Why Software Projects Fail?
According to research published by the Standish Group, we spend more than $250 billion each year on IT application
development of approximately 175,000 projects, here in the United States. The average cost of a development
project for a large company is $2,322,000; for a medium company, it is $1,331,000; and for a small company,
it is $434,000.
Staggering 31.1% of projects will be canceled before they ever get completed. Further results indicate that
more then half of the projects will cost 189% of their original estimate.
Based on this research, The Standish Group estimates that in 1995 American companies and government agencies
will spend $81 billion for canceled software projects. These same organizations will pay an additional $59 billion
for software projects that will be completed, but will exceed their original time estimates. Risk is always
a factor when pushing the technology envelope, but many of these projects were as mundane as a drivers license
database, a new accounting package, or an order entry system.
On the success side, the average is only 16.2% for software projects that are completed on-time and on-budget.
In the larger companies, the news is even worse: only 9% of their projects come in on-time and on-budget. And,
even when these projects are completed, many are no more than a mere shadow of their original specification
requirements. Projects completed by the largest American companies have only approximately 42% of the originally-proposed
features and functions. Smaller companies do much better. A total of 78.4% of their software projects will get
deployed with at least 74.2% of their original features and functions.
This data may seem disheartening, and in fact, 48% of the IT executives in our research sample feel that
there are more failures currently than just five years ago. The good news is that over 50% feel there are fewer
or the same number of failures today than there were five and ten years ago.
The results of the research, including the reasons for failure, are summarized in the tables below.
| |
Large companies1 |
Medium companies2 |
Small companies3 |
| Restarts |
94 of 100 projects had restarts. Some projects had multiple restarts.
|
| Cost overruns |
178% |
182% |
214% |
| Time overruns |
230% |
202% |
239% |
| Features implemented |
42% |
62% |
74% |
|
1 - annual revenue $500,000,000 or more
2 - annual revenue $200,000,000-$500,000,000
3 - annual revenue $100,000,000-$200,000,000
It is very important to understand why software projects fail. The key factors to project success are
- Clear and open communication with the users throughout the project. Users must have clear expectations.
- Properly defined requirements and specifications.
- Proper financing and planning.
- Competent staff. If customer doesn't have IT infrastructure, if IT resources are tied up or insufficient
or if technology or business domain is outside of customer's expertise, customer must considered either outsourcing
the entire project or adding consultants to the team.
- A software development methodology appropriate for the type of project and team size. The methodology
must be followed religiously. Methodology must accommodate for changing requirements and other contingencies.
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