Major projects are typically complex undertakings. Entering a new market and using an offshore software development organization can add to that complexity and multiply the challenges and risks considerably.
In this post, we’ll review the challenges a company faced when it chose to enter a new market and work with a third party organization with staff from a different culture, in a distant location, in a different time zone. We’ll look at the problems that arose and also consider what they could have done differently to reduce the risks and improve their chances of a successful implementation.
A leading financial services organization planned to offer Creditor Insurance to their branch customers through a newly created insurance subsidiary. Creditor insurance provides insurance to cover mortgage payments, credit card payment protection, coverage for home and small business loan payments, and personal line of credit payments. The company aggressively advertised the availability of Creditor insurance at all company branches as of a certain date.
The company needed a new system and new administrative processes to administer Creditor insurance. The change required interfaces with approximately 75 existing systems and procedures within the company and with external partners. The company expected high revenues from this product offering and established a project budget of $7milion
The organization assigned a senior project manager who had a proven track record in managing projects for the company although he had no experience managing an offshore initiative. The company also decided to offshore much of the development work to a vendor in India. These resources were very well-priced and the vendor had a good relationship with the company from work in another division. The developer assigned a senior project manager to guide the offshore effort and liaise with company’s PM.
The project immediately went into a tail spin:
- A plan was developed jointly with the developer and the company’s staff but progress lagged even in the first few months.
- The quality of the products delivered by the offshore developer was abysmal. Over 70% of the deliverables had at least one defect.
- The number of submitted change requests from the company’s staff was very high due to their lack of experience with Creditor insurance products, processes and practices.
- Senior management on both sides of the ocean was not actively involved, even as the project spiraled dangerously out of control.
- The two project managers and their senior staff initially used weekly conference calls to review progress and agree on remedial actions and required changes. However, the sessions were so frustrating and ineffective for all participants that they were abandoned in favor of email. Meaningful communications went downhill from there.
Nine months into the project, the company’s project manager recommended to senior management that the relationship with the offshore developer be terminated and local resources be used to complete the project. After much gnashing of teeth, management acquiesced. The newly acquired local resources had to go through a learning curve to get up to speed and additional resources had to be hired to try and bring the project back on schedule, at significant cost to the company. The final result: actual costs were double the original budget and the project was delivered nine months late.
How a Great PM Would Have Helped
This project is an unfortunate example of what can happen when a project situation varies from the usual organizational experiences and steps aren’t taken to address that gap. The company’s senior management and the assigned project manager had minimal exposure to Creditor insurance and little experience with an offshoring effort, yet they took no action to understand the issues and risks and adapt their approaches accordingly.
Certainly there is a vast store of information and expertise on offshoring challenges and the practices that can be used to mitigate the risks. Unfortunately, considerable time, effort and energy are usually required to leverage that knowledge effectively. That’s where something like Project Pre-Check can add huge value for a company and its project managers, by providing a mechanism to ensure stakeholders are identified and engaged and a decision framework is available to foster effective deliberations and decision making.
Below are some actions a great PM would have taken, leveraging the Project Pre-Check Decision Areas or a similar framework, to ensure a successful outcome.
- First and foremost, a great PM would have ensured stakeholders from both the company and offshore developer were identified and actively engaged in the project.
- Identification of possible risks and development of a mitigation plan is a prerequisite for just about every successful major change undertaking. Had that been done in this case, chances are the risks relating to outsourcing, quality, communication, team performance and expertise and other factors would have been addressed.
- Creating an effective team takes more than throwing some staff at a problem and hoping they all get along. A great PM would have developed a team formation plan that ensured shared goals, objectives, processes and ground rules, addressed the cultural and language differences, dealt with the distance and time zone challenges and leveraged technology as appropriate to enhance team performance.
- A great PM would have looked at the skill and capacity needs in both the offshore and in house teams and put a development plan in place to address the gaps.
- A great PM would have confirmed, with all parties involved, the processes to be used to plan, organize and control the project and communicate performance against plan.
Unfortunately, this project’s key stakeholders didn’t step back at the start and take an objective look at what they were attempting to do. They paid an unnecessary price. So, please, put these points on your checklist of things to do in future endeavors so you too can be a Great Leader. And remember, use Project Pre-Check’s three building blocks covering stakeholder, the engagement and collaboration process and decision area best practices right up front so you don’t overlook these key success factors.
Drew Davison is the owner and principal consultant at Davison Consulting and a former system development executive. He is the developer of Project Pre-Check, an innovative framework for launching projects and guiding successful project delivery, the author of Project Pre-Check – The Stakeholder Practice for Successful Business and Technology Change and Project Pre-Check FastPath – The Project Manager’s Guide to Stakeholder Management. He works with organizations that are undergoing major business and technology change to implement the empowered stakeholder groups critical to project success. Drew can be reached at email@example.com