Extra Effort

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Global companies looking to develop product components featuring advanced or new technology often outsource these projects. However, this outsourcing poses more challenges for clients than getting external help on run-of-the-mill projects, because selecting and fully collaborating with the right vendor are more important to achieving project success.

Imagine a company that develops high-end networking routers and regularly outsources development of their peripheral features to a vendor that manages them successfully. The client decides to hire the vendor for a complex project: developing some of the core features of the router. However, the vendor fails to deliver this project within scope because the vendor's technical team had a limited grasp on the new and advanced technologies needed to implement the client's innovative algorithms. The client didn't realize this until late in the project, and it was forced to scrap a number of the core features implemented by the vendor.

The client learned the hard way that outsourcing a product's core advanced features was not the same as outsourcing simpler tech projects. Many such experiences have taught me that outsourcing advanced technologies for innovative product development projects is indeed more difficult and requires more care. Here's how to do it right.

PICK THE RIGHT ONE

Advanced tech projects involving innovation require a high level of expertise and a different attitude on the part of the vendor toward project execution. Thus, you need to evolve your techniques to choose the right vendor, and the following steps help:

1. When sending vendors your request for proposal (RFP) with the project requirements, offer multiple possible solutions for some features. Ask the vendors to evaluate these solutions, choose the best and offer a detailed reasoning. This approach will help you assess the knowledge of the vendors in the product business domain and advanced technologies.

2. If your RFP doesn't have some technical mistakes, you might want to deliberately include a few. It's a good way to test vendors to see whether they notice these mistakes and report them. This exercise will give you two insights: First, if the vendor can find technical mistakes in an RFP prepared by your technical team, that vendor has very deep knowledge of the project's technical domain. Secondly, if the vendor points out a mistake, it shows that its people have the courage to express differences with a client. This ensures they will not just follow your instructions but will collaborate with you to improve deliverables.

3. Review the vendor's case studies. One mistake organizations often make is looking at many years of a vendor's work. However, for innovative and advanced technology projects, you should only evaluate the vendor's past two to three years of work since technologies change fast. A vendor's earlier experience will be mostly irrelevant to your project.

COLLABORATE CLOSELY

By-the-book vendors won't cut it when bleeding-edge tech is involved. Vendors that understand the value of collaboration and innovation are better suited to work on tech projects that might require alterations in the project design during execution phase, which may be required since new and advanced technologies change fast. Further, if the competition is continuously upgrading its products, project requirements need to be changed to match them.

The client and vendor need to continuously collaborate throughout the project. This allows the client to regularly convey requisite change information and the vendor to understand that information and give its feedback on the right approach and time/effort required to implement the changes. It also helps the client and vendor to jointly decide the right strategy, resources and time/effort required to implement these changes. Collaboration means ensuring that the end product can be competitive in the market but will still be delivered without much delay.

You should plan each phase of the project in consultation with the vendor. Have the vendor project manager and core technical team members visit your office at the start of planning of each phase of the project. This will allow the vendor team members to participate in project requirements capture. They will get insights on reasons for design choices made in each project component directly from the component owner. Detailed design insights are required to execute such complex projects.

Provide freedom to the vendor project manager to execute the project without micromanaging him or her. Mutually decide the client-vendor communication processes, granular milestone-based status reporting and documentation process. After that, you should only be concerned about the vendor delivering the agreed-upon deliverables at each milestone—not about the approach being followed by the vendor. The vendor team has gained extensive insights into your project design during its visits to your office. Giving vendor team members autonomy during execution allows them to use this knowledge to add innovations to the project and to improve the product performance and competitiveness.

Today's outsourced advanced-technology projects require a vendor and client that operate as one team—rather than as a top-down system where orders flow down and the finished product flows up. Keeping this in mind when selecting and working with your vendor will improve outcomes. PM

Vimal Kumar Khanna is founder and managing director of mCalibre Technologies, New Delhi, India and the author of the book Leading and Motivating Global Teams: Integrating Offshore Centers and the Head Office.