How To Reduce Software Development Costs

Alex Lashkov
Yellow Universe
Published in
4 min readNov 7, 2018


Cost management is an important element of the software development process. Below are several practical tips that will help you in reducing costs while building software.

Planning is key to success

According to statistics, the number one cause of failure for software development projects is unrealistic expectations, followed by estimation and a lack of clearly defined deliverables.

Data source: State of software development report 2018

As can be clearly seen, planning is crucial in software development. Before you start coding, you need to define the exact goals you want to achieve and set some metrics that will help to track your progress and measure overall success. This should be done in exactly this order.

So, first it is better to describe the main goal of the project, then deconstruct it into smaller pieces that can be scheduled in time. Then, for example, you can use metrics such as working software, on-time delivery, number of completed tasks etc. Additional metrics like the adoption rate by end-users or percentage of code covered by automated tests are also great things to have.

By doing this you will also get a clear vision and, most importantly, get rid of excessive actions. Your plan will show you what you should be doing in any certain moment of time, what is important today and what is not. This will save you tons of time and, as a result, other resources.

Build a consistent team to work on a product

If your company is quite big, the chances are a lot of people will get involved in any new software product. This number is not always restricted to developers or tech-savvy employees either, and this is normal.

However, forming a team takes time, and it is clear that a bunch of people working on a project will need time to achieve their best productivity. The team becomes more knowledgeable of and within the project, its goals, and users, over time. You just can’t expect top performance from the very beginning. And if you are constantly adding new people throughout the development process, it will significantly decrease overall performance and delay the achievement of top productivity.

Another fact to consider is that the bigger the team, the less manageable it becomes. A lot of people means lots of ideas, discussions, disagreement, and ultimately, less work done. It is not a coincidence that in the early days of Amazon, Jeff Bezos instituted a “two-pizza team” rule: every internal team should be small enough to be fed with just two pizzas.

So, the takeaways from these should be as follows: your team working on a software development project should be consistent and small enough to achieve maximum performance.

Develop the right approach to open tools

Many IT managers think that using open-source can help in reducing the overall cost of development. However, open-source does not mean free. There might be paid components, updates or support which make it more expensive than some closed-source competitors.

When we are talking about completely open-source software, we should understand the specifics of such products. They might be created by enthusiasts, and if these developers give them away for free, this means they need to have another job to get paid. They may not have enough time to support and update their product.

Thus, you could save some money in the beginning, launch your product using such a free tool, but then lack support and further updates. The cost of solving these problems by yourself can be very high.

To avoid such problems it is better to not use a completely open-source but an open-architecture platform approach. This means that there are developers who have created a platform based on open standards that allow the building of new software products on top of it. This type of platform’s source code is closed, however, as it allows users (i.e. other developers) to create open configurations which can then be accessed and used by the community.

Thus, you are able to create software using your own guidelines and approach, achieving high-integration simplicity. This significantly reduces development time and costs (including support), and is how a 1C:Enterprise business process automation system works.

The source code of this new configuration is then open to the public, which means you can create your own repository as a vendor and get the benefits of using and developing other companies’ configurations as well.

Such openness allows code to be re-used in different projects, by different teams as well. This might be crucial for reaching better cost-efficiency of product development.

Open-architecture platforms like this one help companies in saving resources. Businesses need fewer developers who will write code, maintain and update it. Simultaneously there is the bigger flexibility that locked, closed-source systems can offer. The company can create its own software on top of the platform, and this solution will be perfectly tailored to business needs.

Final thoughts

Planning, team management and choosing the right tools are important elements in cost optimization when building software. However, there is still room for improvement and there are more approaches to reducing software development costs, which we will cover in our next posts.

Stay tuned!