When IT's customers are external

Simon P. MacGibbon, Jeffrey R. Schumacher, Ranjit S. Tinaikar






Managing a large IT implementation is challenging for any company, but the risks
increase when the end users are external customers and the price of failure is

damage to the bottom line. Careful planning of the design and rollout is thus

crucial. No one knows this better than software product companies, such as

Microsoft and Oracle, which live or die by how well they introduce products that

both meet their customers' needs and keep their cost base competitive. They

realize the importance of understanding what customers want, of market research

and customer support, and of maximizing value by striking a balance between

satisfying buyers and controlling costs.






In these respects, software product companies have much to teach internal IT
organizations, whose project-management practices usually fall short when it

comes to developing and executing customer-facing systems. Too often the IT

organization assumes that someone in marketing or sales has done the up-front

market research or that budget-busting modifications to the features of systems

are customer driven and absolutely essential. Such faulty assumptions can have

serious consequences: whereas internal customers usually have no choice but to

adopt a new solution-even a poorly designed one-external customers can go

elsewhere. During the recent refinancing boom, for example, one mortgage company

had to forgo 10 to 20 percent in potential extra revenues because its loan

origination system couldn't handle the necessary volume. Rather than deal with a

slow, unwieldy system, the company's "customers," namely, the real-estate

brokers who sold its loans, simply used other lenders.






A market-oriented approach





Traditional project management focuses on prioritizing, scheduling, and
deploying a well-defined set of system capabilities using standard processes and

tools. These are vital steps, but they must be adapted to the special needs of

customer-facing projects.






The market-oriented approach of software product companies differs in two ways.
First, these companies focus on customers, using market research and follow-up

support to ensure that users will like and adopt a new product because they find

that it meets their needs. Second, the companies sell to highly competitive

markets, so they must keep their costs in line. They therefore design products

simple enough to ensure that development and maintenance costs can be

controlled, yet sufficiently comprehensive to meet their customers'

requirements. This balancing act ensures that products are not overcustomized

and that solutions target the highest-value buyers.

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