Software Product Development: Definition, Importance, and Complete Process

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Software is a part of our everyday lives. It’s what runs our phones, computers, cars, and other products. But, despite the wider adoption and understanding of technology, as many as 19% of all software projects still fail.

Most projects that fail have some issues in common. Poor planning and unclear project requirements are often the main contributors to software project failures.

This makes one wonder how big tech companies manage to consistently produce high-quality, working software. All these companies follow a tried-and-tested software product development process that increases the likelihood of creating successful products in the market.

In this article, we’ll discuss software product development: what it is, its importance, and the two most common approaches to it – Agile and Waterfall.

What is Software Product Development?

Software product development is the process of designing, developing, and deploying workable software for end-users. It’s important to note that software does not always mean code or programming. Software is anything that solves a problem with a set of codes or programs using an operating system (OS).

This process is not limited to creating a new product and can also be described as making adjustments to an existing product. As companies release new features, they may have to go through the process again to ensure it successfully integrates with their current product or OS.

Project managers may use different techniques to develop software, such as Agile or Waterfall, but the process often follows certain overlapping steps. 

Importance of Software Product Development

Companies are constantly innovating to create new software that helps make our lives easier and more convenient. For businesses, innovative software enables several benefits including… 

Optimized Business Workflow

Software allows businesses to bridge the communication gap between departments which helps optimize the workflow and maintain productivity. Cloud software, for example, makes it possible for teams to create, edit, and manage documents in real-time.

It allows teams to access documents and provide real-time feedback rather than constantly emailing their colleagues to send them information.

Offers a Competitive Advantage

Companies that create new and advanced software have the opportunity to streamline their operations. Using software enhances the production process and makes it easier to manage teams. Businesses that use modern software gain a competitive edge over those that don’t, which applies to virtually any industry.

For example, a business that uses an order management system (OMS) is usually better at measuring, managing, and forecasting its stock levels. Compare this with a business that manually keeps track of stock levels, and how slow and error-prone that process can be.

Provides a Custom Solution for Businesses

Custom software is unique to a business’s needs which guarantees it aligns with its business goals. Software that is custom-built, in-house won’t have to rely on external support when they run into errors or bugs.

Also, the custom software is built with current employees in mind. This means that a company can gain a competitive advantage in the market as they have the unique skills to run and manage the software.

Adapts to Changing Business Needs & Dynamics

The business landscape is constantly shifting. With newer market trends, developing customer tastes, and evolving business dynamics, it’s vital to be able to keep up with the changes to ensure your business doesn’t become obsolete.

By constantly innovating and developing newer software, companies empower their teams and themselves to streamline production. Through optimized workflows and data-driven production assisted by software, companies can stay on top of changing customer trends and successfully overcome challenges. There is also a need to iterate on existing software to maintain code quality and adapt to shifting technology requirements.

The Three Types of Computer Software

Before moving on to discuss the software product development process, it’s important to know which kind of software you’re planning to make. 

We highlighted above that software is typically used by computers/operating systems, but there are three types of computer software you should be aware of:

  1. System software – base software that sits between hardware and application software. It is responsible for monitoring, controlling, and operating the RAM, processor, and output devices of a computer. Examples include operating systems such as Windows or iOS.
  2. Utility software – software that runs in the background responsible for performing specific tasks that help keep the computer running as intended. Examples include anti-virus, disk cleanup, and file compression programs.
  3. Application software – coded apps or programs that carry specific tasks based on the user’s requirements. Examples include word processors, spreadsheets, browsers, and graphics software.

It’s important to know which kind of software you’re building to evaluate the project’s complexity and the steps needed to achieve the desired result.

Agile Software Product Development Process

Agile software development is a modern approach to developing software emphasizing  adaptation and innovation. In an Agile setting, product development goes through an iterative and incremental process where customer feedback is incorporated at each iteration to provide the optimal customer experience.

It’s important to know that Agile, in and of itself, does not have any practical steps a company can follow to develop workable software. Rather, Agile is a mindset that an organization adopts based on the Agile manifesto, usually using a framework in line with those principles.

The most popular and effective Agile methodology is Scrum. Scrum breaks down complex tasks into incremental sprints and relies on constant feedback to refine the product until the result is achieved.

Below is what the general process may look like under an Agile methodology such as Scrum.

  1. Initiate

Before starting production, teams identify stakeholders and requirements of the project and determine a product goal. Each team has a Scrum master who is responsible for making sure the team executes the plan as per requirements. Each team also has the roles of product owner and developer.

In this phase, the team is developing the product backlog, which is a list of tasks that must be completed to achieve the product goal. The product owner is responsible for creating and managing this product backlog by breaking down tasks into “epics” and user stories.

