Communication Key to Outsourcing Success
By Sam Suaudom, South Carolina Electric & Gas
If there was one phrase in late 1994 at South Carolina Electric & Gas (SCE&G), that could be counted on to raise the blood pressure of information technology (IT) managers, it was “Offshore Programming.” Few SCE&G managers could have imagined that, nearly four years later, offshore programming would become one of the strategic mainstays of their company`s overall IT program or that they would have in place a complex methodology to support clear communication with India. They would have found it equally hard to believe that offshore projects would be coming in 30 percent below comparable onsite project costs and in half the time.
In the early 1990s, the utility, a unit of SCANA Corp., had experienced a difficult offshore project that failed to live up to promises of high quality work at substantial cost savings. Work arrived back from India not fully tested and below standard. Instead of saving an expected 30 to 40 percent on cost, the project actually proved more expensive since the project had to be redone onsite at SCE&G headquarters in Columbia, SC.
The project`s shortcomings, clear to everyone involved, were due in large part to a failure to communicate. India lies 14 times zones and thousands of miles from South Carolina. Moreover, the cultural chasm separating the two regions is every bit as broad and deep as the geographical one. Bridging the gap, seemed far too difficult and time-consuming for SCE&G`s IT management.
The impetus for SCE&G`s second attempt to go offshore came from the increasingly tight market for U.S. computing resources. Until the mid-1990s, SCE&G`s policy was to carefully balance the size of its internal IT staff–then about 200–with an approximately equal number of resources supplied by about 10 outside vendors. Such a policy allowed SCE&G the right mix of continuity and flexibility to manage an increasingly aggressive IT program.
Yet, by 1994, SCE&G was finding the process of screening and managing resources offered by outside vendors more and more difficult. Apparent good hires often fell short of expectations, while SCE&G`s best outside hires would often move on to other jobs before projects were completed.
SCE&G was discovering what many companies in the late 1990s have learned; that the “body-shop” approach to outsourcing has severe limitations in times of very high demand. The greater the demand for experienced programmers, the greater the volatility of the programming work force and the greater the difficulty in maintaining continuity on projects. In such an environment, SCE&G managers were finding it hard to control costs and meet deadlines.
As often happens, a problem with a specific project spurred SCE&G to look for a new approach. The implementation of a distributed management information system (DMIS), converting mainframe information for use in a client/server environment, was falling behind schedule. Complete Business Solutions Inc. (CBSI), a consulting firm based in Farmington Hills, Mich., promised to train programmers to work in the specialized software environment of DMIS and put them onsite at SCE&G`s headquarters. By agreeing to train workers specifically for SCE&G`s project, CBSI offered the prospect of more onsite continuity. In addition, CBSI offered the option of using offshore programmers based in India and, with it, the potential for significantly lower costs.
Given SCE&G`s recent history, this option had to be treated cautiously. Reluctantly, SCE&G management agreed to a small pilot project offshore. Even then, CBSI`s onsite manager faced a difficult balancing act. On the one hand, he had to get his onsite staff trained and the project successfully under way. On the other, he had to find sufficient work for CBSI`s offshore programmers to prove their value to a highly skeptical audience.
He did so using a communications methodology that CBSI has employed on a number of other offshore projects. Some of the key communication methodology elements include:
Dedicated Lines. The first step taken by the CBSI project manager was to install a dedicated line that connected Columbia to Farmington Hills and India. Dedicated lines are the one essential piece of hardware necessary for consistently error-free communications. Using the line instead of standard e-mail guaranteed delivery and also gave programmers access to partitioned data sets so that each project module/program had its own member. That way the trail of messages, specifications, data and questions is clearly dated and in one place. Such an arrangement offers managers a snapshot of each project and also the basis for thorough review.
Daily Double-checks. At the end of India`s day, the day`s work undergoes examination. Then, as the day begins in South Carolina, the work undergoes a second review. This almost trivial-appearing routine catches many errors before they reach the customer and is absolutely essential for acceptable offshore work. Ironically, the two different time zones actually make daily double-checking easier–perhaps one reason why the practice is not common for strictly onsite work in the same time zone.
