The cost of poor software quality

The following article written by Star VP of Strategy, Kim Darling S?rensen, appeared in the August 2024 edition of our monthly newsletter Star Radar.

In early May, Sonos launched their redesigned and rebuilt mobile app to much fanfare. However, user complaints quickly started flooding in about missing functionality and poor stability. The cost? Sonos’ market cap has been shaved off by one-third since the app launch, and their CEO estimated that it’ll cost the company up to $30M in the short term to fix the app (not including the cost of delaying product launches due to the app issues).?

It’s far from the only example of poor software quality leading to customer outrage, product failure, or even bankruptcy. Recent examples include Fisker and Humane, where the software experience was a key component of their value proposition, but where flawed software execution played a prominent role in their product falling way behind expectations. Aside from the high-profile anecdotes, data shows that subpar software execution is incredibly costly – a study found that poor software quality is costing the US economy $2.4 trillion a year.

So despite massive investments into developing software solutions, there’s still a clear issue of poor software quality that in some cases can break a company. So, how can organizations avoid this?

• Make software testing sexy (again) – the days of “move fast and break things” are over. Given the exponential cost increase of fixing bugs later in the software development life cycle, in addition to the erosion of brand loyalty and stock value, rigorous testing is imperative. Besides implementing general best practices, consider utilizing Gen AI testing tools, conducting Cost of Quality (CoQ) analyses, and implementing a Quality Management System (QMS).
• Understand the users of today (and the future) – born-digital consumers have much higher expectations when it comes to their digital interactions with brands. 69% of Gen Z consumers say the quality of their digital experiences have a moderate to extreme influence on their purchasing decisions, versus 52% for Gen X consumers. There are many cost-effective user research methods – research has shown that 85% of usability issues can be found by testing with just 5 users.
• Make your hardware business software-first – In 2007 when Apple had just announced the first iPhone, Steve Jobs said that “Apple views itself as a software company”. It’s no coincidence that the software failure examples shared above are all hardware/product companies, and to be clear it’s usually not for lack of talent that companies like this fail at software. It’s more frequently about priorities, culture, and leadership not being aligned to be a software-first business.

The seminal article "Why Software is Eating the World" came out 13 years ago this month, and software is indeed still eating the world – but only if it's well-built. Prioritizing software quality isn’t just a technical requirement, it’s a strategic imperative that defines market success or failure.

Subscribe to Star Radar and receive our latest thinking in your inbox every month.