Offshoring SPM – Communication Challenges

One of the most important challenges in leverage an offshore team for an IT implementation is to communicate effectively. If this is not taken seriously, all the efforts surrounding making the offshore strategy successful could be wasted.

Communication can be difficult because:

The offshore team is often in a different time zone. Meetings are often very early in the morning, or very late at night (often both).

• Meetings are usually virtual – often onshore and offshore team members never meet.
• The onshore and offshore team don’t always share the same first language. Even in a situation where they share the same first language, accents can be a problem. (Although it can also be a problem between onshore resources). I think people get used to by French-Canadian accent fairly quickly, but it took me a long time to get use to the Indian accent. Expressions also vary from country to country.
• There can be cultural differences leading in communication failure.

Cultural Differences
Erran Carmel and Paul Tjia wrote a great book called “Offshoring Information Technology – Sourcing and Outsourcing to a Global Workforce” in which they list examples of such communication failures with Indian offshore teams. Among their observations, they say that Indians are less likely to engage in small talk than most of their Western counterparts and that they tend to be too optimistic about times and schedules (referred to as the “Indian factor”). Indians are also reluctant to say “no”; they may say “yes” even when they mean “no” to avoid having to give bad news.

Their book also lists many expressions used in English which can be interpreted in a bad way by an offshore team. For example, when an English speaker says “Not bad”, he means the work is good; the offshore resource could interpret that as the work being of poor quality. Another example is when an English speaker says “Interesting!”, it can mean he or she does not agree or believe what the other person is saying; this could be understood as “they are impressed” by the offshore resource.

Improving Communication

• Avoid slang, idioms and acronyms, and speak slowly. Ensure your message is well understood
• When giving a task, ask probing question to ensure the task is well understand.
• Keep written communication short
• “Offshoring Information Technology” mentions six “R” rules: Repeat, Reduce, Rephrase, Reiterate, Review and Recap.
• Have regular meetings (usually daily)
• Use collaborative tools such as Wiki’s when possible
• Be patient – you may have problems understanding them and vice-versa, but treating each other with respect is they key to develop a solid working relationship.
• Read more about the cultural differences with the country in which the offshore team is located.
• If the project is big enough and the offshore contribution significant enough, it may be worth it to meet the offshore team in person. This should create stronger bonds between the onshore and offshore team.
• If most of the meetings are held over the phone (video conferencing not available), sharing pictures of the team members can also help out in creating bonds.

Offshore Outsourcing – Humor of the Week

Here is one of my favorite Dilbert strip:

A friend also sent me this funny conversation between a consultant and an offshore resource:

Consultant: So, today is the checkpoint for the designs, status should be on 90% completed, meaning everything’s done and waiting for final review. Are you finished?
Inder: Yes, I put the status on 90% completed
Consultant: Ok, let’s have a quick look at the document. Well… the document is basically empty? How can you put it on 90% completed?
Inder: Yes, document is empty – but it’s all in my head!

In Summary:

• The communication infrastructure in some countries can be unreliable.
• Risks associated to offshoring should be identified early.
• Expectations need to be set and communicated clearly.

Offshoring Sales Performance Management Implementation Components

Based on my experience and on common sense, there are some project components which are easier to offshore than others.

Requirements and Functional Design

Early phases of a project are more challenging to offshore; these phases include the requirement gathering and the functional planning of the project. Offshoring these activities can be difficult because they require a lot of interaction with stakeholders, users and subject matter experts. This type of interaction usually works much better face-to-face than over the phone.

Technical Design, Implementation and Testing

Once the architecture of the project is established, components of the technical design, implementation and testing phases are good candidates to be offshored. Interaction with project stakeholders will obviously be necessary, but the “what” of what needs to be done should be obvious.

Sales Performance Management Implementation

There are many strategies to leverage an offshore team to implement a sales performance management application. Compensation plans can be divided between on-shore and offshore teams, or both teams can collaborate on all the plans. I prefer the collaboration approach; coordination will be a bit more complicated, but many of the risks will be mitigated. As a result, the onshore team will have a clear idea on the status of the offshore team at all time, and there will be less communication issues such as misunderstandings of the requirement and functional design documents.

Here is a list of several common SPM activities which in my experience are good candidates to be offshored. If the design documents are detailed enough, there is no reason why an offshore team could not work on everything. However, there is probably less risk in offshoring well defined activities.

