What is a Proof of Concept (POC) in Software Development and How Does It Work?

According to the latest statistical data, 90% of startups fail. Just think about that number. Ninety!

Why does this happen? Among the main reasons are lack of demand and a mismatch with market needs. 34% of them launch with a product or service that does not resonate with consumers. Can this be avoided?

Of course! There is one very powerful tool that helps determine whether an idea will work in practice before investing significant resources in its development.

Want to minimize risks and validate your product’s viability? Then read the article to the end: software development experts will reveal all the secrets of a successful launch and effective development.

Definition of Proof of Concept in Software Development

What is a PoC? Proof of Concept is the process of testing an idea or technology before starting full-scale development. A PoC helps answer the question: "Will this work?" and minimizes the risks associated with launching expensive and complex projects.

The main goals of a PoC are:

• to ensure that it is technically possible to implement the intended functions and solve the set tasks.
• to confirm that the idea has potential for successful implementation and will yield the expected results.
• to identify and address potential problems at an early stage before significant resources are invested.
• to provide stakeholders (clients, investors, users) with a prototype and allow them to share their feedback.

MVP vs. PoC – is there a difference? 

At first glance, a Proof of Concept solution may seem very similar to a Minimum Viable Product (MVP), which often leads to confusion. However, with an MVP, you actually have a product of some kind. A technical PoC, on the other hand, can take the form of a presentation, prototype, or even just a document. Its focus is on verifying the technical feasibility and market appeal of an idea. It serves as more of an internal tool for the development team rather than striving for perfection.

A basic PoC document typically includes up to 7 main sections. Let’s take a closer look at the structure of a PoC in software development.

Depending on the scale and complexity of the project, it may be appropriate to add the following sections:

• Financial assessment: Calculate the costs of development and product maintenance, create expense estimates, and analyze ROI (Return on Investment).
• Legal review: Ensure the project complies with legal requirements. Check patents and licenses.
• UX/UI testing: Analyze the user experience and interaction with the product. Conduct A/B testing.
• Compatibility testing with external systems: Develop test modules for integration and test APIs.
• Scalability analysis: Perform performance testing and stress tests.

In conclusion: Proof of Concept in software development is a crucial stage that helps minimize risks and increase the likelihood of successful project implementation. It allows you to verify the feasibility of an idea and gather valuable feedback before proceeding with full-scale development.

Benefits of Creating a Proof of Concept Software Development

What does a company need in a competitive market? To make quick decisions and use resources efficiently. With the right approach, a software PoC can address many weaknesses.

Evaluating technical feasibility of the software solution

Technical feasibility is the first barrier that must be overcome. Not all ideas can be implemented due to technological limitations, lack of resources, or high implementation costs.

Example: A company wants to implement a new facial recognition system for office access control. PoC in technology can help test how accurately and quickly the system works in real conditions, considering factors such as lighting, camera angles, and other variables.

Research indicates that around 42% of startups fail because their idea is technically unfeasible or overly complex (Source: CB Insights).

Initial validation of market needs through a PoC

Even if the idea is technically feasible, it’s not guaranteed that it will be in demand. A PoC helps determine how appealing the idea is to potential users.

Example: A startup wants to launch a real-time communication app based on augmented reality. Through a PoC, they can gather data on whether users actually want such a product and what features are most important to them.

Identifying limitations of the product early on 

During the Proof of Concept Development stage, it is possible to identify limitations that were not initially obvious. This applies to both technical aspects (performance, security) and external factors (regulatory constraints, integration challenges with existing systems).

Example: A prototype of an application using machine learning may reveal that achieving the required accuracy demands more data to train the model than initially expected.

Making informed and rational budget decisions with a software PoC

How much will software development cost you? Proof of Concept helps estimate the approximate cost of implementing the project and make an informed decision about budget allocation.

According to Standish Group, only 29% of IT projects are completed on time and within budget. Using a PoC can significantly improve this statistic by helping avoid costly mistakes in the later stages of development.

Building confidence and having a reason to believe in the project’s success

A PoC can help convince stakeholders (investors, executives, potential clients) of the viability of an idea. It is a powerful tool for demonstrating that the project is not just a hypothesis, but a well-founded solution with real potential.

It’s like an architectural blueprint for a building. It shows the core idea and structure, allowing real estate investors to understand what the final result will look like and make a decision about further funding.

Speeding up the release process through software Proof of Concept

Identifying and solving problems at an early stage. Proof of Concept in Agile development helps reduce the time required to develop and release a full-fledged product.

Example: During the process, it becomes clear that implementing a certain feature requires using an external library. If this had been considered at an early stage, it would have significantly reduced development time.

Key Steps in Proof of Concept in Software

Creating a Proof of Concept in IT requires a clear structure and sequence of actions. Let’s share the key steps our team takes to achieve the best results.

Step 1: Identify the need for a IT Proof of Concept  in software development

The first and most important step is to clearly define the problem you're trying to solve. Without a clear understanding of the problem, creating an effective solution is impossible. Ask yourself the following questions:

• What problem does your product solve?
• Who is this product intended for? (Target audience)
• What existing solutions are there in the market?
• How is your solution different from existing ones?
• What key features need to be tested in the PoC?

