Avoiding Custom Software Mistakes That Drain IT Budgets

Custom software is an extremely useful tool for healthcare providers. It streamlines workflows, increases patient interaction, and protects sensitive data. However, when projects are not adequately managed, they frequently exceed budget. 66% of enterprise-level IT initiatives incur cost overruns. Large technology projects, in instance, exceed budget by 45% and are delayed by 7%, resulting in 56% less value than expected.

Nearly 70% of software projects surpass their original costs, often by 27%. These cost overruns drain valuable capital. Instead of investing in medical care, cybersecurity, or analytics, the finances are spent. Healthcare CIOs, IT managers, and founders can avoid these difficulties. The goal is to identify the core causes and plan wisely from the beginning.

Why Healthcare IT Projects Go Over Budget

• Unanticipated expenses frequently cause budget overruns. These can be caused by changing requirements, scope creep, or unexpected technical hurdles. These unexpected events cause approximately 40% of software projects to miss their deadlines.
• Complexity and technological debt are also important considerations. Many projects misjudge their complexity. This accounts for around 43% of budget overruns. Each dollar spent on new development can result in an additional $0.41 in technical debt.
• Poor communication is also a major concern. It contributes to 57% of project failures. When teams fail to communicate effectively, problems can escalate.
• Finally, a budget mismatch might be a significant issue. When budgets are not in line with strategic objectives, teams may end up sponsoring low-value projects. 
• A carefully designed IT budget is vital. It enables executives to coordinate activities, track spending in real time, and make changes before minor overruns become major issues.

Understanding these factors allows companies to focus their efforts on the most effective areas for preventing problems.

Related: The 2025 Blueprint for Modernizing Healthcare IT Infrastructure

Common Custom Software Mistakes in Healthcare

1. Incomplete Strategy and Planning

• Some healthcare stakeholders begin coding immediately after deciding to construct an app.
• However, Digital Authority Partners cautions that starting without a defined strategy can result in failures and overpaying.
• A robust plan is essential. It describes the app’s functionality, timelines, milestones, and responsibilities.

Before beginning development, it is critical to build a thorough blueprint.

This ensures that the software is consistent with clinical objectives, budgets, and regulatory requirements. Taking an agile approach is also vital. It helps you to adapt as new information becomes available during the process.

Related: Strategic Investment in Custom Healthcare Software: A Guide for Hospital CIOs and CTOs

2. Prioritizing Price Over Value

• Budget constraints can tempt leaders to accept the lowest bid. 
• But, as the adage goes, “you get what you pay for.” Companies that choose developers based exclusively on cost frequently wind up with poor-quality software.
• While experienced developers may appear more expensive at first, they typically provide higher long-term value.

When assessing vendors, consider their healthcare domain experience, HIPAA compliance, and track record. Divide the project into phases and estimate the expenditures for each. Also, request specific proposals that contain cost breakdowns. This will allow you to make an informed decision.

3. Vague Requirements and Scope Creep

• When needs are not properly defined or expectations are misaligned, it can result in costly errors.
• One prevalent issue is scope creep, which occurs when additional features are added in the middle of a project.
• Approximately 34% of projects encounter this issue. Every new feature complicates and raises the budget, making accurate forecasting more challenging.

To avoid this, hold discovery sessions to establish clear goals, user stories, and compliance requirements. Create succinct requirements papers and ensure that stakeholders approve them.

Implement change control methods to ensure that any new feature is thoroughly examined for its impact on both the budget and the timetable.

4. Unrealistic Schedules and Inaccurate Estimates

• Unrealistic timetables can lead to a lot of stress.
• When timetables are excessively tight, teams are obliged to make corners, which frequently results in rework.
• Stakeholders can make broad projections without fully comprehending the complexities of the development process.

To avoid this, create timetables based on data rather than estimates. Have the entire team double-check the estimations to verify correctness.

Don’t forget to include regulatory reviews, integrations, and clinical comments. Also, make sure to include a contingency in the budget to cover unanticipated expenses.

