Resource management on an Ecommerce project
Ecommerce has changed the way we do business. Of all the business trends of the past decade, web enablement of trade has had the biggest effect on the market, the economy and business culture. InformationWeek, on September 13, 1999, started their article on “E–Transformation” with the paragraph:
“But in the past 24 months or so—give or take a few 60-day “Internet years”—companies around the world have embraced the beginnings of a change that promises to be more profound— and more lasting—than anything that has come before. What’s happening is no less than a transformation of the most fundamental business precepts: how a company does business, how it enters new markets, how it communicates across the enterprise, and how it deals with suppliers.”
This has put a laser focus on Information Systems (IS) and how it meets schedules and produces deliverables. Project managers in IS are feeling the pressure to make and keep the organization profitable and viable. And the new projects just keep a-coming: a research report from the Forrester Group (“The Third Skill,” December 1997) shows that more than half of IT executives expect their Net groups to roll out product enhancements at least every quarter, and 10% expect weekly updates.
Victor Lim, an analyst with E*Offering.com, a division of E*Trade, tracks the evolution of the U.S. economy. In his report “The Services Industry—One of the Last Frontiers to Benefit from the Web,” he notes the shortage of knowledge workers and the high demand for them. To offset this imbalance, organizations “will likely focus their attention toward solutions that enable them to maximize productivity from their existing human capital.” Gaining greater leverage from people, rather than through automating factory and business production, is a focus he thinks could potentially emerge as a significant trend in the Digital Age. In this paper, we will look at some of the challenges and opportunities offered by ebusiness, and why solutions that let organizations manage to the skills and capacity of their workforce are so critical here.
The best ecommerce project management will include a system that integrates multiproject management with resource management and process management into what we call workforce management. Resource management especially is needed to meet the common challenges to IS, as well as master those peculiar to ecommerce:
1. The resource shortage is expected to get worse before it gets better. The GartnerGroup predicts that only seven IT workers will be available for every 10 openings through the year 2003 (“AD Methods, Metrics and Myths,” October 1999).
2. The long lead time to find and hire workers, because of the shortage, is compounded by the long lead time to train them on new technology once they’re on board.
3. The resource shortage has helped to create a new type of workforce, one that is nomadic, virtual, telecommuting, contracting, etc., and so requires new methods to communicate with, collaborate with, and monitor.
4. Ecommerce is even more susceptible to the negative effects of paradigm shifts in software, hardware, communications equipment, and technology, so management systems must be timely and agile.
5. Skills of resources can become critical—or stale—in just a matter of weeks.
6. The feasibility, profitability, time to market, and risk of new products are all affected or constrained by the capacity and skills of the workforce.
Fast-Changing, Multiproject Environment
Consider the pressure put on IS by the pace of changes in the new environment. “The only consistent characteristic about ecommerce is that it is evolving so quickly you must continually rethink your business strategies,” said Cliff Sharples, CEO of Garden.com, in ComputerUser Magazine, March 2000. The pace of innovation in Internet technologies is said to be seven years for one business year. The result is you usually cannot use in Y2000 what was so effective in 1995. This high rate of change can place a severe penalty on companies that do not constantly innovate, and the burden is on IS to manage that change.
Multiproject management of ecommerce at the enterprise level is a good, even a critical, beginning. Unlike managing the massive and singular Y2K project, ecommerce initiatives are many and varied. A host of on-hold application-related projects, many of which were ecommerce, were waiting in a huge backlog for IS to come safely into the Y2000. Now clients and project sponsors from multiple departments expect to have their individual project schedules, milestones, and deliverables addressed. And project work is not the only thing claiming the time of the workforce.
Though some organizations would like to hope that most, if not all of their work is on projects, it’s just not so. Ignoring the claims the non-project work has on project schedules is a large contributor to project failure. Further, we break the projectized work into two categories which each require a little different management approach. Including these two project categories, we see that most organizations have in reality four different types of work:
Exhibit 1. Workload of a Department
1. Major projects—Those projects to capture new markets or redefine the workings of the organization, such as ecommerce or business process reengineering. Most of those organizations only have a small portfolio of major projects, and those get the management attention, but actually only 20–50% of effort typically goes here.
