The Main Reasons Why Custom Software Projects Fail & How To Avoid Them

Julian Wallis
14 min read
Businesswoman holding head with hands while looking at a laptop

Out-of-the-box software tools have become an affordable and relatively quick way for businesses to adopt new technologies and achieve the intended purpose. However, this begs the question, is it the most optimal method to do so?

Of course not! You have to understand that all businesses are different from one another. Each business’s needs, wants, and pain points will be different and specific. So, why should the software you use be any different? Why not opt for more customisation when getting what you need from technology tools?

Developing custom software fully integrated with your existing technology systems can bring significant benefits to organisations, such as increased efficiency, improved customer satisfaction, and competitive advantage. 

However, many custom software development projects fail to deliver the expected results despite these benefits. In this article, we will examine the top reasons why most custom software development projects fail and what organisations can do to avoid these pitfalls. 

From misaligned expectations and limited budgets to mismatched resources and the absence of a minimum viable product (MVP), we’ll explore the common challenges organisations face when embarking on custom software development projects and provide practical solutions to help ensure success down the line. 

So, without further delay, let’s discover some of the biggest and most common reasons why custom software projects fail. Avoid these if you want to develop custom software that adds value to your business and solves your unique problems.

Inadequate Scoping 🔭

Arguably, the biggest mistake that most businesses make with software projects happens before a single line of code is written. The process of scoping and requirements gathering is massively underrated and often underestimated. Sometimes, even literally!

Without fully understanding the scope and requirements of your end software product, your developers will have difficulty building something that barely meets your expectations, let alone exceeds them. This is because if the requirements for the software are not well defined and documented, the development team will not have a clear idea of the features and functionalities to build. It’s like asking civil engineers to construct a building without a blueprint!

Project scoping is an essential part of a successful project, as it can help you define the direction of the end product and accurately estimate key constraints, i.e. technical requirements, timeline and required budget. In simpler terms, it helps to clarify the project’s end goal and the process taken to achieve that outcome. An under-scoped project can lead to several misunderstandings and miscommunications later on. In the best-case scenario, you’ll have a product that will somewhat serve its intended purpose. But, unfortunately, if worst comes to worst, midway through, the project’s outcome might downgrade, or it might never see the light of day.

Why custom software projects fail: Inadequate scoping

But why do projects become under-scoped? First of all, scoping out a project in-depth is a challenging and time-intensive process. Especially as custom software projects tend to be more complex, the scoping process alone can take anywhere from a couple of weeks to a few months. This is a major time and resource commitment. So, due to scheduling concerns, most companies are unwilling to invest much time in this process.

Secondly, lack of experience and expertise also factors into this equation. Companies with experienced project managers will be able to understand the importance of accurately determining the technical requirements and estimating the time and resources required for the project.

Due to reasons such as these and others like resource limitations, tight deadlines, and overconfidence in their competencies, most companies spend minimal effort towards scoping but move the project forward without fully understanding the deliverables.

💡 How to avoid

Instead of hurrying to start design and coding, it’s better to take a few steps back and understand the full scope of what you need to build. To set your custom software development project up for success, it’s crucial to invest enough time and resources towards scoping and include all key stakeholders in the process – clearly set the project requirements, details, and objectives to keep everyone on track.

Misaligned Expectations 🤼

Another reason why custom software projects fail is that companies may have unrealistic expectations about what is possible within the constraints of the project (budget, timeline, and resources). Another problem arises when the client may need help understanding the software development process, leading to expectations that are not feasible or practical

Additionally, stakeholders not being fully involved in the development process can lead to a lack of understanding of the progress and status of the project, potentially resulting in dissatisfaction with the end product. Thus, development partners must ensure that the client understands the feasibility of their project within the limitations imposed.

Lastly, the client may change their requirements during the development process, which can disrupt the project timeline and increase the cost and bring scope creep into the picture (more on scope creep below).

💡 How to avoid

To combat this, it’s essential to document the scope clearly, conduct a project kick-off, and communicate regularly to keep everyone in the loop of significant updates.

