Outsourcing: an instrument for project management efficiency raise
Introduction
project management is a widely used
technique in business. This is an independent study which
works more than 50 years. Companies work with a large amount of data and
cooperate with a lot of partners. Thousands of employees work in these
companies. That is why almost all large companies tend to apply project
management methodology in their work.management was used only by large companies
formerly, but today even small companies tend to use theseways to make their
work more efficient. Project appears to be used as a standard approach to
business, so it is not an exception nowadays. Project activities are very
popular today. The fact that projects are
getting more complicated requires the usage of modern software.
Outsourcing is getting popular now because it
seems to be not rational to perform a project totally in-house. That is why
this issue is very urgent nowadays.
The object of this research is IT
project; subject of the study is IT project management.
aim of the research
The goal of this research is to substantiate the
reasonability for usage of outsourcing in the implementation of information
systems.tasks of the research
In order to achieve the established
objective the following tasks should be performed: project management softwarereveal
the special features of IT project management
To define outsourcing range of
applicationanalyze and classify software for project managementconsider the
efficiency of outsourcing some tasks during the process of creating basic
project plan of information system implementationpurpose of this work is to
research the methodology of project management, particularly IT project
management, to acquaint with key points of outsourcing and to ascertain whether
using the outsourcing of some task can guarantee optimization of the work on
the project.
Chapter 1. «Outsourcing: an
instrument for project management efficiency raise»
.1 Project and project management
of all it would be reasonable to
define what the term «project» means. There are many
definitions of it. According to some sources, project refers to a provisional
attempt made to create unique project, service or result. Project aims to
satisfy customer’s demand. opinion of Tsybes G., project management is a
management area which includes producing a new product or service as a full
complex of processes and events which progress within time and cost limits and
requirements to results. (Tsybes G. 2006)to Project Management Institute in the
USA (PMI USA), project refers to a temporary activity, taken for the creating
of a unique product or service.must be taken into account that project can’t be
everyday work or task. It is not a routine activity but a specific set of
operations, performed to achieve an established objective. Usually a project
team may involve people of varied positions from different departments.
Consequently, these people do not usually work together. The results should be
delivered on-time and on-budget. In other words,
project management is the application of knowledge and techniques in order to
execute projects efficiently.
In this work project refers to unique set of
activities with established terms (start time and finishing time) which are
held for the particular purpose. , despite the possible definitions, project
always has a goal, exact life cycle, process of doing something necessary and
new, limited time, costs and actual result. Usually many people and many types
of specialists work on project.final product which company gets as a result of
working on project is not obligatory to be innovative. It might be an
invention, but it is not a precondition. However, it is necessary to take into
account that working with a new partner, with new data, performing new
combination of operations can be called a unique activity too. In other words,
project is run when it becomes necessary to do something what has never been
done before. Thus, every company has 2 types of activities - operational and
project.activity refers to actions which are preformed often and regularly.
These activities seem to be usual and routine. On the contrary, project
activity includes development and improvement of business processes of a
company.are many criterion to classify projects. Razu M. marks out the
following types of projects:classification: (RazuM., 2006):scale: small,
middle, large.complexity: simple, with complicated organization, with
complicated technology, with complicated resources, very complicated. terms of
realization: short run, average, longrun.requirements to the quality:
defect-free, modular, standard.requirements to resources: monoproject,
multiproject..level of participants: international, domestic (state,
territorial, local).type of objective: crisis management, marketing,
educational, reformation, innovative, extraordinary.investment activity:
financial, investment, real.origin of a project: new opportunities, state of
emergency, necessity of structure functional reform, reorganization,
restricting, reengineering.fact, many managers already use project approach to
business. For example, many leaders use
network graph; the try to allocate time, tasks and expenses and make a
schedule. However, companies need more integrated approach for the most
efficient results and for maintenance of competiveness.
1.2 Approaches to project management
management rapidly develops. Consequently, the
number of varied methods and approaches increases. These methods constantly
change and approve; they might be closely interwoven and supplement each other.
Project management is rather old instrument; nevertheless, there is no unified
standard for its usage. Thus, nowadays a lot of methodologies are applicable.
most widespread approaches are:(traditional)MSF and MOFbased management2
(Projects In Controlled Environments)(Projects integrating sustainable methods)
(Critical chain project management)chain methodology project management(Extreme
project management)methodologycovers 9 knowledge areas: scope, time, cost,
quality, human resources, communications, risks, procurement and integration.
