16-01-2012, 06:06 PM
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Introduction
Information Technology (IT) plays an imperative role in almost every aspect of our lives. The world today has become one global village due to the widespread use of Information Technology. It has revolutionized the way businesses are conducted today by the government and private alike. The government and business have become so reliant on IT that it is hard to imagine how they would function without it. It has become an ever-increasing resource with which organizations have created and sustained their competitive advantages [1] [2] [3]. The IT sector basically consists of software and services, Information Technology Enabled Services (ITES) and the hardware segments. All these three have jointly contributed expansively towards the development and growth of all the countries in the world. Out of these, the software and services industry itself is a trillion dollar industry contributing tremendously towards the growth of the world economy [4]. It has not only helped in generating large scale employment in number of countries but has also helped a number of developing nations to take a step forward towards developed nations. According to Li and Gao [5] the world software industry is no longer predominantly controlled by the developed countries such as the United States and Japan. The success story of India has caught more and more attention of academia, policy makers, and businesses. It is widely believed that the software industry offers developing countries a unique opportunity to "break the shackles of economic under- development as a country".
The major contribution of the growth of the Indian economy can also be attributed to the Indian software industry. It has been contributing substantially to increases in the GDP, urban employment and exports, to achieve the vision of a powerful and resilient India [4]. While the Indian economy was impacted by the global slowdown in 2009, the software industry displayed resilience and tenacity in combating the volatile conditions and posted a growth of 16.5% in the year 2009 with an estimated value of USD 26.9 billion [6]. The Indian software industry enjoy a very distinct advantage of a stable political environment, favourable government policies, a large base of English speaking graduates, healthy relationship with existing global clients, telecom infrastructure and NASSCOM - National
Association of Software and Services Companies, a strong industry lobbying body [7]. Besides this, the Indian software industry also boasts of low cost advantage, variety of service offerings from low-end application development to high-end integrated IT solutions, high quality of service offerings and maturity in processes (India hosts more than 55% of SEI CMM level five firms and the highest number of ISO certified companies) (Deloitte report 2009). Today the Indian software industry contributes to 5.8% towards GDP with 45% of incremental urban employment both direct and indirect) and is expected to grow 16% and log revenues of USD 60 billion in 2010 [8].
Thus, it appears that the software industry seems to be enjoying a bed of roses having all the positives. But as it is said that every coin has two faces, similarly on the flip side the software industry is marred with a number of project failures, cost overruns, late deliveries, poor reliability, and user dissatisfaction. According to Standish report [9] as shown in Table 1.1, world over 44% of projects were challenged (late, over budget and/or with less than the required features and functions) while 24% failed (cancelled prior to completion or delivered and never used). To sum up, a total of 68% of the projects were either failed or challenged, which is quite exponential. Boehm [10] found that 15-35% of all the software projects were cancelled outright while remaining projects suffered either from schedule slippage, cost overruns or failure to meet the project goals.
Table 1.1: Standish CHAOS report on Software Project Failure
1994 1996 1998 2000 2002 2004 2006 2009
Successful 16% 27% 26% 28% 34% 29% 35% 32%
Challenged 53% 33% 46% 49% 51% 53% 46% 44%
Failed 31% 40% 28% 23% 15% 18% 19% 24%
This high failure rate of software projects can be attributed to the very basic characteristic of the software itself. The software projects are collections of large programmes with many interactions and functional dependencies. It involves a creation of a product that has never been created before. They are generally complex and their development takes place in a dynamic environment where business conditions and technologies change during the project. Users are often unsure of their needs and frequently change requirements midway through the project. As a result, the software industry is plagued by cost overruns, late deliveries, poor reliability, and user dissatisfaction [11] [12]. A study conducted by Mensah and Przasnyski [13] showed that 35% of abandoned projects are not abandoned until the implementation stage of the project's life cycle. This suggests that project managers are doing a poor job of identifying or terminating projects that are likely to fail. While there are many different modes of failure, one that has occurred very often is the project takes on 'a life of its own'. It continues to absorb valuable resources without ever reaching its goal [14]. Eventually these projects are abandoned but the cost of having funded those results in a loss of organizational resources.
