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I have already distributed my information in English, but because of the time constraint, let me skip it. Let me just say that I am sixty years old. My hobby is climbing up mountains. I have a plan to make a visit to Nepal on the 24th of October for trekking of the area very close to Mt. Everest. About one month ago, I attended an academic meeting in China, and I visited a number of places including Shinzen and Amoy. I heard some of you came from Mongolia. I've been to Mongolia twice in the past. That was in order to attend the Mongol academic meeting. I was invited by the universities. I have worked for Fuji Xerox for the past 34 years. For many years I've worked as a system engineer, and eventually I managed projects. At the present moment, I became the president of a company after I decided to be independent from Fuji Xerox, and I give consultations like this.
I have three things to talk about. The first is how the Japanese software industry makes progress and what will be the view of the future. The second is IT projects, issues and problems. Third point is the important of communication skills, which will be extremely helpful for you if you want to work as engineers within this kind of business environment. In Japan it's said that people are beginning to realize the importance of communication skills. When the new graduates try to apply to many different organizations, one of the criteria for hiring is the communication skill. 20 years ago, one of the priorities of the company for hiring was how well the person can work together with other people. However, 10 years ago, this criteria changed. Companies began to seek people with creativity. Nowadays, communication skill is one of the top priorities.
In order for you to either work in Japan or work with a Japanese company, it is helpful to know the brief history of how computers have developed from old days. The first computer in Japan with the name of Fuji was manufactured by Fuji Film in March 1956. Fuji Xerox, the company I used to work for a long time, is a subsidiary company belonging to Fuji Film. Around 1957, there were many numbers of computation centers established in Japan. Most of the computing centers were using the IBM computer. At that time, there were many computing centers using domestic computers manufactured by Toshiba as well as Fuji. I was engaged in this kind of business sector from 1965. 1965 was about the year when the Japanese banks implemented the first-generation online systems. During the end of 1969, the first software company was established in Japan. At the present moment, we have several tens of thousands of companies dealing with software-related work. Breakdown of what kind of work these companies are dealing with... Government-related work is 58.8%, computer maker is 21.4%, and general use is 19.8%. In 1970, IBM made the official announcement for the unbundling policy. (Slide 5)
The result of this announcement of the unbundling policy, many new companies emerged in the market. This is the breakdown of the companies who are doing business in software-related work in the 1970s. (Slide 6). This is the slide showing the hardware companies. (Slide 7) In the middle column are the domestic and export totals. Beginning from 1970s, Japanese computer-related technology as well as performance has started to increase and improve.
This is after 1975, many of the computer's technologies have dramatically improved. So I was involved in the implementation of the LAN system into the market. The market made great change in 1995 when the Windows 95 was first introduced to the market. Also, the market went through another great change when the first mobile phone was introduced into the market in 1995. This is the history of how the information industry made change. While we started information industry started for providing work for the government-related work, then went into manufacturing, then finance, then logistic and distribution, then communication, now we seem to be aiming for electric government or the person. But there are still a lot of question marks. We aren't quite sure where we are going.
As Mr. Kiniyama mentioned during his preesntation, the Japanese software industry is facing a very difficult business environment at the moment. At the present moment, we have several thousand operators. (repeats statistics from slide 11). The total turnover (global turnover) is about 70 trillion yen. As I said, at the present moment, about 570k people are engaged in software development work. In China, around same number of people graduate from institutes and go to obtain jobs in IT industries. Chinese influence is beginning to be very strong here in Japan.
We have a number of the issues related to the software industry in Japan. One of the difference between Japan and European and American markets is that custom-made software is necessary. Most European and American companies prefer to use packaged software. That is why, since you have to make everything from scratch, the cost of system development is becoming too high. Another unique form of employment, especially when it comes to software development engineers, is that normally you will be asked to work at the client's company, not in your own.
