Small but mighty
trategic business decisions often require a leap of faith, and many small businesses aren't ready to jump.
When investing in project management, smaller companies tend toward an ad hoc approach: They're much less likely to have a project office than larger corporations, and most only recently have initiated project management improvement initiatives, according to the Center for Business Practices (CBP), Havertown, Pa., USA. In fact, in CBP's survey of 92 companies, just 39 percent of small organizations (with sales of less than $100 million) have implemented project management software compared to 73 percent of medium-sized and 64 percent of large firms.
Despite this reluctance, project management makes small companies more agile, better able to satisfy client needs and ultimately maximizes performance.
Investing in project management yields repeatable processes, structure and enterprisewide inclusion.
Companies can couple professional development with improved customer service by creating a career path that begins in the customer call center.
The methodology also gives customers and partners a degree of confidence in a smaller company's performance.
Customizing methodology integrates customers into the procedure as integral partners.
The Right Path
Fifteen years ago, Universal Electronics Inc. joined a crowded consumer electronics field. Having watched countless small- to mid-size enterprise competitors fall to the wayside, UEI credits two semi-secret weapons with its success: project management and empathy for technologically challenged consumers.
To cement this intimate product and customer knowledge in the company's culture, UEI leaders established a well-defined project management career path. A consistent process simplifies product development, smoothes internal speed bumps and enables quicker time-to-market. “Historically, the sales application engineers would create a project scope, get the customer to accept it and hand it to a project manager who would manage the development at the factory,” says Lee Haughawout, PMP, UEI's director of program management. “What we saw, though, was that the handoff created some problems in communication, where the customer expects one thing and gets another.”
As a solution, aspiring program managers are hired from the customer call center where they become intimately aware of customer questions. From there, they move into sales application engineering to familiarize themselves with the technological side of the business, and eventually they begin to manage individual business segments. “We draw hard lines between what our program managers are responsible for,” Haughawout says. “Otherwise they tend to lose their focus on the objective of particular business segments. By keeping them within the boundaries of the business segment, they build relationships with customers, they have greater understanding of their expectations, and they can adapt to those styles.”
Company: Universal Electronics Inc. (UEI)
Business: Develops software, firmware and turnkey solutions for universal remote controls
Location: Cypress, Calif., USA
Annual Sales: $104 million (2002)
Major Competitors: Hitachi, Philips Electronics, Pioneer, SANYO, Samsung, Sony, Toshiba, Motorola
Some of the UEI remote's core features resulted from this well-defined career path. For example, customers often called to complain about a snowy screen. Instead of continually instructing customers to switch back to channel 3—the standard cable receptor channel—program managers developed a new feature for the remote's next release: a channel lock to prevent channel surfers from accidentally cutting off their reception. “The knowledge we gained from the career path has enabled us to really focus on the customer satisfaction, getting the product from concept to delivery,” Haughawout says.
The knowledge we gained from the career path has enabled us to really focus on…customer satisfaction, getting the product from concept to delivery.
LEE HAUGHAWOUT, PMP, UNIVERSAL ELECTRONICS INC., CYPRESS, CALIF., USA
Over the past three years, changes have been gradual, but Haughawout says they now are clearly visible. Project management enables a greater amount of flexibility—a necessity when 99 percent of UEI's customers are large manufacturers. Executives confidently focus on the larger picture and leave the daily operations to their qualified program managers. “They really allow us to run the programs as they should be run,” Haughawout says. “They defer to our expertise on what's feasible, what we can do in terms of cost and schedule.”
Integrate, Collaborate, Perform
For many smaller companies, project management seems like a good idea, but finding the time, money and executive support to put a methodology into place often keeps it from becoming a reality.
In 1998, the team at Stratus Technologies Inc. improvised management procedures. “They always kind of fizzled out because we didn't have a well-defined, documented process with repeatables,” says Marjorie Martin, vice president of software engineering. “It was not totally ad hoc; it was informal, though.”
To remedy the situation, management consultants PRTM, Waltham, Mass., USA, developed a six-phase product development process. “It's helped us bring a lot more discipline to the company and a lot more cross-functional coordination,” Martin says. “We're moving programs along step by step with everybody engaged. It's made sure the whole company is aligned.”
Similar to UEI's basic portfolio management structure, Stratus teams run each product line as “stand-alone” businesses with core team leads, so the management team can see it as a sort of mosaic. “It builds a whole portfolio,” says Denny Lane, director of product management. “Management definitely has a greater confidence in the predictability in each product.”
Company: Stratus Technologies Inc.
Business: Makes fault-tolerant servers that can be configured with its proprietary operating system, as well as with Microsoft or Hewlett-Packard operating systems
Location: Maynard, Mass., USA
$250 million (2002)
Major Competitors: Hewlett-Packard Co., IBM Corp., Sun Microsystems Inc.
This cross-enterprise visibility eliminates competition among projects vying for the same funding sources. In fact, the process enhances collaboration from the project level up. “We can't afford to have competing projects,” Martin says. “We can't afford a whole lot of false starts. Our resources are very valuable, so we have to make sure our projects are correct.”
Core team project leaders meet weekly with Stratus senior vice presidents for status reviews. Each project works on a contract basis with several contingencies built in. “We empower core teams to make decisions that stick,” Lane says. “But we have an escalation path that's rapid if they can't make a decision.”