Restriction Of Budget 💰

We understand that only some businesses need to use the latest and greatest technology to build customised software for their specific needs. This is why it makes sense that not all software projects cost the same. 

However, for developers to produce the best software, some level of flexibility with the budget is needed to avoid being boxed in. So let’s look at some of the most significant impacts of a restricted budget on a project’s ultimate success.

  • Inadequate resources: A limited budget may not provide enough resources for the project, such as the necessary software engineers and designers, which can cause delays and affect the quality of the final product.
  • Reduced scope: To stay within budget, the project scope may need to be reduced, resulting in the final product failing to meet the client’s expectations.
  • Compromised quality: When operating under financial constraints, there may be insufficient resources to test and refine the software properly. This can lead to a lower-quality product prone to bugs and other issues.
  • Lack of contingency planning: Lastly, there may need to be more funds available to cover unexpected expenses or to make changes to the project if necessary, which can cause the project to fail.
Why custom software projects fail: Budget restriction

💡 How to avoid

To avoid these issues, it’s essential to set realistic expectations and clearly understand the budget constraints before the project begins. The development team and the client should work together to prioritise features and determine which are essential and can be deferred to later, if necessary. This should allow you to set a realistic budget for the project without making the client feel overwhelmed.

Mismatched Resources ⛏️

If you have “square pegs in round holes”, you can expect your custom software development project to go as you’d think. Here are some major problems you’ll most likely encounter if your project team isn’t up to scratch.

  • Lack of expertise: If the wrong people are assigned to the project, they may not have the necessary skills or experience to contribute effectively, leading to delays and subpar results. On the project side, developers with adequate experience and expertise should be assigned. And on the client side, having a contact person with sound knowledge of contemporary software development would streamline the process significantly.
  • Inefficiency: When you’ve got incompetent people working on your project, they may not be able to work as efficiently as others who are more suited to the task, which can result in increased costs and longer timelines.
  • Poor quality: The lack of expertise or efficiency can result in a lower-quality product that does not meet the client’s expectations.
  • Lack of motivation: If the wrong people are assigned to the project, they may not be motivated to do their best work, resulting in a lower-quality product and reduced overall productivity.

💡 How to avoid

To avoid these issues, it’s vital to carefully consider the skills and expertise of the team members when assigning tasks and responsibilities. The development team should clearly understand the requirements and skills needed to complete the project, and they should match the right people to the right tasks. Additionally, ongoing training and development can ensure that the team has the necessary skills to succeed.

Lack of Communication 🔇

Poor communication between the development team and stakeholders is another reason why custom software projects fail. Effective communication is essential to ensure that all stakeholders understand the project’s goals, requirements, and status updates. 

Misunderstandings, errors, and delays can occur if proper communication channels are not implemented throughout the project cycle. Doing so will also keep all key stakeholders informed of the project’s progress, ensuring the project remains on track and within the agreed-upon budget.

Furthermore, on the internal project side, the development team needs frequent feedback from stakeholders to ensure they build the right product.

💡 How to avoid

Establish frequent interaction points with the development team through regular meetings and memos to relay necessary directives and project updates. A communication plan documented within the project plan would also go a long way towards avoiding communication mishaps in software development projects.

Technical Challenges 🚧

Technical challenges such as performance issues, scalability problems, and security vulnerabilities can also cause custom software development projects to fail. 

💡 How to avoid

The best way to avoid these challenges is to ensure you have the right people for the job. Developers who have experience in similar projects and proficiency in the tech stack used will result in a seamless development cycle and lead to custom software of the best possible quality. The development team must also stay up-to-date with the latest technologies and best practices to prevent these challenges.

Unclear Responsibility 🤷‍♀️

If the responsibilities of each team member are not clearly defined and documented, it can lead to delays and low productivity. This can result in a project that is completed late or over budget.

Moreover, when team members are unsure of their responsibilities, holding individuals accountable for their work can be difficult – leading to a lack of motivation and commitment and a decrease in the quality of work.

