Software development costs depend on several factors such as required size and scope, features and functionality, complexity, user numbers and whether general or business, timeframe, industry type, technology, whether developed completely in Australia or in hybrid mode i.e. managed by Australians but part or whole work done overseas.
Disclaimer: This article provides generic information on project costs. There are other factors as well.
Size of project is specific to software development company. For large or ‘Tier 1’ companies, a small project may start from $250,000.00. The following are a few estimations of the cost for software development in Australia. The project size definition is for small to mid-size software development companies.
These projects involve bespoke software, line of business (LoB) applications, products development, integration, data migration, cross platform migration of applications, migrating applications or products to cloud, upgrade of applications or products, app development etc.
Envision IT delivers small to medium projects typically between 2 weeks to 12 months.
Envision IT delivers SAAS, ERP and CRM projects typically between 2 weeks to 6 months.
Most important factor for project costing is its size and scope. Complexity is an important factor as well, but it comes second. Project size and scope is based on factors such departments, modules, reach of the software (in-house, local, state level, national or international). The scope and size determine the number of use cases, developers and testers (who are equally important). Larger the scope and size, bigger are costs.
The second important factor is complexity, functionality and required features. More of these factors mean increased effort and time for analysis, research, development and testing. Complexity usually means more work on analysis and design and is an iterative process. Complexity is one of major causes of project cost escalation because it is difficult to define the requirements and find the right solution. The complexity and features include design and user experience (UI/UX) as well. The more involved UI/UX will cost more.
We will not debate whether some technology platforms are easy or difficult. We would rather peg costs related to technology stack and platform to the number of developers available in the market. If a technology platform has fewer developers in the market than demand, then the project costs will be high. On the other hand, when a technology platform has plenty of resources in the market, then the costs will be lower. It is for this reason, we prefer Microsoft, Azure and AWS technologies stack because general availability of resources is high.
Systems that require no or fewer integrations and scalability cost less. Each integration interface adds to costs while scalability requires broad architecture and several features to be built. This means that when your software needs to integrate with several other systems, devices and equipment, the cost will rise and similarly creating a scalable architecture will add to costs.
Today, cyber security is extremely important for all software development. Depending on the security posture of the organization and requirements, the costs will be higher for stringent security and compliance requirements. This is because it requires more and secure coding and testing.
In general, outsourced projects are likely to seem to cost more mainly because a lot of the costs in in-house software development are not counted. Most prospects we talk to consider only the wages of the software developers while comparing the cost of in-house software development with outsourcing agency. They often fail to consider the costs such as leave entitlements, infrastructure, quality and profit margin. Another main reason why outsourced costs look high is the ‘scope and size’. In in-house software development projects, the scope creep is hidden or is easily accepted because ‘we all know it’ attitude. On the other hand, these issues mean a direct cost. In general, accountability in outsourced software development is higher because the project progress is visible to everyone, and escalations hurt!
In general, a dedicated software development team will deliver a project of higher quality and quicker. The same cannot be expected from a contractor run projects because they do not have a strong motivation to complete the project in time.
Compared to business users, the testing and quality assurance requirements are higher for projects that involve general users. This is because usually business users use ‘standard operating environments (SOE)’ in a controlled set up while the general users use different platforms in an uncontrolled set up. The testing and QA are also higher for complex and large size projects.
In general, large and complex projects with large number of stakeholders will require more project management effort than the projects that are smaller, simpler or have fewer stakeholders.
There are several factors that affect software development project costs. Please call Envision IT for a 30-minute obligation free conversation to obtain a reasonably accurate cost and time estimate for your project.
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