LookFar Labs31 August 2023

Are your software maintenance costs outweighing the software’s value?

Determining if your company is paying too much to support custom software involves a combination of financial analysis, performance evaluation, and considering the software’s strategic value to your business.

Before you can determine whether or not you’re spending too much on software maintenance and deciding whether to make a change, you need to be able to quantify what that cost actually is. You can’t analyze what you haven’t measured. Determining cost without knowing the value, results in making decisions in a vacuum.

Getting an accurate support & maintenance cost representation is only the first step in the process. The ultimate answer may be that yes, you are spending too much, but then the question becomes, what do you do about it.

While many factors go into the costs of software support and maintenance, here are a number of necessary components to analyze in order to understand your true cost and how that cost relates to value.

Cost Analysis

  • Break down the costs associated with maintaining and supporting the custom software. This could include salaries of IT staff, software licenses, third-party service providers, infrastructure costs, and any ongoing development expenses.
  • Compare these costs to industry benchmarks or similar software solutions in the market. Are your expenses significantly higher than what is typical for similar systems?

Get more tips on understanding your software maintenance costs here.

Performance Evaluation

  • Assess the software’s performance and stability. Does the software frequently encounter errors, bugs, or crashes that lead to increased maintenance costs or disruptions to business operations?
  • Evaluate the software’s response time and scalability. If the software struggles to handle increased workloads or slows down as your business grows, it might be an indication of poor design or outdated technology.

Total Cost of Ownership (TCO)

  • Calculate the total cost of ownership over the software’s lifecycle, including initial development costs, ongoing maintenance, updates, subscriptions, and potential future enhancements.
  • Compare the TCO of your custom software to the cost of adopting a commercial off-the-shelf (COTS) solution that offers similar functionality.

User Satisfaction and Feedback

  • Gather feedback from users and stakeholders regarding their experiences with the software. Are there recurring complaints or concerns about usability, performance, or functionality?
  • Consider the potential impact of user dissatisfaction on productivity and overall business success.

Technical Debt and Code Quality

  • Assess the level of technical debt in your software. Technical debt refers to shortcuts taken during development that may lead to higher maintenance costs over time.
  • Analyze the quality of the software’s codebase. A poorly designed and maintained codebase can increase the effort required to make updates and fix issues.

This is not a “One and Done” Task

  • Once you have have an approach for cost/benefit analysis and perform the evaluation, make sure to schedule the next review and analysis in six months. Do not fall into the trap of doing the analysis once and then assume that this will hold true for the foreseeable future. Costs and benefits are dynamic, and need to be analyzed on an ongoing basis.

Risk and Impact Analysis

  • Consider the potential impact of not performing maintenance activities. Unaddressed issues can lead to system failures, security vulnerabilities, and reduced productivity, which may result in higher costs in the long run.

Business Value

  • Determine the strategic importance of the custom software to your business. Does the software provide a competitive advantage, streamline critical processes, or generate significant revenue?
  • Consider the impact of discontinuing the software. Would your business suffer significant setbacks, or could you easily transition to an alternative solution?

Engage Experts for an Accurate Analysis

  • Determining costs with an existing team that may not be experts in the software and/or support tech will give you skewed results. Consider engaging with 3rd party subject matter experts that can provide a more accurate understanding of what support costs should look like in an ideal scenario.

ROI and Cost-Benefit Analysis

  • Calculate the return on investment (ROI) of your custom software. Compare the benefits it brings to your business against the costs incurred.
  • Conduct a cost-benefit analysis to quantify the financial impact of continuing to support the software versus exploring alternative options.

Evaluate Internal vs. External Support and MaintenanceResources

  • Determine whether you have an in-house team capable of handling software maintenance or if you need to outsource. Compare the costs of hiring and training versus outsourcing to a third-party service provider.

Alternative Solutions

  • Research and evaluate alternative software solutions, including commercial options and open-source alternatives, that could meet your business needs at a lower cost.
  • Consider the feasibility of migrating to a different solution and weigh the potential benefits against the associated costs.

By thoroughly evaluating these factors above, you can make an informed decision about whether your company is paying too much to support your custom software and whether it’s time to consider alternative solutions or optimization strategies.

Written by

Chris Homberg

Signal-Based Selling FTW with Creative Service Agencies Signal-Based Selling FTW with Creative Service Agencies Build vs. Buy: Third Party or Custom-Developed Software Build vs. Buy: Third Party or Custom-Developed Software