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This time, the theme is failure in system development. In projects, various issues such as quality deterioration, delivery delays, and budget overruns can occur.
Some of you may be thinking, "I want to know how to prevent failure before requesting a system development company."
In system development, it may be more realistic to assume that failures are inevitable. No matter how thoroughly project management is implemented, mistakes and troubles can still occur.
However, by understanding examples and causes of failures in advance and taking precautions, it is possible to prevent them.
Therefore, we have summarized six major causes and countermeasures of system development failure. If you are considering system development and want to ensure success, please take a look.
Akira Shimazoe
CEO of Solashi Japan LLC. Engaged in the development and operation of internal systems at Suntory. Founded Yper Inc., serving as CTO and CPO, contributing to product launch and growth.
What is a System Development Failure?
What exactly does a system development failure refer to?
There is no clear definition, but in the context of system development project management, there is a concept called "QCD." QCD is an acronym for the following three elements:
- Quality
- Cost
- Delivery
In other words, development projects that fail to meet quality, budget, or delivery deadlines are generally considered failures.
So how well are system development projects achieving their planned quality, budget, and delivery targets in reality?
According to the 2023 Corporate IT Trends Survey Report by the Japan Users Association of Information Systems (JUAS), the status of schedule and budget compliance, as well as quality satisfaction, is published by project size.
The percentage of responses indicating "satisfaction" is as follows:
| Project Size | Schedule Compliance | Budget Compliance | Quality Satisfaction |
| Less than 100 person-months | 32.4% | 16.2% | 14.1% |
| 100–500 person-months | 38% | 23.2% | 13.9% |
| Over 500 person-months | 22.4% | 15.4% | 11.0% |
The larger the project size, the more likely it is that delivery delays, budget overruns, and dissatisfaction with quality will occur.
In this way, issues with quality, budget, or delivery can lead to project failure.
Common Examples of System Development Failures
Let’s take a look at some common examples of system development failures.
- A low-quality product is delivered
- The schedule is delayed and not completed as planned
- Development costs balloon beyond the budget
A Low-Quality Product is Delivered
This refers to a situation where quality issues are discovered right before the product release. Specific problems include:
- The delivered product is different from what was expected
- Visual problems occur (e.g., layout breaks)
- Necessary functions were not implemented
- The system was developed for overseas specifications and did not work on Japanese devices
In addition to low quality, there can also be issues such as the design not meeting expectations, poor performance despite functioning, or problems in terms of usability.
The Schedule is Delayed and Not Completed as Planned
This refers to cases where the overall project schedule is delayed and the deadline is missed.
- During development, an unexpected but essential function is identified, extending the timeline
- Specifications are changed mid-development, causing delays
- Lack of coordination between the ordering and receiving companies leads to missed deadlines
- Team member turnover causes progress to stall
- Implementation is not completed due to engineers' lack of skills
There are various reasons for delays, but when unexpected situations arise, it becomes difficult to proceed as initially planned.
Delays in system development can hinder internal improvement activities and DX (Digital Transformation) initiatives, and in some cases, may even result in missed business opportunities.
Escalating Development Costs
After the system is completed, you may be billed a development cost higher than the initially estimated amount. Development costs may increase, potentially exceeding the budget.
If there are specification changes or additional features during development, rework and revisions increase. As a result, the development period gets extended and the workload increases.
The formula for calculating workload is as follows:
- Workload = Number of People × Time Period
The main cost of system development is labor costs.
Development cost is roughly determined by multiplying the unit price of engineers and team members by the workload. As the workload increases, the development cost inevitably rises.
Additional development costs are not included in the initial estimate. Therefore, costs may rise significantly beyond the originally planned budget.
6 Causes of System Development Failure
This section explains the six causes of system development failure.
- Insufficient planning at the project initiation stage
- Estimates lacking sufficient supporting information
- Inadequate communication
- Unstructured project team setup
- Neglecting the testing phase
- Lack of technical expertise in the development company
To prevent failure in system development, it's essential to understand the causes and apply appropriate countermeasures.
Insufficient Planning at the Project Initiation Stage
According to the “Corporate IT Trend Survey Report 2023”, the number one reason why system development does not proceed as expected is "insufficient planning at the project initiation stage".
(Reference: Corporate IT Trend Survey Report 2023 | Japan Users Association of Information Systems (JUAS))
If planning in the upstream processes of system development is not thoroughly prepared, it significantly affects the subsequent development stages.
The upstream processes include requirements definition, specifications creation, system planning, and systemization planning.
These processes are essential for the development team to work together and move the project forward smoothly.
In some projects, development may proceed without a concrete plan. While there may be rare cases where it succeeds,
there is a risk that more workload than expected is required or the complexity of the system hinders progress, causing development delays. Additionally, specification changes during development are more likely to occur, increasing the risk of missed deadlines.
Estimates Lacking Sufficient Supporting Information
One of the common causes of system development failure is incorrect estimation.
Issues such as “not estimating the necessary items accurately” or “not knowing what is included in the cost” often stem from a lack of sufficient supporting information.
