Reasons Custom Software Development Projects Fail



Off the shelf SaaS solutions are great for common, repetitive tasks. However, custom software development can be very critical for many firms to be truly competitive in their respective markets.

In today’s digital-centric landscape, custom software development projects have become a cornerstone of business growth and efficiency. They provide companies with tailored solutions that align with their specific needs and objectives, offering the potential to streamline operations, enhance customer engagement, and carve out a competitive advantage. These custom-built applications and platforms can range from internal productivity tools to customer-facing websites or mobile apps, each tailored to a business’s unique specifications and requirements.

However, the path to successful custom software development is fraught with challenges. Numerous factors, from inadequate planning and unclear objectives to communication breakdowns and technology mismatches, can lead to delays, budget overruns, or even outright failure. Understanding these pitfalls is critical for any organization embarking on a custom software development project. In this blog post, we will explore the most common reasons why custom software development projects fail, providing insights to help you avoid these hurdles and steer your projects towards success.

This includes unique service offerings, deeper system integration, better efficiency  and more.

Unfortunately many studies show that the failure rate of custom software projects ranges between 50% – 80%. Meaning that a large portion of custom development projects do not meet their intended goals.

There are many reasons for failures with some of the key reasons and antidotes noted below:


Lack of clear requirements

What are you are building and why are you building it. Ultimately, what is the business value that the new solution will bring to you and your stakeholders. 

Act like a product company rolling out a new solution by developing clear business requirements before the first line of code is developed:

  • Product objectives – How does it align with business goals? What are the planned outcomes?
  • Project scope and key requirements – What do users need and why?
  • Key stakeholders – Identify roles including gathering requirements and feedback.
  • Schedule – Include timeline, milestones, and dependencies – especially for the top priority new requirement.
  • Cost-benefit analysis – Is there a clear ROI?


Not using an agile development methodology

Using an agile, iterative model will dramatically increase the chance of success of your project*.

  • Agile is an iterative approach to project management and software development that helps teams deliver value to their customers faster and with fewer headaches.
  • Instead of betting everything on a “big bang” launch, an agile team delivers work in small, but consumable, increments.
  • Requirements, plans, and results are evaluated continuously so teams have a natural mechanism for responding to change quickly.


Selecting the wrong tech stack

The choice of which technology to use cross front-end/back-end development and hosting infrastructure has an impact on your success.

  • The ramifications of choosing the wrong technology and infrastructure can include issues like security, performance, costs, scalability, supportability and more.
  • You also may incur technical debt going forward that will be even more expensive to replace in the future.


Lack of end user input

If users don’t find a solution useful or usable, your custom software development will be a failure. 

  • Input from the end user should be considered during the planning, designing, development, testing, and rollout process.
  • Using agile development methods, you should incorporate end user reviews to test early and test often so you can adjust the next set of priorities to help improve the success rate.


Excluding long-term needs in budget

This includes not considering the maintenance support and enhancements when developing the software budget model. 

  • Maintenance support – How will end user issues be addressed – from initial support to developing, testing, and deploying fixes.
  • Enhancements – You need to include a budget to develop enhancements as the business needs, competitive landscape or regulatory needs evolve.

By not including these considerations in the plans, the solution will become less and less advantageous to the business and useful for the end-users.

As a bonus sixth issue to highlight, project management is critical to the success or failure of a software development initiative. Staff, enable, and support project management like the success of your new solution depends on it – because it does.

A Real-world Example 

Let’s look at one recent real-world example – the State of Minnesota Licensing and Registration System (MNLARS). After years of software development, an audit commission concluded that “the system did not adequately meet the needs of Minnesota residents and key stakeholders, despite a decade of work and significant state expenditures.

In Chapter 3, the MNLARS post-mortem summary included the following key issues with the implementation – project scope issues, lack of clear business requirements, staffing issues, time pressures and more.

Using a proven and agile methodology, Valtira has delivered successful custom software projects for HealthPartners, Edina Realty, AMC and many more – helping them meet their strategic business goals.

Whether you need to deploy a strategic innovative solution, enhance features of an existing system, or deepen integration and data insights, we are here to help.

Learn more about our client projects or contact us to discuss in more detail.

* Source: The Agile Coach, Atlassian

One of Our Past Custom Software Projects

Edina Realty and its parent company HomeServices of America had a vision to simplify the home buying, selling, and refinancing process through MyAtlas, a new customer dashboard that tracks the home buying process. Valtira helped bring this vision to life by architecting a system that integrated their various services into a unified dashboard.

Edina Realty’s Needs and Challenges

The real estate process is not something most people encounter on a regular basis, making it difficult to navigate. The process of buying or selling a home involves many different companies including, buyers, sellers, agents, appraisers, lenders, title companies, and county recording offices. These services have historically been siloed because each part of the process has its own technology system. Edina Realty had a vision of becoming the first full-service real estate company, offering all the resources needed to buy, sell or refinance a home.
After nearly 20 years of discussing the idea, Edina Realty and HomeServices of America Partnered with Valtira to begin planning how to build the system. For the past 2 years, we’ve worked together to architect, design, and build the first iteration of the platform and many enhancements and feature additions are on the roadmap.


When a user logs on to MyAtlas, they are able to see multiple services offered by Edina Realty, or one of their affiliates including mortgage, title, insurance, and warranty companies. The app visually shows the user what milestones they have completed, their current point in the process, and upcoming touch points before closing.
The long-term vision is to offer homeownership recommendations as well. We’re exploring ideas around home renovations and insurance coverage.

Technical Architecture

The MyAtlas mobile app and responsive web experience is designed to be white labeled. This allows the numerous HomeServices of America companies to utilize the same codebase and brand the applications to match their guidelines. From a customer perspective, they can log into the various services under a single login.

The iOS and Android applications were built with React Native, utilizing Microsoft’s AppCenter to automate deployment to the App stores. The underlying services were built on Microsoft Azure Functions, powering both the web and app experience. Each company integrated with the back-end data store using a different set of Azure Functions which pushed the data into the Dataverse. Model-driven & canvas-driven LogicApps were built to help administrators review the data and make changes.

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