maximizing project potential

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WHITE PAPER

Maximizing Project Potential:

Using Virtual Teams to IncreaseProject Efficiency and ROI Corporate IT budgets are shrinking due to the current recession, andtechnology managers are challenged to do more with less.

Three common cost-saving strategies being used by IT today are:

Postponing hardware upgrades

Cancelling projects

Avoiding external services

However, ruling out professional services can actually be adisadvantage if certain skills are needed for a project or the outcomewill be significantly better with the help of consultants. To help ITmanagers decide when to use in-house resources and when tooutsource, this white paper presents four steps to doing a cost-benefitanalysis.

It also shows how using a “virtual team” to complement your in-houseskills can be cost-effective and can lead to better results.



Maximizing Project Potential

April 2009 www.nuwave-tech.com

How IT Is Coping with Lower Budgets

The current economic conditions have compelled the majority of CIOsto cut at least 10% from their budgets. And with almost half of those

making cuts of 20% or more,

1

the big question is how to make fewer dollars go further.

Many IT departments are reducing spending on hardware or cuttingprojects to accommodate a smaller budget, while some are freezingspending on external services.

IT cost-cutting strategy #1: Postponing hardware upgradesThe heaviest IT cuts are probably in hardware. For the first time in manyyears, IDC forecasts that hardware spending will decline (by 3.6% in2009).2 Companies are simply keeping their servers, PCs, and printersin service longer. This is practical and easy to do, and it’s fair to say thatmost companies are using this strategy.

Extending the hardware life cycle is a good short-term solution whenworking with a limited budget. However, Forrester Research predictsthat hardware spending will jump in 2010, as companies make up for lost time on upgrades.3 If the recession continues into 2010, though,and budgets remain low, IT directors will need to find other strategies toreduce costs.

IT cost-cutting strategy #2: Cancelling IT projectsMany IT managers are also reducing the number of technology projects.Some projects are being postponed until budgets increase, while othersare being cancelled outright. Twenty-four percent of companies haveincreased the hurdle rates for new projects.4 This means that IT projectswill have to pay for themselves faster, have a higher return oninvestment (ROI) or make a more significant contribution to the health of an organization.

Although postponing or cutting IT projects is another strategy that canhelp IT managers meet budget requirements in the short term, thisapproach can actually be damaging to a company. According toGartner, the #1 business priority in 2009 is improved businessprocesses.5 And in many cases, business processes are improvedthrough the implementation of new technology. IT projects can also

1: “The Pitfalls of IT Cost Cutting” Business Week. 6 Feb 2009. Retrieved 7 Apr 2009 fromhttp://www.businessweek.com/managing/content/feb2009/ca2009026_260212.htm2: “Hardware Vendors Will Feel the Pinch in 2009” CIO Update. 25 Feb 2009.Retrieved 7 Apr 2009 from http://www.idc.com/getdoc.jsp?containerId=prUS217028093: “US IT Market Outlook: Q4 2008.” 9 Dec 2008. Forrester Research, Inc. Retrieved 5 Apr 2009from http://www.forrester.com/Research/Document/Excerpt/0,7211,46671,00.html4: “The Pitfalls of IT Cost Cutting” Business Week. 6 Feb 2009. Retrieved 7 Apr 2009 fromhttp://www.businessweek.com/managing/content/feb2009/ca2009026_260212.htm5 : “Gartner EXP Worldwide Survey of More than 1,500 CIOs Shows IT Spending to Be Flat in2009 “ Gartner. 14 Jan 2009. Retrieved 7 Apr 2009 fromhttp://www.gartner.com/it/page.jsp?id=855612

Improved project success rates are

more beneficial to a company than the short-term savings from cancelled IT projects.





bring about Gartner’s second and third business priorities: reducing

enterprise costs and improving workforce effectiveness.

Unfortunately, since project requirements are now centered aroundpayoff timelines, other benefits of the project are being pushed to thebackground. As a result, vital IT projects may be cancelled or postponed, unknowingly threatening a company’s competitive edge andleaving it in a vulnerable position for the economic turnaround.

Despite concern over costs, the real issue is to make every project thatis funded a success. It is more effective to focus on improving thesuccess rate of projects, rather than simply cutting costs in the shortterm.

IT cost-cutting strategy #3: Avoiding external servicesWhen moving forward with strategic projects, the big question is alwayswhether to do the work in-house, or to utilize external services. Although

costs and benefits will be different for each situation, many companiesare actually ruling out external services completely in an attempt to stayon budget.

Some organizations are partial to internal spending because they feelthat projects will be less expensive this way. But this is not always thecase. It’s best to do a separate cost-benefit analysis for each project todetermine whether it will be more beneficial to complete the project in-house, to outsource, or to use some combination of the two.

In-house or Outsource?

There are benefits and pitfalls whether a project is completed in-houseor it is outsourced.

Assigning a project to the staff on-hand allows an IT manager to havecomplete control over and visibility of a project. It also helps to get moreuse out of available resources, although using these resources maytake away from concurrent projects.

Additionally, if the available staff does not have all of the skillsnecessary for the project, this can be a risky option. Attempting tocomplete a project with a staff that lacks the necessary capabilities caneasily lead to missed deadlines, quality issues, and cost over-runs.

Although not all consultants deliver prime results, some do havenecessary specialties, management experience, a proven track record,and a project guarantee.

In many cases, your available staff will have some, but not all, of theskills necessary for a project. In this scenario, combining resources withan external services provider can be the best solution. After identifying

Approaching a project with a staff that does not have the necessary capabilities can lead to problems and higher costs.

To go in-house or

to outsource: that is the question.





skill and efficiency gaps, the next step is to hire consultants withspecialties that will complement your team’s current capabilities.

