5 Reasons Why Software Development Projects Fail

Software development is the cornerstone of the advancement of technology. Whether it be mobile apps, onsite applications, SaaS or web development the result of a failed software project can be devastating and costly.

Research by the Standish Group Chaos Report provides a fascinating insight into why software development projects fail. The Chaos report which has been published since 1994 is a snapshot of the state of the global software development industry. The 2021 report studied 50,000 projects from tiny enhancements to major global IT projects.

The latest research shows that only 29% of projects were successful, 52% were challenged and 19% were outright failures.

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The research shows that the larger a company is, the more likely it will be that the software development project will fail. According to the report, only 9% of projects in large companies were successful.

Protect Your Company From Software Development Failure Now!

Looking deeper into why software development projects fail, we come across many repeating factors. Keeping on top of these factors will strongly increase the chances of a successful outcome.

1) Unrealistic time & budget expectations

It is quite common for customers who want to start a software development project to ask for it to be done as soon as possible at the best price and highest quality. Unfortunately for the software developer, they sometimes agree to these terms to win the business but this is sometimes where disappointment starts to become apparent. According to the research, most software development projects overrun in terms of time and cost. The average overrun cost across all companies is 189% of the original cost estimate. In terms of time, the average overrun is 222% of the original time estimate.

More companies today are adopting an off-the-shelf SaaS solutions approach which can then be modified to suit the company’s needs by the software developer. This approach can result in a more cost-effective way to start a software development project with timing and budgets being managed more effectively. One way to alleviate the effect of overrun of time and cost, is that expectations need to be carefully managed by the developer. From the outset, the developer must be honest and transparent about timings and budgets with the customer to avoid disappointment later in the software development project.

2) Miscommunication & Unclear Requirements

Make sure exact requirements are worked out before the software development project commences. At the beginning of a project, customers may become too involved in the end result rather than focussing on the project step by step. Clear and transparent communication between the customer and developer come hand in hand with working out exact requirements for the software development project. This clear communication channel needs to be in place from the outset and include every phase of the project from planning, development, testing and final deployment. A breakdown in communication is one of the most common reasons cited for the failure of software development projects.

For the best chances of a successful project, the customer should be involved every step of the way to ensure they play an active role in building a business relationship with the developer. This allows for the customer’s expectations to be managed and can provide early indicators if the project is going to fail.

3) No Feasibility analysis

Before undertaking a large scale software development project, it is vital for the customer to undertake a feasibility analysis to ensure that the project makes sense, is needed by the organisation and will actually work if it is implemented. End-user involvement for the project from start to finish is paramount for it to be successful. A software development project is more likely to succeed if the completed software is user friendly.

 4) Absent or poor legal agreements

Ensuring that you have a clear legal framework that outlines the development project including the expectations of both parties are critical for a successful outcome. The last thing that you want in the middle of a software development project is a bitter legal dispute.

Before commencing a software development project, it is highly advisable to have a strong and binding agreement in place to protect both the developer and the customer.

The contract should include:

  • The software design
  • Development process and timeline
  • Testing – both at the developers site and the customer site
  • Software deployment and integration into customer operating environment
  • Support, maintenance and service level agreement
  • Schedule for updates and major releases
  • Change control
  • Managing variations
  • Intellectual property rights
  • Source code escrow
  • Penalties for delays
  • Termination clauses
  • Dispute resolution

5) Insufficient Testing

With any project, timelines can often slip for a number of unavoidable and avoidable reasons. Unfortunately if this does happen and the project is rushed, it’s usually the testing of the software that is affected. Enabling the customer to test the software throughout the project will ensure customer satisfaction on completion and peace of mind that the customer is also happy with the end result. Being active in the software development process is your best bet to ensure the software that has been built for your company is a success.

Software Escrow enables added protection

If you are a company who is looking to embark on a new software project, or one who is in the midst of one, you may be following all the points above but still feel you need that added protection – this is where a software escrow vendor can help.

Instructing a software escrow vendor to securely hold the source code of the software can give you that peace of mind you are looking for.  The Software Escrow vendor will ensure that a copy of the source code is automatically deposited on a monthly basis during the project.

By instructing a Software Escrow vendor, the customer is instantly protected if a dispute was to arise during the project timeframe. Although a difficult decision and only likely to be used as a last resort, it provides the customer the option to change developer midway through the project without relying on the goodwill of the previous developer to transfer over the code.

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