Understanding the Difference Between Application Cost and Business Value

When developing an application, understanding the difference between cost and business value is crucial. The cost of creating an app affects the return on investment and the success of the product on the market. As Mark O’Neill, Chief Technology Officer at Axway, explains:

“App creators must attempt to understand the business value of their apps as well as the associated costs. Business value is a measure of the impact an app has on an organization, while cost is just the amount an organization needs to invest in order to create the app. Whereas cost is a simple number, business value takes into account several factors that can include financial gain, market share, competitive advantage, user satisfaction, customer retention and acquisition, and more.”

In other words, an application has to be able to bring in a positive return on investment, or else it will be a waste of resources. Calculating the business value of an application helps identify and prioritize the initiatives which will be most beneficial to the organization. It also highlights areas where cost-saving initiatives can be implemented.

In terms of how it works, business value takes into account a variety of factors, such as market share, user satisfaction, customer retention and acquisition, competitive advantage, ROI, and more. These factors are used to calculate the potential benefit to an organization. For example, a mobile app could have a higher business value if it increases user engagement or customer loyalty.

In addition, there are some costs associated with the design, development, and deployment of an application. These things need to be taken into account as well. For example, hosting and infrastructure costs, development costs, and improvement costs all need to be factored in order to make sure the product is successful and cost-effective.

It is important to understand the difference between application cost and business value in order to be successful in the development of an app. Understanding the business value of an app is the key to ensuring that the application is successful and cost-effective. By calculating the potential return on investment, evaluating user satisfaction, and assessing competitive advantage, organizations can identify the initiatives which will be most beneficial for their app.

References:

Mark O’Neill, What You Need to Know About API Business Value, Axway, 1 June 2017