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What Makes Software Development So Risky?

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by Brian Terrell 

Often, I spend time with prospects or customers who intend to engage a software developer to automate a business process. No one considers this technology purchase trivial.  Buyers get nervous because they hear real horror stories from their peers, or the media, about the unending and ever more expensive projects. I agree that software development is risky, but there is always a way to manage that risk.

Why do companies waste so much money in pursuit of a custom application that, by definition, cannot be purchased off the shelf?  This question answers itself and also exposes a fundamental truth of software development. Developing or improving software technologies, for internal use, qualify as research and development expenditures, as defined by the Internal Revenue Code, because software development is the creation of something that does not exist. The business of creation is risky, thus a prospect must constantly manage that risk throughout the entire project lifecycle. Risk cannot be avoided without nullifying the potential for reward. Therefore, you manage the risk; the buyer is right to be wary.

However, for reasons that escape me, many small- to mid-sized businesses often resist proper planning, as practiced in other professions, once they engage a developer to create the code. Proceeding without a plan amplifies risk without adding anything to the potential return or reward. Any budget you think you saved by proceeding without a plan, is added back to the development phase of the project later due to unforeseen circumstances that would be caught in the planning phase. Would you consider building a house without a plan drawn by a certified architect? Why, then, do you proceed with a mission-critical business automation development effort without a requirements analysis and a design document? I guess pressing on without a plan appears too tempting to resist. Taking this course of action never makes sense to me and represents the exact opposite of risk management.

To make matters worse, the software development profession operates without regulation. Unlike Certified Public Accountants, professional engineers, or licensed attorneys, no government entity imposes certification requirements on the software development profession in exchange for monopoly status on certain services. No one checks up on this profession as a whole to require a minimum standard of ethics, experience and education. A prospect must, therefore, exercise exceptional due-diligence in qualifying a developer’s experience and background before venturing forward.

As noted previously, risks make rewards possible, and the reward of automation includes getting more work done with less effort. Managing the inherent risks of software development cannot be over emphasized.  Look for firms or individuals that demonstrate a verifiable track record of success in the creative process. Once they are found, look for them to suggest a paid discovery plan at 10-20% of the total budget of the project. And, remember to keep the end in mind by quantifying exactly what it will mean to your business to automate the particular business process. Knowing the potential reward helps keep the risks in perspective and will keep the project moving forward when difficulties arise.



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On October 14, 2013 in Development, General, Integration, Project Management by Lori Thomas
Tagged With: Automation, Business Process, Success / 2876 Views

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