Digitalization is a key priority for every organization. The financial industry is no exception to this. However, moving too fast in this process also entails unwanted surprises in the long run. The excitement for new technology and the promise they bring causes other factors to be overlooked. The Total Cost of Ownership is an example of this. Not only should the costs of the purchase or the development process and the implementation of a solution be considered, but also managing solutions can be costly. Therefore it’s interesting to look carefully at the Total Cost of Ownership (TCO) of your shiny new application and how these can be limited.
There are 3 important phases to consider when calculating the TCO of applications:
1. Startup costs
All the costs required to digitalize a process, such as acquisition costs, customization costs, hardware and training.
Operating costs
The costs incurred when using an application, including license fees, upgrades, inefficiency costs (when you use less functionality than you pay for) and ongoing hardware costs.
Retirement
Costs are also incurred when software is phased out, such as data retention and usage licenses for audits.
3 ways how low-code can contribute to lower TCO
The need for a flexible way of working that allows faster response to developments requires technology that can keep up. Traditional development of digital solutions has its limitations. Low-code development can be a solution and help banks lower the TCO of applications in several ways.
1. Lower inefficiency costs
You buy a license for the entire platform with low-code, which means you don’t have to pay for individual components. Upgrades, updates and security are integrated in the platform and you can run multiple applications on the same platform. You don’t pay for features you don’t use anyway.
2. Lower operational costs
Within full-code applications, it’s not always easy to understand someone else’s workflow, let alone make changes to it. Managing and updating a large number of disparate applications is a time-consuming and costly process. With low-code, applications are faster and easier to understand, making for faster updates that can usually be carried out by smaller teams.
3. Simplify complex systems
A recent survey by low-code specialist Mendix found that 98% of leaders in the financial services industry found that low-code has the potential to simplify complex systems. The application landscape of banks is often varied, with many features built and sometimes already retired in the core systems of the bank. With low-code, it is much easier to take a small part of an application and design it to do only the thing it needs to do, stripping away unnecessary features. This results in more transparency and less complexity.
Combining flexibility and continuity
Low-code offers multiple advantages for banks, including greater accessibility by more employees outside the IT department. At the same time, it remains important to develop low-code applications according to tried and tested software development principles, with a team that has in-depth knowledge of the financial industry, relevant developments, and that leverages best practices. This way, the benefits of developing with low-code can be coupled with flexibility and continuity of your applications and the complete IT-landscape, while keeping the TCO of your digitalization journey manageable.
