Modern businesses are increasingly turning to low-code development platforms to accelerate their software development processes. These platforms allow users to create applications with minimal hand-coding, utilising visual development tools and pre-built components. While the benefits of low-code development are clear—speed, flexibility and reduced need for highly specialised skills—the question of Return on Investment (ROI) often occurs.
How do businesses measure the ROI of adopting low-code applications? In this blogpost we'll discover the key factors and metrics that can help in assessing the value of low-code platforms.
ROI in the Context of Low-Code Apps
ROI is a performance measure used to evaluate the efficiency or profitability of an investment. Within low-code applications, ROI can be measured by comparing the costs associated with adopting the low-code platform against the benefits it delivers.
Key Metrics for Measuring ROI
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Development Speed and Time-to-Market
Metric: Time saved in development and deployment
Low-code platforms significantly accelerate the development process by providing ready-to-use templates, drag-and-drop interfaces, and automated code generation. Businesses can measure the time saved from project inception to deployment compared to traditional development methods. A faster time-to-market can lead to earlier revenue generation and a competitive edge in the market.
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Development Costs
Metric: Reduction in development costs
Traditional software development often requires substantial investment in skilled developers and extensive coding time. Low-code platforms reduce the need for specialised coding skills, allowing less technically skilled employees to participate in the development process. This reduction in the need for highly paid developers and shorter development cycles can lead to significant cost savings.
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Operational Efficiency
Metric: Improvements in business processes and workflows
Low-code applications often streamline business processes and improve operational efficiency. By automating repetitive tasks and integrating various business systems, low-code platforms can reduce the time and effort required for routine operations. Businesses can measure the impact of these efficiencies by assessing improvements in productivity and reductions in operational costs.
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Employee Productivity
Metric: Increase in productivity metrics
The intuitive and user-friendly nature of low-code platforms enables non-technical staff to create and modify applications. This empowerment can lead to increased productivity, as employees can develop solutions tailored to their specific needs without relying on IT departments. Measuring the increase in productivity metrics, such as the number of applications developed per month or the reduction in project backlog, can provide insights into the ROI of low-code platforms.
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Customer Satisfaction and Experience
Metric: Enhancements in customer satisfaction scores and feedback
Applications developed using low-code platforms can often be delivered faster and with higher quality, leading to better customer experiences. By reducing the time required to implement customer feedback and launch new features, businesses can enhance customer satisfaction. Tracking customer satisfaction scores, net promoter scores (NPS), and customer feedback can help measure the impact of low-code applications on customer experience.
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Scalability and Flexibility
Metric: Ability to quickly scale and adapt to business needs
Low-code platforms provide scalability and flexibility, allowing businesses to quickly respond to changing market demands and scale their operations. The ease of modifying and expanding applications without extensive re-coding can lead to cost-effective scalability. Businesses can measure ROI by assessing the platform's ability to handle increased workloads and adapt to new requirements without significant additional investment.
Calculating the ROI
To calculate the ROI of low-code applications, businesses can use the following formula:
Total Benefits: Sum of all measurable benefits such as cost savings, increased revenue, improved efficiency, and enhanced customer satisfaction.
Total Costs: Sum of all costs associated with the adoption and use of the low-code platform, including subscription fees, training costs, and any additional resource expenses.
Example of ROI Calculation
- Total Benefits: £500,000 (savings from faster development, reduced labour costs, etc.)
- Total Costs: £45,000 (platform fees, training, etc.)
ROI= £200,000 - £45,000 / £45,000 x 100
ROI= £155,000 / £45,000 x 100
ROI= 3.44 x 100
ROI= 344%
In this example, the business would see a 344% return on its investment in the low-code platform.
Final Thoughts
Measuring the ROI of low-code applications involves assessing various metrics that reflect the platform's impact on development speed, costs, operational efficiency, employee productivity, customer satisfaction, and scalability. By systematically evaluating these factors, businesses can gain a comprehensive understanding of the value delivered by low-code platforms. In the dynamic and competitive business environment, the ability to quickly and efficiently develop applications can be a significant differentiator, making the investment in low-code platforms a strategic decision with potentially high returns.
By adopting a structured approach to measuring ROI, organisations can make informed decisions about the implementation and expansion of low-code solutions, ensuring they maximise the benefits and achieve their strategic objectives.