9 Reasons Software Projects Burn Through Cash (And How To Avoid Them)
Developing new software can easily result in unexpected expenses. Forbes estimates that software development projects can cost between mid-five to seven figures. Adeva reports that one in six projects exceeds its budget by 200%. Mismanaging projects is one of the most costly mistakes software developers can make.
Technology plays a vital role in a company’s profitability. However, many businesses struggle to manage their software projects and eliminate unnecessary expenses that significantly impact their budget. This issue is particularly prevalent among mid-size companies and enterprises that have complex, long-term projects.
Software development projects can burn through cash unnecessarily in several ways. Below are 9 industry experts weigh on why new software projects lose money and how to avoid them.
- Failing to Verify The Needs of Users
- Taking Longer Than Expected to Complete
- Ignoring Scope Creep
- Outsourcing Projects
- Seeking Funding Before Clients
- Not Establishing a Customer Support Portal
- Hiring Inexperienced Developers
- Poor Planning, Resource Management, and Communication
- Cutting Corners During the Planning Stage
1. Failing to Verify The Needs of Users
An experienced product analyst can aid in capturing valuable user feedback, says Ace Infoway COO Vipul Shah. As a result, you will be able to adjust your expectations.
It’s easier to fall in love with your idea than to verify whether users need what you’re building,” said Shah. “I call this phenomenon ‘Visionary Premises’. According to a Standish Group report, 47% of new software applications face challenges, while only 4% are successful and 49% fail. Every entrepreneur believes he/she is Steve Jobs. Nevertheless, you should hire a good product analyst to conduct small user studies and observe how people interact with prototypes when you begin developing your software. Make sure you listen to their feedback and adjust your expectations accordingly.”
Vipul Shah, COO, Ace Infoway
2. Taking Longer Than Expected to Complete
This can be because of various factors, such as unexpected technical challenges, changes in project scope, or issues with project management. As a result, the project may require more resources (e.g., additional developer time and hardware) and incur additional costs, leading to a higher burn rate.
To address this issue, planning and managing the project from the outset is important. This can involve defining clear goals and objectives for the project, creating a detailed project plan with realistic timelines, and allocating sufficient resources (e.g., personnel, hardware, software) to ensure that you complete the project efficiently and on time.
Ilija Sekulov, Marketing & SEO, Mailbutler
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