Risk management in Software Development in 2022

Introduction

Creating an entirely new software or service in IT is a complex process, that requires a combined effort from all participants involved, from CEOs to programmers and testers. Unfortunately, more often than not, this process doesn’t run smoothly and according to plan. There are certain measures that must be taken in order to make your project a successful one, and it doesn’t matter whether you develop a mobile app or build a groundbreaking Artificial Intelligence solution.  

Risk management is essential for creating any business or product successfully. Today we will speak in detail about risk management in software engineering. The software development industry is growing day by day, especially after Covid-19, running businesses remotely became extremely vital for their survival. According to Entrepreneur, 74% of developers began working remotely since the pandemic. Meanwhile, the provision of remote working systems by companies will increase by 46% compared to 2019.

Due to research from Investopedia, more than half of startups fail during the first decade of their existence. Less than 20% of organizations do not consider risk management as a crucial process that can save their business. Big companies can also suffer from huge financial losses as a result of poor risk management and analysis in software engineering.

What decisions can cause problems? Quantivate gives some of the main reasons:

• Deficient focus on emerging strategic, market, or industry risks: Less than 45% of survey participants focus extensively on determination, evaluation, and responding to emerging risks.
• Limited consideration of risk exposure: Less than 47% of participants extensively consider existing risk exposures when assessing new strategic initiatives.
• No articulation of risk appetite: Only a third of participants consider extensively articulating risk appetite or tolerance in the context of strategic planning.

In this article, we will discuss at length the main classification of risk that impacts software products and find out what are potential threats to every software project. We hope our expertise in risk management in software development will help you manage your risks!

“Managing risk is very different from managing strategy. Risk management focuses on the negative threats and failures rather than opportunities and successes.”

— Robert S. Kaplan, Professor of Leadership Development

Risk management in software project management

Definition of risk management

This is a combination of identifying, assessing, mitigating, and controlling any potential problems of your business. Threats may be classified as internal (from clients and employees) or external (including political events or changing currency exchange rates). The primary purpose of risk management is to prevent unexpected situations or at least minimize the negative consequences of events that will occur. 

Risk management process in software engineering 

To create a successful software product, you need to eliminate or prevent all possible threats that could cause not making the original budget or timeline delays. It is vital to stick to the following steps:

Risk identification

First of all, you need to identify potential threats. Maybe, your team already has a member, who is versed in software development and can figure out threats, before they cause a major problem, and you can talk to this person for the initial consultation. 

Risk evaluation and prioritization

After the identification of the problem, you need to assess its severity. Determine if it needs an urgent intervention or if you can focus on more serious tasks at that moment. If you reveal several threats, you need to create a step-by-step plan on how to deal with each separately. 

Risk management

Now you can finally come to grips with your threats! You have three possible ways to overcome threats:

• The first type of dealing with risks, is when they can be removed without any negative impact on the existing software development processes.
• The second type of eliminating risks is when you interfere with a schedule or resources, and you can solve your challenges within the limits of the contract with the IT vendor.
• The last type is when your risk management approach is completely or partially ineffective to eliminate the problem. In this case, you should reassess the risk and find another strategy to deal with it.

Who is responsible for the risk management process in software engineering?

You may think that the Project Manager is in charge of risk analysis and management. But in fact, the whole team shares responsibilities of finding and assessing threats and not allowing changes to a schedule or damage to a future product. 

Examples of risks that impact software products. A view from a business perspective

Now we look at potential threats to every software project on both sides, from a business and a technical perspective. They are both crucial because they influence the original idea and final product. So let’s discuss in more detail the main types of risks in risk management from a business point of view. 

Bad planning and misunderstanding from the executives

A Project Manager or a Product Owner create the base of a project that includes a roadmap, scope, or the first research and analysis. Sometimes executives don’t bother themselves to go deeper into a project and understand its necessities, but it is a huge mistake. They should be in touch with the development team to manage the process and control whether the project meets their business criteria and needs. You need to be sure that all of your workers keep in touch, especially the CEO and Project Manager.

No buy-in from management

This may cause unexpected cuts in budget or unforeseen project changes. In order to avoid this situation, detailed preparation work should be done, and business goals should be highlighted before launching work with a design.

Poor communication of business context to a developers team

The development process might be influenced negatively by poor communication between the development and management teams. In some cases, goals are defined clearly by the upper management but transmitted poorly to a tech team, so they can’t do their work properly. 

Remember, that developers require a lot of information to get the full business vision of your project. You need to give detailed requirements of the product you want to see in the results. 

Unrealistic expectations

This situation can take place on the business side as well as on the tech side, but nonetheless, it is more common in the first one. This may happen because of external factors, which sometimes can’t be realistic. Poor planning in the future can cause running out of money or even a cancellation of the project. 

What are potential threats to every software project from a development perspective? 

Inappropriate time spent in Research/Prototyping

The vital thing here is to find a strict balance of time spent on research and on the development of your project. You should discuss it with experienced software development providers to figure out the perfect timeline. Delaying the research time can cause a waste of time that could be spent on the development of your project. But If you do not do enough research, you will probably get an increase in the budget and most likely won’t meet the deadlines.

The expansion of the project

You should think ahead and always leave space for additions or corrections in your project, even if you don’t see it growing much in a foreseeable future. 

Incorrect estimations

To prevent this problem you should be well aware of all the information like plans and research and your development team should keep in touch with the management team. 

Poor code quality

Check whether the code of your developers is up to industry standards, carry out regular checks and implement User Acceptance Criteria (UAC) to make code quality better. 

Integration with existing solutions

If your project has an existing legacy solution that can’t be replaced that easily, you should consult with your development team and find out a way to transfer your product into the new ecosystem.

Tight deadlines

A too-short deadline can cause constant pressure on your development team, which in turn leads to bringing down the morale and as a result, failed deadlines. Too-long deadlines will give your tech team a lack of motivation. So, it is important to strike a balance here. 

Budget changes

Almost always you will need more money than was planned initially. To be prepared for this, check back with the stakeholders frequently and add additional changes to the product before the implementation

Technical issues

Sometimes working with the latest technologies may result in problems like data security issues. These problems can be solved by having a proper legal team and adhering to the latest compliance and security standards.

Low productivity

To prevent this unpleasant thing from happening, you should be up-to-date with the work attitude and potential personal problems of your team members. Your Project Manager can help you with this by conducting regular face-to-face meetings.

Inadequate user testing before launch

Before the launch, your project should be carefully checked by Quality Assurance Engineers. The lack of manual and automated testing may lead to the failure of your product.

Ignoring user feedback

You should have the opportunity to get customer feedback and use it for quick corrections of your product, no matter if it is an MVP or a full-fledged product. 

The Final Word

As you can see, you may have some problems from a business as well as from a development perspective, So, proper risk management in software development is really vital for your project. If you face risks and can’t cope with them by yourself, consult with an experienced IT vendor. Good luck!

FAQ

What is a risk in software development?

It is possible obstacles that impact your software development process.

What are the top 4 software project risks?

There are 4 possible risks from a business perspective: bad planning and misunderstanding from the executives, no buy-in from management, poor communication of business context to a developers team, and unrealistic expectations.

How to identify risks in a software project?

To identify risks, your development team should look at the scope of the project, assesses the approximate budget, and look at a deadline before the development process. You should discuss possible risks with your team and think about the ways to prevent them.