Numerous researches have been conducted on identifying the causes of failure or delay of the software projects and equal amount of time has been spent on recommending methods and models to combat these causes. Most of the researchers have named these causes as risks affecting the software projects. Keil et al. [15] assert that the high failure rate is due to managers not taking cautious measures to assess and manage the risks involved in the software projects. According to Boehm [10] and Phan et al. [16], most projects fail due to managerial issues and not technological issues. Mc. Farlan [17], Brooks [18], Boehm [19] are some of the pioneers in the area of software risk identification. They have identified a number of risks such as high level of attrition, lack of top management support, miscommunication for requirements, personnel shortfall, estimation errors etc that impacts the successful outcome of the project and leads to project delays and failures. Equal amount of research has been conducted in the area of software risk management and mitigation. Researchers have time and again focussed their attention in developing novel approaches towards mitigating the risks and ensuring project's success [12] [15] [20] [21]
[22] [23] [24] [25] [26].
During the literature review, one interesting aspect that came across was the provision of a resilient organizational climate to ensure the project's success. Numerous studies have all pointed out the effect of organization's climate on the motivation, job satisfaction and the overall performance of the software developers and the project's outcome [27] [28] [29] [30] [31] [32]. In spite of so much study, managing the software project is still a daunting task because of the difficulties associated with it.
1.2 Need for the Study
Software project risks have long been claimed to be a major cause of software project failure and empirical evidence exists to support it, with high levels of risk being associated with undesirable project outcomes such as low software quality, delays and budget overruns [10] [33] [34] [35]. In India, most of the studies conducted have focused on the outsourcing aspect of the Indian software industry, where various issues such as cross cultural issues, macroeconomic issues and project specific issues in outsourcing have been detailed out [22] [56] [57] [58] [59] [60] [61] [62] [63] [64]. However, not much work has been done on the various dimensions relating to software development work in India. Software development is no doubt a part of outsourcing but still is one of the major revenue generation sources of most of the Indian software companies. Arora et al. [65] and Athreye [66] have tried to identify various issues impacting the Indian software companies both at macro, micro and project specific level. However, a comprehensive list of risks affecting the software development cycle in Indian software industry is still missing. Though extensive literature has laid down the various affects of organizational climate on motivation of software developers, job satisfaction, performance and project outcome, but there is hardly any empirical evidence to suggest the affect of organizational climate factors on project specific risks. Besides this, there are hardly any empirical studies that identify the key organizational climate factors that contribute towards the project's success in the Indian context. Therefore, there is a dire need for a systematic and comprehensive work that studies the collaborative affect of the organization's climate and the risk factors on the success of the software project and the three performance constructs. And also the need to study the moderating affect of organizational climate on project specific risk.
1.3 Conceptual Model of Research
The present research aims to explore the dimensions of organizational climate and project specific risks holistically and produce a model for predicting the success of the project. For this, a conceptual model of research has been proposed which incorporates the organizational climate dimensions, the software risk dimensions, the overall success of the project and its three performance constructs namely budget, schedule and quality. The organization's climate plays a very crucial role in the execution of the project. It is like an umbrella under which the entire process of software development takes place. Since every single step in the development process can be marred by anticipated or unanticipated risks such as high level of attrition, lack of domain expert, miscommunication of requirements, continuous requirement changes, estimation errors, insufficient testing, poor code and documentation etc., that need to be tackled for a successful implementation of the project. If the organization has an open and consultative climate where the team members have a clear idea of their roles and responsibilities, are given timely and adequate feedback and are provided with adequate tools and techniques to effectively perform their tasks many of these risk factors can be annihilated. Thus, the model shown in figure 1, clearly demonstrates the direct and indirect effect of organization on the success of the project.
ORGANISATION CLIMATE
PROJECT SUCCESS
Figure 1: Conceptual Research Framework
1.4 Objectives of the Study
The specific objectives of this thesis are:
1. To identify and rank the risks in software development projects based on secondary data.
2. To explore and analyze the dimensions of project specific risks based on primary data collected from field survey.
3. To identify and explore the dimensions of organizational climate factors present in the Indian software companies based on primary data.
4. To investigate the effect of the organizational climate dimensions and demographic characteristics on the software risk dimensions.
5. To investigate and propose a model for predicting the effect of the project specific risks and organizational climate dimensions on the overall success and the three performance constructs namely budget, schedule and quality of the software projects in India.
6. To validate the models by critically evaluating the causes of failure and success of real life software projects through case studies.
