Why Do We Need a POC in a Software Project? (And How It Saves You Money)

Have you ever had a project that sinks your budget due to the notion that it would be a good idea? You’re not alone. Companies are losing millions of dollars annually developing complete software applications that appear to be ideal on paper but fail miserably when implemented.

This is the point where a Proof of Concept (POC) will serve as your best financial insurance. Consider it an experiment, a low-cost experiment, not a delay. A POC validates or disapproves the most dangerous aspect of your vision, answering the most important question: “Will it work technically, and is the core functionality going to perform as desired?

Constructing this focused prototype initially will convert costly assumptions to operational data. A POC in software development assists in identifying the technical challenges at the very beginning, aligning the stakeholders with the real evidence, and ensuring the interests of the users are considered before full-scale development.

Ultimately, POC is not an added feature; it is your most intelligent initial investment. In this blog, we will look at how this disciplined way of doing things not only safeguards your budget, but it also makes your vision based on a base of confidence.

What is PoC in Software Development?

A Proof of Concept (POC) in software development is a small project that is done to ensure that your software idea is a feasible concept worth doing before going any further. It is not a prototype or MVP; it is simply about answering a question: Can we build this?

Consider it as your project reality check. A POC will test the main functionality and find technical roadblocks prior to spending hundreds of thousands on full-scale software development, and validate assumptions with minimal investment.

This renders a PoC of risk mitigation in projects particularly useful, as it assists in discovering technical boundaries, scaling problems, and possible project failures at the initial stages.

Beyond feasibility, a PoC also supports smarter decision-making by providing real data to stakeholders. Implementing a PoC in your software project leads to substantial cost savings, as technical problems are discovered before they escalate into major expenses.

A PoC typically answers questions like:

• Can this technology handle our requirements?
• Will these systems integrate as expected?
• Is the performance acceptable at a basic level?
• Are there any technical blockers we didn’t anticipate?

If the answer is “yes,” you move forward with confidence. If not, you pivot early, before money is wasted.

PoC vs Prototype vs MVP: What’s the Real Difference?

Before diving into why we need a POC in a software project. Let’s first understand the main difference between POC or MVP, and Prototype.

These terms are used interchangeably, which can lead your project down the wrong path before the project has begun. It is important to know the differences between poc and MVP software development to select an appropriate one when needed.

We will also let you know about proof of concept vs pilot project, since it can save you months lost in development to know when you should confirm a concept and when you should test it on actual users.

When Should You Use Each?

• Start with a POC if you’re unsure whether your technology stack can handle the core functionality.
• Build a Prototype when you need to visualize the concept for stakeholders or test UX assumptions.
• Launch an MVP when feasibility is proven, and you’re ready to validate market demand.d
• Run a Pilot Project when you have a working solution but need to validate it with a specific user segment before full launch.h

Why Do We Need a POC in a Software Project?

The question isn’t really “why do we need a POC in a software project?”, it’s “can you afford not to have one?”

1. Technical Validation Before Major Investment

The importance of POC in software development starts with technical validation. You might have the perfect vision, but if the technology can’t deliver, you’re building a house of cards. A POC checks if your suggested tech stack, APIs, integrations, and architecture can effectively cope with whatever you are suggesting.

Real case: A fintech company needed to develop real-time fraud detection with the help of machine learning. Their POC showed that the algorithm they selected was unable to handle transactions as quickly as possible. POC cost to find out this? $8,000. Discovery cost after six months of development? Over $300,000.

By the numbers: It has been demonstrated that when projects begin with a POC, it can help save 25-30% of the development expenses by distributing resources more effectively and preventing the wasting of effort on features that are not viable.

2. Stakeholder Buy-In and Confidence

Nothing kills a project faster than skeptical stakeholders. The business value of a software POC includes turning doubters into believers. When you can demonstrate a working concept, even a rough one, you move from “trust me” to “see yourself.”

A POC gives executives, investors, and team members tangible proof that their investment won’t disappear into a black hole of failed experiments. Studies indicate that a working POC can increase stakeholder investment readiness by as much as 40%, dramatically improving the chances of securing funding and organizational support.

3. Early Risk Detection

Reducing software development risks is what POCs do best. They expose the landmines before you step on them:

• Integration nightmares with legacy systems
• Performance bottlenecks that won’t scale
• Security vulnerabilities in your approach
• Third-party API limitations
• Data migration challenges
• Unrealistic timeline assumptions

The software proof of concept benefits compound over time; every risk you catch early is exponentially cheaper to fix than catching it mid-development or post-launch.

4. Informed Decision Making

One of the most underrated aspects of how POC improves project success is the clarity it brings. After a POC, you can make decisions based on data, not hope:

• Should we proceed, pivot, or stop?
• What’s the realistic timeline?
• What’s the actual budget needed?
• Which vendors or technologies should we choose?
• What team skills do we need?