One U.S.-based Manager to a Project. To assure accountability, CBSI assigns one onsite coordinator to each project. That coordinator typically has a counterpart in India who serves as the main communications link to the offshore team. As new team members join the team in India, the U.S. coordinator makes himself familiar with each programmer`s working style in order to ensure that all members of the team are truly effective on each customer`s project.
Clear Division of Routine and Non-routine Work. One of the keys to smooth project performance is to only assign relatively routine programming tasks to offshore personnel. Anything having to do with the overall functionality of SCE&G`s information system stays onsite in Columbia. Similarly, anything new to the system is always performed first onsite in Columbia. Only when onsite managers and programmers understand the new program do they allow it to move offshore.
Teambuilding. To maximize understanding of SCE&G`s corporate culture and build personal bonds between the two sites, SCE&G brought over key CBSI managers from India for several months to work as members of the on-site team. Offshore, CBSI maintains a team atmosphere by segregating programmers by customer and project. Thus, even though many projects for many different clients proceed simultaneously at CBSI`s Indian facilities, programmers and managers assigned to SCE&G all work elbow-to-elbow. At the entrance to their work area, India-based employees assigned to SCE&G have even erected a multimedia display complete with pictures of SCE&G in Columbia.
When programmers decide they want to move on to a new job, they often see a stint in the United States at SCE&G as their next career move. Virtually all of CBSI`s onsite Columbia staff got their start in India. The result is a core of programmers who have a good bottom-up understanding of both SCE&G`s information systems and the business processes they support.
Clearly Delineated Lines of Customer Communication. As a rule, SCE&G IT managers make requests only to CBSI onsite personnel in South Carolina. Aside from maintaining clear lines of authority, it also spares SCE&G managers and Indian managers from much of the difficulty of cross-cultural communication.
Drawing on all these techniques, CBSI and SCE&G have continued to expand the scope of offshore work, module by module. Even before the DMIS project was complete, CBSI and its offshore facility began absorbing new projects. Since 1995, CBSI has taken on close to a dozen projects performing about 50 percent of the work offshore. These have included database and Year 2000 conversions, and application maintenance. The work has steadily expanded to include projects of significant complexity and strategic importance. The number of onsite CBSI programmers and coordinators has also grown from five to 20, while the number of offshore programmers, originally three, now fluctuates between 20 and 30.
An internal SCE&G study also came to the conclusion that, besides producing 30 percent cost savings, projects implemented offshore typically take half the time to complete. According to the study, it is easier to add personnel quickly and find them space and equipment in a large development center like the one CBSI maintains in India than it is to do the same onsite in Columbia.
At the same time, job continuity has increased. More than 80 percent of the CBSI employees who began with SCE&G in 1995 and 1996 are still working for SCE&G and there are other, “softer” benefits. For SCE&G IT managers, for example, the presence of round-the-clock programming has become somewhat addictive. When at 5 p.m. a program needs analyzing or a report needs to be written, the IT managers simply ask the onsite project manager, who forwards their request to India. First thing the next morning, SCE&G IT managers have the answers on their desks.
Although SCE&G maintains some key relationships with other systems vendors, the company increasingly regards CBSI as its long-term partner. This fall a milestone toward that partnership will be reached when SCE&G`s CEO and other top executives pay their first visit to CBSI`s Indian facilities. It will mark the first time any SCE&G official has visited in the nearly three years since the project began, but, given the strategic direction of the partnership, it will probably not be the last.
Sam Suaudom is an information system manager for South Carolina Electric & Gas Co., a subsidiary of SCANA corp., where he has worked for the past 22 years. Suaudom holds a Master of Accountancy degree from the University of South Carolina and has implemented the company financial information system three times.
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CBSI employees assigned to SCE&G projects work together with their coworkers in India.