  1. Plan

In the planning phase, teams decide on the sprints that’ll be carried out in the production process. Each sprint typically lasts around two to four weeks and addresses important tasks of the product backlog.

The product owner prioritizes the list of tasks in the product backlog and communicates it to the developers. These prioritized tasks are then moved to the sprint backlog, which is a list of tasks to be completed within the sprint.

This phase is also called Sprint Planning, as it defines what and how to achieve the sprint goal with the collaboration of the whole team.

  1. Build

After project requirements have been decided and work has been assigned to the development team, it’s time to initiate the sprint. 

During the sprint, teams actively plan and collaborate to work towards the sprint goal. They start working on the prioritized tasks moved into the sprint backlog, and the product owner ticks off and removes any tasks that have been completed.

Teams will also hold daily scrums, or “stand-ups”, which are short 15-minute meetings at the start of every day before starting work to ensure everyone’s on the same page. During these meetings, teams will discuss obstacles and solutions as well as any changes that need to be made to the plan to better achieve the sprint goal.

The Scrum Master will be responsible for creating a collaborative environment where team members are effectively communicating and adapting to the plan as well as holding each other accountable.

  1. Review

After the first sprint is completed, the software will move to stakeholders who will test the product. This is an important phase of the software product development process, as developers rely on feedback to bring about significant innovation.

Stakeholders will give their feedback, which the development team will use to refine the product. At this point, stakeholders will also conduct a Sprint Review, where developers will showcase what they were able to achieve during the sprint.

After a Sprint Review follows a Sprint Introspection where all teams get together to identify the challenges faced with solutions to try to prevent the same missteps from happening in the future. This last stage allows people to better plan for the next sprint by setting realistic goals and evaluating the performance of workers.

That was the entire production process under Scrum for one sprint. However, when it comes to making a complete working software solution, it’s not possible to complete development in one 4-week sprint. Rather, sprints are iterated and incremented until a final product emerges.

Waterfall Software Product Development

The Waterfall model is a sequential approach to the software product development process where the product passes through multiple software development phases. Under Waterfall management, each phase of the production process has to be completed to pass on to the next stage.

The Waterfall software development process is losing its importance due to better software development methodologies such as Agile. Even though the Agile methodology saves time, the Waterfall model may work well when it’s combined with design thinking.

  1. Ideation

The software development process starts with the team gathering together to generate ideas for possible software solutions. During the ideation phase, software development teams generate ideas through brainstorming sessions, market research, and competitor analysis.

After generating multiple ideas, stakeholders narrow down their list to a few ideas from which they choose their one winning idea.

  1. Requirement & Feasibility Analysis

After discovering a promising idea, stakeholders will discuss the initial requirements needed to start and complete production.

This stage may require collaboration with a business analyst (BA). These experts collect information about the product and translate it into technical documentation called the Software Requirement Specification (SRS).

During this phase, a feasibility analysis is also conducted to evaluate if the business can achieve the required specifications to make the product. The acceptance criteria, along with software quality attributes (SQA), are also defined to ensure the product will be industry standard.

  1. Software design

Software architects use the SRS documentation to define how different sets of technologies, tools, and workflows will be used with database structures and data flows to achieve the desired end goal.

In this phase, software architects are responsible for developing the Design Document Specification (DDS), which highlights the technical steps needed to create the product.

  1. Software development

To develop working software, programmers and software engineers write code using the agreed tech stack and programming languages. They code the product according to the specifications mentioned in the SRS and instructions provided in the DDS.

  1. Systems Integration & Testing

After developing the software, it moves to system testing, where the testing team conducts quality assurance tests to ensure the software meets all the quality standards (SQA), product specifications (SRS), and technical requirements (DDS).

The testing team will also test how well the software system integrates with other systems and applications and if it will perform as intended during the software development life cycle.

Any errors and technical improvements in the code are collected and reported to the software developers for correction. This process is iterated until the software works fine and is free from any bugs, defects, and errors.

  1. Deployment

After the product has been tested and is free from any errors, it is released into the market for consumers to buy. Sometimes businesses may launch a beta version of the software first to test how it performs with users. After gathering some feedback, developers can further enhance the product to ensure a successful official launch.

  1. Maintenance

The software product development life cycle doesn’t end after the product is released into the market. After deployment, businesses have to maintain the product by providing support, bug fixes, and newer features to keep the product up-to-date.

Developers may also use the market response as feedback for ongoing performance evaluations and to incorporate this information into the product.


The software development process is a complex process that requires considerable time and money to implement, making it important to get it right.

By implementing design thinking and following a proven development process, you can lessen the risk of failure and ensure smoother project execution.

Other factors affect the success of your software products, so the process may look different for every business according to their needs and the product development methodology they choose to adopt.