2. Projects—Those enhancement and maintenance projects affecting in-place systems and procedures. They are necessary to keep the organization viable. These projects are typically shorter duration with less dramatic impact on the organization.
3. Service requests—A service request is an occurrence with a resolution; any event that has a limited scope and can be resolved or completed. They often can be handled directly by professional staff without management intervention. The critical issues with service are to accurately account for the work performed, to update metrics, charge back the work, and communicate with the customer.
4. Administrative—These are the unavoidable claims on time, and the necessary activities to maintain the health of the individuals and the organization—such as holidays, vacation, sick leave, and training. Training especially can be a claim upon the time of the IS ecommerce worker.
Build or Buy? Hire or Outsource?
Though almost every U.S. company thinks they must be a part of ebusiness or be left behind, one business strategy for ecommerce says that, if you’re not going to capture a leadership position, then the effort will not ultimately pay off. And the effort can be significant: a May 1999 GartnerGroup report says that the average cost of developing and launching an enterprise Web ecommerce site is $1 million. That cost will continue to rise over the next few years by at least 25%. To pull into the lead as a market differentiator, they say a company must spend another $2–4 million and invest up to $20 million. As a result, Gartner feels most budgets for transitioning to ecommerce are underestimated by 50%, mostly because companies overlook the labor costs. About 79% of the $1 million is labor related.
Though the decision to “build or buy” an ecommerce system is often made by executive management, it is one that IS must project manage. Homegrown ecommerce versus off-the-shelf? Even with the plethora of commercial solutions, businesses can expect to perform a certain amount of tweaking. “Customization is a necessary evil, and a costly one at that,” says the May 1999 Gartner report. Managing contractors has been the focus of analysts and media. Another Gartner Group report, the “CIO Alert” of March 29, 200 warns of outsourcing risks if elements like these are present in the outsourcing project:
•This project is different from previous projects.
•Unclear project scope, objectives, and deliverables, or unrealistic goals.
•Deficient technical data.
•No contingency plans.
•Plan to “go live” without testing,
•Not all stakeholders have had input on project design, or they start distancing themselves from the plan.
Exhibit 2. Five Stages of a Project
Their suggestion is that you create a risk assessment team who determines what types of risks, segments them into recurring and non-recurring risks, prioritizes them, assigns a probability, and assesses the consequences and severity so the organization understands what’s at stake.
If you build your ecommerce system yourself, then you’re forced to address the critical shortage of skilled, knowledge workers, and how to find, recruit and train what you need. A Meta Group report dated February 19, 2000 (“E-Intensity Heats Up Web Skills”) says their research shows IT organizations are projecting a threefold increase in Java use, double in the US and increasing sixfold in non-U.S. companies. During 2000/01, ensuring e-project (e.g., CRM, Web) success will heighten the need for access to ‘hot’ skills. The pace of the IT hiring process is fast, and can erode stability. As pointed out in an InfoWorld article on March 20, 2000 (“A Day in the Life of the IT Job Search”) attrition is high in a market that encourages downright mercenary career moves, and loyalty is not praised like it used to be. The hiring experts suggest that you pay recruits for long-term performance, not just for signing up, and that you create perks related to quality of life issues. They also note the high cost of using recruiters, and that “Recruiters are hired to ‘pass the flesh’ and are only as good as the info they’re given. They’re not too technical, so some companies worry about security when they give too much information to a third-party recruiter.”
Geographically Distributed Virtual Teams
Today’s IT organization can include a “virtual” staff, comprised of contractors and subcontractors along with full-time, part-time and borrowed direct employees. Managing this human capital asset well is a key indicator of the success of an organization. A project manager must typically draw workers from the various resource pools of full-time or part-time employees, contractors, and subcontractors, all with multiple skills, who may or may not have indoctrination into the organization’s business practices. Managers are also being asked to manage 50, 100 or more resources—employees, contractors, part time workers, etc., without line-of-sight. Managers must be able to match people to the work and communicate objectives through a common business language. There must be a simple means of communication of complex information to large numbers of people in this type of distributed collaborative process.