Projects proceed according to the written estimates. If the estimate is vague, it may negatively affect development costs, deadlines, and product quality. For example, there are cases where rough workload is estimated based on experience or intuition.
Also, if the ordering company’s representative is not familiar with IT, they may not grasp the specific workload required for development, leading to omissions in the order.
To optimize cost management and resource allocation, accurate estimation is crucial.
There are two stages to accurate estimation. First, the ordering party must thoroughly extract all requirements. This helps the subcontractor provide a more accurate estimate. Second, the ordering party must thoroughly review the subcontractor’s estimate to ensure there are no omissions.
Inadequate Communication
Inadequate communication is another factor that often leads to system development failure.
Lack of communication can occur in various situations, not only between the ordering and development companies, but also as shown below:
- Between the project manager (PM) and the development team
- Among development team members
- Between the development company and external vendors
Recently, more companies are choosing offshore development to reduce development costs.
Offshore development refers to outsourcing system development to overseas companies where labor costs are lower.
In offshore development, communication with foreign engineers unfamiliar with the Japanese language or business customs frequently occurs. Differences in language and culture can lead to miscommunication.
However, if communication challenges can be overcome, it is possible to gain great benefits such as cost reduction and securing resources.
In any case, without sufficient communication, the project’s objectives and instructions may not be conveyed properly. It also becomes difficult to grasp the progress, increasing the risk that the final deliverables will not meet expectations.
Unstructured Project Team Setup
If the project structure is not properly organized, management will not go smoothly.
Specifically, it can lead to the following types of failures:
- Multiple leaders with equal authority cause confusion at the site
- Dispersed reporting lines make it difficult to collect information
- Unclear roles for each member make responsibilities ambiguous
As a result, there is a higher risk of being slow to detect critical problems or giving incorrect instructions.
There is also a possibility that the project may be delayed due to poor progress management.
The Commonly Overlooked Testing Phase
If the client lacks IT or web knowledge, they may assume, "We can leave testing to the development company without worry."
However, testing is one of the most critical phases that determines the success of the project.
If the necessary checks are skipped or test phases are omitted, the risk of overlooking bugs increases.
Testing in system development is mainly divided into the following four types:
- Unit Testing
- Integration Testing
- System Testing
- Acceptance Testing
Among these, "unit testing" conducted when a single module is completed is effective in detecting bugs. It targets small and less complex parts.
However, if you leave everything to the development company, it tends to be neglected. If bugs are not caught during unit testing and are discovered later, fixing them will require much more effort, so caution is needed.
Ensure communication with the development company, such as "ensuring functionality in unit testing through test case reviews" or "checking test environments and demo videos early on to verify that specifications are being met."
Lack of Technical Capability in the Development Company
There are cases where the technical ability of the development company is insufficient for the difficulty level of the system implementation.
If the engineers’ skills are lacking, it might result in either an inability to implement the desired functionality, or significant delays in the development schedule due to longer implementation times.
Even tasks that should take only a few hours may take several days if assigned to inexperienced personnel.
To avoid such issues, carefully evaluate the development company and their team members.
Specifically, check the following points:
- Experience with programming languages and frameworks
- Experience developing similar services
- (For cutting-edge technology projects) Proven track record with the relevant technologies
As you can see, the lack of technical expertise among engineers at the development company can lead to failure.
6 Measures to Prevent System Development Failures
Here are six measures to help prevent failures in system development:
- Thorough requirements definition
- Detailed cost estimation review
- Active communication
- Creation of project organization chart
- Comprehensive testing
- Selection of a capable development company
Thorough Requirements Definition
To ensure smooth system development, first clarify the overall project goal and conduct a thorough requirements definition.
Specifically, perform the requirements definition in the following steps:
- Clarification of goals
- Current state analysis
- Formulation of system concepts
- Extraction of functional requirements
- Selection and prioritization of features
- Non-functional requirements
- Prototype validation
Since requirements definition often demands specialized knowledge, it may be difficult to handle in-house.
In such cases, you can rely on a development company that will conduct thorough interviews and handle requirements definition.
Our company, "Solashi Co., Ltd", is a system development company based in Vietnam. We provide comprehensive support from requirements definition through post-release maintenance and operations.
If you are concerned about requirements definition or need assistance from the strategy planning stage, please feel free to contact us.
Japanese PMs Handle Communication
Looking for an Offshore Development Company
For such individuals, we recommend Solashi’s Vietnam offshore development
Detailed Cost Estimation Review
To avoid budget overruns during development, be thorough in reviewing cost estimates.
Before accepting the estimate provided by the development company, check the details and the basis for the quoted prices.
Specifically, focus on the following points:
- Is there a rationale behind each figure and amount?
- Are the assumptions clearly recognized?
- Are the scope of work and responsibilities clearly defined?
- Are the inspection methods and conditions clearly specified?
- Are the man-hours for research and analysis included?
- Are the man-hours for management included?
- Are potential risks and issues taken into account?
- Are costs for necessary hardware and software included?
In reality, it's rare to estimate extra costs for potential risks and issues. However, having a conversation such as “There might be additional costs if issues arise” is considered very healthy.
