Lowering The Risks In Developing "Do-It-Yourself" Software Projects
by Phil McCutchen Marketing Manager, VCG, Inc.
Mike Dunville* had a decision to make. As new operations manager for Alpha Staffing, he wanted to make a difference at dynamic staffing firm. The principals of firm had charged him with making day-to-day operations run smoothly and efficiently while they concentrated on growing business.
With his background in operations and finance, Mike had successfully translated some of those service practices into Alpha's daily staffing and recruiting operations. Now it was time to take next step and modernize hodge-podge of computer systems that until now had been adequate for their operation.
But where to start? Mike knew that custom system his former employer, an insurance giant, had implemented year before had done wonders to improve efficiency and overall profitability. It had also taken three years to develop, and another to implement.
Mike didn't think that Alpha could invest that kind of time or money, but Mike knew that continued success of Alpha Staffing, and its entrance into new markets and business lines would be greatly dependent on a successful staffing software system implementation.
This reinforced Mike's doubts that one of "off-the-shelf" staffing software packages would fit their needs, even if it were quicker and easier to implement. The more he thought about it, more Mike felt that his decision on business automation would be his biggest, and if wrong, his last. He reached for a bottle of antacid.
Mike's business is unique, like yours. Special. Your business practices are equally different. As a result, your business requires specialized information technology that addresses those unique needs. You are convinced that with right IT infrastructure you will be more efficient, productive, and profitable. If you subscribe to this common belief, you, like Mike, have three options to achieve that end:
1. Develop your own custom staffing software and technology infrastructure;
2. Hire a consulting firm to develop software and IT for you;
3. Buy from a software/IT vendor familiar with your industry.
Of these three options, which do you think is most likely to work best, cost least, and get implemented fastest?
If you, like high-profile public staffing firms of Norrell (now Spherion) and Manpower choose to develop your own software solution, you too may have a very expensive future write-off to enjoy. In fact, Manpower's write-off for its failed three-year software development effort in late 1990's was pegged at $57 Million.
The right answer to this perplexing question is to buy from a staffing software vendor who is intimately familiar with industry.
Surprised? After all, you're special, unique, different, right? Well, not exactly. Yes, it is very true that you and your competitors differ in a number of important areas, such as management styles and objectives. However, you and all of your competitors also share a wealth of common traits, such as tracking employees and candidates, performing business transactions of orders and assignments, making payroll, and billing customers.
These shared business issues are at core of your staffing and recruiting business, and it is these issues that a staffing software vendor familiar with your industry is best qualified to address.
After all, such a vendor has researched issues to develop necessary technology. These industry-specific software vendors can often implement a solution that can handle 80 percent to 90 percent or more of your business operational needs. (It should be noted however, that vendor solutions may vary greatly in quality, efficiency, and cost-effectiveness, depending on their expertise and previous success in marketplace).
But let's say that "90 percent solution" that an industry-familiar vendor has to offer just isn't enough for you. You want it all. Or you want some features or functions that vendors don't have.
Your options then are to either do job yourself or hiring project out to outside consultants. Both are similar in that you assume overall project management risks, and, in case of doing job yourself, programming chores for your unique staffing software. If you decide to take either of these routes, do so with extreme care -- as industry surveys indicate that there is nearly a 60 percent probability of its failure.
According to one survey of thousands of software projects, conducted by Standish Group of Hanover, Massachusetts, four of 10 software projects failed outright. To make matters worse, an additional 33 percent of software projects were completed late, went over budget or were completed with fewer features and functions than originally specified. Can you afford to make that kind of risky investment?
In an even more unexpected finding, study also revealed that use of IT consulting houses -- even highly respected companies such as Andersen Consulting (now Accenture) and Lockheed Martin -- increased risk of a project's failure. This is astonishing because such consulting firms have staked their reputations on and are hired for their claimed expertise at developing or implementing enterprise software.
But reason for their poor results is not so surprising -- as it pointed to business practices that leave a lot to be desired, frequently at considerable expense of their clients.
It should be no wonder then that dissatisfaction with IT contractors has reached an all-time high. A poll of 200 MIS managers conducted by Information Week revealed that 63 percent of them had either eliminated or rebid an IT service contract within a year. This was typically due to unacceptable performance or failure to deliver as promised.
Why low success rate of home-grown "Do-It-Yourself" software projects?
With a success rate of only roughly 40 percent, you might be tempted to accept premise that very complexity of custom software would have a bearing on success or failure of project. To a degree, this is true, however, three main causes of software development failure, as determined by industry surveys, are not related to technology itself, but to experience, management, and politics. They are:
1. Inexperience: Technologies and programming methods change rapidly. This means that both business-side and/or contract programmers and program managers are not always up to speed on latest development technology. What is more important, IT-oriented program managers and programmers are rarely totally familiar with business issues to be addressed, and so may not be able to make connection to best technology needed to address them.
Consulting companies, including largest and most well-known, often use novice talent, fresh out of school, to handle programming and management chores. This inexperience leaves clients open to potentially massive cost-overruns or, worse, a system that never works even after years of development.
You probably won't hear much about these consulting firm failures though; both firms and their clients have a vested interest to keep such admissions of failure quiet. Only when it reaches "public scandal" or "write-off" stage does such information become public knowledge.