Telecommuting or nomadic workers who get distracted easily, or require close supervision and/or social stimulation will not achieve their best productivity. The GartnerGroup predicts that by 2002, there will be more than 108 million people worldwide working regularly outside the traditional office. This “nomadic” workforce concept goes several steps beyond the conventional distributed workforce to include satellite office workers, hoteling (temporary cubicles), and the true nomadic worker who is getting almost all their work done in hotel rooms, on airplanes, and at cafe tables.
Exhibit 3. Skills Searching
One Solution: Workforce Management
Getting your hands around the work already in queue and the profile of your resources are both results of good workforce management. We suggest you consider the following:
Exploit the asynchronous communication and collaboration support of the Web by creating an extranet or intranet project management system. Offering each user a personalized web portal can improve communication and reduce training time.
Establish a Project Management Office (PMO). An evolved PMO uses resource management to analyze how effort is being applied across different projects and other work. It collaborates with executive management on aligning IT with the strategic priorities of the company. The effective PMO will also manage resource allocation to service work, create a total resource capacity plan, and identify future skills needs for outsourcing and recruitment.
Create a skills database integrated with a management system that tracks all work—project, service, and administrative—to give true resource availability.
Allow staff to self-administer their skills and standard activities (vacation and training time commitments, for example) to keep the data fresh so the organization can better leverage its human capital.
Being able to view all the workload for a given resource or department or group can be supported with a good time tracking system, especially one that integrates with project management tools. See Exhibit 1 for a typical resource histogram.
Manage to the Workflow
Historically, project management techniques have focused on planning work (Step 2 in Exhibit 2) and left the definition of the overall model and workflow process to the customer or consultants. This approach limits the effectiveness of a software solution in delivering real process improvements to the customer. In fact, all the stages of workflow for ecommerce management can benefit from workforce management.
1. Start Work: Verifying future work capacity when estimating and preliminary planning; naming skills needed to drive recruitment or outsourcing; identifying risk to proposed and scheduled projects from unrealistic schedules.
2. Plan Work: Ranking projects by capacity and skills of workforce; managing queue according to workload of critical resources; incorporating realistic schedules in time-to-market analysis.
3. Plan Resources: Searching and allocating by skills, proficiency and availability; supporting knowledge management and technology transfer within project teams with collaborative tools.
4. Status Work: Using integrated time and expense tracking to allow contributors to progress projects; charge back work if applicable.
5. Close Work: Updating skills, interests, and proficiencies in the resource database to harvest new knowledge of the workforce; using metrics and skills to identify new business and its feasibility; analyzing the profitability of outsourcing versus recruiting.
Time Tracking Integrated With Project Management
When it comes to IT schedules, you can’t manage what you can’t measure. We have found that a good foundation to workforce management is integrated time and expense accounting. Web-based software tools with an architecture that can enforce universal business rules are critical for accommodating a geographically dispersed workforce. Typically the work and resource data is in one central repository that can be accessed in real-time by dozens, up to tens of thousands, of staff and managers and other stakeholders. This ensures consistency of information across the entire enterprise. We suggest a standard SQL database for the repository. The business rules are generally enforced by middle-tier, application-server software, which allows scalability.
The week’s tasks and estimated hours are displayed in a webclient interface when any staff member or contractor logs on. Personalized web portals for each user can also help with alerts, collaboration and other communication for virtual teams. The staff member reports their hours worked and hours estimated to completion, adding any tasks “on-the-fly” that were not scheduled. This integrated system of simple, accurate time and expense accounting then not only provides a framework for notifying staff of weekly tasks and other work, but for progressing projects and service requests, as well as charging work to customers, explaining changes and measuring performance. A tightly integrated system will feed staff information to the repository and then provide regular, timely status reports to functional managers and others.
