Here's What Software Errors Could be Costing your Business

Special contributor to Scout APM  on May 27, 2021

Software errors are annoying – they are troublesome for IT departments and affect many company processes. A software error is essentially a mismatch between what is expected of the program and the produced output. Sometimes these software errors could have negligible impact, while on other occasions, they could wreak absolute havoc, especially for industries like banking, healthcare, airlines, and stock markets. 

With the world becoming more and more reliant on software technologies, developers want to make sure that they can mitigate errors during a software’s lifecycle. If not carefully attended, these errors can affect businesses and operations in ways that could be devastatingly expensive to fix. They can also lead to a loss of time and other resources otherwise allotted to more productive endeavors.

To err is human. It is impossible to expect software to have zero bugs. However, there are several ways to minimize these errors and reduce their impact. In this post, we will dive into software errors, how they impact businesses, and how they can be effectively prevented and tackled.

Here’s a preview of what we will be covering in this post –

Software Errors and Their Impact

Typically, errors occur in a software system due to:

Software bugs and errors are cumbersome and inconvenient to deal with and can cost companies a fortune. A study conducted by Undo found that businesses are losing billions every year due to software issues. However, it is important to note that money is not the only cost businesses incur in such cases.  

Apart from the monetary expenses, fixing issues wastes a lot of time. If the issue impacts end users, these costs increase exponentially. This is mainly because the company has to fix the software issue, deal with end-user complaints, and resolve their grievances. This leads to increased time costs. Furthermore, this also results in a loss of opportunities to update and upgrade business products. Instead of capitalizing on their strengths and improving their products, organizations (especially small to medium-sized) are forced to pause and fix these errors.

Thus, the expensive cost of software errors is categorized into actual monetary costs and indirect, intangible costs. The monetary costs include the more substantial amounts of money spent in trying to fix the issues. In 2017, tricentis.com found that software failures were costing the economy about 1.7 trillion USD. CISQ’s study showed that software issues cost organizations 2.8 trillion USD in 2018. 

Consequently, indirect costs are also incurred that take the shape of less tangible losses like reputation, customer relations, lost business, and development timeline. The same study by Tricentis also found that software failures affected 3.6 billion people in 2017 – almost half the world’s population. End users might even consider switching to a different service if things don’t go well. In worst-case scenarios, this could also lead to negative publicity, loss of market trust and reputation, and even opening up to a slew of impending lawsuits.

All of these costs combined can suspend a company’s growth and even go to the lengths of killing it. Therefore, software companies must understand the cost of software errors and learn to deal with them quickly. This includes ensuring they are not just quick on their toes but also proactively and preemptively monitoring and evaluating all potential issues and risks. After all, anything that can go wrong will go wrong (Murphy’s Law). This philosophy can help many developers and organizations to think ahead, be preemptive, and ensure they leave no stones unturned before shipping their software. 

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How Software Bugs Cost Businesses Money

Software bugs are every developer’s worst nightmare and the bane of any software engineer’s existence. A 2018 study by CISQ found that, on average, software developers usually make anywhere from 100 to 150 errors for every thousand lines of code that they write. Furthermore, as the complexity of software systems seems to be growing with every passing year, organizations are forced to deal with an increasing number of bugs and errors across tens of thousands of lines of code. If not dealt with intelligently, these will only lead to increased costs for businesses to overcome.

Developer Labor Costs

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One direct cost incurred by companies is that of employee salaries. A study found that to find and fix a single software error, software engineers typically spend about 13 hours. To keep up with the development workload, companies are, as a result, forced to hire more developers (increased costs) or overwork current ones (reduced productivity).

Undo also found that developers would be able to ship software faster if it were not for these software issues. This indicates how companies end up paying more for fixing errors than for developing new stuff. To some extent, this might be an unavoidable expense; therefore, companies should focus on ensuring that most errors are effectively mitigated and resolved before they wreak havoc for clients and customers.

Customer Attrition

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47% of customers have claimed if they encounter an issue in a software product they are using, they are more likely to stop using it immediately. That is bad news for the software company and all other companies that use their service to cater to their customers. An example of this could be how, in 2019, a data leak from Facebook due to hackers exploiting a security vulnerability in the system left many consumers wary of the social media platform. Facebook, as a result, lost several users from its platform and continues to have a bad reputation when it comes to matters of data privacy.