1.5 Research Methodology
A systematic and organized methodology was obtained for the research study. First and foremost, based on an in-depth discussion and exhaustive literature review, the objectives of the study were chalked out. This was followed by in-depth interviews and discussions with 40 software project managers to gauge the risk factors and organizational climate factors that affect the success of their last executed project. The project managers in the interview were specially asked to identify the critical risk factors affecting the software development lifecycle and also key out the organizational climate factors which they perceive were present extensively in their organizations during the execution of the software projects. Based on the perception of the project managers in the interview and in-depth secondary data analysis, 23 risk items and 17 organizational climate items were identified. A questionnaire was prepared using the risk and organizational climate items and was administered on the software professionals with a minimum experience of four years in handling software projects in India.
The questionnaire was intricately designed to tap the demographic variables including age, designation and experience of the respondents. It also gathered details about the project such as name, team size, total duration and the value of the project executed by the respondents. The questionnaire was then divided into four parts. In Part A, the respondents were asked to rate the overall success of the project. They were also asked to rate the performance of their project on the basis of the three performance constructs namely budget, schedule and quality. In Part B and C, the respondents were asked to rate the impact of risks (twenty three risk items) on the success of their last executed project. All the items were put on a five-point scale ranging from far too much effect to no effect on the success. In part D respondents were asked to rate organizational climate factors (seventeen variables) present during the last executed project. A five-point likert scale was designed to gauge the responses in part D. The scale ranged from never to always present.
Besides gathering data through questionnaire, in-person interviews were also conducted with the project managers and senior management to accentuate the data collected. Random sampling technique was used to gather data from software professionals with more than 4 years of experience in handling software projects. For the survey, 4 major IT hubs viz. NCR (Gurgaon, Noida, Delhi, Faridabad), Hyderabad, Bangalore and Chennai were selected. From each IT hub 8 companies were selected making 32 companies in total. A total of 900 questionnaires were sent to these 32 companies out of which only 340 responses were received. For the study, only 300 completely filled questionnaires were considered and the rest were discarded due to incomplete data. Main data collection began in the month of July 2008. Statistical Package for the Social Sciences (SPSS) version 17.0 was religiously used for statistical analyses.
Introduction
Information Technology (IT) plays an imperative role in almost every aspect of our lives. The world today has become one global village due to the widespread use of Information Technology. It has revolutionized the way businesses are conducted today by the government and private alike. The government and business have become so reliant on IT that it is hard to imagine how they would function without it. It has become an ever-increasing resource with which organizations have created and sustained their competitive advantages [1] [2] [3]. The IT sector basically consists of software and services, Information Technology Enabled Services (ITES) and the hardware segments. All these three have jointly contributed expansively towards the development and growth of all the countries in the world. Out of these, the software and services industry itself is a trillion dollar industry contributing tremendously towards the growth of the world economy [4]. It has not only helped in generating large scale employment in number of countries but has also helped a number of developing nations to take a step forward towards developed nations. According to Li and Gao [5] the world software industry is no longer predominantly controlled by the developed countries such as the United States and Japan. The success story of India has caught more and more attention of academia, policy makers, and businesses. It is widely believed that the software industry offers developing countries a unique opportunity to "break the shackles of economic under- development as a country".
The major contribution of the growth of the Indian economy can also be attributed to the Indian software industry. It has been contributing substantially to increases in the GDP, urban employment and exports, to achieve the vision of a powerful and resilient India [4]. While the Indian economy was impacted by the global slowdown in 2009, the software industry displayed resilience and tenacity in combating the volatile conditions and posted a growth of 16.5% in the year 2009 with an estimated value of USD 26.9 billion [6]. The Indian software industry enjoy a very distinct advantage of a stable political environment, favourable government policies, a large base of English speaking graduates, healthy relationship with existing global clients, telecom infrastructure and NASSCOM - National
Association of Software and Services Companies, a strong industry lobbying body [7]. Besides this, the Indian software industry also boasts of low cost advantage, variety of service offerings from low-end application development to high-end integrated IT solutions, high quality of service offerings and maturity in processes (India hosts more than 55% of SEI CMM level five firms and the highest number of ISO certified companies) (Deloitte report 2009). Today the Indian software industry contributes to 5.8% towards GDP with 45% of incremental urban employment both direct and indirect) and is expected to grow 16% and log revenues of USD 60 billion in 2010 [8].