At this stage, it's crucial to conduct market and competitor analysis to ensure the relevance of your idea. 

Example: The team plans to create an accounting automation app for small businesses. They conduct market research to understand the challenges faced by business owners in this sector.

Step 2: Ideate the best solution for your software PoC

After identifying the need, it's essential to develop the concept of the solution. Describe how your product will solve the problem, what technologies will be used, and what the system architecture will look like. At this stage, it's important to:

• Define the key features that will be implemented.
• Choose the appropriate technologies and tools.
• Develop a high-level system architecture.
• Establish success criteria.

Example: Instead of creating a fully-fledged application, you can test basic functionality, such as automatic tax calculation via a web interface.

Step 3: Develop a prototype to demonstrate the concept

Based on the developed concept, a prototype is created — a minimal working version of the product that demonstrates the key features. Prototyping in software development should not be a fully functional product; its goal is to demonstrate the feasibility of the core ideas. When creating a prototype, it is important to:

• Focus on implementing the key features.
• Use rapid development methods (e.g., creating mockups or using ready-made components).
• Consider time and budget constraints.

A prototype can be:

• An interactive mockup created in Figma or other tools.
• A coded prototype that performs a single key function.
• A physical mockup (for IoT or hardware solutions).

Prototype feedback allows you to move forward and proceed to the next step.

Step 4: Gather user feedback by testing the prototype

Software prototype testing is another crucial step, and arguably a key phase in the process. At this stage, it is important to:

• Gather real data on how users interact with the product.
• Analyze whether the prototype solves the stated problem.
• Identify weaknesses and receive suggestions for improvements.

Testing can evaluate:

• Functionality (functional testing).
• Usability (usability testing).
• Performance (performance testing).

Example: An accounting automation app incorrectly calculates tax rates because it operates with outdated data (creating a bug report). Users note that they are missing an integration feature with other internal accounting systems used by their company.

Step 5: Create a roadmap based on the results of the PoC

If the product PoC showed positive results, the next step is to create an action plan. The roadmap should include:

• Software development lifecycle 
• Timeline
• Budget and resources
• Expected results at each stage

A well-structured roadmap helps plan the next steps and ensures the project is successfully completed.

Examples of Proof of Concept  IT in Software Development

Proof of Concept (PoC) plays a key role in the development of startups, allowing them to validate software ideas before full-scale implementation. Let's look at a few well-known startups that successfully went through the PoC stage, which became the foundation for their subsequent success.

Uber: Transforming the Taxi Industry

The idea came to Garrett Camp after he faced difficulties hailing a taxi. Existing services were unreliable, and Camp considered creating a more efficient solution.

PoC: Initially, the team developed a simple app that allowed a limited number of users in San Francisco to order rides through their smartphones. This helped verify the technical feasibility and user interest in the new way of hailing a taxi.

Result: Positive feedback and growing demand confirmed the idea's viability, leading to the expansion of the service to other cities and countries.

Airbnb: A New Model for Rental Housing

Context: Airbnb founders Brian Chesky and Joe Gebbia were looking for a way to earn money by renting out part of their apartment. They noticed that many travelers were searching for affordable and unique accommodation options.

PoC: They created a simple website and offered air mattress rentals in their apartment during a major conference in San Francisco. This allowed them to test whether people were willing to rent accommodations from private individuals through an online platform.

Result: The success of this experiment confirmed the demand for such services, forming the foundation for creating a global housing rental platform.

Dropbox: Cloud Data Storage

Context: Drew Houston, the founder of Dropbox, aimed to create a simple way to store and synchronize files across devices.

PoC: Instead of developing a full-fledged product, Houston created a demo video showcasing how the service would work. The video garnered significant attention and validated user interest in such a solution.

Result: The feedback and support from users provided the foundation for developing the complete product, which later attracted millions of users worldwide.

Instagram: Focus on Photography

Context: Kevin Systrom and Mike Krieger initially worked on an app called Burbn, which combined features like location check-ins, event planning, and photo sharing.

PoC: User behavior analysis revealed that the photo-sharing feature was the most popular. They decided to focus exclusively on this feature, creating a simple app for sharing photos with filters.

Result: Instagram quickly gained popularity, attracting millions of users and was eventually acquired by Facebook for $1 billion.

Creating a Proof of Concept for Your New Software Product

If you plan to start a proof of concept project, this article is your starting point. You’ve learned how to mitigate risks, why PoC is essential, and how it can convince investors of your idea’s viability.

To make creating a PoC for your new software product simple and effective, we recommend following these straightforward tips:

• Start small: Don’t try to implement all features at once. Focus on the most critical ones.
• Leverage existing tools: Using readily available tools can save time and resources.
• Engage real users: Their feedback will help refine and improve your product.
• Be open to changes: PoC is a process of discovery, and its outcomes can often be surprising.

Remember, PoC is not just an evaluation tool—it’s also an opportunity for your team to better understand user needs and market constraints.

Would you like our team to create such a tool for you? We offer a free Proof of Concept consulting to help you decide if you’re ready to hire software developers.