Loss of Potential Customers

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If your software is full of errors, especially recurring ones, it can result in many unhappy customers, and consequently, many negative reviews. Potential customers often read reviews to see how others are experiencing the software. Many also depend on word of mouth from friends and family for the same. If user reviews paint a poor picture of your product, future users are much more likely not to use the software at all. 

A Local Consumer Review Survey reported that 40% of consumers are most likely not to use a product if they read negative reviews about it. Yikes! This means maintaining a good reputation is not only crucial for your current users but also prospective ones.

Loss of Investor Trust

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Investors fund companies that are promising to provide them with returns. A tangible way of ensuring those returns is by evaluating the company’s reputation, customer satisfaction, sales, profits, etc. Therefore, naturally, software bugs have the potential of having investors pull out their financial support. An example that comes to mind is Samsung's Galaxy Note 7 debacle in 2016. The company faced a huge loss to its reputation and share prices because it did not wholly test its battery management system. Additionally, recall of the product meant that the company would lose money from sales and prospective customers. All of this caused many investors to lose trust in the company, leading to reduced funding and falling share prices.

Opportunity Loss and Suspended Growth

Software errors force developers to get back to the code, troubleshoot the issue, solve it, and run further tests. The time spent fixing these errors could have been better used to develop new ideas, products, services, improvements, etc. This leads to delayed releases of new updates and products as they are forced on the back-burner while developers fix the current issue.

Cost of Quality

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Software development companies budget at least 70% of development costs for dealing with errors and overall quality assurance. Companies not investing in bug prevention and error detection are waiting for disaster to happen. If quality assurance is not performed, how will the company know whether the software they built works the way intended? These costs vary depending on if the company hires a developer focused on testing for bugs or outsources this task.

The Cost of Software Bugs by SDLC Phase

The Software Development Life Cycle (SDLC) is a framework that marks the multiple phases involved in shipping a product – from planning to deployment to maintenance. The whole point of the SDLC is to ensure that companies can deliver a product that is high quality and aligned with the customer’s requirements. The phases of SDLC are as follows:

This cycle provides organizations with an overview of the operations, enabling them to outline tasks according to the phases of development and monitoring the project. As software development progresses through the SDLC, expenses can exponentially increase if a bug is found. So, it will be much less expensive to fix an issue when identified in the planning phase rather than in the operation and maintenance phase.

Phase 1: Planning

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This is where a concept is shared and identifies the need. In this phase, team leaders evaluate various aspects of the project like:

This is essentially where the idea is planted. Team leads also discuss foreseeable issues in the product. The prospect of bugs occurring in the system allows the team to begin thinking forward and be vigilant about it beforehand.

Phase 2: Requirement Gathering and Analysis

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Phase 2 is where teams identify the software requirements and outline the operations and the resources required for the project. The costs incurred here can be considered an investment in research conducted on the kind of software required. This is also where they communicate with the client before moving towards the design and prototype. Communication is vital so that when development starts, there are already goals available for the developers to follow as per precise requirements. 

Phase 3: Design and Prototyping

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This is where the real action begins, and the project starts taking shape. The design phase includes:

In this phase, the development team will be using all the information gathered from the requirement gathering and analysis phase to come up with solutions for each requirement. In doing so, they define all the necessary outcomes and necessary tools for the next phase. Within this phase, it is also important to figure out the potential risks and establish the types of health checks needed to ensure quality. With a list of potential issues and risks juxtaposed with the requirements and wanted outcomes, the team can plan ahead and understand what needs to be done to reduce the risk of bugs. 

Phase 4: Software Development

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This is the phase where developers code the software application. The cost of errors starts to increase from this point onwards. Developers go back and forth between the development environment’s output and the code to ensure no errors. Bugs and errors in this phase involve the financial cost of rewriting code and the temporal costs associated with the wastage of developer time. However, it is still better to have errors found in earlier stages rather than in the later stages of deployment and maintenance.

Phase 5: Testing

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Testing of the software that the developer has been working on happens in this stage. This is where errors that slipped through the development phase can be detected. This is also where the developer can see how the program is working in an isolated environment. 

Errors encountered during testing need to be fixed by going back to the development phase and ultimately delaying progress. Regardless, this is a crucial step in the process you should never skip. Skipping this step can allow software errors to bleed into production code and cause major damage.

