Darius Charles scored the only goal of the game as a toothless Royals crashed out.
McDermott said: "Stevenage are organised, with a fantastic manager who has done a terrific job. They deserved to win.
"We were a little bit too nice. We had to win more tackles and more second balls.
"You can have times when players don't play to their level as individuals but we didn't perform as a unit. For me it should have been a 0-0 game.
"We have reached the quarter-finals of the FA Cup in the past couple of years and we wanted a good run again this season."