What percentage of software technology projects fail?

Part
01
of one
Part
01

What percentage of software technology projects fail?

OVERVIEW

Hello, and thank you for your question about the percentage of software technology projects or startups that fail. The short answer is that at least 19% of software projects fail, and another 52% are considered "challenged". Below you will find a deep dive of my findings.

METHODOLOGY

The Standish Group offers research, benchmarks and consulting services to support the management of software projects, so was a logical place to start. The Standish Group focuses on software project performance--of which success and failure are key metrics. The organization publishes an annual CHAOS report that measures the software development industry's performance. I also investigated other current software-, startup- and IT-related development sources (articles, reports, etc.) for additional details and context.

SOFTWARE DEVELOPMENT PROJECTS -- DEFINITION OF "SUCCESS"

The Standish Group defines "success factors" as the software project being on time, on budget, and with a satisfactory result.

CURRENT SOFTWARE DEVELOPMENT FAILURE RATES

* In 2015, the failure rate for software projects was 19%--fairly consistent during the past five years.

* "Challenged" projects--i.e., those that failed to meet scope, time or budget expectations--account for about 52% of software development projects.

* Only about 29% of software development projects are successful.

Those statistics from The Standish Group are consistent with 20-year statistics.

(Please note: The most current 2016 Standish Group CHAOS report is available for purchase for $950.)

LONG-TERM TRENDS

According to The Standish Group's annual CHAOS report on software development, statistics on software development's failure rate have not changed substantially in the past two decades:

* In the past 20 years, 23% of software projects failed;

* 48% of software products failed to meet scope, time or budget expectations, and were therefore labeled "challenged"; and

* 29% of software projects successfully delivered on functionality, deadline and budget.

While software development success/failure rates may have seen slight year-vs.-year shifts up or down, the trend line is relatively flat over the past 20-year period.

Somewhat consistent with those results are statistics on the failure of IT technology projects overall, which show an estimated 66% ending in partial or total failure--sometimes so badly that the failures threaten the existence of the company. In general, success in IT is difficult to achieve.

FACTORS THAT DETERMINE SOFTWARE DEVELOPMENT SUCCESS

Even though software development success/failure rates have not changed substantially in 20 years, several factors help increase the software projects' odds for success. Those factors show that smaller companies and smaller projects tend to be most successful:

* Smaller software development projects are much more likely to succeed (62% success rate vs. 6% for large projects).

* Smaller companies also have a higher success rate with software development projects: 28% success rate for smaller companies, vs. 9% for large companies.

* The primary determinant of the project's success or failure is not technology, but people: User involvement, executive support and clear requirements increase the odds for success.

* Agility is also a key success factor, with the iterative agile software development process seeing three times more success than the more linear "Waterfall" development process.

CONCLUSION

In summary, an estimated 19-23% of software development projects fail, with that statistic holding steady for the past couple of decades. Smaller companies tend to have an easier time achieving success than larger companies.

Thank you so much for using Wonder's research services. I hope you found this summary helpful. Please let us know if we can help you with anything else!
Sources
Sources