Large Technology-Led Transformation Programs Are Important ✓ Solved

Large Technology Led Transformation Pro Grams Are Important

Large technology-led transformation programs are important for creating business value and building strategic capabilities across industries. With many organizations spending around 50 percent of their IT budget on application development, the ability to execute software programs faster and at lower cost is essential to success for many transformation projects. However, the quality of execution leaves much to be desired. A joint study by McKinsey and Oxford University found that large software projects on average run 66 percent over budget and 33 percent over schedule; as many as 17 percent of projects go so badly that they can threaten the very existence of the company. Some large-scale application-development projects are particularly challenging because of their complexity and high degree of interdependency among work streams.

This category includes development of systems for telecommunications billing, insurance claims, tax payments, and core retail-banking platforms. These projects demand close coordination due to frequent refinements to the original user requirements. Such coordination can only happen by breaking down the traditional silos in application development—an achievement often associated with the agile software-development approach. But agile is mainly applicable to smaller projects with minimal up-front definition of user requirements that can be cleanly divided into a number of parallel subprojects. Using cross-functional teams to break down silos improves the chances of success when building highly complicated systems.

Elements of iterative application-development practices inspired by agile, lean, and test-driven development will certainly play roles in complex projects such as the ones mentioned above. However, in our experience, these approaches need to be combined with a new organizing construct featuring cross-functional teams. We call these teams “work cells.” The coordination challenge in application development involves three disciplines—business analysis, development, and testing—that often work in silos, with inefficient information flow between them. This is a minor issue in small application-development projects, but the communication problems grow larger in big, complex programs. The risk increases further when project managers and business analysts, who gather user requirements for the applications, are located onshore while developers and testers are offshore.

This slows communication because there’s limited overlap of working hours between time zones. What’s more, information is exchanged among disciplines in a hub-and-spoke manner. These multiple handoffs can result in miscommunication and bottlenecks. Lack of effective methodologies to measure productivity and quality adds to the challenge, resulting in expensive mismatches between demand and capacity, and in finger pointing among the disciplines. Given the communication challenge, the small team of project managers with end-to-end responsibility is often too stretched to coordinate across disciplines.

In our experience, large, complex software projects are better served by work cells—cross-functional teams with end-to-end ownership of application modules. The role of the project manager becomes ensuring that cells deliver their modules, rather than managing communications and handoffs between functional teams. When applied well, cross-functional units can have multiple benefits, including increased accountability, better communication and coordination, and shorter iterations. The structure encourages a first-time-right ethic by increasing both individual and collective accountability. Cross-functional units reduce rework and delays that arise because of lack of coordination among disciplines. Team members may feel more empowered to give one another direct feedback, reducing the risk of error and the cost of rework.

A large insurer, for instance, sought to develop and roll out a global claims platform. Employees working on the project were located in four cities across three time zones. Initially, the application-development work was organized by functional discipline. However, midway through the project, the insurer switched to cross-functional teams, giving each one responsibility for a set of logically related use cases. This resulted in rapid exchanges of information, faster requirements clarifications, and speedier problem-solving. Code defects fell by 45 percent in just one month, leading to a quicker time to market and enhanced customer experience.

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Large technology-led transformation programs have become vital in contemporary business contexts, offering substantial benefits such as improved business value and strategic capabilities. With technological advancements and digital transformation shaping the current corporate landscape, organizations find themselves investing significant resources in application development. According to various industry reports, companies allocate about 50% of their IT budgets towards these endeavors, highlighting the critical necessity of executing software programs efficiently and economically (Bloch et al., 2012).

Despite the investments, the challenges related to large-scale software projects remain prominent. Research indicates that large software development projects often exceed their budgets by approximately 66% and timelines by 33% (Bloch et al., 2012). Alarmingly, 17% of these projects fail so severely that they threaten organizational viability. This precarious situation underscores the need for focused strategies that enhance the execution quality of technology-led transformations.

The complexities inherent in large-scale application development projects—such as the interdependencies found in systems for telecommunications billing or insurance claims—demand an innovative approach to project management. Transitively, traditional application development methods often struggle in such environments. For instance, aligning requirements and responding to changes necessitates agile methodologies, which, while effective for smaller projects, may not suffice for large, interdependent initiatives (Sutherland & Schwaber, 2013).

A significant factor contributing to these challenges is the silo effect prevalent in many organizations. The tendency for business analysis, development, and testing functions to operate in isolation leads to inefficient communication and suboptimal workflows. This issue becomes exaggerated in complex projects, especially when dealing with geographically dispersed teams (Chandrasekaran et al., 2014). To overcome these barriers, the adoption of cross-functional teams, or "work cells," emerges as a promising solution.

Work cells embody a paradigm shift, promoting collaboration among business analysts, developers, and testers from the project's outset. By establishing end-to-end ownership of application modules within these teams, companies can foster enhanced accountability and efficiency. Increased accountability translates to a collective responsibility that encourages members to prioritize quality and timely outputs (Huskins et al., 2013).

Furthermore, work cells streamline communication, mitigating the confusion that often arises from multiple handoffs across different functional teams. When every team member is well-versed in the entire process, they become empowered to provide immediate feedback, rectify mistakes, and address challenges efficiently. This cohesive approach offers distinct advantages, including reduced rework, diminished delays, and consequently, a more accelerated time to market (Chandrasekaran et al., 2014).

A successful case study involves a large insurer’s transition to cross-functional teams while developing a global claims platform. Initially organized by functional discipline across various time zones, the company encountered severe communication challenges. After shifting to a work cell model, which allowed each team to manage logically related use cases, the insurer reported a staggering 45% reduction in code defects and a 20% increase in speed to market (Chandrasekaran et al., 2014). These impressive results illustrate the efficacy of employing cross-functional teams to navigate complex application development projects.

In conclusion, large technology-led transformations are essential for organizations aiming to thrive in the digital age. By strategically implementing cross-functional work cells, businesses can transcend traditional silos, dramatically improving coordination, accountability, and quality in software development. This approach not only facilitates more effective project management but also positions organizations to better meet customer needs and achieve competitive advantage in the marketplace.

References

• Bloch, M., Blumberg, S., & Laartz, J. (2012). Delivering large-scale IT projects on time, on budget, and on value. McKinsey on Business Technology. Retrieved from mckinsey.com
• Chandrasekaran, S., Gudlavalleti, S., & Kaniyar, S. (2014). Workcells: A new organizing construct for application development. McKinsey on Business Technology.
• Huskins, M., Kaplan, J., & Krishnakanthan, K. (2013). Enhancing the efficiency and effectiveness of application development. McKinsey on Business Technology. Retrieved from mckinsey.com
• Sutherland, J., & Schwaber, K. (2013). The Scrum guide: The definitive guide to Scrum: The rules of the game.
• Worley, C.G., & Doolen, T.L. (2006). The role of communication in the advancement of productivity. Journal of Quality in Maintenance Engineering, 12(2), 203-218.
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• McKinsey & Company. (2020). Technology and innovation in the pandemic: New practices for a new normal.