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Calculating the ROI of Low-Code & Bespoke Development

Technology

Nov 23, 2021 - 4 minute read

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Konrad Łukasik Head of Architecture

He manages a team of over 30 Software Architects. He has 17+ years’ experience in commercial software development and is responsible for supervising clients’ software architecture. Occasionally, he’s also involved in certain key projects and provides technical consultancy services.

He’s a co-organiser of the WROC# conference as well as conducts company training sessions on  estimation- and bid-related topics.

See all Konrad's posts
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This article is an overview and introduction of a tool available on our website. If you want to skip straight to making the calculations, go to our low-code ROI calculator.

Is Low-Code a Viable Option for Your Project?

COVID-19 has been a catalyst for digital transformation. With more and more business moving to the digital space, 76% of businesses plan on long-term IT changes. Choosing between the bespoke development and low-code development is one of the major dilemmas technical leaders face when building or modernising business services.

Low-code becomes more and more popular — SD Times and TechRepublic have named 2021 the year of low-code. Taking into account the strong support from big players like Siemens or Microsoft, low-code platforms became an option most companies cannot ignore.

Moreover, low-code introduces the element of organisational abilities. According to Forrester, companies that adopted low-code platforms, digital process transformation and collaborative work management were more effective in responding to the COVID-19 crisis. The same research organisation reports that 84% of companies that embraced low-code did it for its ability to reduce strain on IT resources, increase speed-to-market, and involve the business in digital asset development.

In order to understand the key differences between low-code and bespoke, let’s look at the benefits of both approaches:

Advantages of low-code

  • Short time to deliver the solution to market & users,
  • No need for big investment at the beginning of the project due to the lower cost of development,
  • Cheaper cost of change requests (CR) and support in comparison to bespoke,
  • High software quality guaranteed by the use of pre-defined components.

Advantages of bespoke

  • Better control over UI, business logic and data schema for your sophisticated and performance-critical solutions,
  • Speed of delivery can compete with low-code, when you use solution accelerators and have significant experience with bespoke development,
  • No extra costs or long-term subscription commitments, when using open-source technologies, frameworks and components.

However, as with any technology that’s relatively new, it’s not that easy to objectively assess whether this is the best choice for your organisation. Things like platform selection, subscription-based licensing and access to talent pool bring plenty of new challenges to the equation. And this is exactly why we decided to create the ROI calculator — to help you assess whether low-code is a viable option, before you start talking to platform and delivery providers.

Modelling ROI

Our low-code ROI calculator is a straightforward tool. You don’t need a strong technical knowledge of our projects in order to use it, just some insights from your IT department will suffice. You’ll only need a few simple inputs divided into three sections. The ‘Traditional approach project estimates’ section defines:

  • Monthly benefits — savings or new revenue generated as an outcome of implementing the solution,
  • Estimated development costs — estimated cost required to deliver the project provided by your IT department or software provider,
  • Estimated development duration (in months),
  • Yearly support and maintenance cost — expressed as a percentage of the development cost, in our experience this value often falls within 10-15% range,
  • Yearly extensions and enhancements cost — also a percentage of the development costs.

Next, the ‘Low-code project estimates’ section requires just two values:

  • Monthly license cost — you can get this information from your potential platform provider.
  • How much faster do you expect low-code delivery to be? – You can check different values from the suggested 2-10 range to discover the potential of low-code in your specific project. In our experience, low-code allows for verifying business ideas 5 times faster than bespoke development.

Now, let’s take a look at an example scenario we prepared:

low code calculator project estimates

The bottom part of the calculator’s page shows the results of ROI calculations and compares them with the expected results from bespoke development. For the presented scenario, you can see that cumulative 3-year ROI for low-code is 79%, while bespoke reaches only 17%.

low code calculator ROI

Long-Term Effects of Low-Code Adoption

Chances are, with just a single low-code project, you will be able to see a positive return on investment. However, remember that low-code adoption is a platform adoption. Most often than not, organisations continue working with low-code after completing the initial project. Make use of our low-code ROI calculator to see whether this technology can be beneficial to your business. If you need a stronger understanding of the possibilities introduced by this approach, visit our page dedicated to low-code development.

Please note that this calculator should be used for checking ROI for the application that introduces low-code to your company. In an organisation that uses low-code for building multiple solutions, ROI will be even higher due to the lower impact of licence costs.

V01 2053 Cloud Checklist Res 385X300
Konrad Łukasik Head of Architecture

He manages a team of over 30 Software Architects. He has 17+ years’ experience in commercial software development and is responsible for supervising clients’ software architecture. Occasionally, he’s also involved in certain key projects and provides technical consultancy services.

He’s a co-organiser of the WROC# conference as well as conducts company training sessions on  estimation- and bid-related topics.

See all Konrad's posts

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