4 ways development firms take advantage of their customers
The Genpact Research Institute recently found that, of nearly $600 billion spent on digital projects, almost $400 billion of it was invested in projects that fell short of expectations and returns on investment (ROI).
If you’re someone who has recently invested in your own technology or are considering taking the leap into development, its essential to understand where and how these shortfalls and waste happen.
The simple reality is most people don’t understand development, and more importantly, don’t fully understand the details of what their technology should do. When these two factors combine they create a shaky foundation doomed for failure from the start. Before investing any money in the development of your product, its critical to understand where this waste is happening so you can create a plan to fight against it.
Big words and absurd amounts of money
Taking your first dive into technology development can be intimidating and scary, particularly when you’re talking to people using big development words you don’t understand. A typical call with a firm will involve an hour conversation that results in an absurd quote to develop your product. Most people come away discouraged, overwhelmed, and left wondering how they’re going to come up with the $100,000.00 they were told they needed.
When someone tells you to spend the equivalent of your home’s down payment on a process that you don’t understand, the typical reaction is a heavy pit in your stomach.
This is a primary method that development firms use to take advantage of their clients. They set your financial expectations to a point where they can endlessly bill you for things that you don’t understand. This isn’t your fault, its how the industry is set up. Rather than taking the time to explain each step and walk you through each process, your left paying absurd invoices with no way of validating or understanding what’s actually happening.
Before we take on new clients we ask them to go through the exercise of talking to other firms. Its important to understand that in order to successfully run your new technology, you must understand the big words and more importantly, you must select a firm who’s willing to walk you through each step in a way that makes sense to you. Don’t let the use of an unfamiliar vocabulary justify endless costs at your expense.
Undefined deliverables and hoping for the best
We believe the greatest source of waste in this industry results when developers develop to their UNDERSTSANDING of your idea without taking the time to fully understand and define your expectations. This is particularly devastating when you’re delivered the first version of your product and its completely different from what you expected.
A typical tactic used by firms to increase their billable hours is to deliver the first version of a product knowing additional development is required. We’ve seen cases where firms knowingly develop a misrepresented product with the goal of charging clients more money to improve it.
Ambiguity and undefined deliverables put you at a significant disadvantage. Unless a clear plan has been developed and a detailed list of objectives have been defined, you’re left holding the bag when the final product is nothing like you expected. Your forced to either spend more money to get the product to where you want it, or you’re forced to accept a product that you didn’t want.
Under no circumstances should you spend a dollar and green light a development without a clear understanding of what you’ll be delivered. You wouldn’t build a house without a blueprint or take a long road trip without a map. In the same way, you should never spend money to develop your product without a specific outline detailing what the expected deliverables should be. Don’t get caught in the trap of undefined expectations!
No, you don’t have to develop every component at once
Don’t let anyone tell you that your entire product needs to be developed in one swoop. Not only is this wrong, it’s a gross waste and an irresponsible use of money. The first version of your product should always be what’s called your “minimally viable product” or “MVP.” Your MVP should contain the smallest version of your product possible.
10 times out 10 there will always be revisions and changes after you see the first version of your product. As such, you don’t want to invest 100% of your money on the first version, because there won’t be money left for changes. Development firms know this but are insistent on billing as much as possible on the first round so that you’re forced to spend more money to get your product to where you want it.
Its okay and highly recommended that you take each development phase in small chunks so you can build and optimize your product overtime without spending all of your money up front. Its essential to understand that your product will change over time as you have the chance to interact with it. Knowing that changes will take place should influence how you budget your money over the course of development.
Developing technology in a vacuum
Most firms develop in a bubble; they look at the technical requirements without considering the context of your product. Simply put, they cast aside the most important aspects of your product, the core business considerations.
The context of your business, the market its designed to impact, and the eventual rollout and execution of your vision must be a primary consideration when developing new product. Few firms take the time to contextualize the overall environment and consider how the product their developing fits into the bigger equation.
Developing in a vacuum without considering the context of your business takes the strategic control out of your hands. Any piece of technology that’s developed without thoughtful consideration of your business is destined to fail.
Its essential that any developer tasked with building your software has a firm understanding of your business and the objectives therein. Without that context, you’ll be forced to pay for ongoing revisions until that understanding is grasped.