For most ISVs, starting or running a business can be a daunting endeavour. Times are tough because of the competitive nature of the IT industry and disproportionately multiplying costs of software product development. There is a steadily increasing list of bills to be paid — from office space to infrastructure to facilities to employees and a pricey mix of other things. As an ISV owner, you are keen to receive good value and see a return on your investments.
Having a really great product idea and zeal to succeed is just not enough
Increasing your Return on Investment (ROI) depends greatly on your ability to manage finances and handle company assets. Surprisingly, a large number of software entrepreneurs aren’t failing because of a lack of genius in their product. Instead, it is because of discrepancies in prioritizing investments. When there are so many factors requiring a part of your capital – talent, technology and infrastructure – how do you decide what comes first?
For instance, some founders get so neck deep into building a stellar product that, marketing and business development efforts take a backseat, resulting in an inability to generate consumer interest or even reach their target market. The entire development process takes a beating once overhead costs and back office expenses start flooding the spreadsheets, making it nearly impossible to see the light of profits at the end of the tunnel. From bootstrapping founders to established organizations, reducing investment and increasing profits is a common struggle in the software industry.
Breaking down what it really takes
There are two key elements that determine your ROI potential—Gain from Investment and the Cost of Investment. As important as a metric ROI is in guiding companies to choose how to spend their money, it should be clarified that success and profits are only achieved through sound business acumen and judgement. Any business proposal should first be measured for its potential to bring speed, efficiency and innovation.
Is your business decision helping or hurting your goal?
It’s crucial for business owners to ensure that every investment and cost savings they make is helping and not hindering, the ultimate goal of product quality and speed to market. In an ideal world, ROI would be directly proportionate to your product idea and the value it brings to customers. However, executing a great idea also requires strategic vision and smart investment. For instance, if you outsource your development work to get it at done as cheaply as possible —the subsequent cost savings are going to decrease the quantity or quality of your returns, which is obviously not recommended.
According to a report by IDC, by optimizing IT operations and services, companies were able to create a more scalable, efficient IT infrastructure and reduce costs by 10–30%. A more efficient infrastructure allowed IT staff to lower operations costs by as much as 50% as well as deliver IT services faster and with better quality.
So how do you make sure your software development efforts are efficiently optimized and giving you the best return? We have boiled down the intricacies of the various investments an organization makes into three broad categories: Talent, Technology and Infrastructure.
Are you interested in discovering the best strategies to optimize each of these categories? We are offering you a free eBook that will help improve your ROI from the context of reducing the cost of investment. All of the approaches discussed in this eBook have been employed successfully by global software companies in reducing investment costs while still being able to make deadlines and ensuring speed to market. Get it now!