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Discovery Phase in Software Development: A Comprehensive Guide

Vladyslav Mozghovyi

Vladyslav Mozghovyi

Content Writer

Anna Korotkova

Anna Korotkova

Solution Architect

10 min

This guide will tell you about the discovery phase in software development. You’ll learn about:

  • What is the project discovery phase?
  • Why do product founders need to conduct the discovery phase?
  • What are the benefits of this phase?
  • How does the discovery phase process look like?
  • And more.

If you’re a startup founder, a serial entrepreneur, or a product manager, do you want to find out how to prevent significant budget overruns, missed deadlines, or complete failure of your software projects?

Without further ado, let’s go straight to the point.

If you prefer visual to text, then go straight to the bonus infographic “What is the Discovery Phase in Software Development?”

What Is the Discovery Phase?

The discovery phase of a project is the initial stage of software development.

It is designed to let developers understand the idea and vision, set up business goals, collect business and technical requirements, provide you with a budget, plan the development process, assess and prevent risks.

This phase includes a few aspects:

Aspect Description
Market Analysis Market analysis is the analysis of market demand: the size of the market, the number of competitors, financial and technological trends.

As per CB insights, 101 small businesses closed, and 42% of them were due to the fact that there was no market for their products.

These stats prove that market research is an important part of the discovery phase of a software project.

Market analysis has to be carefully carried out to determine if the end-users actually need your software product or not.

Competitor Analysis Along with the market, it is equally necessary to find out about your competitors.

Statistics suggest that 19% of businesses fail due to high competition.

Hence, competitor research is essential to understanding what type of products your competitors have developed and how they are performing.

It is also a crucial part of the project discovery phase.

Learn about your target audience If you are making new software, it is crucial to know if the audience needs it. On other hand, it helps you to form a clear vision of what you want to develop.

To assess the viability of the mobile app or software, you can develop an MVP and find out if it has market potential. t.

Identify business goal Another crucial aspect of the discovery phase of a software project is setting a business goal.

As long as you are not focused on what you need, you will not succeed in your venture. As per a CB insights study, 13% of the businesses fail just because they lose focus.

Therefore,  you must focus on the agile discovery phase.

Cost analysis There is not a single thing you can do if you don’t have enough money to run your business.

As per CBInsights, 29% of the businesses fail because they run out of cash.

The discovery phase is the part where you need to analyze this aspect to plan your further process of development.

All of these are the basic aspects of the agile discovery phase that need your utmost attention.

Now, let us move on to the next section, which will explore the reasons for focusing on the discovery phase of the project.

On this image you can see the key aspects that include the discovery phase

Why Do Entrepreneurs Need to Сonsider the Agile Discovery Phase?

The discovery phase is necessary for founders because it is a tool that helps create a startup safely, on time, and on budget.

We highlighted 4 key reasons why the discovery phase is required. Let’s take a look at the details.

Reason 1. To Create a Market-Driven Application

To help you understand what we are talking about, let’s look at an example. The confrontation between Facebook and MySpace. 2 social networks, identical in idea and key functions.

But Facebook surpassed  MySpace. What is the reason? Basically, the perfect match of the target audience, market, and launch time.

In other words, the Facebook team was able to catch an early trend and offer a market-oriented product without creating disruptive innovation. And discovery stage could allow you to do the same thing.

The discovery phase is a product development framework that helps to test your idea/market fit to find out is there potential to build the Next Big Thing or not.

Reason 2. To Create Detailed Project Documentation

The software requirements specification is a roadmap of your future web or mobile application. It helps to plan the development stages and structure the team.

The elaboration of requirements defines the complexity of functionality. Thus, it defines the required efforts on design, development, testing, and project management stages.

It helps you keep the development process aligned and project team members aware of their job.

Here you can find an example of project documentation. Now let’s talk about how the team will use the SRS.

Reason 3. To Design UX Prototypes

A  prototype file is a black and white, low-fidelity version of the app design based on requirements documents. It represents how the application should work rather than visual components. It is an indispensable part of a software project discovery phase.

Prototypes are a must to test an idea via user research and the only way to know if it can be actually built.

Moreover, a prototype model helps the development team in understanding the project better, and you can also focus on improving the user experience beforehand.

Here are 2 examples of wireframes: for a web app and for a mobile one.

Reason 4. Test the Matching of  Your Expectations and Developers Deliveries

At this point, you should understand, that the discovery process is a negotiation stage in the software development lifecycle.

In fact, you as a customer, negotiate with your potential development team everything related to a project: from the concept to potential post-launch risks.

That’s why you could consider the discovery phase as a quality check approach on the matter of your development partner at a low cost. Because the price to develop a website or app development costs will be much higher.

You can check an app cost calculator here to find out examples. Now, let’s go further into the benefits of an agile discovery phase.

On this image you can see the reasons to start a product development with agile discovery phase


What Are the Various Benefits of the Discovery Phase of a Software Development Project?

If you undertake the agile discovery phase of the project in the required way, you will succeed with flying colors in your business and achieve various benefits in the end.

Here are some of them.

Benefit Description
Cost Reduction The very important benefit that you will get from the discovery phase of a software project is a reduction in the overall cost.

Stats suggest that 18% of firms fail due to pricing issues, and the project discovery phase can help you prevent that.

Proper documentation, along with a well-coordinated team, will help reduce the cost of your app development process.

Consequently, this will make your product competitive in the market.

Risk management Risks are always there when you do something new. Most companies do not perform a risk analysis that may exist in the process.

Due to this, they face issues like missed deadlines and low-cost savings.

But, with an agile discovery phase, you can save a lot of money, visualize your target clearly and also prevent missing deadlines.

Idea validation No matter what idea you have, the discovery phase of the software project will help you validate your idea.

