Project Management – a Necessary Overhead for Small IT service Providers

The most important, but usually substituted role for a small IT service provider is that of a project manager.   With both software and system integration projects now constantly linked to timelines, quality and budget objectives, the management of small IT organisations have to take the call of having to identify project management roles which may be fulfilled by an employee or a founder. 

Ashok Subramanian   explores the various needs and nuances of project management in a small IT organization.

Chandrima Choudhury, PMP,   Subbu Subramanian – an IT Transformation Specialist, and Varadharajan V – ex- CIO Daimler share their views on how Project Management is critical for small business organizations.

Customers demand products and services of certain quality and within a certain budget.  The ability of the service provider to deliver in the perceived quality and within a particular schedule and budget is the biggest challenge for any IT service provider.   “Most IT Service providers and System Integrators forget that an investment in managing projects is of common sense, and the most relevant investment at that,” said Subbu Subramanian.

Chandrima Choudhury, a Project Manager earlier at IBM, and a PMP practitioner, and more recently a project owner talks about her experience with a small time IT service provider based in Chennai.  She opined, “They had quoted a low price, so initially we were happy.  Then when we realized that all may not have been assumed right, or understood – we asked for another meeting.  Now they allow scope creep easily, as there is no base lining of the scope of work.”

The key issue here is about how IT service providers cost their services.  With proper estimation tools, or clear effort-role matrix, both software and system integrators, especially the smaller ones, struggle to make the right price.   Either they end up delivering an inferior quality product because they have a low budget to deliver, or they end up dragging, as the efforts are minimized to cut corners, Varadharajan adds.  “The first role of a project manager is early involvement to guide sales teams or founders to get the right size of project efforts will help understand both time and price feasibility.  That helps the customer understand that there is a logical sense to pricing,” he said.

Chandrima pointed out that about 15 to 30% of projects suffer due to this lack of clarity. The scope of work and efforts needs to be defined upfront.   A project revolves on four axis – Scope, Time, Budget and Quality.   Every aspect of these is interrelated and hence there   getting one wrong has a multiplicative effects on other factors. Agreeing with Chandrima, Subbu added,” All the above factors come under Project management.  Getting the head right is important for the tail to wag properly.   Early clarity on the scope, time, budget and quality is key.”

Varadharajan elaborated on the issue, saying that an end to end governing system – call it Project Management   is key for project based services.   The project based system essentially runs on three    major elements – Governance, Traceability and Communication.  Governance is the complete ownership of the project.  It means that the customer sees a layer of responsibility and ownership.  This comes typically with a person who can handle various aspects of a project.  Most importantly it is the visible face of customer satisfaction and delivery.

Chandrima explains from a customer point of view, “we never knew what stage of development, each modules were at, so a rigorous follow up was required.  We found that there were about 7 developers working on our projects.   We had to talk to multiple points, and nobody could give a full picture.  As an investor into the project, we had to split hairs.”  The main reason for this to happen is that there was no governance layer, no SPOC who could be the single point for us to understand the project status and present the overall picture.

The second issue was traceability.  The requirements   given to the vendor were quite comprehensive, and it was understood that the project would run on the waterfall methodology but as the project progressed,    somehow a lack of documentation and tracking had made the whole activity unclear.  The quality of developers was really good, but finally what matters is   some point of accountability on the progress.  This is closely interrelated with governance.

She found another way out, ”Finally, we had added some work, and they just accepted it – as they felt probably not so comfortable due to  the fact that they had not delivered.  Essentially, it was a reasonable amount of addition owing to a business decision.  Without a baseline, their team just added this to their already pending pile of work,” and that was certainly not the best of working systems.

The highlight of the failure in [project management was that when a report was required, the vendor did not even have a format to submit it in. there was no tracking of agreed action points, no formal tracker and reporting on deliveries and fails.

Subbu felt that the main reason for the rise of this situation was the mindset of the project owner or the company management and leadership. “Delivery of software or system integration projects needs focus, and that means that there is somebody in the organization at a senior level who tracks customer deliverables at a project level.   Most of the promoters act as defacto project managers, but without experience, and more so with so many things on the table, they struggle to deliver.   This can be avoided by getting a project management specialist as the co-founder or as one of the first employees.”

Varadharajan pointed out that this failure sometimes applies for   system integration projects as well.  “As I used to monitor vendor performance through clearly defined parameters, it is clear that vendors who have clear governance, tracking and reporting processes do well to complete project on time and on track.”

The biggest issue, said Chandrima, was lack of communication.  “Most technical team members don’t have the inclination to decide or communicate.  That is why the project management layer becomes very important in terms of the progress of the project,” she said.

Varadharajan added to this issue, often faced by smaller SI companies. “Leaving the project management to a technical lead because he/she knows the technology is the biggest mistake a small IT service provider can make.  The business impact of a project is not really the concern of the technical lead and therefore he/she goes about trying to solve the problem with only the technical point of view.   These results in a major impact on the business outcome associated with the software or the system integration deliverable.”

However, the good news is that most organizations have realized this, added Subbu.   Most organizations set up processes using ISO 9001:2000 standards to start with, as it gives a basic level of framework of project delivery and governance.   Then based on the industry – if it is software – CMM, and if it is support project – standards such as ITIL V2 are implemented.  This results in some level of method to the madness, as process framework push teams to meet certain basic criteria in the form of guidelines.

However, there are few organizations that have taken the importance of project management seriously.  This layer brings focus and therefore higher degree of customer satisfaction and avoids revenue leakage.  Varadharajan felt that some of the small scale IT service providers write-off the last 20% as money that would not come – the “sign-off or the acceptance fee” as he calls it.   But what all of them agree is that – a good project management layer in a small IT service provider makes a big difference in retaining customers and increasing revenue opportunities.