Cost optimization through effective engineering is a core task behind many projects we build as a technical partner. Because cost-efficiency directly impacts our client’s business achievements, we pursue it in all phases of the product development cycle. In this blog, we share our knowledge in this domain and offer a framework for development cost optimization analysis in modern realia.
Cost optimization is a continuous process, yet according to Gartner research, only 11% of organizations maintain cost savings for three consecutive years. The ideas from the post should help approach cost optimization more strategically. We’ll share our view toward building and operating cost-aware development workloads that achieve business goals while minimizing tech costs and, at the same time, maximizing ROI.
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While cost management focuses mainly on removing unused resources and getting rid of old data, cost optimization is a more complex, comprehensive, and, most importantly, continuous process that ensures a company pays for things that bring the maximum business value and receives maximum return on investment.
We believe development cost optimization should be analyzed from the following three verticals: product rationalization, cost reduction, and development efficiency. Each of these has separate points we are going to discuss further. This is not a roadmap to cost efficiency but rather three perspectives on how you can look at it taking into account the business development lifecycle, product specifics, and its tech context.
Product rationalization vertical includes analysis of the product’s functionality or company’s product/service offerings to determine the strategic alignment, profitability, and overall business value. The goal at this step is to eliminate underperforming products or product parts on the UX and focus resources on things that have the most impact or have the highest potential to do so.
The main idea at this point is to look at the product development roadmap and move things that have the highest impact to the top. At the same time, projects that are nice to have or have low potential should be better put on hold.
To define this, one needs a detailed customer journey worked out. It will show the critical points of taking a user from point A to point B. Usually, this is a common practice while MVP scoping, and as the project progresses, many unnecessary things are added. At this step, it is time to take a moment to recognize what means what for the customer and where you invest more than needed.
Tech stack optimization is a holistic approach that should go beyond cost efficiency and also include growth and business goals focus. When assembling a tech stack for the project or analyzing the current one, we take into account:
We deal with the requests for tech stack optimization and modernization in every second project we start to build. Check out a case study on technology stack optimization, where we helped our client to scale the product without blocking the engineering team.
Important aspects to remember when analyzing product architecture for cost optimization:
After looking at the product organization from a more broad perspective, you can move towards direct cost reduction. This includes reducing and eliminating lazy spending, review of unused licenses, analysis of the third-party integration you’re using or about to integrate.
The main goal at this point is to eliminate inefficiencies, reduce costs, and improve performance by aligning the infrastructure with the actual needs of the organization. This includes tasks such as:
While the effectiveness and importance of different integrations vary depending on industry, business size, and specific requirements, some general perspectives can be applied across domains. When we analyze the efficiency of the integration portfolio we assess:
The idea behind the build vs buy decision is figuring out whether a business will achieve better results by developing a custom solution or simply purchasing an off-the-shelf tool for a given use case. We always analyze each situation and the requirements separately, but here are some factors that might influence our final choice.
From our point of view, the product roadmap, tech stack, architecture, infrastructure, and other optimizations should be further integrated with the efficient development processes and form what your tech departments do on a temporal basis. As opposed to the chaotic separate initiatives that might bring some immediate improvements but have no positive impact in the long run.
Optimized product engineering team composition plays an important role in the development process efficiency. Having a clear understanding of who best fits wherever you go with your business is not easy, but essential. The qualities of an effective engineering team include:
At Wise, we have expertise in building dedicated engineering teams for different projects across many domains and industries. Each time we start assembling a team, we start with a detailed audit of the tasks ahead. Learn what business value dedicated teams can bring from our recent blog post.
Agility in technology, culture, and processes is a direct response to constantly changing market demands. Rapidly flexing, changing, and continuously evolving has become fundamental for organizations that want to succeed.
When development is moving in small and well-planned steps, it allows us to adapt and pivot whenever it is needed. For us, user feedback has always been a driver that defines our next moves as a development team. An iterative approach to development saves lots of engineering time and, therefore, costs.
As for prioritization, we have experience using the following framework to balance and budget engineering resources and find it very helpful. Matt Eccleston describes it in his article in more detail, but here are the highlights:
From our experience, DevOps helps to create an engineering culture that prioritizes cost optimization and improves cost efficiency in a number of ways:
Development cost optimization is a continual process of refinement and improvement over the span of business development lifecycles. A good starting point for technical costs optimization would be:
At Wise Engineering, we collaborate with companies who want to achieve business goals while minimizing development costs and maximizing their return on investment. We use our cross-industry expertise to build cost-effective solutions, reduce tooling investments, and optimize the development processes for each specific business case. Let’s talk about yours.