There are several key areas that will help position investors for success over the years to come. Digitalisation is one example, which has the potential to penetrate every aspect of the asset management industry and value chain. In the evolving tech and data ecosystem, investors therefore need to ask themselves whether they are builders or buyers.
In this blog, we set out to answer this question from an engagement management perspective, providing insights into the process and economics behind this choice, modeled against Esgaia’s own journey.
Are we a builder?
For certain investors, in-house development will be a valid option when assessing alternatives. In short, the benefits are ownership and control, but at the risk of an often very costly and time-consuming endeavor. For a more detailed analysis, let’s consider this in the context of a software development life cycle framework (SDLC). SDLC reflects a process and plan of how to develop, maintain, enhance or replace specific software. While there are different models, the steps involved can typically be summarised as follows:
Stage 1: Planning and requirement analysis
This analysis is used to plan the basic project approach and to assess feasibility from an economic, technical, and operational standpoint. I.e. what would be required to implement the project successfully and with minimum risks.
Stage 2: Defining requirements
The next step involves defining the product requirements. This is structured as a document consisting of all the requirements, more formally known as an SRS (Software Requirement Specification) - for your benefit, we have developed a generic checklist that you might find useful here.
Stage 3, 4 & 5: Product design and architecture, production and testing
Based on the SRS, design approach(es) for the product architecture is proposed to and agreed on with stakeholders, accounting for e.g. product robustness, design modularity, budget, and time constraints. Thereafter we enter the development phase where the product is built as per the design specification. While testing is normally a continued effort throughout the SDLC, it is often also a separate step to ensure meeting set quality standards.
Stage 6: Maintenance and support
Now it’s Go time. If we're talking about commercializing and selling software here, there are all kinds of considerations, otherwise, for in-house use, we can bring it down to maintenance, support, and further enhancements.
Let’s talk about time and money
Scrolling the web, you’ll find an endless number of sources suggesting average development costs. One company with over 10 years of experience in software development, 250+ engineers and 170+ successful projects suggests the following ballpark figures for mobile and web applications:
basic apps are estimated at approx. 500-700 hours,
medium complexity at 700-1200 hours, and
complex builds at +1200 hours.
Without in-depth analysis, using ballpark figures to estimate the cost of building specific software is quite useless, it does however prove a point as we narrow this down to engagement tracking software.
To date, we estimate having spent close to 4,000 hours through stages 3-6. With an average software developer cost of 100$ / hour (standard benchmark) that means a total development cost of close to 400k $ (excl. storage costs, etc.)
Understanding the complexities in software development also means acknowledging the costs associated with the different stages. An often overlooked cost driver is the “running costs” over time - popular software maintenance studies suggest that between 15-25% of the total development budget should be allocated to maintenance and support. For Esgaia, this would in theory equal >60k $ in standard annual maintenance, without accounting for new development and innovation.
The following table summarizes the relative costs and resources needed:
No need to reinvent the wheel
With the rapid expansion of organisations’ overall software capabilities, these projections can look daunting, even with effort reductions due to synergies with already existing systems. Luckily, there are instances where modernising your IT architecture doesn’t require growing your team or paying for outside help. Today, you can quickly implement advanced external SaaS and DaaS capabilities to help improve a multitude of business processes and use cases.
When you dissect the end-to-end activities associated with developing an engagement tracking software, it becomes evident that for most, there’s no need to reinvent the wheel here. If you struggle with engagement management and keeping up with best practices, consider something purpose-built. At Esgaia, we are committed to continually developing and supporting the software to meet the evolving needs of our clients. Investors save both costs and valuable time, freeing up resources to focus on what really matters, driving purposeful engagement that leads to sustainable outcomes.
To learn more about Esgaia, please contact us.