1. ETL: A large project will use an Extract, Transfer and Load (ETL) tool to move data where it can be used by the SPM solution. With proper access, an offshore team can make a significant contribution to this process.
2. Configuration Management: An implementation is usually carried in different environments; development, various testing envionments, and production. Moving the latest files from one environment to the next can be very time consuming, and often can’t be performed while a team works in the environment.
3. Reference Data: Loading all the reference data including participants, titles, positions, relationships, territories, etc are activities which will not impact the building of plans, until required for testing.
4. Quotas, rate tables and lookup tables: Creating and updating these objects can be a very time consuming activity.
5. Formulas and rules: Sometimes, several formulas and rules which are almost identical to each other are required. Not all SPM solutions have an easy “clone” feature, making this activity very tedious.
6. Processing: Also called pipeline in Callidus TrueComp, with a large number of participants and of transaction (in late testing phases), processing can take up to several hours. It can be very nice for the onshore team to work on the implementation during the day and come back the next morning to find the results ready and analysis of issues that occured.
7. Testing: Testing can be a tedious job. As I discussed before, test scripts should exist which will be executed again and again… and again. Some of the first testing phases such as unit testing and system testing can be almost entirely offshored, but later phases such as integration testing and user acceptance testing are often kept onshore to be able to better monitor quality.

Note: Offshoring all the boring and repetitive activities could have negative impacts on the moral and efficiency of the offshore team, just as it would on any team.

Does anyone have other examples of SPM components which can be offshored easily?

ICM Implementation Offshoring Pros and Cons

Projects can be partially or completely outsourced. The outsourcing can be done partially or entirely offshore. The most common scenario I usually encounter is when a company outsources a project to a consulting company. The consulting team usually works on-site, and often have several resources located offshore. There seems to be a trend for consultant who used to work on-site, to be allowed to work remotely.

As I pointed out, many EIM/SPM solution vendors and consulting companies will discuss the benefits which can be achieved by outsourcing parts of an Incentive Compensation Management implementation. I agree with these benefits, but there are also many challenges which must be carefully managed to be successful.

Working with an offshore team through a consulting company reduces a lot of the risk; you don’t have to worry about contracts, quality, infrastructure, intellectual properties, etc. Furthermore, consulting companies usually have a good relationship with their offshore arm.

Setting aside all ethical and macro-economics discussions about offshoring, here are some of the main pros and cons.

Main offshoring benefits:

Labor: Skilled labor can be very expensive, but it can especially be very difficult to find. Even a large consulting company may have problems finding an available consultant with the right skill set.

Cost: Offshore locations are usually developing countries where labor is significantly cheaper.

Speed: When a project is well managed, more people usually mean a more aggressive schedule.

Work 24/7: For North-American people, working with a country such as India makes it “easy” to work around the clock.

Some of the challenges to be managed

Communication and language barriers: Most of us have some experience working with team members who are located somewhere else, and have faced communication challenges related to this. Offshoring brings another layer to the communication challenges, a topic to which I will dedicate another article.

Coordination: Because of all the communication challenges, complex coordination activities become even more complex.

Cultures: Each culture have their own principles and values. Not being mindful of cultural differences can lead to big problems.

Cost: Savings could be only marginal, especially with rising labor costs in some countries (especially in India)

Quality: This is a challenge for on-site and offshore team alike. Offshore teams are usually very good at achieving very high quality standards. However, quality is still perceived as a higher risk with offshore teams.

Security: Quality is another concern most companies have, especially when dealing with confidential employment information. There are very secure mechanisms to collaborate, even across continents, but security is a topic which requires particular attention.

Key to Success

In my opinion, the key to successfully leveraging an offshore team is in:

• Having a good manager and team leads experienced with offshore projects
• Having A good [formalized] communication strategy, “hand-off” mechanism between onshore and offshore teams and processes in place
• Having a good understanding of which project components can be tackled “at night” by the offshore team and handed to the onshore team “in the morning”, and vice-versa.

Outsourcing and Offshoring your SPM Implementation

I’m planning to write several articles related to sales performance management outsourcing and offshoring. Let me first define what outsourcing and offshoring means.

Outsourcing: This is when you subcontract the design and implementation of your compensation plans.

Offshoring: This is when you subcontract (typically parts of the implementation) to another country. India and China are well known IT offshoring destinations, but there are many others.

One of my first post on the blog was about in-house development versus outsourcing. Most SPM implementations I see follow one of these patterns:

Pattern 1:

An implementation partner is selected – this can be a vendor agnostic implementer, or the product vendor. As part of their submission, they propose the use of an offshore team to reduce the cost of their bid, or to be able to “go-live” more quickly.

Pattern 2:

An implementation partner is also selected. There are no upfront discussions about offshoring any work. The concept of an offshore team is brought up if the project falls behind schedule.

Upcoming Topics

The reality is that most vendors and consulting companies use offshore teams. I will write about the pros and cons of offshoring, the associated risks, the challenges it will add, the importance of communication strategies, and a few personal stories of managing offshore teams.

I will also write about which aspects of the implementation can be “offshored” more easily. The good news is that with an SPM implementation, once the design phase is completed, there are different way to “break-out” work in different components which are not on a critical-path to each other.

Finally I will answer several questions I have received on this topic. If you have any questions, please don’t hesitate to send them to me.