Each area has a number of processes. (PMI, 2010)approach is thoroughly
developed. However, it has too many processes. Moreover, it hasn’t specific
methods for IT projects. In addition, PMBoK illustrates cascade model rather
poorly, and it is difficult to apply it to ill-structured projects.MSF and
MOFMSF and MOF - IT project management and IT process management.methodology
has completely different model. It is an agile methodology. Development,
planning, creating a concept, stabilization and implementation are the main 5
processes in this case. It also has more detailed division. Another
consideration is that this approach is good to apply to IT projects. In
addition, it pays much attention to the economic indicators.this approach is
not widely spread in Russia, so it is not developed enough in the local
companies. Furthermore, there is no leader or manager in this
methodology.project management.to Doug DeCarlo, extreme project is a complex,
high-speed and self-correcting enterprise where people communicate in order to
get the desired result under complete uncertainty, regular changes and a great
stress. (Doug DeCarlo,2007)are old and new methods. Some of them do better for
the particular projects. Nevertheless, all methods do not eliminate each other.
Actually, it can’t be determined which approach is more appropriate or correct.
The choice of the approach may depend on the project enterprise. There is no
common classification of project management approaches.approaches to project
management constantly change and improve. However, usually all approaches cover
the following areas: managementmanagementmanagementmanagementmanagementmanagementmanagement
(risks, problems, changes)managementto the majority of the methodologies,
project management has 5 process groups/stages (fig.1):and controlling
1. 5 stages in
project management
it has been already mentioned, project
management is continuously improving. That is why the following tendencies can
be noticed: (Tsypes G., 2006)uncertainty in the projectup of the
projectscultural integrationof project managementmethodologies - (these
methodologies became popular and widely applicable;the balanced scorecard,
knowledge management, organization development and process-based management are
among them.
«Models of maturity»managementof the
basic instruments of project management is a network graph. Network graph is a
model of scheduling which shows tasks, connections between them, terms and
condition of a project. consideration is that there are 2 approaches to a
network graph development. In the first case task refers to an object, whereas
in the second case task refers toan arc. It is thought that the first variant
is more convenient. A network graph appears to be one of the most significant
tools in project management.(Patel, 2008)
. 2. First case
Figure.3. Second case
most common procedure in work with a
network graph refers to a critical path. This term describes the path, which
takes the biggest amount of time. In other words, such path has the least
downtime. If the project has float time, it is possible to delay some tasks.
IT projects can be found in varied
areas. The most common IT projects refer to software development or
implementation. Usually IT projects are prone to risks and difficult
requirements. Management of such projects need more detailed scheduling and
network graph. According to The Standish Group International, extreme Chaos,
The Standish group International, Inc. 2000, all IT projects can be divided
into failed, problem and successful. Successful projects tend to account for
only 28%. Successful projects refer to the ones which were fully implemented,
satisfying the requirements, terms and budget. Problem projects need more
resources than it has. Finally, failed projects are the projects which even
have not been completed. Consequently, these circumstances need measures to be
taken.
1.4
Outsourcing
The term «outsourcing» means «using
external resources». Nowadays outsourcing is often used by many companies. It
should be taken into account that outsourcing is convenient to apply for both
countries. The companies can save their time and money if they do not perform
some tasks independently. It is a good practice to outsource the tasks of the
business field in which the company is not specialized. Thus, the company which
uses outsourcing may concentrate on the core issues of its business.
Additionally, the company may direct all its resources, time, knowledge and
skillsto the particular part of the business. Thus, each party shows the best
result, the highest level of proficiency and quality. Such approach saves money
of the each company because neither of them needs to spend money on new and
unfamiliar scope of activity. Consequently, the company applies fewer efforts
to achieve the objectives. Furthermore, customers get the high-quality product.
