3 Reasons Why Innovative Software Technologies are Pricey
From cost reduction to productivity growth, the emerging technologies including AI and IoT hold promise for transforming businesses. Whether you run a successful enterprise or lead a tech startup, investing in R&D and innovation will help you outpace the competition in the long run. The thing is, the cost of software research and development is rather high. Here’s why.
Top 3 factors driving R&D and software innovation costs
A couple of months ago we told you how much it costs to develop an IoT solution, setting the minimum threshold at $ 50 thousand.
Innovative ideas in software industry, however, stretch far beyond the Internet of Things.
PayPal, for instance, uses machine learning algorithms to detect purchases made from stolen accounts. Samsung has recently spent an undisclosed sum on Viv, a smart voice assistant which can be injected in any gadget and…writes its own code.
Basically, any software program that incorporates new APIs/unusual combination of APIs, makes use of cutting-edge technologies or automates processes no one has ever automated before is considered innovative by default.
Here’s what impacts its costs:
- Research. You want to build an IoT device that would detect early symptoms of a heart attack through monitoring patients’ heart rate 24/7 and matching the data to health records. Thus, you solution will operate on three levels: a custom gadget enhanced with an embedded system and smart sensors, infrastructure (a server- or cloud-based application which receives, stores and processes sensor data) and complementary mobile apps supporting different user roles (patient, doctor). Although similar solutions exist on the market (the Cordio app, AliveCor and even Apple Watch), you need to create Proof of Concept to test viability and usability of your device. Judging from our experience, few non-IT companies possess the required expertise, R&D facilities and human resources to handle the task, so you should trust it to an experienced vendor with a solid IoT portfolio. Your vendor will write trial versions of each app incorporated into the system, build hardware prototypes using off-the-shelf solutions (Raspberry PI, Adruino, BeagleBoard) and test these components to ensure the gadget’s smooth performance. It’s a huge job that can’t be done at one sitting (if at all).
R-Style Lab was once contacted by a US enterprise that manufactures intervertebral prosthetic gadgets. The gadgets have unique identifiers, so the company wanted to develop a machine vision system to decode patients’ X-ray images faster. During the research process we discovered that modern X-ray machines did not produce 4K images. Without the 4K resolution the accuracy of the image recognition program only reached 70%, so the project was postponed for an indefinite period of time. Thus, we helped our customer filter out an unfeasible idea and…save huge money. You can’t be too serious about research, right?
It is a time- and resource-consuming process which won’t necessarily bring you closer to a market-ready product. However, it will help you write software project requirements (thus increasing your chances for success by 50%) and identify potential technology limitations.
- Developer hourly rates. Innovative software development projects are always carried out by architects, senior developers, top QA engineers and other employees with a Master’s Degree in computer science, math and business analysis. There are no exceptions to this rule, because middle and junior programmers do not have the required expertise to put innovative software and hardware technologies to work. High-profile specialists do not come cheap. While US software architects’ hourly rates range from $ 180 to $ 265, in-house architects employed by IT tycoons often make $ 300 per hour (and more!). Their British colleagues earn anything between $ 150 and $ 200 per hour. Provided you address a software development company from Eastern Europe, you can hire skilled architects for $ 40-50 per hour.
Still, innovative projects always fall under the Time & Material pricing model, so you’ll pay for the actual hours spent on your project – including the research process, testing and trials.
Pavel Shylenok, CTO at R-Style Lab, says customers often underestimate the scope and complexity of innovative software projects:
“They tend to see research data as ordinary charts you can find on Google. They do not understand how much time and effort developers spend on getting those numbers – or implementing certain functions of an application. If I’m working on a weather app or casual game, I can always extract reusable code from previous projects and thus shorten the product development cycle. When it comes to innovation in software development, there can be no out-of-the-box solutions, so every product is built from scratch”.
- External factors. In case your innovative solution is all about apps, the success of your endeavor will largely depend on your vendor’s expertise and project management skills. Things get a little more complicated once hardware kicks in. According to Pavel Shylenok, building a custom device typically consumes up to 80% of the entire dev budget and involves contracting smart gadget manufacturers and logistics companies. Ineffective supply chain management is the primary reason why 4% of innovative ideas in IT and software industry in particular never materialize. Combine it with poor planning and unclear requirements, and you’ll get the classic 50/50 success rate.
If the end result of most innovative projects is unpredictable, does it make any sense to apply innovation in hardware and software development in the first place? Believe us, it does.
Over 70% of US and UK executives say IoT helps their companies meet business requirements and achieve a competitive edge. By 2018, 30% of current Fortune 500 companies will be outperformed by their rivals who invest in emerging technologies. Enterprises that addressed R-Style Lab to build IoT solutions (you can check the cases on our company web site) met their goals in terms of cost reduction and customer engagement. Why don’t you follow their example?