The budget barrier: Why unrealistic budgeting hinders customised software
Surprisingly most customised software doesn’t fail because it was too expensive, rather it fails because the budget does not reflect the true costs. It might be counter intuitive but boards don’t get frustrated with the cost, but more frustrated with budget overruns due to inaccurate costings causing problems further down the line.
Our research with over 500 key decision makers in the private sector revealed that budget was high on the list of the biggest risks to building customised software. W hile 37% of respondents worried about the lack of budget, the same percentage listed ‘unrealistic budgets’ as a reason for project failure in the past.
It’s not a lack of money that’s the issue…
Over half the firms we spoke to were spending less than £1m a year on custom software. That means firms may be underestimating how much they need to spend to get projects working successfully.
You can easily spend more buying off the shelf
While almost all decision makers recognised the need to customise technology to some degree, just over half (51%) were still ‘mostly’ buying off the shelf. 1 in 3 respondents chose bespoke builds because they were actually more cost-effective than buying off the shelf.
Why people build bespoke
The top four reasons for wanting bespoke software are to:
- solve a specific problem (75%)
- improve customer experience (49%)
- solve process automation (50%) and legacy issues (49%)
- own software and be in control (45%).
It’s been said that it costs £1m to buy an off-the-shelf product, and £20m to get it out of the box. Business cases must be realistic about the ongoing costs of ‘tweaking’ off-the-shelf products and understand that bespoke can be more cost-effective in the long run.
Convincing the board
61% said boards needed full project costings to convince them. And these costings need to be clear and realistic — 37% said unrealistically low budgets caused problems, not the budget itself.
It’s also important to highlight that if you have to keep customising off-the-shelf products, they can end up costing more in the long run — and change costs are controlled by the supplier.
Project management is key
An experienced delivery manager will help a firm predict and manage costs. This can help avoid the extensions to both time and budget that boards a wary of. Get your tips to deliver a project successfully.
Start at the end
Thorough end-user research will create a more realistic scope for the project, leading to fewer extension requests later on.
Want to know more?
These findings are the result of a white paper based on a survey we commissioned YouGov to carry out with 537 decision makers across private sector firms.
If you’re interested in 6point6 working with you and your team to deliver custom-built technology, get in touch .