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  • Writer's pictureAkeju Abiola

Behind the Numbers: Understanding the Causes of Over 50% Tech Project Failures

Updated: Jan 30

Tech project fails

Introduction

Every year, thousands of companies begin working on new tech products. Project management is used to ensure that these projects are developed and reach implementation. While they plan and work hard to bring these projects to life, one cannot ignore the sobering truth that over 50% of tech projects fail, some totally, others partially, as they struggle to meet expectations. Behind these statistics is a story of unrealized potential, wasted resources, and missed opportunities to craft solutions that dare to be revolutionary and take civilization a leap closer to perfection.


On a brighter note, tech project failures contain valuable lessons waiting to be learned. Organizations can chart a course toward success by understanding why products fail to launch as planned. Doing so can help organizations identify and address potential issues before they arise. This proactive approach can help teams stay on track and ensure successful project outcomes. This article will examine such tech failures and some ways they can be avoided and managed.


The Numbers Game

According to Zipdo, over 31% of tech products will be canceled even before they are launched, providing insight into the challenging product ecosystem. Additionally, 52.7% of software projects end up costing 189% of their original estimates, emphasizing the importance of planning within a workable budget for timely project launches. Also, only 16.2% of software projects are completed on time and within budget, making it crucial to plan projects within workable schedules for timely completion.


The impact of these statistics is significant, as timely project completion results in more products with the potential to improve quality of life. Only 64% of projects meet their goals, and 17% of large IT projects go so badly that they threaten the company’s existence. For example, the Samsung Galaxy Note 7 launch in 2016 was a disaster as the phones were defective, leading to a massive recall of devices. The replacement for these devices also came out defective! With phone batteries overheating and exploding. The entire process of recall, replacement, and subsequent discontinuation of the product line cost Samsung billions of dollars.


Why do tech projects fail?

Tech Projects

Tech product failure often results from unclear objectives, leading to a lack of direction in development. Inadequate planning and scope creep deviate projects from their initial goals, while communication breakdowns hinder timely delivery. Insufficient resources, both in budget and manpower, impede progress, and technology challenges pose additional hurdles. Overlooking proper risk management also exposes projects to unforeseen disruptions. Addressing these issues and more will significantly enhance the success rate of tech projects, ensuring projects launch within set deadlines.


Lack of Clear Objectives

The absence of clear objectives is a major factor leading to tech product failures. Founders must set clear objectives before products are planned and built. A clear objective puts the team on a clear path, creating initial clarity. When a team begins with a clear end goal, they are more likely to deliver on the given objective. The most crucial importance of having clear objectives lies in creating a roadmap that developers and team members can follow for direction and guidance on what to do and when to do it.


A clear project objective should be SMART—specific, measurable, achievable, relevant, and time-bound. This approach allows the team to measure metrics and assess how well the project is progressing.


Inadequate Planning and Scope Creep

In project management, planning plays a pivotal role alongside clear objectives. It involves mapping out the project's expected trajectory through impact studies and assessments. Another challenge is scope creep, the gradual, uncontrolled expansion of a project's scope beyond its original limits. This occurs when additional features or deliverables are introduced without proper evaluation, often without adjusting the timeline or budget. When project managers deviate from original plans, scope creep creeps in, disrupting the project.


Inadequate planning leads to budget overruns due to unplanned work. The introduction of new tasks without timeline adjustments causes delays, and resource strain may lead to burnout, decreased morale, and potential product launch failure. Comprehensive planning with extensive scope management should be deployed to avoid these pitfalls and ensure project success.


Communication Breakdowns

Project management involves a complex process of communication between project managers, developers, clients, stakeholders, and others. When there are communication breakdowns, projects struggle to meet set timelines and achieve success. Effective communication is therefore crucial for project success, as it ensures all stakeholders are on the same page and working towards common objectives. 


To tackle communication breakdowns, managers need to set up clear communication channels and create an environment where everyone feels free to share their thoughts. Keeping everyone in the loop ensures that news travels fast and crucial information gets where it needs to be without any unnecessary delays. It's like the secret sauce for making a project not just good but downright awesome. Managers should learn to prioritize effective communication when executing projects.


Insufficient Resources

What brings a project to life after adequate planning and clear objectives are set? Resources! Allocating the right amount of resources can be the difference between achieving your projects and ending up with an inconclusive project, which may end up getting abandoned. According to data, 49% of projects run out of budget before completion, and as noted earlier, 52.7% of software projects will cost at least 189% of their original estimates.


It is important to consider all scenarios when planning projects because project progression will not always be linear. There may be additional costs incurred in correcting errors, and it is crucial to plan for contingencies and have adequate resources available to cope with any unexpected issues. Additionally, having realistic expectations for the project and being aware of potential obstacles is essential. Regularly reviewing the project budget and adjusting it if necessary to ensure financial alignment.


Technology Challenges

Technology is the soul of tech startups. It includes the scope, the logic behind the code, and the code that brings products to life. One common reason for technological challenges is the lack of expertise among the development team. Managers should invest in training programs, hire skilled professionals, and seek external consultants to address this issue. Continuous learning and staying updated with evolving technologies are crucial for overcoming these hurdles.