Thus, it appears that the software industry seems to be enjoying a bed of roses having all the positives. But as it is said that every coin has two faces, similarly on the flip side the software industry is marred with a number of project failures, cost overruns, late deliveries, poor reliability, and user dissatisfaction. According to Standish report [9] as shown in Table 1.1, world over 44% of projects were challenged (late, over budget and/or with less than the required features and functions) while 24% failed (cancelled prior to completion or delivered and never used). To sum up, a total of 68% of the projects were either failed or challenged, which is quite exponential. Boehm [10] found that 15-35% of all the software projects were cancelled outright while remaining projects suffered either from schedule slippage, cost overruns or failure to meet the project goals.
Table 1.1: Standish CHAOS report on Software Project Failure
1994 1996 1998 2000 2002 2004 2006 2009
Successful 16% 27% 26% 28% 34% 29% 35% 32%
Challenged 53% 33% 46% 49% 51% 53% 46% 44%
Failed 31% 40% 28% 23% 15% 18% 19% 24%
This high failure rate of software projects can be attributed to the very basic characteristic of the software itself. The software projects are collections of large programmes with many interactions and functional dependencies. It involves a creation of a product that has never been created before. They are generally complex and their development takes place in a dynamic environment where business conditions and technologies change during the project. Users are often unsure of their needs and frequently change requirements midway through the project. As a result, the software industry is plagued by cost overruns, late deliveries, poor reliability, and user dissatisfaction [11] [12]. A study conducted by Mensah and Przasnyski [13] showed that 35% of abandoned projects are not abandoned until the implementation stage of the project's life cycle. This suggests that project managers are doing a poor job of identifying or terminating projects that are likely to fail. While there are many different modes of failure, one that has occurred very often is the project takes on 'a life of its own'. It continues to absorb valuable resources without ever reaching its goal [14]. Eventually these projects are abandoned but the cost of having funded those results in a loss of organizational resources.
Numerous researches have been conducted on identifying the causes of failure or delay of the software projects and equal amount of time has been spent on recommending methods and models to combat these causes. Most of the researchers have named these causes as risks affecting the software projects. Keil et al. [15] assert that the high failure rate is due to managers not taking cautious measures to assess and manage the risks involved in the software projects. According to Boehm [10] and Phan et al. [16], most projects fail due to managerial issues and not technological issues. Mc. Farlan [17], Brooks [18], Boehm [19] are some of the pioneers in the area of software risk identification. They have identified a number of risks such as high level of attrition, lack of top management support, miscommunication for requirements, personnel shortfall, estimation errors etc that impacts the successful outcome of the project and leads to project delays and failures. Equal amount of research has been conducted in the area of software risk management and mitigation. Researchers have time and again focussed their attention in developing novel approaches towards mitigating the risks and ensuring project's success [12] [15] [20] [21]
[22] [23] [24] [25] [26].
During the literature review, one interesting aspect that came across was the provision of a resilient organizational climate to ensure the project's success. Numerous studies have all pointed out the effect of organization's climate on the motivation, job satisfaction and the overall performance of the software developers and the project's outcome [27] [28] [29] [30] [31] [32]. In spite of so much study, managing the software project is still a daunting task because of the difficulties associated with it.
1.2 Need for the Study
Software project risks have long been claimed to be a major cause of software project failure and empirical evidence exists to support it, with high levels of risk being associated with undesirable project outcomes such as low software quality, delays and budget overruns [10] [33] [34] [35]. In India, most of the studies conducted have focused on the outsourcing aspect of the Indian software industry, where various issues such as cross cultural issues, macroeconomic issues and project specific issues in outsourcing have been detailed out [22] [56] [57] [58] [59] [60] [61] [62] [63] [64]. However, not much work has been done on the various dimensions relating to software development work in India. Software development is no doubt a part of outsourcing but still is one of the major revenue generation sources of most of the Indian software companies. Arora et al. [65] and Athreye [66] have tried to identify various issues impacting the Indian software companies both at macro, micro and project specific level. However, a comprehensive list of risks affecting the software development cycle in Indian software industry is still missing. Though extensive literature has laid down the various affects of organizational climate on motivation of software developers, job satisfaction, performance and project outcome, but there is hardly any empirical evidence to suggest the affect of organizational climate factors on project specific risks. Besides this, there are hardly any empirical studies that identify the key organizational climate factors that contribute towards the project's success in the Indian context. Therefore, there is a dire need for a systematic and comprehensive work that studies the collaborative affect of the organization's climate and the risk factors on the success of the software project and the three performance constructs. And also the need to study the moderating affect of organizational climate on project specific risk.