5. Cost Optimization

Let’s talk numbers. The average cost of a software POC  and PoC timeline ranges from $5,000 to $25,000, depending on complexity. Compare that to the staggering reality of software project failures:

• Only 16.2% of software projects are completed on time and on budget
• 19% of software projects result in complete failure
• 52.7% of projects exceed budgets by 189%
• Companies worldwide waste approximately $2 trillion annually due to ineffective project implementation

Cost savings with software POC come from multiple angles:

• Avoiding full development of unviable solutions
• Identifying the most cost-effective tech stack early
• Preventing scope creep by clarifying requirements
• Reducing rework and pivots during development
• Negotiating better vendor contracts with proof of need

A real-world case: A fintech company did not spend $500,000 because, through the process of their POC, they discovered that the API of their core data provider was not scalable. That POC investment of $15,000 rescued them from a major failure.

Benefits of Proof of Concept in Software

The benefits of proof of concept in software extend far beyond simple validation. Here’s what a well-executed POC delivers:

For Startups:

• Attract investors with demonstrable technology – A working POC can increase stakeholder investment readiness by up to 40%
• Validate market assumptions before burning through seed funding. 42% of startups fail due to a lack of market need, making POC validation critical
• Build team confidence and alignment
• Accelerate time-to-market by identifying obstacles early
• Prove the founder’s vision is technically achievable

For Enterprises:

• Justify budget allocation to leadership with concrete proof
• Reduce innovation risk in digital transformation – 66% of technology projects end in partial or total failure
• Test vendor claims before signing massive contracts
• Align cross-functional teams around feasibility
• Protect reputation by avoiding high-profile failures, 17% of IT projects risk collapsing the company itself

The proof of concept for startups and enterprises serves different but equally critical purposes: startups prove viability to survive, and enterprises prove viability to innovate safely.

How to Create a POC in Software Development: 5 Essential Steps

The value of a Proof of Concept (PoC) is in its planning. Missing steps or hurrying through the process may result in poor validation, resource wastage, and a higher risk. The knowledge of how to develop a POC in software creation will make sure that your concept is properly tested before investing in the development process.

1. Define the Problem Clearly

All software projects begin with assumptions; however, not all assumptions are enough. This is done by identifying the actual problem that the software is meant to solve. Market research, user interviews, and competitive analysis can give information on the actual pain points. Some of the crucial questions are as follows: What problem are we solving? What does success look like? What resources and time are available? This makes sure that there is a match between the technical feasibility and the business goals.

2. Explore Potential Solutions

The second step after clearly defining the problem is ideation. The process of brainstorming about possible solutions should be done by the teams, with the constraints being budget, time, and technological limitations. Involving developers and engineers at a very early stage will allow assessing the technical feasibility and finding the most realistic, scalable solution. This is a stage that is concerned with strategy rather than execution.

3. Build a Prototype

A prototype gives a physical manifestation of the idea. This may involve wireframes, flowcharts, mockups, or a bare bones implementation that proves functionality. It is not an end product but a graphical and practical aid to the stakeholders and users to know how the solution functions.

4. Test and Gather Feedback

User testing plays a very important role in proving assumptions. Present the prototype to a small number of end-users, domain experts, and stakeholders to get feedback regarding the usability, functionality, and feasibility. The iterative testing is used in order to ensure that the concept fits the expectation and improves product-market fit.

5. Develop a Roadmap for Execution

The last stage is to sum up all the knowledge into a roadmap. This report incorporates a technical feasibility report, resource needs, possible risks, and the schedule of the final product construction. The above steps in the proof of concept process ensure that inefficiencies are reduced, priorities are clear, and the implementation proceeds easily once the project is out of the validation.

How a POC Can Save Your Business Money

Spending money on a Proof of Concept (POC) might feel like an extra expense at first. Executives often ask, “Why spend $15,000 on a POC before even starting the project?” The answer is simple: $15,000 can save you hundreds of thousands.

The Cost of Skipping a POC

If you skip the POC and jump straight into full development, here’s what can happen:

Without a POC:

• Months 1-3: Build core features and architecture — $120,000
• Month 4: Realize a critical API doesn’t work as expected
• Months 5-6: Try workarounds — $80,000
• Month 7: Discover workarounds cause security risks
• Month 8: Project is canceled or needs a major pivot
  Total Loss: $200,000+ and 8 months wasted

With a POC:

• Weeks 1-2: Test API in a small, controlled environment — $8,000
• Week 3: Identify API limitations early
• Week 4: Explore and validate alternatives — $7,000
• Month 2: Start full development with confidence
  Total Savings: $185,000 and 6 months

A small upfront investment in a POC prevents wasted time, unnecessary costs, and potential project failure. It’s not just spending, it’s smart risk management.

Ready to Build Your POC with TekRevol?

Now you understand why we need a POC in a software project, how to create a POC in software development, and the massive business value of a software POC.

The question isn’t whether you can afford a POC, it’s whether you can afford not to have one.

At TekRevol, we guide startups and enterprises through the entire POC development life cycle, helping you transform assumptions into actionable insights and build a roadmap for full-scale development. Don’t leave your project’s success to chance, partner with our experts and turn your vision into a validated, ready-to-scale solution.