Five factors that determine the success or failure of a globally delivered applications project

Love it or hate it, for the past two decades the story of global delivery (or offshoring as it’s often considered), has been a mixed bag: for every success story put forward there has been a horror equivalent highlighted as well.

On one hand, more and more organisations are eagerly embracing the concept of global delivery for application projects in order to lower costs, increase efficiency and productivity. While on the other side, communication issues, management overhead and cultural incompatibility are forcing companies to re-think their global strategy. And even within organisations, some divisions will report successful project deliveries using global teams while others fail to take advantage of the same.

Application projects are no longer delivered by IT professionals all huddled up in a single office. Today, application projects and related activities make-up the bulk of IT business delivered by global teams. The breakdown of global delivery activity makes for interesting reading:

• By sector: While the private sector has led the way in embracing the Global delivery model with over 30% already doing some form of offshore, the public sector has stayed away from it with less than 1% usage, predominantly citing security and social reasons

• By geography: While USA and UK account for over 70% of global delivery business and have been in the forefront of using offshore and nearshore services, mainland Europe and Japan have been slow in adopting the same and account for less than 25%

• By domain: The largest vertical sectors using global delivery are financial services (32%), manufacturing (20%), telecom (12%) and energy (11%). However, retail (5%), health care (5%), media (3%) and supply chain are still warming up to the idea

But whether or not applications projects are delivered successfully on a global scale depends on a number of key factors. Below are the five areas organisations need to be considering if they want to implement successful applications projects globally:

1. Organisational maturity

Research4 indicates that many global projects are perceived to have failed because the benefits expected are far higher than the delivery maturity of the organisation. So, it is vital that the right expectations are set with all stakeholders. Organisational maturity is a key factor that defines the type, size and complexity of the work that can be delivered using the global delivery model. Maturity in this context also means the availability of the infrastructure (e.g. remote development centres, WAN etc.), having standard global project development practices, having staff with experience of the model and, of course, commitment from management to deal with issues. All of this will have a significant bearing on what can be delivered globally and what potential benefits can be gained.

2. The right project

Taking a blanket approach is a recipe for failure. Technically, all projects can be considered for global delivery, but, practically, not all lend themselves to offshore or nearshore development. Practical considerations likely to prevent work being carried out using global teams are often either security related (regulatory compliance, data protection and confidentiality), the business case itself not stacking up – where the cost of overheads outweigh benefits gained, or simply because the client is not comfortable with the model.

A recent report by ComputerEconomics5 confirmed that 51% of the organisations that engage with offshore use it for application development and the average amount of development work done offshore is 35%. With the evolution of cloud, there is a general expectation that the potential for using global resources on application projects will increase as the required infrastructure can easily be made available to remotely located staff.

3. The right location

Having identified a suitable project for global delivery, it is important to choose the best offshore/nearshore location that will meet the project objectives. The deciding factors for selecting your location will typically include cost effectiveness, the technical skills and numbers, the functional roles of the project and the cultural affinity, security and language requirements. The 30 Top regional locations for 2010-117 as identified by Gartner are listed below:

• Asia/Pacific: Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.

• EMEA: Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine

• Americas: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru.

4. The optimum blend

Perhaps the greatest challenge to successfully implementing global delivery is choosing the right blend to offshore. It depends on a number of factors – the platform, the project size, the project type, the development methodology, and the process maturity. There is no one size fits all solution here. Typically, there are activities such as application and product development that can see a high offshore blend. Assessing the right blend is crucial to your company’s needs.

5. Project Management Skills

As ever, the success of rolling-out a globally delivered project lies in its management. Whether done locally or globally, the basics of project management apply in both cases. But many project managers underestimate the skills required to build a blended team: indeed it is one of the biggest reasons responsible for projects failing. Training project managers is therefore vital so that they get the expertise and skills to deliver offshore/nearshore projects. Working remotely demands a greater degree of communication and collaboration to ensure that all involved are working in tandem and are aware of all the factors that might impact their delivery.

Global delivery is not about offshoring. It’s about “doing the right things from the right places”. Global delivery is not a ‘silver bullet’ for all IT issues and needs to be applied in specific circumstances according to the criteria listed above. As ever, it is down to experience and judgement in order to apply the right global delivery model to your business.

ENDS

[1] - NASSCOM, 2009

[2] - PMP research, 2008

[3] - BCG Group 2007 and Data Monitor 2009

[4] Tom Philip, Erik Wende, Gerhard Schwabe - Identifying Early Warning Signs of Failures in Offshore Software Development Projects, 2010

[5] - IT Outsourcing statistics 2010/11, Computer Economics