Another problem is that software industry is facing this stratified system. You have the parent company, then the subcontractor, then the second tier, then the third tier... The added value is considered to be very small, so manhour has not been correctly evaluated. The reason because Japanese people as well as Japanese companies fail to provide information. Even the service is important. People are expected to pay for this service. This is the problem derived from the company who place the order as well as the company who receive the order. Their relationship cause the problem. In the case of software industry, most of the people working have great knowledge of engineering and technical skill, but you don't know much about selling and sales kind of knowledge. I'm sure you will immediately detect this kind of disadvantages once you go to host companies and try to receive training there. Most of the software companies in Japan are considered to be either small or medium-sized companies. As I said, we have total number of slightly more than 7000 companies in software development. six000 employ less than 100 workers. 100 million yen capitalization or less, 5000 companies. Software development become border-less, including (list of countries).
These are the top 20 companies listed in here. (Slide 13) The top 20 major software giants control at least 70% of all the turnovers coming out of this industry.
I'd like to talk about the issues and problems relating to the information technology industry in Japan. Obviously, issues and problems common to all for the IT business can be divided into three different categories. Sales on the left-hand. In the middle is development activity. On the right is the supporting activity. There are many number of the sisues and problems coming out of these development activities. One of the biggest difficulty in the Japanese software industry is facing is very severe competition from Chinese and Thai software industries. The labor cost from China is said to be 1/10th that of Japanese labor. But Chinese labor price is going up little by little. They are still 1/3 compared to Japan when it comes to labor cost. Especially in major cities like Peking, and Shanghai, this labor price is going up slowly. So since the Chinese labor price is going up, now the focus will be Thailand, India, and elsewhere. That's why the needs of Japan and what you can provide seems to be coinciding. Maybe your labor cost will also go up accordingly. You have to take account of infrastructure and other factors.
Surprisingly, there aren't many Indians working for IT business here in Japan. It seems that Japanese companies prefer to work with China and SE Asia countries. At the present moment, IT business-related companies' focus is shifting toward stringent activities focusing on sales. Also to provide a much more strict control on project management work than before.
There is a great movement which started to take place from recent years is the shift from hardware to providing the services. And also the people beginning to think it is important to provide good consulting work, focusing on sales skill as well as the skill to provide proposals and skills to your clients.
The second is the project issues and problems.
How many of you have involved yourself in the project? Please raise your hand. In Japan, people are starting to pay attention to how important to look after management of the project is. We call it project management. So project management means that you are not asked to just develop a certain technical engineering system, but involvement of human factors is becoming to be considered very important. People skill. So in order to carry out the project, you will always confront three goals. You have to keep it within the budget. You have to deliver the project on delivery time which you promised. As well as you have to have a good outcome. So that's why you as a human being you need to establish a good plan and provide a good execution and provide a good control of your project. But most projects don't go like that. Here I wrote three characteristic of carrying out a project. These three elements I have taken out from the PMBOK (Project Management Body of Knowledge). It's a project management association. Delivery date, service in product which is unique to your own company, and you will try to provide a detailing of the work phase by phase.
Allow me to skip...
When you talk about the project, there are so many different kinds of projects which exist. Most of the software company dealing with the IT industry, we try to deal with the development of information systems as well as the development of networking systems. These are the main focus of our business. So allow me to give you a definition for the terminology of project management. Project management is in order to provide satisfaction for the items that were requested by the customer. You need to apply the activities, including the technological skills and methods. Whenever you will execute a project, you will face the three constraints: time, cost, and scope (the outcome of the product as well as the quality of the product). So what normally happens in the market is that your initial work is considered to be that gray small pyramid. As your project progresses, you will receive the request from your customers, and the size or cost of your project is likely to inflate. The problem most of us is facing is that obviously the scope and size of the work has expanded as you can see, so naturally the time and working hours and cost will likely increase. However, it is the matter of negotiation between the software industry and the customers how you are going to charge this extra cost. If you are not doing anything clever, then your project will end up as a project making absolutely no money. In some cases you will make red.
