Comment 2:

Yida's Difficulty:
Problems Beyond Project Management

By Hans Lou

Here is a story: A fruit vendor accepted a big order from the neighbouring company for 500 Kilograms of fruit as the gift to employees for the Mid-Autumn Festival. The vendor was excited about the deal and advised the company to buy the seasonal fruit of fragrant pear, to which the company agreed. However, when the ordered pear arrived at the company, the employees grumbled about it. The pear didn't look as appealing as traditional Chinese pear, for it was much smaller. Some of the pears were green and some yellow. People were even wondering if the pears were ripe or not. "Distributing pear in Chinese pronunciation sounded like "separating, which was not a good sign for the company. Eventually, the company had to ask the vendor to replace the pear with apple. The unlucky vendor, instead of earning much as originally expected, finally suffered huge loss.

The vendor in this story was in a similar situation as Yida. They both failed to fully understand the customers' needs, and had to constantly change the content of the delivery. As a result, they paid high price to no avail. So what shall we pay heed to in the case of Yida?

WHO IS THE CLIENT?
The question seems very simple: Kaye was the client. But pushing the question further, we have to ask: Which department owned the project? Which departments only partook in the project? Who could help Yida get a better knowledge of Kaye's internal business needs? In order to effectively manage the internal operation, many companies usually separate the signatory from the end user. Apart from trying to get the deal done, the supplier should make more efforts to clearly understand what the end user requires of the target object in the contract. Otherwise, though the contract stated "the fruit, what the client really needed was "the vegetables instead. In the case of Yida, it ignored this issue and got stuck as the project progressed.

If the project was as simple as buying the fruit, it would be much easier for the supplier to identify the end user. But the target object in the case of Yida was to develop a software, whose functions, stability, extensibility or interface-friendliness could not be specifically described in simple terms. In a software development project where the end user is separated from the signatory and from IT department, the supplier is confronted with the initial challenge of "who the client is. If the supplier assumes that the procurement department of the buyer is the client, the project is bound to fail. Also, if one takes it for granted that diverse departments of the buyer have parallel functions, the project will inevitably go astray. Generally speaking, when the business terms are initially settled in the contract, the sales department of the supplier should bring in its designing, engineering and services functions and get them in contact with the end user and technological support functions of the buyer. Thus, the requirements, scope, progress and real focus of the contract can be defined as early as possible. In this way, the supplier will invest much less than the potential cost incurred by the misunderstanding of the client identity.

Besides, a better knowledge of the client will help to remove the barriers on the way to project success. Communication makes the client feel respected and so facilitates the smooth progress of the project. On the contrary, lack of communication hinders it. For example, because Yida neglected Kaye's IT department, the latter then became a big hurdle for the project.

WHAT DOES THE CLIENT REALLY NEED?
Yida was a fast-growing software company which gained great profits in the Mainland China. The management of Yida had strong desire of tapping into new markets, probably because they were very confident in their products as well as their R&D capacity, or because they expected to avoid domestic price wars. What Kaye needed happened to offer the opportunity Yida wanted. It was indeed an attractive deal in which almost 6 million RMB could be earned. And the confidence might be further boosted by positive responses from the stock market.

Yida was perhaps blinded by this great prospect of the project and became reluctant at the very beginning to spend efforts identifying end users or understanding real customer needs. Even when problems emerged later, the project management team still failed to do what they should have done: the customer needs analysis. In every project, the first step should be the customer needs analysis; secondly the customer's current business situation should be investigated; thirdly, the gap between the customer's needs and business situation, and that between the supplier's R&D capacity and the client's requirement should be reviewed; the last step is to make decision on whether to do the project and how to do it. In the views of many companies, all these analyses, investigations and reviews are not profitable and therefore are regarded as a waste of time. However, only on the basis of proper analyses, could the company accomplish the project progress arrangement, the resource allocation plan, and the cost and benefit estimation. All problems plaguing Yida were rooted in the lack of analysis in the initial stage of the project.

On the other hand, the customer requirements should be replied in a reasonable way: not all their needs are to be satisfied; instead, reasonable suggestions should be offered. Take for example the fruit vendor mentioned previously, if his client asked for vegetables instead of fruits, he might be able to come up with a solution; but if the client ended up requesting an orchard, he might as well refer them to some other vendors. In reality, it is indeed difficult to bring the project to a halt. So the project manager needs to be more skilful in dealing with the customer requirements: he should insist on the bottom line of the customer requirement according to the contract, based on the proper analysis of their real needs.

Additionally, the project manager has to make sound judgment as to how the changes of the customer needs may be fulfilled and whether or not it can be controlled within the expected costs or how much has to be further added into the original costs. If putting extra cost falls beyond his limit of authority, he will have to report it to his supervisor. A company that effectively manages the project usually adopts all kinds of tools. For instance, different colours are used to signify if the project security, cost and progress are within the controllable scope, and different levels of management personnel will be designated to make corresponding decisions.

HOW SHALL WE COMMUNICATE WITH THE CLIENT?
Communication is a business catchword nowadays. But communication is also where people easily make mistakes. The means, the object and the content of the communication have to be constantly reviewed and adjusted. In the case of Yida, not many efforts were made in communication and as a result, expensive costs were constantly incurred. One example is that Yida was not equipping its team with personnel of suitable language capability for this cross-language and cross-cultural project. The problem might appear trivial, yet eventually it caused unnecessary loss. While lack of communication deprives the opportunity of the clients to clearly state their needs, excessive communication may put them off and show the lack of confidence and capacity in the project development. Proper communication should be a flexible process of adjustment based on well-defined plans. This poses a challenge to the whole project team, for the communication is not a job for an individual such as the project manager, but rather a task for the group as a whole. It is not realistic to expect every one to be able to communicate with others smoothly. Nonetheless, the project manager should be capable of facilitating effective communication among all team members.

Currently in a common model of business operation, the sales team is separated from the after-sales team, with the former concentrating on the customers and the latter focusing on the products. However, in a big project where diverse customer needs have to be met, this model will cause the project to get stuck due to the lack of understanding of the customer needs. A good project management starts from a full understanding of the customer needs at the very beginning of the project, instead of rushing into the project and struggling with it during the process.

There are two solutions to Yida's problem. The first is to involve the after-sales team in the initial stage. Before signing the contract, Yida could bring in the after-sales team to conduct an evaluation on the technological terms in the contract, and even to directly communicate with the technology team of the client. In this way, Yida would be able to learn about the gap between the product and the customer needs and accordingly define the plan of the project management afterwards. Another method is to hold the sales team accountable for the project delivery so that the sales team would not make blind promises simply to boost the sales volume and that the cost of trans-department communication and potential information loss could be avoided.

To summarise, what determines the fate of a project is the efforts invested before it is officially launched. So the following advertising slogan could serve as a motto: "Never lose the race at the starting line.

The author is CEIBS MBA04 Participant, now working as Advanced Consultant, IBM Global Business Service (China).