Outsourcing: Agile Culture in Business
A recent study by McKinsey and the University of Oxford on 5,000 large IT projects showed that 17 percent go so poorly that they threaten the very existence of the company. In addition, over half go massively over budget and deliver 56 percent less value than predicted. An example of this is finding a home listed for $250,000, paying $275,000, and moving in to find that it is really only worth $125,000. We would not agree to it in everyday life, and we certainly should not accept it in our IT departments. The blame for these bad end results can be attributed to poor project management and outdated ways of working. Based on the research, a solution for these outcomes focus around four key points:
- Mastering a method that will assure the most valuable part is completed before the project ends
- Shifting the focus from budget and scheduling and moving into a long-term, sustainable approach with stakeholders (read: users) in mind
- Working on sustaining know-how and keeping it in the company
- Creating effective teams that are self-driven while maintaining their focus on a long-term strategy
If you are an IT manager or a C-suite level executive, you must think about the possible sourcing models that will satisfy the above requirements to make your next project or current service more efficient. Based on our experience in the industry, in order for the above to work, a cultural shift that is focused on shortcutting business needs with the workforce that does the job is necessary, as well as removing the boundaries that make higher management detached from people executing the work. The shortest way to achieve this is to employ an Agile methodology.
As a reminder, Agile is a set of methodologies based on four main principles that were written directly for software development.
- Individuals and interactions over processes and tools
- Working software over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
A skilled IT manager can quickly see that an Agile methodology (with slight adjustments) can be put in place of any process. However, that requires change, which is often painful. Is it worth it? The way to find out is to pick a service or a project with people who are likely to be early adopters and ask them to employ at least some of the tools, processes or methods utilized in Agile. Nonetheless, since the process is happening within a company, it is likely to lack an outside perspective. More dedicated IT managers can employ a skilled Agile coach or consultant to ensure that current processes in the company will not be an impediment (or at least will show that they are) in the process of adopting Agile.
There have been times when we have seen two projects run in parallel that were supposed to deliver the same results. Both project teams had little to no knowledge about the other, therefore no competition was enforced. Results showed that Agile project teams (not only software development) were able to deliver meaningful tools within the first two to four months. Projects usually ended within six to 12 months while delivering enough value that users stopped asking for more. On the other hand, sibling projects did not have that advantage. In many scenarios, non-Agile projects were still in a design phase after the first two to four months, and some did not leave it before 12 months.
Regardless of the size of a company and current position, working on outperforming competition is key. The half-life of business requirements to any IT project is between six and 12 months. That means if a team is going to deliver working software in half a year, it is very likely that 25 to 50 percent of the business requirements will no be longer valid. Based on market trends, clients will expect something different by then.
Until now, most IT managers employed some part of Agile in their organization within the last year. These processes are frequently applied to the old ways of working and expected to deliver what is “promised” by Agile followers. Checking Agile project management status is important when working with new clients, regardless of what is claimed. This is because off/nearshore location employees typically are younger than those in mother locations, therefore they tend to be more familiar with Agile ways of working and new technologies. If a company has an Agile process rooted in old ways of thinking, many problems arise that make the adoption of an extended team harder than it needs to be. Therefore, it is important to focus on resolving process issues first, so the cultivation of a new team/location brings a return on investment as quickly as possible.
These questions will help you better understand how to utilize Agile in your IT department:
- Time to market – Do project teams deliver minimal viable products (MVPs) within three months or less?
- Alignment – Is our online product or service competitive due to a constant alignment with client needs?
- Ways of working – Does our workforce think that improvements in ways of working are easy to make?
- Self-sustaining – Are methodologies and tools imposed onto the teams?
These are organizational and business questions that focus on the four main values of Agile. Lack of a positive answer to the first three questions and a negative to the fourth means that an organization is still lacking a significant Agile factor. The first two are especially important because they directly relate to a return on investment. Utilizing proper Agile methodology in business is essential to keeping up with current market trends. An Agile approach must be empowered from top to bottom, which means that in some scenarios the entire business, including sales and finance, must go through the pain of change as well.
In summary, the aspects that are hard to deal with and, based on statistics, will be even harder in the next few years, are maintaining talent, utilizing workforce creative potential and having effective teams. Now it is more important than ever to make the right strategic outsourcing decisions the first time. Looking into off/nearshoring might be a great way to solve issues, however, the price tag on a head is not the key ingredient. The focus, rather, should be on what you get for the price and whether or not the model is sustainable in the long term.