So this chart contains the so-called lifecycle of a project. On the vertical line shows the availability of manhour cost against the horizontal line, which shows the time. In the midphase, your manhour cost is most likely to reach quite high. At the end of the project, that manhour cost will almost become 0. This particular chart (23) shows you the incident of emergence of number of the risks in dottled color red line, and inference coming out of these risks are used with the blacking dotted line. In order to interpret this particular chart, the risk is most likely to take place at the initial stage of the project. The risk is most likely to be dissipated at the end. However, the inference coming out of the risk will become serious toward the end of the project. These three bombs show you that you are most likely to come across risks in the beginning. If you have too many risks, your project is most likely to fail at the end. In order to carry out successful project management, most important thing is to how you will make the forecasting of how many, what kind of risks you may experience at the start of the project. Risk coming out from many different areas. There are many different types of risks that you may face. So if you want to determine the performance or skill of the project manager, think of how much the project manager can see how many risks there are.
So from now on, I would like you to share some of the failures we have experienced.
What is the failed project? Are you familiar with the Japanese TV program called Project X, from NHK? In Japan, we have two different categorization. If the project make a success, we will call it Project X, successful. If failed, batsu or peke. So many people say that failed project, but the definition of the failed project is somewhat ambiguous. Allow me to give you the definition of failed project. Failed project is in case you are unable to deliver the requirement from your customer in terms of Quality, Cost and Delivery, that is definetely a failed project. If the company fails to make a profit, that is also a failed project. However, generally speaking, the people most likely to be referring to a failed project would be the project that does not bring profit to the company.
This is the success rate and failure rate of projects in Japan. (28). How many of you have had a success rate of what? Out of more than a few hundred project numbers, at least 73.3% are failures. As you can see, majority of the projects ended up as a failure. From now on, I will share with you a number of the failures that someone I know closely has experienced, including myself.
I only wrote down the six, but there are so many more.
This is the actual example of failure which we experienced in the manufacturing industry in the production management area. The status was that software development manhour was dramatically increased. It didn't say the actual numbers in it, but this project was about 50 million yen to start with. However, the project manhour was dramatically increased, so it ended up as 75 million yen. There were number of reasons for the failure. First one is the so-called internal reason, which was the relationship between system engineers and the sales department. External reason is that the customers came up with different requirement from different department, so the customer's requirement was not unified as one. And another third reason is that the client size, each different department keep coming up with additional requirements one after the other. As a result of that, the project should have been completed within 50 million, but the software development company spent 75 million yen. Lessons learned: one of them, just because the client give you some order or requirement using strong attitude, don't listen to him. You have to understand the essence of the project. Another thing that we have learned is that we needed to understand the system within the customers. What kind of project operating system, what kind of responsibility is in the hands of whom... These details we need to understand. As I said on the third external reason for the failure is that customers keep on adding additional requirements. Just because you are facing the delivery time, if you decide to pour additional engineers, project will not necessarily be finished as a success. That doesn't solve the problem. This kind of problem will be derived from the communication among the people.
Second example of project failure is from the commercial side, when the sales management system failed. This was an example of receiving the ... for the finished product, which we delivered to the customer. However, this finished software did not meet the requirements of the customer. This was not a large-scale project. It was quite a small size, about 20 million yen budget. One of the reason was the internal reason. The person who worked within the sales department made his own judgment and decided to place the order using external vender to carry out the software development work. Since then we have so many different kinds of companies engaged in software development work, you have to have eye to analyze and evaluate to whom you want to give the order to. If the sales person make the final judgment based on the cheap price, then he or she may end up with receiving the software that comes without any document, or the contents of the software itself is extremely poor or low-quality. We have a saying here in Japan, you buy cheap thing and you lose your money. So this is the kind of lesson we have learned from past company.