According to Ollie Ross, the head of research for The Corporate ITForum user group, more important than having the right technology “is

investing in and having access to the right people who understand howa business’ potential can be delivered through technology.”6

Consultants can also provide an outside perspective and a reality checkon a project’s potential. Any IT manager can usually benefit from thisoutside analysis.

So when is one approach better than the other? The following sectionprovides a systematic way to help answer this question.

Four Steps for Cost-Benefit Analysis

Here are four steps to help you find the best approach for any project,by doing an independent cost-benefit analysis.

Step 1: Determine the potential of the projectGiven the ideal project team, what will this project accomplish? Whatwill the payoff be: increased efficiency, improved customer service,decreased expenses, higher profits? How vital is this project to your company’s executive team? Does it have a highly placed champion?

Step 2: Assess the project needs and your current capabilities What skills are required to achieve the best possible solution? Analyzethe capabilities of the current available staff (those who could work onthe project). Carefully identify any need gaps.

Does this project require certain specializations, or a certain level of experience to deliver the best results? Is the current staff capable of performing the required tasks and delivering the highest return? Wouldit be helpful to have team members with management experience?

Step 3: Think about additional resources How much space; how many servers, workstations and so on areavailable? What added software or training will be required?

Step 4: Complete your analysis

If the project fulfills its potential, what will be the financial benefits to thecompany, in hard dollars? Beyond those, what are the qualitativebenefits, such as better customer service and retention, greater efficiency, etc.?

6 : “Innovating in a Downturn” Verbatim. Corporate IT Forum. 11 Mar 2009. Retrieved 7 Apr 2009from http://www.tif.co.uk/verbatim/2009/03/11/innovating-in-a-downturn/#more-117





Compare the benefits and costs of completing a project in-house versuswith the help of consultants. Do a best- and worse-case scenario for each approach to help identify the risks.

The Best of Both Worlds: Virtual Teams

While there are thousands of technology consultants in the market, notall of them have the expertise to produce a quality solution in anefficient manner. IT service firms come in many shapes and sizes: fromsmall companies with a single team, to corporations with hundreds of consultants on staff.

One type that can deliver best-of-breed expertise is the virtual team. Avirtual team comes together around a client’s specific needs, giving youthe best of both worlds: the vast skills of a large consulting firm at a far more cost-effective price.

Since even large consulting firms may not have all the skills andexpertise required for each type of project, a different type of firm hasemerged. This is a technical services provider with a small core staff,and a large network of highly effective IT specialists who are only calledin when needed, many with years of management experience.

Some of the major differences between in-house teams, traditionalconsulting teams and virtual teams are highlighted in the chart below.

Benefits In-House

Traditional

Consultants Virtual Team

100% Visibility NO NO Large Variety of Skills

NOSmall firm— NO

Large firm—

ManagementExperience

Maybe Maybe

Use of Available

Staff

NO

Filled-In Need Gaps NO NO

Guarantee NO NO

A virtual team is one that has not been assembled until a project’s particular needs call for it.





Benefits of Virtual TeamsThere are many advantages to employing a virtual team of professionals, as follows.

■

Higher productivity rate: Team members with more experienceand greater specialization can deliver custom solutions in less timeand at a better quality level than traditional consulting agencies. Thevery best talent is selected as needed, giving clients an efficient,capable team without any deadwood.

■ Filled-in need gaps: A custom team of specialists can fill in ITefficiency gaps in almost any organization. This optimizes themoney spent on services and allows IT to use its current staff for theother parts of a project.

■ Innovative solutions: IT experts, especially those withmanagement experience, can often devise original solutions tobusiness problems. During the analysis phase, IT managers mayhear a recommendation or solution that they had not alreadyconsidered.

■ A better return on investment: With higher productivity, anefficient mix of in-house and outsourced skills, innovative thinking,and guaranteed results, a virtual team can deliver a better ROI for your budget.

What to Look for in a Provider

Here are some questions to use as a checklist when comparing virtualservice providers:

■ Do they have a good track record?When putting a project in the hands of another firm, an IT manager must be sure that they have provided quality services in the past.Do they have proof, such as data or testimonials, that shows this?

■ Can they offer a guarantee?If a company cannot guarantee that they will meet the givenrequirements within the allotted budget, why not?

■

How much experience do they have? How long has the company been in business? How long has eachteam member been active in the technology industry?

■ Who will lead the team and take responsibility for the project?An IT manager should feel comfortable with the person takingcontrol of a project and be confident in their capabilities.

Virtual teams help IT departments cash in on critical

projects.





■ What is their approach or process?How does this firm go about completing a project? Will they take fullresponsibility from conception to completion?

■ What are their values?

Which do they care about more: profits, or quality of workmanshipand satisfied customers?

Conclusions

Many IT managers are struggling to achieve the best results with lower budgets. But this does not have to mean cancelling IT projects or avoiding external services.

A virtual team from an outside service provider can complement your in-house skills in a cost-effective way. This approach can also lower risksand boost the ROI on an IT project.

To learn more about how to use virtual teams to help with your critical ITprojects, visit http://www.nuwave-tech.com/services. You can also e-mail [email protected] or call (603) 594-9896 ext. 251 to speakwith Ernest Guerrera, Director of Professional Services.

About NuWave Technologies

NuWave Technologies, Inc. has been providing professional servicesand innovative software solutions for 10 years, but its staff membershave been delivering high-quality solutions much longer. NuWave’s

customers include Bankserv, Chevron, Excelergy, FirstData, JCPenney,LogicaCMG, NSTAR, and RBC Capital Markets. By assembling itsteams from the most highly qualified professionals, NuWave is able totake full responsibility for a project, as well as guarantee projectsuccess.

[email protected](603) 594-9896 ext. 251154 Broad StreetSuite 1531Nashua, NH 03063

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