In 2002, a Stratus core team was developing a low-end server with an aggressive price point, but market research revealed issues. “We did a focus group, told them the product has got a lot of good features, but they said, ‘Here's what's not going to work,’ and so we went back to the drawing board,” Lane says. A reincarnation of the product just a few months later has made a much stronger impact on Stratus' product portfolio. “[Our] process talks about how you should drill some dry wells,” Martin says. “But it gives you the ability to invest the minimum amount of time and money before you find out you're not going to play.”
Larger companies tend to be more bureaucratic. That causes delay. We try to push decisions down as far as we can and move as quickly as we can.
MARJORIE MARTIN, VICE PRESIDENT, SOFTWARE ENGINEERING, STRATUS TECHNOLOGIES INTERNATIONAL, MAYNARD, MASS., USA
The interplay between the executive approval council and project leaders provides a level of visibility up and down the organization that many companies never really achieve. Running the product lines as separate entities also bolsters Stratus' mobility in the marketplace. “Larger companies tend to be more bureaucratic,” Martin says. “That causes delay. At Stratus, we try to push decisions down as far as we can and move as quickly as we can.”
Hands to the Fire
Growth tends to throw ad-libbing project managers off course. At ARM, a British microprocessor software developer, company leaders learned the hard way.
“In the early days of ARM, project management was very much all hands on deck,” says Graham Budd, vice president of operations. “Basically, the most capable technical people also would do the project management on the early projects.”
But between 1992 and 2000, the microprocessor developer went from a small startup of 12 people to a staff of 750. “We found the ad hoc approach to project management just wasn't capable of going forward. We were burned in the early days on occasion by not having a system that ensured that key risks weren't missed.”
Company: ARM Holdings plc
Business: Develops and licenses microprocessors based on reduced instruction set computing—a chip architecture that allows several tasks to be processed simultaneously
Location: Cambridge, U.K.
Annual Sales: $243.2 million (2002)
Major Competitors: MIPS Technologies Inc., Hitachi Ltd.
The complexity of ARM's development process reinforced the need for a more stringent system. Because ARM develops software for silicon chip hardware, bugs in the design result in massive rework, Budd says.
ARM realizes it needs top-quality management to stay in the good graces of the billion-dollar Silicon Valley enterprises that comprise the majority of its annual sales. “If we are late in shipping our part to the semiconductor company, then they're late in finishing their chip, and it's late to market,” Budd says. “What happens at each stage of the value chain, by the time you get to the manufacturer, just one week late—that could be worth millions of dollars.”
To complicate the matter further, ARM discovered that none of the available enterprise resource planning systems on the market would meet these parameters, so ARM developed an in-house system to accommodate formal project management.
What resulted is a grouping of virtual modules that contain all necessary forms, assessments and ARM best practices. “There's a greater sense of accountability with this system,” Budd says. “It's more streamlined. It's making sure that key stakeholders are brought into what's being done.”
In addition, ARM takes a more rigorous approach to metrics. For instance, in the first six months of reporting a delivery date metric, project teams improved their timeliness by 13 percent.
Company: Rila Solutions
Business: Builds and maintains enterprise IT and wireless solutions for clients in the United States and Europe
Location: New York, N.Y., USA, and Sofia, Bulgaria
Annual Sales: N/A
Major Competitors: IT companies from India, Philippines, Russia and Indonesia
Despite a multitude of competitors, Rila Solutions, a New York, N.Y., USA-based software company with its development center in Sofia, Bulgaria, credits its project management expertise with its early success. “I believe that due to the implementation of worldwide recognized project management methodologies we won projects in the area of financials, banking and logistics in the U.S. and U.K. where we competed with more than one IT company,” says Vladimir Lilov, director of project management and software development.
Rila's continual emphasis on process improvements has led to great successes for the small company. In 1999, the organization integrated a strong matrix base. Since then, the company has logged more than 35,000 hours of project management and now is focusing on a more complex portfolio management system that customizes project knowledge to each customer's expectations and requirements. “We are accustomed to continuous learning and improvement of our project management skills and techniques,” Lilov says.
But this methodology customization doesn't just impress customers at presentations, it integrates them into the procedure as integral partners. “Our framework allows our project team and our stakeholders to be an active part of the solution, not a side of the project living on another planet,” Lilov says. “We start to integrate our customers into the solution development right from the beginning—our first meeting or our first conference call. That means not only answering questions, but also asking questions and suggesting solutions to raised issues. Such an approach allows us to start building the integrated team immediately.”
Rila's flexible approach means it can tackle a diverse range of projects and can infuse creativity into their management procedures. While working for SynXis Corp., Denver, Colo., USA, the project team decided to modify the development process to meet client standards. “We decided on a ‘no blame’ policy and instead of errors, bugs and undefined functionality, we accepted the term UBR—unexpected behavior report,” Lilov says.
With AST StockPlan in New York, N.Y., USA, Rila divided a large scope of projects into several smaller projects “to improve client awareness and control over the project,” Lilov says. With Icosr Ltd., Edinburgh, U.K., Rila opted for short work sessions on site to enhance communication with the client about project requirements.
In all, Lilov says, there is no one standard Rila approach. It depends mostly on the client's needs. The company's size and concentrated expertise enables this capability. PM
PM NETWORK | JUNE 2004 | WWW.PMI.ORG
JUNE 2004 | PM NETWORK
PMI research shows project teams that draw from an array of perspectives and skillsets deliver powerful outcomes.