Third example comes from engineering management. This was quite a big project, with a budget of 100 million yen. The production cost went out of the way because halfway through the project, the client came up with extra requirements, and software company couldn't make a stop to it. So the external reason, the project wasn't properly functioned within the customer's company. Because this is the kind of typical failure you may experience in Japan since most of your customers aren't professionals, they don't know anything about system development. So the lesson that we have learned is that once you know the customer or the client, they don't have any kind of system to deal with the project, you have to maneouver the battle airplane with a single engine. And second lesson we have learned is that you need to clearly divide the responsibility. What kind of responsibility are in the hand of the client? If you are just told what to do, the customer wants you to do everything. You shouldn't say yes all the time. You should divide the responsibility. This kind of failure is most likely to derive as the start-up of project management is taking place and the work breakdown structure is not successfully defined. So you must not do anything which is not stipulated in the work breakdown structure. Well, it is quite true to say how the minds of your client or customer work is that they often say to you, since you are the professional, you have 100% responsibility, do what you think is best. But that is a trap. You are most likely to fall down later on. This is where the difficulty lies.
The fourth example. This is the engineering technical management system to be used for precision machinery sector. We do not have many failure like this in the past. We received the complaints from the customer because the function and performance did not meet the customer's requirements. The reason for the failure came from the internal reason. People gave the overtalking. It was insufficient technical specification as well as verification for engineering feasibility was not sufficient. The lesson learned is that we need to fully understand the needs of the customer so that the company can lead the client in the right direction, and also to say what you can do and what you cannot do--these have to be directly conveyed to your customer. And also that you must check at all times what you can provide and what the customer needs on a regular basis.
Fifth example is manufacturing technology system used in the product making industry. This is one of the example coming from one of the major automobile manufacturers in Japan. This project was the new IT system to be used as a start-up of building new factory. So their status was that the customer specifically required a particular technology, a new advanced technology to be used for this development. Unfortunately, the technology was too new. It was not mature enough to use on a practical level, which is why the delivery was delayed for five months. One of the reasons for the failure came from the internal reason. The software development failed to carry out verification from the technological point of view. And unfortunately, another internal failure reason, this project was managed by a project manager who was also looking after another project. So another external failure came from that this particular customer had a great interest in new technology, but when it comes to development of system, that company has absolutely no knowledge. The main contractor also had no experience, especially in the information field. So the main contractor virtually threw the project to the software development company. The major lesson we have learned is to make sure to carry out verification before you use any engineering technologies. And another important factor we learned is to make sure we identify the responsible system looking from the total project management view. Also, the project manager should have responsibility until the very end. This was quite a fortunate case because all involved party including the client company and the main contractor as well as the vendor responsible for the system, every party admitted their own fault, so nobody had to pay any penalty.
This is the last example. This is the system management development for the manufacturing industry. The delivered software had so many troubles. There was the reason for too many trouble after software was delivered. The initial requirement asked for delivery in an absurdly short time, because the client side has the specific internal reason that they need to receive the software in a very short period of time. So this was the external reason. The responsibility is in the hands of the customer, because they had a double standard. The customer said this is just the test version, but they actually meant a real version. The development company realized they had more time. That was entirely an internal reason. The double standard derived from the very serious management problem inside the company. This is again another example from one of the major automobile companies in Japan. The software company made 300 million yen deficit. It's a very huge damage. The three things we have learned from this severe experience is that even facts that needs are coming out from the customers, you must not say yes all the time. If you believe there are risks, you must provide serious control or management of these risk-related elements. You must always have discussions with customers with minutes or memoranda every time you meet with a customer.
So these kind of mistakes or the experience is taking place in daily basis here in Japan, between the companies and the clients. In order to avoid all these things, that is why you need to acquire communication skill.
Reason for the all the common failures are written on this page (thirty-six). You did not have the eye to clearly understand the requirements from the customer. Business analysis was not sufficient. Over-talking during the sales. Technology? was not appropriate. Dev manhour forecasting was not accurate enough. You have made a mistake in choosing outsourced vendor. You could not deliver your product. Insufficient sales engineer leadership. Insufficient project management capability. No infrastructure to promote the project within the customer's organization. We spent too much cost to clear all these problems.
Here is the tendency for the failed project. For some cases, you try to put on your jacket, and the top of the button doesn't match. You made the mistake from the very beginning. Incompatibility in the business. Mistake in forecasting. You didn't notice the number of the risks. Insufficient infrastructure for the management as well as the system. All these elements will eventually take you to making failures.
