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Discovery Phase in Software Product Development: Why Do Startups Need It?

28 May 2021 • 7 min read
Discovery Phase in Software Product Development: Why Do Startups Need It?
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Slava Ivanov
Slava Ivanov
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Andrii Horiachko
Written by Andrii Horiachko
Co-Founder and CTO at Softermii
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Most startups fail. According to Investopedia, the failure rate for a business within the first ten years is around 90%. There is no definitive statistic as to why startups fail, but the reasons usually come down to one or several of the following:

The top reasons startups fail after the discovery phase

CB Insights published the results of a postmortem of over one hundred startups with the top 20 reasons that startups fail — and three of the top five reasons startups face can be solved by doing the groundwork in the discovery phase.

So what is the discovery phase in software development and why is it so important? Let's dive in.

What is the discovery phase in software development?

The discovery phase in software development is the earliest stage of developing any product that happens before any code is committed, also known as the planning stage. It's a business process that's there to circumvent problems and reduce the overall risks the business takes to create and establish its products. Besides setting clear goals and outlining potential pitfalls, the discovery phase is there to unite a team under a vision for the product.

The importance of the project discovery phase in software development cannot be overstated — the groundwork done in this stage can make or break a business before it even starts. The team involved in this phase should consist, at minimum of the following:

Team member Responsibilities description

Business Analyst 

This person has an outsized role in the process and is responsible for conducting market research, analyzing it, and synthesizing it into actionable plans for the teams involved at later stages.

Project Manager

The PM's role is to organize the whole team's work process, supervising deliverables and keeping track of deadlines.

Tech Lead / Architect

Their job is to choose the tech stack used during the development of the product and its architecture, including all APIs, SDKs, and non-proprietary code in the solution. They must also decide what timeline is most appropriate for the given project, as well as determine a budget for the scope of work defined by the BA.

Designer 

During the discovery stage, the designer is tasked with creating the UI/UX wireframes for the software, which will be the backbone of the look and feel of the application under development. 

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Benefits of the discovery phase in software projects

The benefits of the discovery phase in software projects are so numerous, there is no question for the modern business whether it's a worthy pursuit. Let's look at a few of them in depth:

Optimize development costs

If you know what you're making and how you're going to make it (as opposed to figuring it out as you go), it will save developers from doing extra work they don't need to do and therefore save money for you.

Validate the idea

Your idea may have seemed amazing and novel when you came up with it, but what if there's already a business with that model that's been in the market for years? You need to validate your idea to reduce risks before proceeding to lose time and money on a business doomed to fail.

Increase trust

Starting a business really doesn't have to be a crapshoot. The process of the discovery phase of a software project will eliminate risks and therefore increase trust between participants, further increasing the success of the whole endeavor.

Develop the marketing strategy

Once you have a clear idea of what your product is, you should already have an idea of how to market your product. The discovery stage is when you should map the user journey throughout the funnel, outline the messages you'll be using in each phase, and have a pricing model.

Establish clear goals

With a clear roadmap that every participant of the process can refer to at later stages, you will be avoiding any possible confusion and disarray that can occur.

Main stages of the discovery phase

The top reasons startups fail after the discovery phase

There is no definite timeline for how things go during the discovery phase, since there is hardly a limit to the depth of research that can be done while preparing for a project. There is, however, a generally agreed upon method to the madness. Here is the step-by-step of the discovery phase of a software development project.

Identify stakeholders

The stakeholders are the participants of the process. See above for a detailed list of the roles involved in this project. You'll need to find one or several professionals with experience in this early stage of development to fill every slot. The solution to this is either relying on your network, a robust HR and staffing firm with experience in this type of hiring, or hiring an expert agency like Softermii.

Research the subject

Start by identifying the customer you're targeting. What are their pains and needs? How are they solving the existing problem now? Research your competitors — find out what their product can deliver, what it lacks, and how much it costs. What does it take to implement beyond the financial cost? Knowing the playing field well is the first step to avoid being outcompeted.

Set business goals

What does your MVP look like? What are the resources that your business needs to get there? What is the optimal time to market? How does success translate in measurable units? You need to have answers for these questions before moving on to development.

Define technical requirements

The project discovery phase in custom software development is necessary from a technical point of view to have a clearly defined tech stack to be used in the development of the product. Prioritize features based on how essential they are to your product and its intended target market, planning only the essential for the MVP. You should also have an idea of what the product can be moving forward.

Design UI/UX

You can't develop a product without a strong UI/UX wireframe that will guide the further development of your product. This process should include some deep thinking about the branding of your product and its positioning in the market.

Define bottlenecks

Any project will have bottlenecks, and as the product owner, it's your job to prevent this problem before it occurs. At the end of the software development discovery phase, you need to have a very clear of what the process will entail, including how

Project discovery phase deliverables

As mentioned above, when it comes to the discovery phase for software development, there is no limit to the depth of preparation and analysis that can be done. But there are several key documents that must come out of this process that will ensure the success of the project. Here are the key deliverables you and your team should focus on producing:

Technical Specifications

This document should contain a detailed description of the MVP that you're building, from the overall logic of it down to each individual feature and button.

Project Roadmap

Your Tech Lead and developers will benefit form a clear roadmap they have to follow. It should cover every part of the development process, including a plan for what to do after the release. Don't forget to include deadlines.

The Budget

Whether you're going to outside investors or self-funding, it's equally important to forecast any expenses that the project will incur. Estimates are OK in this phase, but it's best to be predictable in business, so do your research and be as accurate as possible.

The Mockup

The final product design that illustrates the functionality, flow, and interface of your application. Finalizing this in the Discovery phase will ensure that the development team is united under a common vision during the process.

How much it will cost

The Discovery phase can be a significant expense to incur for a company that's just starting. Besides the more expensive forms of research like focus groups and purchasing access to exclusive market research, there is payroll to consider, as well as costs related to recruiting, and overhead.

If you're mulling over whether to conduct the research phase of software development completely in-house or using a dedicated team, here's a quick comparison for how much either option can cost:

In-house team Dedicated team

Business Analyst salary

$6000/mo — $8000/mo

Not billed for separately

Project Manager salary

$8000/mo — $10,000/mo

Not billed for separately

Tech Lead salary

$10,000/mo — 13,000/mo

Not billed for separately

Designer salary

$8,000/mo — $10,000/mo

Not billed for separately

Recruitment-related costs

~$10,000

None

Total

~$50,000

From $20,000

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The cost difference can be truly stark. Remember — you want the best, most experienced people on this project, since they are the ones who will lay the groundwork for your future success. For a budget-minded startup, the choice should be clear.

SOFTERMII’S CEO TAKEAWAY

By now it should be clear why the discovery phase of a software development project cannot be skipped or rushed. It involves deep thought on the part of multiple highly specialized professionals. And it's not going to come cheaply. 

No matter if your project already has funding or not, you will need to stay budget-conscious when delving into a new venture at least until you're found product/market fit and gotten some revenue. At the same time, later success will be a direct result of the quality of the work done now. It's an impossible dilemma without offshoring. 

The good news is that Softermii has lots of experience creating software from the ground up, including helping our clients through the discovery phase of a software project. 

Do you have any more questions about the discovery phase and how Softermii can help you? Contact us here.

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