Software Development Services

Goals

Find how much the average company in each of the three segments, (SMB, mid-market and enterprise) spend on software development services. What types of services do they pay for (such as staff augmentation, project-based development, configuration, deployment, etc.) and who are the typical decision makers for each segment.

Early Findings

How much does the average company spend on software development services?
  • CIO Magazine published findings in 2018, that suggested SMBs spent proportionally more than large enterprises. The average small company spends 6.9% of revenue on IT. Mid-sized companies spend was reported to be 4.1% of revenue, and larger companies 3.2%.
  • Following on from this, software development (and maintenance) as a percentage of IT budgets was reported to be 19% in 2019, and this was down significantly from 27% in 2018. This decline was mostly due to the rise spending on cloud services, over the same period.
  • Software spending varies significantly by industry. SaaS (Software as a Service) companies were found to be spending 23% of revenue on research and development in 2018.

What type of services do they pay for?
Who are the typical decision makers?
  • Depending on the size of the company, the strategy, budget and software development goals, managers and individual contributors from many departments play a part in providing information for company executives to draft proposals.
  • Product owners and project managers are best placed to provide a vision of the end-product and to optimize the efficiency of the development team.
  • Developers are playing an increasing role in technology corporate decision-making regarding software development tools.
  • Tech companies rely on well-informed CEOs/CFOs/Controllers understanding the accounting standards surrounding capitalized software costs in order to determine and support, company policy on software capitalization costs.
Challenges
  • There is a lack of available information on the specific spend by companies on software development, however there is more documented evidence of software as a percentage of IT spending and budgets.
  • Software development and IT spending varies by industry, with tech and software companies likely to spend significantly greater amounts as proportion of revenue.

Research proposal:

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