Up until now I have spoken about project management looking from the personal point of view. However, in order to make a success out of your projects, you need to tackle the issues looking from the organizational point of view. In order to make the successful project, you need to make your organization's maturity to bring up to a high level, including you need to have the body to provide support for the strategy, and your top management team has to have management skill, as well as some kind of standardization or methodology to carry out the projects. In the future, you may become managers or management team members. In that case, you cannot on your own achieve anything. You have to have the organizational power in order to be used to execute your projects. Having that in your mind, you can participate in a project. In Japan, whenever a project seems to fail, the people point finger at each other. The project failed because of that particular person. In order to avoid that, you have to protect yourself by establishing logical thinking using the organizational power. So this is the issue for companies is to provide much more stringent control and management of the strategy for project management work.
Shall we have a five minute break?
(You will obtain the English translation later on, so you do not need to translate by yourselves.)
So allow me to continue. From now on I will like to mention the presupposition for making the project a success. In order to make a successful project out of it, you should not depend on human factors alone. This is the organization and system, mechanization and rule, funds and resources, information, human resource and skill. This is most important factor: human resource and skill. The first thing you are asked to do is provide most stringent control for human resource. This is universal. This concept applies to everybody. In order to make a successful project, you have to divide clearly into management side of project and operational side of project. Also, you need to think deeply about what kind of responsibility and authority is given to a project manager. Often, if the PM is not given sufficient authority, that project is likely to fail. Depending on how much authority the organization is willing to provide to the project manager, the project might not work. The degree of authority depends on what kind and what size of project you are dealing with. It is important to place the emphasis on the project charter in which you will appoint a certain person to be the project manager. Often, in the case of Japan, the selection of project manager is determined verbally, not using documents. Often, you will caught with the problem if the project manager's assignment was carried out without clear order document.
How to construct a so-called project team. You need to establish the organization that will meet the targets and objectives of a particular project. And by establishing that, you will need to procure the necessary resources, including the human resource. And also you needed to clarify what kind of rules and what kinds of methods you will be willing to use for this project, as well as clarifying the degree of responsibility as well as authority for different people. In order to carry out the project management looking from the organizational structure elements, it sort of works, quite similar with the management activities. Person, product, management, information... So what will be the difference from the project against normal organizations? The project is going to be worked with a special budget and responsibilities. It's a single shot project using the matrix. However, when you define the normal organization, the definition will go like this. They have the periodical budget and you will employ the similar kind of person and the work is continual as well as the ... type of operation. So this chart is how to review your project organization system whether your project is on the function type of the project or it is truly project-oriented type or what kind of scale of project these elements will determine what kind of authority and what kind of authority you need to provide to the project manager. it has a close relationship to the kind of project itself. Important things to bear in your mind is in order to carry out the project in a very healthy and successful manner, both your clients and developers have to establish common goals. I'll skip the details. Again I will emphasize how important to establish good communication between client and developer companies. This is again the chart to review your project organization system. The top is the use project, from the user's point of view. The bottom is the vendor project management. Problem management has to be carried out by both parties. You need to establish successful communication between the two parties if you wish to achieve the successful outcome.
We will use this kind of formulation to determine whether the project is operating successfully or not. (Slide 48). P: profit, V: value, QCD: quality, cost, delivery, M: management. In order to obtain the profit, you have to have good management, so that you will eventually come up with a value.
Some of you already said you have some knowledge about project management thinking. What will be the difference between the legacy kind of project management and the modern kind of project management? The legacy or old type of project management relied heavily upon the personal individual skill and coordination at work site. The essence of the modern project management is to place the focus on the mechanism as well as the plan of the project. So in order to do this, you need to use the project management methodology as your platform for your activities. And then you will need to add the individual skill and knowhow, and then again add the organizational knowhow. So let's skip this page...
So here is the review of the mechanism of project management. This is the tendency taking place in the US. Recently they use the title called PMI. Project Management Institute. At the present moment, at least 50k people are qualified as project management people. P2M is the first in Japan project management system. It's called Program and Project Management. At the present moment, there is a movement here in Japan by introducing this PM standard or criteria to South East Asia countries as well as to China so as to encourage the system engineers to be qualified with these qualifications.
