Vegar Imsland, Sundeep Sahay and Yvonne Wartiainen April 9th 2003

1. Key issues in Managing a Global Software Outsourcing relationship between a Norwegian and Russian firm: Some Practical Implications • Vegar Imsland, Sundeep Sahay and Yvonne Wartiainen • April 9th 2003

2. Agenda • The context of the research • Methodology • Discuss 3 key issues that influenced the relationship, and suggest some points of action: • Knowledge sharing • Estimation • Project Management • Communication • Discussion

3. The context of the research • NorSys: The Norwegian customer • RussCo: The Russian developer • Relationship started in 1999 • Possible future projects

4. The context of the research – compared with IN364 issues • Theoretical foundations • Research methodology • Illustrating complexity • Structuration theory: Understanding culture • Organizational complexity • Geographical distance • Context specific knowledge • Language • GSO vs. Participatory Design

5. Methodology Data collection: • 12 interviews in Norway and 14 interviews at RussCo in St. Petersburg. • Reading project documents. • Analyzing tools used in the project. • Discussions. Other: • Feedback to the Norwegian project staff – used by the project-members to justify their actions. • We felt moral obligations to give something back to the companies. • The Norwegian company sponsored our trip to Russia. • …but never instructed us what to write. • Our engagement in the project has had practical implications which we consider positive. • We believe we could not have collected our data being less involved in the project. • We were asked for advice during the project.

6. Knowledge sharing • Definition: Concerns the various processes through which information and knowledge is acquired, shared and integrated. • Various forms of knowledge: the Norwegian tax- and salary rules, about developing estimates, about SalarySystem, TestTool, and Delphi. • Various mechanisms: face-to-face meetings, written documents, e-mails, telephone-conversations and ICQ-chats, project-reports and bug-reports. • Local knowledge: Knowledge which could not be transferred, which was in the heads of people and embedded in work practices.

7. Knowledge sharing • Problem 1: Lack of domain knowledge • Problem 2: Inadequate efforts to transfer knowledge • Estimation

8. Knowledge sharing Lack of domain knowledge • NorSys was supposed to have complete knowledge of SalarySystem • SalarySystem is very context specific • Little written documentation • RussCo was believed to have established procedures and understanding of how outsourcing should be done • Redesign projects are different from ”new” projects

9. Knowledge sharing Inadequate efforts to transfer knowledge • Knowledgeable RussCo people spent time on other projects • Language problems • Positive: TestTool and the test cases improved the knowledge sharing

10. Knowledge sharing Estimation • Technical focus • Top-down approach • RussCo wanted the contract → made low estimates • No negotiation process • No overall evaluation; interconnected modules

11. Knowledge sharing Suggested points of action: • Earlier and regular face-to-face meetings • Encourage more communication channels to be used • Videoconferencing • Closer control over movement of personnel • Language and cultural training Estimation: • Take the GSO nature of the project into consideration • Do not make estimates unless the understanding of the system is appropriate • Emphasize the need to develop “correct” rather than “low” estimates

12. Project management Within the issue of project management, we include the formal (and also informal) routines and procedures for application of knowledge, management of skills, use of tools and techniques for project activities in order to meet the common aim of the partners to successfully complete the project. We first discuss some project management related problems and then discuss some suggested points of action.

13. Project Management • Problem 1: The role and movement of key people • Problem 2: Project Reporting

14. Project Management The role and movement of key people Key people: those people that because of their role, knowledge, and work-tasks are important to the project Organizational structure: the information-processing network in the organization including points of team members’ power

15. Project Management The role and movement of key people • No formal demand related to the team members skills and experience was made. • The challenge of language led to bigger workload on two people (the Russian speaking developer on the Norwegian side, and the Russian project leader on the Russian side) than originally intended.

16. Project Management The role and movement of key people • Too much information is routed through one person, increasing the risk for overload – and “person dependent”. The result of overload is often selection, which again might lead to ignorance of important issues. • The organizational structure of the Russian company prevents the project leader from taking important decisions based on the knowledge he/she’s gained – “responsibility without authority”.

17. Project Management Project reporting • Testers are pressurized due to lack of time to close and report a build as verified (successfully fixed), before they are satisfied with the corrections made. • Both the companies lacked the appropriate level of understanding about the project status in the beginning of the project due to general reports, and that no checks were made to verify the status.

18. Project Management Project reporting • The programmer on the Norwegian side has no formal responsibility to report his progress on the calculation engine, complicating the parallel programming and integration process. • Detailed reports are good for the project members closely involved in the project, but more high-level and general reports should be made for the upper-management.

19. Project Management Suggested points of action: • Make it a contractual obligation for the vendor to provide the buyer with CVs from project members, and report shifts of people and get approvals from NorSys. • Allow more direct communication lines to: • spread knowledge among people. • reduce risk of overload on one person. • make cross-site problem solving more efficient.

20. Project Management Suggested points of action: • Decrease the consequences of shift in personnel by introducing shadowing/buffering – let one extra person follow the project so that if one leaves, this one can step in on short notice. • CMM : establish routines, procedures, and make documentation about the project more available.

21. Project Management Suggested points of action: • Reexamining the relationship between testers and developers to find answers to whether closing builds premature creates new bugs and will result in further delays in the long run. Release build every second week instead of every week? When 80% of bugs are fixed.

22. Project Management Suggested points of action: • Generate more general and less-detailed report for the overall management of the project – for top management. • Introduce another level of management that reports to the project leader from the testers and programmers.

23. Communication Definition: describes the transmission and receiving of information, and the feelings and attitudes of the people involved with the overall purpose of having it understood and producing a response.

24. Communication • Problem 1: Content of communication. • Problem 2: Channels of communication.

25. Communication Content of communication • Issues of high and low context communication: Norwegian expect direct communication, while Russians has a more indirect communication style. • Concepts are not universal so that even if you could translate the word “bilgodtgjørelse” to English or Russian, you need to fill in with an explanation of the actual meaning.

26. Communication Content of communication • Due to English language limitations Russian team members seems reluctant to write to the e-mail list because it is to serve as formal documentation. Explaining technical issues, and concepts that are local to Norway was further complicated by the limitation of language. • Black-box communication.

27. Communication

28. Communication Channels of communication Different channels have different characteristics which makes their use more, or less, critical at different stages in the project: • Face-to-face: in this project these meetings have been too few, to late, and with not enough people attending. • E-mail: result of the e-mail list: team members reluctant to use it due to visibility to management. Led to use of informal channels and more work for the Russian project leader.

29. Communication Channels of communication • ICQ: has encouraged its own use because it allowed for informal, invisible communication in Russian between the two sites. Was removed for security reasons. • TestTool: made monitoring of bugs efficiently, made customer input on bugs possible, increase the customers sense of control. • Telephone: due to costs and lack of shared language this has not been used, but for those speaking Russian it would have been preferred. • Video conferencing: provide similar opportunities to face-to-face meetings, but is not used in this project. • Fax: not used in this project.

30. Communication Suggested points of action: • Explore additional channels • Increase amount of face-to-face meetings • Consider the use of videoconference as a complement to face-to-face meetings • Sort out the technical problems with NetMeeting because it will provide the capabilities of ICQ and the visual dimension • Encourage more direct channels of communication • Introduce language and cultural training

31. Communication

32. Discussion • Methodology • Problems • Suggested action • Questions