Page 314 - Global Project Management Handbook

SUCCESS FACTORS IN VIRTUAL GLOBAL SOFTWARE PROJECTS 16-3

Although the SWD industry offers immense opportunities for new and existing busi-
nesses, it presents equally big challenges. The majority of the ventures initiated by software
companies in the last decade have been unsuccessful (Nambisan, 2001). Software companies
face tremendous time pressures; in fact, most of the revenues generated in the SWD
industry are from products that are less than two years old (Hoch et al., 1999). Moreover,
the issues that are associated with this fast pace are coupled with historical problems that
plague SWD efforts, for example, budget overruns and schedule delays. Even in today’s
connected world, these problems keep the SWD success rate at a lower level than in other
industries. Several studies have reported failures in up to three-quarters of all software
projects undertaken in the last decade (Berinato, 2001; Jiang and Klein, 2001; Nidumolu,
1996; Standish_Group, 1995). These failures are either total failures and cancellations or
major slippages in cost, time, and quality targets.

What Makes SWD Projects Different

SWD projects are obviously big business with both strategic and tactical impact. But
what is so special about them? Five project characteristics can to help answer this question
in a comparison of SWD projects with new development and construction projects, two
common types of projects in the business world (Fig. 16.1).

New product
development projects
Software development
Construction projects

Degree of intensity of project characteristics Medium
HIgh

Low

Technical Product Speed Changeability Risk
novelty visualization involvement
Project characteristics
FIGURE 16.1 Compared characteristics of new product development, software development, and
construction projects.