Also, by tracking planning/scoping and training/support separate from development time, you can easily create quarterly reports that support GAAP (Generally Accepted Accounting Principles) SOP 98-1 requirements on accounting for the costs of software systems. Publicly traded companies, who must follow GAAP, and others who choose to, will find it easier to support whatever investment strategies their company chooses with this basic process. And since another SOP 98-1 requirement is that all of the costs of a failed IS project must be written off in the quarter it was canceled, successful project management is even more important with this visibility of IS to the stockholders and investment community.
Track Soft Skills and Hard Skills
A critical foundation for workforce management is to develop a resource database on the central repository that can be accessed by all project managers, resource managers, and engagement managers. Included in this resource database should be information on the skills and proficiencies of each person, as well as other criteria such as location, functional group alliances, and, most importantly, availability. An integrated skills scheduling tool would then be able to access this repository to assign project tasks to the best person(s) for the job. Searching through the resource database should take no more than a few seconds up to a minute, and the results should be real-time data, with a ranked list returned according to preset algorithms. Since ecommerce is so volatile, a system that allows staff and contractors to self-administer their skills, proficiencies, interests, etc. (with managerial review) will help to keep the skills database fresh and the workforce management system agile.
The process of defining roles for each task can enhance skills scheduling with or without software tools. A “portrait” is created of the person(s) needed, with a list of the skills, and the proficiencies. Workplans created around these roles are then better positioned to maximize the organization’s work by leveraging the critical skills of the staff.
Remember that, though hard skills (OO, Java, XML, C++, etc.) and proficiencies are important, the IT worker of today and for the future will need soft skills, such as communication, leadership, management, etc. According to Gartner Institute’s report “Star Model: Assessing the Potential of IT Workers,” dated February 2000, IT workers will be more distributed throughout the enterprise. In many cases, these new business technologies will be physically located in the business units or at remote divisions. So IT project managers won’t just be managing a team of developers anymore, but must learn to manage contracts, service-level agreements, be adaptive and handle change well, even be an entrepreneur in using initiative to grow the business with IT.
Workforce Capacity, Now and Forecasted
When you have a system that tells you the workforce availability based on project work, as well as recurring work, customer support, administrative, etc., you can manage to true capacity, avoiding overbooking and underuse. Professional service organizations can maximize billable time. Since resource assignments are volatile, since they are generally forecast several weeks in advance and changes are inevitable, a good system will provide real-time identification of availability of individuals who are assigned to multiple projects.
Managers should be able to rearrange work assignments based on work priority, criticality, start date and other key factors. Business development staff should be able to build program or client profiles to put current work requests in context of other projects, the risk conditions, etc. The complete pipeline (early stage as well as authorized work) can be used to project skills and to drive recruitment. You can then create over/under staffing reports by skills, customer, or other criteria as part of your staff forecasting process. Employee skills are “fresh” in the central repository and can include attributes such as “field of interest” allowing a dynamic interaction of staff interests with new products and business areas. New roles and/or skills can be dynamically added and immediately used in pipeline engagements and skills forecasting for the future.
Managers in ecommerce must balance a limited workforce against many projects, most with changing priorities. Some projects are time sensitive, so a missed milestone will invalidate all the work. Others have high security or high-quality requirements. At the same time, managers are pushed to estimate schedules, costs, and deliverables on multiple projects based on incomplete information, leading to unrealistic and inaccurate project plans. Since the work is critical to the organization’s competitive position, the manager is being held accountable for their schedules and costs as never before.
For the organizations that learn to integrate resource management with project management well, the reward can be lower risk, increased revenue, realistic ecommerce project schedules which use the full capacity of the workforce without overbooking, better alignment between project management practices and the goals of the organization, and recruitment or outsourcing initiatives that position the organization to capitalize on new business trends.
Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA
The Project Manager of the Future: Developing digital-age project management skills to thrive in disruptive times
Disruptive technologies can help project managers perform better and on a more strategic level. Building a truly digital skillset today requires a combination of skills.