addition, competition favours the development of outsourcing, for both
companies strive for the raise in the level of quality. All companies seem to
seek for the best business solutions. The main benefits of using outsourcing
are saving of resources and concentration on the key issues. Incidentally,
today companies tend to outsource not only non-core operations but even the
basic tasks.of using outsourcing depends on risk management of the company
because the practice of outsourcing is prone to risks. The most widely spread
risks are: of termsin level of qualityby the partners (under the contract).the
one hand, the application of outsourcing may help the business, but on the
other hand, it adds risks in the project., today many companies outsource the
functions of project management. In the USA the majority of companies apply
this approach, and it is believed to be the main requirement for a successful
project. (Anikin B., 2009). Consequently, outsourcing became rather strong
instrument for the raise in efficiency. and its usage in project managementnot
many projects are being created totally in-house. Outsourcing some parts of
work tends to be a common practice. Many corporations hire independent
companies to perform some tasks. It is suggested that more and more companies
will interact with other firms in order to delegate some activities. companies
apply outsourcing to such business activities as accounting, IT or call
services, for example. Another consideration is that outsourced activities tend
to be performed virtually, using varied information technologies and online
communication. They even may not see each other in reality. Using outsourcing
in a project appears to be a mixed blessing. It has the following benefits:in
costsavingon the core issues, activities and problems, it also has drawbacks:in
coordinationin monitoring and managingof conflictsof the company might be under
the threataddition, it is significant that outsourcing may be
expensive.Besides, the issue of reasonability for these costs is very
difficult. Project manager must define whether outsourcing costs will be
finally repaid and will make a profit. This is a serious and a difficult task
to find a reliable partner. In order to succeed some recommendations should be
followed. First of all, requirements, terminology and processes should be
clearly defined. Personnel training and team-building are needed, as well as
regular control and monitoring. It is obvious that contracts must be fair and
incentive. As it has been previously said, it is advisable to develop long term
outsourcing relationship with partners. Additionally, Gray remarks that if
employees of the partners work near to each other, it may increase the capacity
too. (Grey, Larson, 2011)
1.5
Problem
Managers try to think of the ways to
reduce required time and costs for the project implementation. One of the
possible solutions may be using the outsourcing. It is argued that if one task
or activity is decided to be outsourced, it can save time for the project.
Nonetheless, this question about outsourcing reasonability is still open.
Chapter 2 «Implementation of the
information system management»
2.1 Classification of the software
for project management
different software tools are used
for project management. These tools satisfy the particular requirements. First
of all, project management software can be divided into desktop software and
web-software. Desktop software is installed on the personal computer of the
user. Usually it has friendlier interface. Web-applications require access to
the Internet. These applications are run by web-browsers and do not need to be
installed on the particular computer. The drawbacks of such software are that
it has lower capacity. Moreover, its work depends on the server. The following programs
are the most well-known: project professionalEbusiness Suite Professional
Services AutomationProject Managementsoftware SoftwareApplications analyze the
effect of outsourcing on the project results Microsoft Project is applied. It
has a simple interface, and it is similar to other MS Office products
interface. Moreover, the logic of the program is easy to understand.
2.2
Project description
Project of this work consists in
implementation of a particular information system for the client. The project
includes several stages. The customer lays claims to the product. These
requirements should be formalized and fixed. Subsequently, project manager uses
these requirements, resources, time and people.
2.3
Development of the basic plan
The basic plan will be developed
during this work, and then particular tasks to outsource will be chosen.
According to the state standard specification, there are 8 basic stages in the
integration of an information system:formationdevelopmentdesignlast stage
«Support» probably will not be a part of the project.Fitsr of all, project
should be organized. The development of a short basic plan has been started and
is presented below.(Figure 4,5)
Figure. 4. First steps of the
projectwhich can be delegated to the partner will sooner be chosen from the
draft design or the preliminary design. It is necessary to define which
activities are not the most important or profile in this case.
Figure 5. Gantt chart
Conclusion
Outsourcing is a very promising
method. Nowadays more and more companies try to apply outsourcing in their
projects. Implementation of an information system is long and complicated
process. Perhaps, it is worth to outsourcing some activities. However, more
detailed research will be introduced in the final study.this work basic
definitions and terms of project management have been considered. Outsourcing
range of application has also been reviewed. Moreover, enterprise has been
described, and possible tasks to outsource have been proposed. It was
significant to choose appropriate project management software. The next step is
to decide and choose which exactlytasks should be outsourced. After that the
basic an adjusted projectplan will be created. Consequently, these 2 plans will
be compared. The observations will help to determine whether it is reasonably
sufficient to outsource the chosen tasks in the given IT project.
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