Why custom software projects fail: Unclear responsibility

💡 How to avoid

To effectively manage your project team, establish who’s involved from day one, whether you’re going for in-house or outsourcing software development. Use the internal project kick-off meeting to inform the team of their specific roles and responsibilities. Documenting the details in the project plan, conducting regular check-ins and meetings, and establishing clear objectives for all participants are all additional steps to further solidify this process. 

Poor Project Management 🏗️

Poor project management practices are also a reason why custom software projects fail. Some of the most common project management mistakes include lacking a clear project plan, not monitoring progress regularly, mismanaging stakeholders, failing to establish contingencies, and assigning the wrong resources.

Poor project management can significantly negatively impact custom software projects in several ways:

  • Failure to meet promises and deadlines: If a clear project plan is not established, then the agreed-upon timeline and deadlines may be missed, which can delay the project and potentially result in cost overruns and schedule slippage.
  • Scope creep: When project management best practices are not followed, there may be a tendency to add new requirements to the project without properly assessing their impact on the project timeline, cost, and resources. This can lead to a situation known as scope creep, where the project expands beyond its original scope, making it harder, if not impossible, to complete on time and within budget.
  • Lack of quality control: Without clear quality control processes, there is a risk that the software may not meet the client’s needs or quality expectations, which can result in rework, project delays, and additional costs.
  • Inefficient resource allocation: Finally, poor project management can lead to inefficient resource allocation, which can cause frustrations and lower productivity and overall quality of work.

👨‍🏫 How to avoid

To avoid making these mistakes, we recommend building an experienced and skilled in-house team or outsourcing software development with a proven track record of successful projects over the years.

Resistance to Change 🙅

At the penultimate spot in our list, resistance to change can also cause custom software development projects to fail. Stakeholders may be uncomfortable with the new software and need persuasion to fully embrace it

Some level of resistance is normal, and it’s part of the transition from what was to what will be. However, the transition can be eased by including everyone involved as early as possible, managing expectations at each point in the journey, acknowledging the difficulties those involved are bound to encounter, and reminding them of the benefits they are working together to achieve.

💡 How to avoid

If the development partner can educate their customers about the value and significance of using the technologies that they feel would suit the project the best, this should ease their clients and make them less resistant to trying out new methods.

Absence Of MVP To Navigate The Entire Process 🧩

A Minimum Viable Product (MVP) is a basic software version with enough features to satisfy early adopters and provide valuable feedback for future development. Not having an MVP is another reason why custom software projects fail because without it, the development team may lack direction and focus, leading to scope creep and a bloated final product that is difficult to manage and maintain. 

Why custom software projects fail: Absence of MVP

The absence of an MVP can result in the development team spending too much time on non-essential features, which can cause delays, missed deadlines, and poor focus on the features and software functionalities that actually matter. There may also be a lack of user engagement and feedback during the development process, resulting in a final product that may not meet the user’s needs. It’s always wise to test out the viability and usability of your custom software with the end users before deployment so that necessary changes can be made during development. 

💡 How to avoid

To avoid these issues, it’s essential to clearly understand the MVP and use it as a guide throughout the development process. The MVP should be used to validate assumptions and to provide feedback for future development. 

Final Words: Why Custom Software Projects Fail 📋

With more accessibility and affordability than ever, customising your business technology with out-of-the-box solutions may seem attractive. However, It’s important to remember that no two organisations are alike, so why should their software be? In the long run, it pays off for businesses to make sure they have tailor-made solutions created just for them – meeting all of their unique needs!

It’s recommended to address these challenges early on to increase the chances of success for custom software development projects. By being proactive and working closely with stakeholders, development teams can deliver high-quality software that meets the user’s needs and drives business success.

Ultimately, mistakes can be costly and contribute heavily to why custom software projects fail. Whether starting from scratch or continuing with a long-term project, certain missteps can lead to project delays and cost overruns. To avoid this, thorough planning and documentation are essential. Of course, involving experts in the software development process will also be helpful in ensuring the best results.

By staying on top of the process and by reaching out for help when needed, your custom software project will have the best chance of succeeding. So if you’re ready to move forward with your project and need expert help, make sure to book a discovery call soon – our team of experienced software development experts know just what to do to get your project up and running as quickly as possible. Good luck!

Published On

February 17, 2023