This will also help you in understanding if the audience needs your app or software.

Team formation As per CBInsights, 23% of businesses do not succeed because they don’t have a good team.

The discovery phase of the project helps you find out what type of people are required to manage the whole process.

Hence, you can hire team members early and develop a well-coordinated plan.

Set business goals One of the pros that you will get from the discovery phase of the development process is that you will have a clear idea about the final product.

It will help you streamline the whole process.

We looked at the what and the why of the software development discovery phase.

Now let’s move to the detailed description of a process and deliveries on each step.

On this image you can see the key benefits, that impact to the discovery phase

How Much Will a Product Discovery Phase Cost?

The cost of the discovery phase of a project on average ranges from $5000 up to $15,000.

There is a pretty simple formula behind these numbers. Pricing of a discovery phase is 10% out of a development budget. After the initial discussion of the idea, the developers already have a rough idea of what is to be created and how it should work.

Therefore, the price of the discovery stage can tell you in advance about the price of the final product – an MVP or a large-scale application.

Now let’s talk about the factors, that impact the cost: the team structure and the process.

Building a Team Required for the Discovery Phase

Here are the crucial team members that would easily manage the entire discovery phase of your software project.

  • Project manager
  • Business analyst or solution architect
  • CTO
  • UX/UI designer
  • Backend, frontend, or mobile developers
  • Marketing manager

In fact, the same team members that will develop the project and work out the prospects and market will be working on the evaluation of the project.

Now let’s look at how they will work.

The team required to conduct a stage of discovery for a project rapidly and quality


The Step-By-Step Process of the Product Discovery Stage

The workflow of a discovery phase may be different from company to company. However, we’d like to highlight the most common way to conduct product discovery:

  1. Interview with a founder
  2. Analysis of a product idea
  3. Analysis of a market, target audience, competitors
  4. Creation of specifications
  5. Design of user experience wireframes
  6. Detailed estimation of a development

We’d like to describe each step in detail.

Step 1. Interview with the Founder

The initial stage includes interviewing the founder, the business owner, or the product owner.

The major motive of the interview is to get an insight into how they got the idea and what is so special or different about their idea. This way, it is easy to understand the intention of the person.

After getting all the necessary information, we ask the founder to start the discovery phase.

Step 2. Discovery Workshops

At this stage, the development team analyzes the key results of the original idea and thinks through the business objectives, goals, and expectations.

According to the business requirements, initial technical requirements are developed: the workflow of the application, as well as the choice of technologies stack, is determined.

The finalization of this choice happens after an in-depth analysis of the product prospects.

Step 3. Customer Analysis

This part of our workflow includes the overall analysis of the customer. As your product will be targeted to customers only, it is essential to check if they even need it.

Here are some of the aspects that  must be checked:

  1. Customer profile
  2. Demographics
  3. Buying process
  4. Problems and pain points

We closely study the factors that make the customer buy the product, their pain points, and all. It helps in building a better product through the discovery phase of the project.

Step 4. Market Analysis

This step of the discovery phase of a software project deals with the overall analysis of the market. It includes various factors like:

  1. Market size. Check if the market size of the product is high. The market should grow in the next 5-10 years. Also, we check the market trends.
  2. Competitors. A close look at direct and indirect competitors: what are they, where are they, what type of apps they have, how do they work, how do they market, and so on.
  3. Business analysis: We do thorough business research to know about the challenges that might come your way in the business. Some of the popular techniques for business analysis are SWOT, MOST, Business Process Modelling, PESTLE, and more.

Once we finish with the market, we take a closer look at competitors.

On this image you can see the key steps that consist of the product discovery stage

Step 5. Competitor Analysis

The last step of the analysis performed as a part of the discovery phase is competitor analysis. Here are those factors:

  1. Location of the competitors
  2. The business model they follow
  3. Monetization model of the competitors
  4. The pricing offered by the competitors
  5. Features and aspects of their product

In short, these are the factors that will decide how better you are than your competitors.

Step 6. Creation of SRS

Software requirements specifications are a description of the software to be developed in the form of user stories.

It includes the user journey or app’s workflow, roles, features as well as technologies to use on each aspect: server-side, backend and frontend, and even marketing toolkit.

In the project discovery phase, we maintain a document that has all the necessary information that is required to keep the project in line with the team.

The documentation uses to create a user experience and visualize how the platform needs to work.

Step 7. Prototyping and Wireframes

The wireframes help to make sure that the team understands and interprets the expectations of stakeholders correctly. If something is wrong, it’s much easier to fix as workflow already visualized as a wireframe.

But it’s important to remember that stakeholders may be wrong about workflow too. Then UX wireframes a tool to improve the platform’s workflow and make it more user-friendly.

Step 8. Project Blueprint

Lastly, in the discovery phase of a software project is project blueprints. This is a complex of deliveries of each previous step.

It is essential to have a project blueprint for making sure that all of the processes are being taken care of in the allotted timeframe. It also specifies various technical requirements and other aspects like:

  1. Project timeline of the development process and scope of work
  2. Technical details and project requirements
  3. Cost estimation
  4. Milestones
  5. Deadlines
On this image you can see the key steps that consist of the product discovery stage

What’s Next?

The discovery phase is a must for anyone seriously planning to develop a software product.

We discussed the benefits, price, process, and deliverables involved in a discovery phase in this article. But we have more to offer.

SpdLoad is a company that has been creating MVPs for startups for 8 years and has a track record of developing its own product.

We will be happy to help you with the discovery phase to realize and nurture your idea.

Bonus Infographic

Here you’ll find a summary of our in-depth guide. Learn the highlights of the discovery phase in software development.

This is an infographic that describes all the necessary steps to start the discovery phase in the software

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