Did you ever wonder what makes or breaks a product? There is a multitude of factors that impact whether some products will survive and become a market success and others will fall into obscurity to never see the day of light.
The product development process is a very complex thing that needs a lot of attention to detail and experience in how to make it right. There are multiple engagement models like Fixed Price and Time and Materials, there are few options for hiring like in-house or outsourcing, and there are various methodologies like Agile and Waterfall for running your project.
Whatever road you choose, there is one thing in common for projects like simple mobile applications or sophisticated Big Data solutions for an enterprise. This thing is the risk, and you need to learn how to deal with it. Why?
According to Finances Online, proven project management practices reduce the risk of budget waste up to 30 times, compared to companies that ignore those practices.
As you see from the graphic, based on the data from PMI, there are ten causes that might lead to the failure of your product. You can’t influence some of them, like the changes in the priorities of your organization, but you can fix aspects like opportunities and risks to ensure the success of the project.
Risk management software engineering is an important topic that deserves an article of its own. According to a survey by Safran, 92% of CEOs that completed a survey, believe that information about the risks is critical for the long-term success of the software project.
But how do you obtain the information about possible threats to the project in time? This is exactly what we will talk about in the following sections, as we will be sharing our expertise and experience in risk management in software project management.
“Expect the best, plan for the worst, and prepare to be surprised.”
— Denis Waitley
What is risk management in software engineering?
The primary purpose of risk management is to identify, assess, prevent and control possible risks that might affect negatively the product development process. For an effective risk management process, you should set a competent person that will be responsible for possible threats to the project.
It is important to have a plan that will address possible threats and act before they will be able to cause any damage. While you have to have one expert focused on dealing with risks, it shouldn’t be your sole responsibility. The risk management process in software engineering should involve multiple parties to reach the maximum efficiency:
- Project Manager should facilitate the risk and arrange a meeting
- The team on a project should decide who will take the roles of recorder and timekeeper
- Stakeholders must participate in risk mitigation and avoidance strategies
- You could also include part-time subject-matter experts that will participate in the project while solving the risks
- The sponsor of a project may be involved depending on a situation, size and the scope of the project
Process of risk management in software engineering
Every business scenario is unique, and there is no unified solution that will fit all the cases, industries, and businesses. Risk management can be taken in different ways, however, there is a basic formula that can become a great start. Here are the essential steps:
Determine the threats
Figure out what possible risks exist, that already materialized and could have a negative impact on your company. Some examples of risks may include natural disasters, and power or utility outages. You should include all possible factors during the risk assessment process.
Find out who or what might be affected
Discover what assets of your company might be in danger when the potential threat will become a reality. The list of things you might protect can include employee safety, the reputation of your business, critical infrastructure, IT infrastructure, and overall business operations.
Plan and set preventive measures
After you identified the threats and their possible targets, you should figure out what steps need to be taken in order to prevent risk or minimize the consequences.
Record your results
When you successfully dealt with a threat, it will be a good idea to store your findings for your company to have an actionable strategy in case the risk occurs again sometime in the future.
Conduct regular reviews
From time to time, and make a review of a current risk situation in your company, as your business is constantly evolving and expanding, there could be more possible threats that might pop up.
Now, that we talked about how to practice risk management in software engineering, let’s discuss more closely what specific threats you might face during the development of your product.
What are the potential threats to every software project?
Innovative technologies
When you introduce new, nascent technology into your processes, you take your chances to surpass the competitors, but put your business in danger automatically. The truth is, that most software projects work with innovative technologies to some degree anyway. We don’t talk about some groundbreaking Artificial Intelligence and Machine Learning techniques (but don’t exclude them, either). Things like protocols, standards, and tools are changing all the time, so your tech team must keep up with the advancements. The best advice to deal with this risk is to train your employees, so they would be able to deliver the best results.
Changes in functional and user requirements
Software requirements illustrate all needs of the users in the form of features and functions of the product. Defining requirements for a particular project can take a lot of time and effort, and become a complex thing. The bad news here is that the requirements might change on the fly after the discovery, prototyping, and integration phases. These changes in requirements could potentially lead to disruptions in the development process, so they should be carefully planned in the first place.
Changes in the architecture of the system
There is always a threat of making bad decisions in choosing a platform, a particular component, or an entire architecture for your project. To deal with technological risks, you should form a team of proficient experts right from the very start that will make the correct design choices. If you go with outsourcing, it is vital not to compromise on the abilities of your employees, because fixing their mistakes can cost you a lot more in the long run.
Performance issues
Conduct benchmarks and threshold testing of the product to ensure that the development process is going according to the expectations of you and your partners. If the product fails any key tests, you will be able to identify the lack of performance and fix things.
Management problems
There are a lot of things that can go wrong from a managerial standpoint. Make sure to set effective communication among all participants of the development process to get the best results out of your team and prevent any possible issues of this type.
Types of risks in risk management with practical examples
Example of an internal risk
Imagine one of the team members being unable to work on the project, and it might seriously affect the end result. To prevent this issue, all of your developers must be aware of what each team member is doing to substitute for another, when necessary.
Example of an external risk
There could be a moment when an external provider will change a particular policy in your country. The good news is, that software developers are usually aware of possible problems that might occur with the provider, and are ready for the worst-case scenario. The best you can do here is to talk with your developers and be aware of what this scenario is.
Example of an external and internal risk
Commitment is one of the most important aspects of the software development process, and it is closely connected to communication. The lack of commitment in one department will result in a lack of performance in the other. For example, when developers won’t finish the necessary part of code in time, the UX/UI designers will have nothing to do, and the stakeholders won’t get a demo when they expect it.
To prevent this from happening, it is important to have a product owner role as well. This expert should be in charge of effective and close cooperation between all departments that are responsible for creating a software product. Having a product owner won’t solve all possible issues that your development team might have, but this person will alert you when anything will go wrong, and you will have time to act.
Principles for all types of risk management in software engineering
| Wide perspective | Look through all possible risks in the system, including overall description, design elements, and practical implementation |
| Future in mind | Try to predict what risks might appear in the future and after key events that the project is planned to go through |
| Communication | Make sure to set an effective communication between the stakeholders and all team members, in case the danger of risk will occur |
| Integration | Consider risk management a full-fledged part of the project management process |
| Continuous process | Don’t stop to monitor possible risks and be ready in case something unplanned will happen at any time |
FAQ
What is risk management in software project management?
This is a process that focuses on dealing with potential problems that might occur during the development of your project. Those problems can be divided into the usage of new technologies, changed functional and user requirements, changes in the architecture, lack of performance, and different organizational issues. There is no single formula to deal with all possible threats, however, there are certain approaches that will help you to start setting up a risk management process.
What are the 5 stages of risk management?
Five main stages include: determining the threats, figuring out the possible consequences, planning preventive measures, recording results, and conducting regular reviews.
Why is risk management important in software projects?
It is important because it can save tons of money for your organization and can be a deciding factor in making sure that the entire project will be successful and will be delivered on time and within budget, according to specs. The absence of the process will put your entire product in danger, and it can become a victim of unforeseen circumstances.