Phase 6: Deployment

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Once the product and its performance have been safely tested and verified and developers and the organization are happy, it is time to release the software and make it available to the end-users. Once the product is deployed and reaches end-users, the organization will likely see a spike in reported errors due to the hundreds/thousands of user interactions. Any severe issues discovered here will negatively reflect the company, causing customers to lose trust in the product and raise financial burdens. This is why most companies choose to deploy alpha and beta versions before releasing the final product.

Phase 7: Operations and Maintenance

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Now the product has been launched and is being used by the end-users. An error in this phase could be disastrous for any company if the right steps are not taken. Fixing these bugs could result in downtime (i.e., a software industry equivalent for a product recall) and therefore be very expensive for time-critical sectors like banking, healthcare, etc. Downtimes, like product recalls, hurt an application’s reputation the most.

Putting out fires left and right halts progress so teams can debug the code, make amends, test, and re-deploy. As a result, fixing the issue can cost 5 to 30 times more than if the issue was found in an earlier phase.

How to Prevent Software Errors from Reaching Production

As clichéd as it sounds – prevention is always better than cure. Prevention of software errors during the design phase of development will always be more cost-effective. Even the Systems Science Institute at IBM has reported that costs for making amends after implementation are much higher than those before the release. According to IBM, it cost six times more to discover the error after the product’s release. 

Even the most meticulous developers can make mistakes sometimes. This is why it is important to test for errors and other potential issues at all life cycle stages, especially before product deployment. That way, it reduces many of the stresses mentioned above, allowing the company to focus on growth. Here are some best practices to reduce issues as much as possible:

Plan: Make a Checklist 

This may not be entirely technical, but it is a good idea to make a checklist of process activities and tasks. This could be shared with and unanimously updated by all team members with tasks or activities required along the way. By following a written step-by-step checklist, the team doesn’t miss any important steps.

This is essentially a rudimentary but detailed version of the software development life cycle. This can also be used in conjunction with the SDLC as a supporting document.

Proactive Error Monitoring 

Proactive Error Monitoring is a great way to ensure that software bugs are kept at bay. It is essential to help identify potential issues that may arise in your coding, especially in the pre-production phase of development. Remember, the earlier the detection of errors, the faster you can fix them and reduce the downtime of the program in the future. An easy way to do this is to use APM tools or integrated development environment (IDE) plugins to support your team during every stage of the production life cycle. 

Through proactive error monitoring, the team can customize regular alerts every time the tool identifies a potential degradation or threat to the program. With a regular monitoring system, it can provide reports and alerts that send you warnings of any issues that you want it to look after. Timely alerts can save a lot of time for the Software Development teams. Firstly it helps automate the system of the program. This is done by configuring what kind of health checks you are looking for and integrating them into the system. Secondly, an impending issue means that you can tweak the code before the issue arises to ensure it does not become a train wreck. Thirdly, the automation affords your team more time to focus on development. Lastly, it allows you to develop high-quality software because most of the potential issues were taken care of before deploying the software. 

Run Tests and Review Before Deployment

While testing should be done at every stage, businesses must run dedicated test suites before deploying the software – testing individual components of their code where they simulate various user actions and scenarios. This way, the team can be confident that what they have written works as it is supposed to. This not only helps in outlining coding issues but also identifies any potential security risks.

Similarly, collective code reviews are equally beneficial for ensuring the accuracy and logical consistency of the code. When all code changes and updates are proofread and reviewed by the team before merging into the main code, it prevents avoidable errors from falling through the cracks. Such practices can save the company a lot of money, time, resources and significantly improve their products.

Be Thorough 

Another mindset or skill to incorporate is being thorough, especially when analyzing software requirements. This requires effective communication between the client and the organization to ensure that there are no communication gaps or holes in the understanding of the desired product. It is, therefore, better to lay out all the requirements and plans coherently and clearly for both parties to benefit from. 

Stop Software Errors in Their Tracks

Software errors are unavoidable. However, errors found after deployment have longer-lasting and more catastrophic impacts on business as compared to those found in the deployment stage. It is imperative that businesses tackle this head-on and develop strategies for mitigating errors right from the conception phase of the product. These errors must be identified as early as possible in the Software Development Life Cycle because failure to do so creates issues that cost a lot more than just money. Moreover, this allows businesses to focus on fulfilling additional goals, work on upgrades and newer products, and move closer to achieving their long-term goals.