If you imagine what is the project management, then you can imagine driving your car. In order to drive your car, you need a driver's license, which is like the qualification. Methodology is like the driving rule, like stopping at red signals. I noticed there are many people who don't stop even when the color is red. Risk management is just like when you are driving a car and you encounter a car and you do not see the road in front of you. It is the same thing when you are confronting risk. So why do you need project management methodology? Using that method, you can stabilize the quality of your work and decrease the number of unnecessary work you need to carry out. However, just because you have the methodology, it doesn't solve anything. You will be asked to continuously review the system. Otherwise, this method will become just a formality.
When we talk about or think about the characteristic of the qualification, if you put too much emphasis on the qualification, some of the engineers have the qualification, but they can't drive the car, just like a paper driver. Or if you think too much about ignoring obtaining qualification, that means you are skilled driver, but you failed to obtain driver's license. So it is better to understand the qualification is necessary and at the beginning of, everyone is terrible driver to start with, but as you acquire your experience, you will become skilled engineers, just like driving your car.
From now on I would like to talk about the human resource development. When we think about the human resource development, it goes like this. At the bottom, there is the personal skill. Then we have the three pillars on top of that. Business, management, and technical. In order to carry out the successful project progress, it is essential to have communication ability as well as leadership ability. That exists within the personal skill. Being a project manager, the technical skill is the necessary condition, but it doesn't have to be 100% so.
Last chapter is to talk about the communication skill. It is important to establish good communication with people from the stake-holding organizations. There are so many different kinds of stakeholders that exist. You will be asked to establish good relations with all of them. (Long list from slide 58.) All these people or parties are called stake-holders. Key to a success of the project is to establish the good communication with each member of the stake holder.
Are you familiar with this term called stake-holder? (Brief excursion into explanation of term.)
What will be the structure for the communication skill? The foundation starts with the communication of the social life of the individual persons. Second is the communication to be carried out within the companies or organizations. The third one is the communication that takes place within the activities surrounding the project. So your level of the communication skill is most likely to increase as you go up the steps. We have a saying in Japan in order to establish good communication in our daily lives, it is good to have good facial expression, speak clearly, and act--agility is the key. It is very important to acquire the listen speak read and write, the basic essential. This is universal essential things.
In order to carry out the project activities, you need to involve so many different kinds of communication skills. Skill to discuss. stakeholder discussion skill. Negotiation skill. Documentation skill. Presentation skill. Unless you will clear all these communication skills, you will never become a good project manager. That's why it is important for you to acquire the skill to be a good communicator, step by step.
This is the process for the establishing communication. Most important foundation to establish the communication is to have the leadership. So this page contains the basic of communication process, start with the leadership and communication plan, formulation of relationship, consensus to be formed, and maintenance management with related partners using discussion skill, negotiation skill, documentation skill, and presentation skill. I will skip a number of the slides because of redundancy.
Important thing to be remembered is that whenever you will establish the plan for the project, you have to include the plan for how to establish the communication with the parties involved. Reason because many of the failure of the project that we have experienced here in Japan is derived from insufficient communication plan. Most of the problem will be ended up and you'll find out the communication manhour was not included in the whole project manhour planning.
(Slide 66) This is the link of the communication as you will see the number of the links will increase when you involve more people. If your project needs 100 people involved, then you need 4450 ways of involvement. In order to avoid that, you have to organize your project team to be a certain standard. This is one of the examples. (Slide 67.) In order to determine how many communication man hour is necessary with 100 people a month, with 2500 people days using 200 thousand hours. We don't have time to calculate. It is very important to accommodate this information into your project plan.
This is the communication issue that exists among the human beings. This is an example. (p68). Some people lose their mind and say "That's not what I said..."
This is another example. I understand you are all learning Japanese. One word in Japan has several meanings. That's where your difficulty comes. This kind of problem often takes place among the Japanese. So there are phonetical difference between some of the words between what you think in your brain and what comes out of your mouth can have big difference. For example, HAshi, chopstick, and haSHI, bridge. If you have some kind of gap between yourself and the customer, that will eventually lead to some serious problems.
