LookFar Labs5 February 2024
Am I Spending Too Much Maintaining Software and Should I Be Exploring Alternative Solutions?
Determining if your company is paying too much to support custom software is a cross-departmental and multifaceted process. It should involve a combination of financial analysis, performance evaluation, and strategic value consideration.
Before you can determine whether or not you’re spending too much on software maintenance and decide whether to make a change, you need to be able to quantify the cost. 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 several necessary components to analyze. This analysis will reveal your true cost and how that cost relates to value. We’ll break these tasks up by department:
Finance Department’s Evaluation of Software Maintenance Costs:
- 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?
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.
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.
Customer Success Department’s Evaluation of Software Maintenance Costs:
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.
Engineering Department’s Evaluation of Software Maintenance Costs:
- 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.
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. It can be helpful to involve an unbiased 3rd party vendor in this process. LookFar Labs conducts code reviews without any long-term commitment. Contact us today for an unbiased review of your current software.
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.
Evaluate Internal vs. External Support and Maintenance Resources:
- 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 software maintenance provider.
Operations Department’s Evaluation of Software Maintenance Costs:
- 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 who can provide a more accurate understanding of what support costs should look like in an ideal scenario.
- 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.
Make Your Decision & Plan Your Next Review
Once you 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 this will hold true for the foreseeable future. Costs and benefits are dynamic and need to be analyzed on an ongoing basis.
By thoroughly evaluating the factors above, you can make an informed decision. If you determine your company is paying too much to support your custom software, you will feel confident considering alternative solutions.
Ready to upgrade your existing app? At Look Far Labs, our goal is to find the best solution to meet your needs. We do this by guiding you through a strategic process that determines and delivers the right technology for your business. Our team of custom app developers build B2C, B2B, Web-Based, Native Mobile, SAAS, Internal Business apps, and more.
Contact us today for a free consultation on how our services can improve your business processes.