1.3 Conceptual Model of Research
The present research aims to explore the dimensions of organizational climate and project specific risks holistically and produce a model for predicting the success of the project. For this, a conceptual model of research has been proposed which incorporates the organizational climate dimensions, the software risk dimensions, the overall success of the project and its three performance constructs namely budget, schedule and quality. The organization's climate plays a very crucial role in the execution of the project. It is like an umbrella under which the entire process of software development takes place. Since every single step in the development process can be marred by anticipated or unanticipated risks such as high level of attrition, lack of domain expert, miscommunication of requirements, continuous requirement changes, estimation errors, insufficient testing, poor code and documentation etc., that need to be tackled for a successful implementation of the project. If the organization has an open and consultative climate where the team members have a clear idea of their roles and responsibilities, are given timely and adequate feedback and are provided with adequate tools and techniques to effectively perform their tasks many of these risk factors can be annihilated. Thus, the model shown in figure 1, clearly demonstrates the direct and indirect effect of organization on the success of the project.
ORGANISATION CLIMATE
PROJECT SUCCESS
Figure 1: Conceptual Research Framework
1.4 Objectives of the Study
The specific objectives of this thesis are:
1. To identify and rank the risks in software development projects based on secondary data.
2. To explore and analyze the dimensions of project specific risks based on primary data collected from field survey.
3. To identify and explore the dimensions of organizational climate factors present in the Indian software companies based on primary data.
4. To investigate the effect of the organizational climate dimensions and demographic characteristics on the software risk dimensions.
5. To investigate and propose a model for predicting the effect of the project specific risks and organizational climate dimensions on the overall success and the three performance constructs namely budget, schedule and quality of the software projects in India.
6. To validate the models by critically evaluating the causes of failure and success of real life software projects through case studies.
1.5 Research Methodology
A systematic and organized methodology was obtained for the research study. First and foremost, based on an in-depth discussion and exhaustive literature review, the objectives of the study were chalked out. This was followed by in-depth interviews and discussions with 40 software project managers to gauge the risk factors and organizational climate factors that affect the success of their last executed project. The project managers in the interview were specially asked to identify the critical risk factors affecting the software development lifecycle and also key out the organizational climate factors which they perceive were present extensively in their organizations during the execution of the software projects. Based on the perception of the project managers in the interview and in-depth secondary data analysis, 23 risk items and 17 organizational climate items were identified. A questionnaire was prepared using the risk and organizational climate items and was administered on the software professionals with a minimum experience of four years in handling software projects in India.
The questionnaire was intricately designed to tap the demographic variables including age, designation and experience of the respondents. It also gathered details about the project such as name, team size, total duration and the value of the project executed by the respondents. The questionnaire was then divided into four parts. In Part A, the respondents were asked to rate the overall success of the project. They were also asked to rate the performance of their project on the basis of the three performance constructs namely budget, schedule and quality. In Part B and C, the respondents were asked to rate the impact of risks (twenty three risk items) on the success of their last executed project. All the items were put on a five-point scale ranging from far too much effect to no effect on the success. In part D respondents were asked to rate organizational climate factors (seventeen variables) present during the last executed project. A five-point likert scale was designed to gauge the responses in part D. The scale ranged from never to always present.
Besides gathering data through questionnaire, in-person interviews were also conducted with the project managers and senior management to accentuate the data collected. Random sampling technique was used to gather data from software professionals with more than 4 years of experience in handling software projects. For the survey, 4 major IT hubs viz. NCR (Gurgaon, Noida, Delhi, Faridabad), Hyderabad, Bangalore and Chennai were selected. From each IT hub 8 companies were selected making 32 companies in total. A total of 900 questionnaires were sent to these 32 companies out of which only 340 responses were received. For the study, only 300 completely filled questionnaires were considered and the rest were discarded due to incomplete data. Main data collection began in the month of July 2008. Statistical Package for the Social Sciences (SPSS) version 17.0 was religiously used for statistical analyses.