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   ► KBIT Water-Coo...Computer Ind...   Print This     
 
Computer Industry:
The Business Science of Custom Software Design
 
Posted 54 days ago on 10/8/2020
Take Away:

This article describes something I have experienced over my years of designing custom software and how I harness it for protection in my business dealings.

KB104900

When people ask me what I do for a living and I respond with COMPUTERS, they just assume right away that I have it made because it is such a good business to be in. In reality, it is like any other business. You need good business judgment as well as sound management skills.

Many service contractors like me typically receive some kind of monetary deposit to start work. It is usually about 30% to 50% down of the agreed on price so the contractor knows that you are serious about having the work performed as well as paying. Well, I have tried doing that in the custom software design business and it usually backfires on me. Designing application development software is unlike any other business in the world and I will explain why.

Programming a customized application is one of the most highly subjective businesses there is. The design process can go off on tangents and the volume of work can escalate out of control from all the customer changes. In general, all kinds of wacky, unpredictable things can happen. This is nothing like having a new roof installed on your house or having your car repaired at the auto garage. Those are relatively well defined tasks with little to no input from the customer. In my business, the customer is actively involved in the design process. Quite often, a customer will have a general idea of what they want done, but nothing real specific. That only surfaces when you are in the middle of the construction of the application. And this is why designing custom software is highly subjective – it is not well defined from the outset. It comes together through a series of additions, changes, tweaking, fits and starts spread out over a span of time. As a businessperson, I cannot manage this kind of risk in the same way a plumber, electrician or auto mechanic can manage the risk they are taking from the relatively well defined nature of their work.

Over the years from doing this work and from what I have learned about it, I have developed a process for managing the duration of the custom software design process. It does a good job of protecting me, because I can stay in control of what I am doing. And you must stay in control of what you are doing regardless of what business you are in or else unpleasant things happen. In my business, there will be EXTRA WORK that materializes during the design process as the customer comes to realize that we need this or we don’t need that and something else should work differently to facilitate the way the company does business. The industry term is SCOPE CREEP. Call it what you may, the extra work is a fixture of the custom software design process and every customer will create it to one degree or another.

So how do I manage this risk? The answer is I use a 2 pronged approach with my Terms of Service: PROFESSIONAL LABOR RATES AND STRINGENT PAYMENT TERMS. Of these two components, the stringent payment terms is the most important. Someone can say they will pay my hourly labor rate and even sign their name to a labor contract agreeing to it, though that doesn’t mean they will. More specifically, that has been my experience in the real world and that is why I factored stringent payment terms into the equation. THE BILLING CYCLE I USE MUST BE SYNCHRONIZED WITH THE HIGHLY SUBJECTIVE NATURE OF THE CUSTOM SOFTWARE DESIGN PROCESS. It sounds like something from a science fiction movie, but that is what it takes so I can stay in control of what I am doing so I don’t get burned. If it is someone I have known for years and years, then there is no need to manage the risk because it doesn’t even exist to begin with. I have found that billing for my work in 10 to 12 hour increments seems to mitigate the risk down to a reasonable level. One of the most dangerous things I can do in this business is allowing someone I do not know very well to accumulate a large block of unbilled time. In many cases, they will use that as leverage to make me do more and more work for them without them having to pay for it. It basically defeats the purpose of being in business.

As I move further and further away from the 10 to 12 hour billing cycle threshold, the rate of increase of the extra work becomes less and less LINEAR and starts to morph into something that is more and more EXPONENTIAL. I never want an exponential rate of increase for the extra work, because I will stop being a business and become an all you can eat buffet!

Another big benefit of my Terms of Service is that it tends to act as a powerful deterrent to people who don’t care about being fair and businesslike. They never enter the business even under a façade of being reasonable. They will never get what they want from me and they know it.

So there you have it. A detailed explanation of how I survive in the highly subjective jungle of custom software design. Without good management, I would be courting disaster.


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Article Contributed By NE Ohio Computer Guy:

Please visit my software developer website for more information about my services. I offer application development as well as Android app coding services. My developer skills are best suited to dealing with custom software projects. I can perform programming for Corel Paradox as well as C# and PHP.

In my local area of northeast Ohio, I can cater to computer repair and "fix my computer" issues. And don‘t forget to check out my YouTube Channel. It is full of cool videos and has something for everyone!

Use my contact web page today to reach me about any software design ideas you have.

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