Developers often need to integrate different infrastructures into their platforms, and any difficulty integrating these technologies or components within a system can lead to functionality issues and hinder seamless communication between modules. Adopting well-established integration standards, conducting comprehensive testing, and collaborating closely with vendors or third-party providers can help overcome integration challenges. Insufficient or ineffective testing can also pose technological challenges, resulting in undiscovered bugs, security vulnerabilities, and performance issues that may surface only after product release, ultimately causing the project to fail.


Poor Risk Management

Effective risk management is integral to the development of tech products, guiding the identification, assessment, and mitigation of potential risks that could impact project success. Proactive risk management should be employed to tackle this. It involves a methodical approach to recognize and address potential challenges before they adversely affect the project. The process begins with a comprehensive analysis of the project environment, considering both internal and external factors.


Poor risk management poses severe consequences. The Boeing 737 Max crisis of 2018–2019 is an unmistakable example. Initially intended as a fuel-efficient upgrade, the new Boing 737 aircraft experienced fatal crashes in 2018 and 2019 due to a flawed Maneuvering Characteristics Augmentation System (MCAS). Boeing's inadequate assessment of the potential risks of MCAS, coupled with a lack of clear communication with pilots, led to catastrophic failures. Tragically, 365 lives were lost in two 737 Max crashes, leading to the global grounding of its fleets, substantial financial losses, and a tarnished reputation for the company.


This case underscores the critical importance of thorough risk analysis, transparent communication, and proactive mitigation strategies when implementing software technology, especially in industries where poor risk management can be fatal.


Inadequate Market Research

Marketing is the driving force for any business, necessitating continuous market research and innovation to adapt to evolving realities. Adequate and relevant market research is crucial before planning and developing tech products. Incomplete market analysis neglects critical areas pivotal for project success, ultimately leading to failed product launches. 


A prominent example of poor marketing research is the case of Microsoft Zune. The Zune was positioned as a competitor to the Apple iPad five years after its groundbreaking success. However, Zune lacked significant innovation, effective marketing, and a competitive price point. The absence of a well-rounded market research strategy encompassing pricing, penetration, and advertising contributed to its inevitable failure. 


This example highlights the need for a robust marketing plan from the project's inception, as projects with tech flaws have survived initial market trials if they are backed with effective marketing strategies, which can provide ample time to correct these flaws and plan a product relaunch. Managers should prioritize comprehensive market research to ensure project success.


Solving the wrong problem

Before deciding to develop a tech product, understanding the problem you want to solve can be the difference between developing a great product and developing a product unable to solve the problem you envisioned earlier. Creating solutions to problems that do not exist can result in critical project failures.


An unforgettable example demonstrating this is Juicero. Formerly headquartered in San Francisco, California, and founded in 2013, Juicero was created to produce high-end juicers that could efficiently juice fruits and vegetables. However, the company failed to keep its solution simple and chose to make it high-tech, requiring Wi-Fi and a camera to scan fruits to check for freshness before juicing and raising the price to $700 per juicer. It also required a $5 monthly subscription (because the company supplied the fruits). 


Although the price was later slashed to $400, Juicero eventually failed when two Forbes journalists published an article that showed customers could simply squeeze the Juicero pouch and get the juice faster and with less waste compared to the machines. Even the use of the internet to scan QR codes was rendered useless, as these Juicero pouches came with expiration dates, essentially rendering the technology useless. People preferred to pay just $5–$8 to get their supplies of fresh fruits and squeeze them by themselves without the machines. It became a case of paying $400 for the machines or getting the Juicero pouch and squeezing out the juice with your hands. 


Poor project management

Poor project management can severely impact the effectiveness of a tech project. Prioritizing archaic project management systems, such as the waterfall project management technique, instead of more recent ones like agile project management may result in poor project execution. 

Ineffective planning, organization, and execution characterize poor project management, leading to various challenges and hindrances that impede the project's success. Shortcomings in key project management areas contribute to difficulties in meeting goals, adhering to timelines, and delivering desired outcomes. Addressing these shortcomings will contribute to the project's success. Streamlining project management processes, embracing modern methodologies, and fostering effective communication are critical steps toward overcoming challenges and achieving project objectives. Tech projects should be managed by project managers with relevant expertise in managing tech product development.


Conclusion

The staggering reality that over 50% of tech projects fail is a painful narrative of unrealized potential and missed opportunities to create many remarkable solutions.

Despite this, tech project failures are invaluable lessons for organizations willing to learn from others' mistakes. Recognizing the role of clear objectives, planning, communication, resource allocation, technology proficiency, risk management, market research, and avoiding creating solutions for non-existent problems is imperative. 


Learning from tech failures, such as the Boeing 737 Max crisis and the Juicero debacle, underscores the critical importance of addressing these challenges and maintaining a robust risk management process. By proactively identifying and rectifying potential issues, organizations can navigate the complexities of tech project development, ensuring timely launches and successful outcomes. It's a call for the tech industry to embrace resilience, innovation, and a commitment to learn from past mistakes for a future where tech failures are greatly reduced.


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