Software development makes the digital world go around. We use software to build convenient applications for customers who want to buy products online. Software improves productivity by enabling teams to collaborate with professionals around the world.

So, in a world where so many people rely on it, why is it that many software development companies still go under?

Whether you’re building robots, applications, or buildings, all businesses need to ensure that they have the right strategies and best practices in place to ensure success. Learning from the companies that have struggled in your industry before will protect you from making the same mistakes.

5 Most Common Reasons Software Development Companies Fail

Here are the five most common reasons that software development companies fail.

1.   Relying on the Wrong Project Manager

Project managers are at the heart of a software development team. They drive the group towards success by delegating tasks to the people with the right skills and keeping employees focused on the right outcomes.

Unfortunately, it’s not always easy to determine which project managers should be responsible for what tasks.

When you’re hiring project managers for your team and assigning them to the correct workloads, carefully consider the following:

  • Their specialty: What kind of software are they most experienced with? How do they work, how do they solve problems, and how will their methodologies benefit the team in question?
  • Their people skills: How good are they at working with others? Do they know how to organize a team regardless of who is on it?
  • Customer satisfaction: How often have customers expressed satisfaction with this project manager’s work in the past? Do they know how to collect information effectively to achieve the right results?

In software development, your team looks to their project manager for guidance on how to act and what to do. The wrong project manager will derail the entire enterprise.

2.   Unrealistic Time and Budget Expectations

Unrealistic expectations are a common problem in any business. With skilled professionals on your team, you assume you can do anything. However, setting unrealistic expectations often merely means that you’re setting yourself up for failure.

According to research from the Standish Group Chaos Report, most SaaS development projects go over the planned cost and time. More precisely, the average overrun in terms of expenses is around 189%. On the other hand, the average overrun for time is usually about 222%.

To effectively alleviate the stress of budgets and time scales that fail to match your needs, ensure that you manage expectations properly from day one. Figure out what’s possible and don’t promise your customer anything you can’t deliver.

3.   Poor Communication

Communication is another factor that significantly impacts the success of any team. If leaders fail to communicate effectively with their teams, then misunderstandings and errors plague development processes. Companies working on bespoke development projects need to have a clear vision of what they will create.

5 Most Common Reasons Software Development Companies Fail

The only way to ensure success is to make sure that you maintain clear and transparent communication between everyone involved. This includes the customer, the developer, and the project planning and testing teams.

Phone calls are unlikely to be the best option for every situation, especially in modern times. Make sure your team is prepared for the future with instant chat tools and video conferencing apps.

Don’t forget to provide training for those who need extra help learning how to use something.

4.   Hiring the Wrong People

Software development companies consist of more than just project managers and sales teams. A successful software company requires a selection of dedicated workers, each with their own specialty and skills to bring to the table.

When deciding who to add to your development team, carefully consider the kind of projects you’ll be working on. For instance, while hiring junior developers might save you some money, they may not be suitable for the type of work you need to do.

Senior developers are more familiar with best practices in the SaaS landscape, which means you have a higher chance of successful results.

Choose your hires carefully, and make sure to fill all the gaps in your talent pool, so you’re ready to tackle anything.

5.   Unrealistic Expectations

Before you take on any software development project in your business, both you and your customer need to have a realistic view of what’s possible.

A feasibility study can help achieve this. It can show you what kind of work is necessary for the project to be a success and whether your company can reasonably complete the task.

Sit down with the customer and discuss their expectations in depth. Be clear about what your business can accomplish, and what may not be possible within the timeframe and the budget at your disposal.

Although it’s tempting to promise the world to companies that come to you wanting your services, failing to follow through on those promises can destroy your reputation.

Set Your Software Company Up for Success

Software development companies are in high demand today. Digital products are more indispensable than ever before, and everyone is looking for software to help them accomplish their goals.

However, that doesn’t mean that software businesses have no challenges to overcome.

Go into the landscape with your eyes open and be prepared to learn and improve along the way. Make sure that you avoid the five common reasons that software businesses fail above, and you’ll be one step ahead of the competition.

About Author:

Lisa Michaels is a freelance writer, editor, and a thriving content marketing consultant from Portland. Being self-employed, she does her best to stay on top of the current trends in business and tech. Feel free to connect with her on Twitter @LisaBMichaels.

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