5. Poor Stakeholder Engagement and Communication

• Projects frequently derail when stakeholders are not actively involved.
• When they are not participating, it might result in lost work and higher expenditures.
• Communication gaps are a major factor, contributing to 57% of project failures.

To avoid this, get clinicians, administrators, and end users involved from the beginning. Schedule regular check-ins and demos to ensure everyone is on the same page.

Use collaboration tools to ensure that everyone can monitor progress and provide input. Make sure to document all choices and modifications made along the journey.

6. Lack of Risk Management and Testing

• Skipping quality assurance might expose significant vulnerabilities.
• When testing is missed, it frequently results in security flaws, coding errors, and damaged systems.
• Projects involve numerous risks, such as workforce turnover and regulatory changes. 
• Unexpected problems can derail a budget if risk management is not properly implemented.

Start by identifying hazards at the outset of the project. Set aside funds to cover unexpected expenses. Make sure to start unit, integration, and load testing early.

Validate the project against HIPAA and ADA standards to confirm compliance.

7. Ignoring Maintenance, Security, and Compliance

• Budgets frequently focus solely on the initial build costs.
• However, maintenance and updates account for more than 60% of the whole program cost.
• If security measures are not budgeted for, breaches might cost $3.8 million or more.
• Technical debt can also build up quickly when shortcuts are used.

It is vital to plan for ongoing maintenance, upgrades, and infrastructure.

Make sure you set aside funding for penetration testing, encryption, audit logging, and compliance certification. Choose architectures that will help reduce technological debt from the start.

8. Misaligned Budgets and Lack of Strategy

• Health IT budgets must align with the organization’s mission-critical objectives.
• Strategic budgeting involves aligning revenue and expenses with the organization’s mission and priorities.
• When spending is tied to specified goals, each purchase should either improve patient care or boost operational efficiency.
• Real-time budget tracking allows executives to adapt spending as priorities change.

Use rolling forecasts to keep on target. Connect each IT project to a strategic goal, such as improving patient satisfaction, expanding interoperability, or strengthening cybersecurity. Create dashboards that show actual spending versus budget projections.

9. Inexperienced Development Team

Experience with software development is required. Inexperienced teams usually underestimate project scope, use inefficient technology stacks, and fail deadlines, resulting in budget overruns.

When choosing vendors, consider those with healthcare-specific knowledge. Look for teams that have already built EHR modules, telehealth platforms, or compliance frameworks. Do not hesitate to request references and samples of previous pilot projects.

Practical Steps to Optimize Custom Software Budgets

1. Identify and record user personas, workflows, data fields, and compliance requirements. Use this to estimate feature complexity and costs.
2. Create a minimal viable product to provide value early on. Iterate based on the input.
3. To avoid investing too much in unused features, evaluate providers carefully. Focus on more than just price. Consider their experience, regulatory knowledge, and communication strategies.
4. Create a steering group that includes representatives from IT, clinical operations, finance, and compliance. Review changes to scope, budgets, and risks on a regular basis.
5. Set aside sufficient resources for testing, cybersecurity, and usability. Plan for maintenance and updates after the launch to avoid technical debt.
6. When calculating software ROI, track key performance indicators like reduced wait times, increased throughput, and improved reimbursement accuracy. Adjust the budget according to the results.

Optimize Your IT Budgets with CapMinds

At CapMinds, we understand how important it is to make smart, strategic decisions when it comes to custom software development in healthcare. 

Avoiding common pitfalls like overspending, poor planning, and technical debt is key to maximizing your ROI and improving patient care.

Our comprehensive services ensure that your software development projects stay on track, on budget, and aligned with your organization’s goals. Our services include:

• Health IT Consultation: Tailored advice on optimizing your IT strategies, avoiding common pitfalls, and aligning software development with healthcare goals.
• Custom Software Development: Expertly designed solutions that meet your specific healthcare needs, from EHR systems to telehealth platforms.
• Health IT Strategy: Guidance on budgeting, vendor selection, and long-term IT planning to ensure your investments yield the best results.
  

Let CapMinds help you make the right decisions and turn your IT projects into a success.

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