Proactive Communication
To prevent insufficient communication, it is crucial for the client company to proactively engage in communication.
We do not recommend delegating everything to the development company from the early stages. Instead, share your objectives and goals with the development team and initiate discussions from the client side.
Whether the development company is domestic or overseas, it's important to clarify any uncertainties or unclear points in a timely manner.
In addition to text communication, setting up regular meetings is also an option. Casual conversations can also help build closer relationships and make communication easier.
If you're concerned about communicating with overseas engineers, choosing an offshore development company that has a capable bridge SE or Japanese PM as the point of contact is also a good option.
Create a Project Structure Chart
Creating a project structure chart is recommended to organize the project framework.
A project structure chart visually illustrates who does what and clarifies the responsibilities and roles of stakeholders involved in the project.
It should list the names and roles of team members and leaders responsible for development, design, quality, operations, testing, and the overall project.
By creating a project structure chart, you can clarify roles and authority, while also aligning understanding among members.
When outsourcing to a system development company, it's also a good idea to create a role-sharing chart.
A role-sharing chart outlines the processes and tasks involved in system development and identifies whether the client or the development company takes the lead.
Creating such a chart clarifies accountability and helps prevent trouble.
Thorough Testing
Conduct appropriate testing to detect bugs and issues as early as possible.
System testing is typically performed by the development company, while integration testing may require collaboration depending on the situation.
Acceptance testing, which checks if the system works properly in the production environment, is conducted by the client company.
To ensure smooth execution of these tests, building a cooperative relationship with the development company is essential.
Testing shouldn't be just a formality — share the following points and prepare in advance:
- Create an acceptance test specification
- Prepare test data
- Clarify pass/fail criteria
- Utilize appropriate test tools
Additionally, ensure the development company provides all the necessary information, including the testing environment. With proper preparation, you can thoroughly check everything that needs to be verified.
Selecting a Capable Development Company
To prevent issues caused by lack of technical expertise, choose a development company with proven capabilities.
Each company has different areas of expertise, so select a development company that can meet your objectives and project requirements.
Specific points to consider when selecting a system development company will be explained in detail in the next section.
How to Choose a System Development Company Without Failure
Finally, here are some tips on how to choose the right system development company to avoid failure. Key points to look out for include the following:
- Do they have proposal and listening skills?
- Do they have a well-structured quality management system?
Related article: How to Choose an Offshore Development Company: 4 Selection Steps and Tips to Avoid Failure
Do they have proposal and listening skills?
To avoid failure when selecting a system development company, you should choose one with strong proposal and listening abilities.
Some system development companies provide not only implementation but also consulting and strategy formulation services.
If you’re planning long-term operation, it’s best to select a company that can consistently handle all processes to avoid deviation from your objectives.
Our company, Solashi Co., Ltd, actively provides proposals from strategic development planning to services and frameworks that streamline development.
Experienced Japanese PMs with startup backgrounds will support your project. Feel free to contact us.
Do they have a solid quality management system?
To avoid bugs and errors, it's important to check the quality management system of the development company.
Choosing a company with a structured quality management system helps ensure product quality. It also minimizes the risk of serious damage in case of any issues.
- Do they set clear quality goals?
- Do they have QA engineers for testing processes?
- Are there clearly defined rules for testing?
- Do they take measures to prevent miscommunication?
Check the above points to ensure there's no issue with their quality management system.
Also, make sure to verify what kind of recovery system they have in place in case of trouble, and whether the cost for recovery is included in the estimate.
Anticipate potential issues and risks during development and confirm whether the company will handle the situation until the end and whether additional costs will be incurred.
For Failure-Free System Development, Contact “Solashi”
System development often encounters problems, but with the right precautions, you can minimize the risks.
If your company is unfamiliar with IT or web technology, choosing a development partner that listens to your challenges and makes proposals is crucial.
If you're looking for failure-free system development, leave it to us at Solashi Co., Ltd. We deliver high-quality systems at reasonable costs.
We have multiple experienced Japanese PMs with backgrounds in launching new businesses and handling startup projects, so you can trust us even if it’s your first time outsourcing overseas development.
We also have many engineers well-versed in cutting-edge technologies such as blockchain and AI, and we can handle a wide range of fields from B2B to B2C.
If your current outsourcing efforts are struggling, feel free to consult Solashi Co., Ltd first.
Akira Shimazoe
Representative of Solashi Japan LLC. Born in April 1989 in Fukuoka Prefecture. Graduated from the Graduate School of Information and Mathematical Sciences at Osaka Prefecture University. Joined Suntory System Technology Co., Ltd., an IT subsidiary of Suntory Holdings, in 2014. Broadly responsible for the development, operation, and implementation of vending machine delivery management, efficiency improvements, and sales management systems. Founded Yper Inc. in 2017, serving as CTO and CPO. Contributed to the launch and growth of the app-linked delivery bag "OKIPPA." Selected for Toyo Keizai's prestigious "Amazing Venture 100" and Forbes' "Forbes 30 Under 30 Asia 2019."
