I saw precisely this in the (attempted) cross-continent deployment of some enterprise software. The amount of data being moved was relatively small, but the software was so damned "chatty" -- insisting on dozens of requests/responses for even the simplest operation -- that latency effectively killed it in this context.

I'd argued this point and that it be tested -- a simple network simulator would have sufficed. But management was willfully clueless, and the vendor wanted the sale more than an effective deployment.

Latency should be a part of any non-trivial testing.