on investment. Those who have the most involvement in a software development project are likely to be those most concerned about the value. However, by focusing on day-to-day deadlines, keeping within budget and maximising utilisation, business value can get sidelined.

In reality, software development should be managed from the top down. That means that value should be a core focus for both the CIO and the business managers who are driving the requirements. Collaborating, communicating and measuring against shared goals will go a long way towards ensuring value is achieved. What’s more, by having a top-down approach, those who are involved in the project on a daily basis will be much more aware of the business value that development will bring and can make decisions that will maximise that value. 

How to Make Your Next Development Project More Successful

Software is key to operations for every modern business, so deriving value is fundamental. When it comes to software development, business value should be used as the primary consideration for prioritising work, tracking progress and making changes along the way. After all, the clue is in the title. Software is ‘soft’; it is able to tolerate and facilitate ongoing changes, accommodate evolving requirements and deliver constant value. 

To make your next software development project more successful, consider whether everyone is invested in the project and focused on delivering value rather than keeping costs down or sticking to timelines. It is the return on investment rather than the upfront cost that is fundamental. 

To summarise, the business value of software development includes:

  • Operational efficiencies – by investing in new software, businesses can save time and money and become more flexible and adaptable. 
  • Increased visibility – software development can deliver clearer insights that enable companies to make data-led decisions.
  • Competitive edge – while some businesses are resistant to change, those investing in software development have an opportunity to gain a competitive advantage.
  • Improved experiences – whether for internal or public use, delivering user value can help to improve brand reputation, customer satisfaction and productivity. 
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About the author

Michael Ridland is the Co-CEO and Founder of Xam Consulting.

Design-led problem solving delivering digital solutions.

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