This case elaborates on an international software development project in Indonesia with the involvement of Australian programmers

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Question:

This case elaborates on an international software development project in Indonesia with the involvement of Australian programmers for the fifth largest financial leasing corporation in Indonesia, BIG (name disguised), worth about 15 million US$ turnover. As a typical Indonesian company, BIG had an organizational culture where a lot of importance was attached to personal relations. These were considered more relevant than processes and procedures of any kind. BIG's information systems were based on software not fully catering to all the needs of the fast growing company. Therefore, the company was looking for a new IT-solution which was finally provided by C-Consulting. C-Consulting was a spin-off of an IBM subsidiary in Belgium, with offices in Singapore, Indonesia and Australia. Early in 2007, C-Consulting was acquired by an Indonesian consulting company with strong international connections. At its peak in 1998/1999, C-Consulting along with its Singaporebased parent company had a consolidated book accounting turnover of about 6 million US$ and around 25 employees. In the aftermath of the Asian crisis, turnover drastically decreased due to the fact that new investments in information technology were made only reluctantly. C-Consulting was led by two executives, an Australian and a Belgian, the former with an in-depth programming background and the latter with an IBM consulting background. Both executives were well trained in standard project management methodology. They were used to managing projects according to strict milestones and tight schedules with clear procedures to sign off the deliverables on the contractor and customer side. Despite their knowledge, they were not consistent in the implementation of those project management tools and techniques. In order to obtain suitable customized software for his company, the CEO of BIG called an old friend whom he trusted fully, one of the founders of C-Consulting. Both parties negotiated the following agreement: BIG would pay C-Consulting about 30,000 US$ for the development of web-based leasing software which would integrate all functionalities, from sales to lease insurance and accounting reports. That quoted price came after tough negotiations by BIG and implied a serious cut in price compared to the closest competitor of C-Consulting. Such web-based lease software, developed in Microsoft PSP weblanguage with the possibility to migrate to a Linux version at a later stage, had the advantage of allowing managers to access the software regardless of their physical location. Although not unique, such software created crucial advantages for BIG. Both parties intended to start a long-term collaboration for the mutual benefit of both companies. They agreed on an indicative price without bothering too much on the detailed specifications. That price was way below the Indonesian competitor's offer, let alone an international software supplier which would have charged roughly ten times as much as C-Consulting. The agreement was based on a kind of partnership with the aim of continuing to supply other leasing companies in Indonesia after the successful implementation of the system at BIG. When the price was determined, the specifications of the financial lease software were more indicative than precise. Somehow, the high-level specifications were considered sufficient at that stage because of the long-term relationship between the senior managers of both companies. The need for further detailing of the specifications to customize the software to BIG's requirements was not seen since no bad intention by either party was assumed. Such a 'loose' contract implied that the dates were guidelines and that the deliverables were referring to generic modules without any specific features of the modules which needed to be signed off. It was presumed that an attachment with the detailed specifications would follow at a later stage when work was in progress. Of course, the fact that precise specifications did not exist and were never signed off meant that there was no legal reference or basis to refer to. Nobody, however, made the effort to create & sign off detailed specifications. In the course of modelling the business processes, the client BIG unilaterally decided at least three times to request some changes to the software concerning the information workflow. Those changes seriously affected the information flows and the interdependencies between different modules. In addition, they made a lot of work which had already been done up until that stage redundant. Due to the fact that those changes were not documented, it was as if the requests had never taken place, resulting in a largely modified scope. The project specifications became broader and broader while no real additional substantial fees were granted since the spirit of the contract was that both parties were making an investment. But BIG conceded with a later delivery deadline which was postponed a couple of times. During the first seven months the work process proceeded more or less according to the initial schedule, or so it seemed, and no real conflicts appeared on the surface. Reports about the work in process were usually delivered orally. Some written progress reports turned out to reflect more the expectations of top management rather than flagging up delays. Over time, those reports became increasingly defensive from both parties since the respective Indonesian project managers on either side did not want to admit to any wrongdoing and did not want to lose face. The lack of open clear reporting against pre-defined milestones was initially compensated for by the two CEOs whose good relationship guaranteed the smoothness of the overall process. The Indonesian project managers for both CConsulting and BIG were well trained and experienced. However, they were not used to such big change management processes and ignored the requests of the international CEO of C-Consulting to implement some tough formal procedures regarding time performance and progress. The Indonesian project manager of BIG did not rely on formal sign offs, instead using only written statements of specifications without signatures. A formal sign off could have been misinterpreted as distrust which was seen as counter-productive in a business relationship. The project managers of both parties relied on ad hoc management if issues occurred. They did not ask probing questions of their team members, and received only insufficiently detailed feedback about project status. When the Australian programmers of CConsulting who were responsible for the quality assurance of the software started to complain about the numerous change requests by the Indonesian client BIG that were accepted by the Indonesian project manager and his Indonesian team, resulting in so-called 'spaghetti programming',1 it became obvious that the project was facing real time versus deliverables issues. After the CEOs of both companies had found out that the progress reports were mere cover ups rather than a reflection of the reality, the CEO of CConsulting decided to hire a new project manager to bring the project back on track. The new project manager was a trained civil engineer from a top Indonesian university with an international MBA degree from an Australian university. By the time the new project manager was about to take full control, the project was heavily behind schedule. The change requests had led to delays of 22 months in total. In fact, one could argue that the whole program plan to be finalized within 9 to 12 months (based on limited specifications from C-Consulting's perspective) was dragged up to almost 2.5 years as a result of those changes and add-ons. At that stage, the Anglo-European executives of C-Consulting tried to install strict procedures and processes in order to rescue the project. The Australian partner of C-Consulting even got involved operationally with the completion of the software, overruling some of the decisions previously made made by the respective Indonesian program managers of BIG and C-Consulting. The Asian project managers interpreted these steps as a sign of distrust and as a way to avoid taking real responsibility for the project. In another effort to rescue the project, one of the lead programmers was laid off, not for incompetence, but because of a lack of commitment. Since his bonus was linked to the successful completion of new projects he did not have any interest in completing the old lingering project, despite an agreed time schedule. In the meantime, C-Consulting was acquired by a local business consulting company which partially blamed the management of C-Consulting for not having taken appropriate early measures to rectify the project. Ultimately, the project was outsourced to a third party in Indonesia and losses were cut at both ends.

Questions:

1. Identify the issues in the project initiating phase.

2 How could the scope creep have been avoided?

3 Where do you see the impact of national cultures in this case?