So we wonder why this kind of communication mistake takes place. Because there's always a gap exist in the mind of the person you're talking to because the person's background and skill is different from yours.
One of the examples of how difficult it is to communicate. Let's say you had to tell someone the distance between earth and a certain star. (p71)
Often you come across miscommunication when you talk about database design with your client. Since that you are system engineer or IT engineer, you all have great professional knowledge. But if you are asked to define what is one ppm, you have to use the layman's definition for your customer. (p72)
This is extremely important information when you would like to do business with Japanese people or Japanese company in the future. To make sure you acquire the habit of putting yourself in a customer's position. Every individual person has a sense of value. Even though your sense of value is the very best, you should not try to push these ideas to other people. Even though your sense of value is right, if you take the attitude of pushing too hard or selling your value to other people, they will close their minds and will not be able to listen to you. From now on, you may have the opportunity to have participation in a project. However, you have to understand that the performance of the project depends on the project manager, and you will be greatly influenced. And if you happen to take participation in a particular project, you must do everything the project manager tells you to do. You have to put yourself in the project manager's position. You have to acquire the habit of putting yourself in the project manager's shoes. If you acquire all these skills, then you are most likely to become the good project manager.
Whenever we think of what is the communication skill.. Communication skill is your ability to establish human relationship. That's what communication skill is all about. In order to improve your communication capability, it is better for you to have a great interest in other people. Lastly, the communication comes from the bottom of your heart. Even though your words are not enough, if you're serious enough to establish communication with others, they will understand and accept you.
There are keys to make the project a success. To provide the strong management skill, provide the stringent control for the project management skill knowhow and methods... Before you do that, you need to improve your communication capability. The important message is here. If you happen to be a horse rider, you don't have to run faster than the horse. You just need to know how to control the horse. This is the kind of issue when you become the project manager. You always have a headache like that.
Things that we've learned from the failure. If you do something you must not do, that will lead you to a failure. Again, you make failure if you fail to do the things you have to do. The things you are supposed to do, and if you do it as you are supposed to do, you can do what you are supposed to be doing. This is a quotation from the strategy from the baseball team called Dodgers. Stick to your basics.
(Thoughts on outsourcing: How to reduce the project cost, as I explained during the presentation. In the past, our project development was closed to the Japanese domestic market. Now we have deals with China, Thailand, Vietnam, India.. For example, major companies like NEC in Japan. NEC has a software house in China. For example, this summer, one of the big projects with 3000 man hour went over to the company in Dairan. Fujitsu, IBM, NTT, they are major operators in Japan, and they have the science and technology centers in a place in China. So I'm sure the big-sized project will be much more outsourced elsewhere. Maybe it will eventually shift over to Mongolia. =) )
(Thoughts on quality control: ISO 9000 series. CMM not very many. Within the PMI, there is a special section dedicated for the quality control, but it doesn't say specifically what you have to do. So the thinking is in the hands of each organization, what kind of quality control system you have implemented. However, before you start thinking about the quality control, you have to first understand if your organization or team has the project management or not. You can't just pursue quality control. You have to go through a number of processes. So it is important for the quality which you will be expected from system engineer's point of you. Another viewpoint is applied to the finished project. There are so many different aspects for quality control management. Because earlier I mentioned it is very important to establish product planning in the very beginning. That will become the foundation to assure that which you are developing.)
The agenda of this afternoon is first Mr. Kiniyama will give us the outline, then we'll take a brief visit, then we'll hear the lecture from Mr. Hisai.
Good afternoon everone, I am Mr. Kiniyama from ACS software inc. So today I am going to give you a lecture for a duration of about 20 minutes, whose title is Software Development Status. I'd like to share with you the problems and issues we confront on a daily basis. Before I'm going to give you the detailed explanation, first I'd like to give you the brief history of the company. The ARC information sstems inc was first established 18 years ago, and we have a capital of 300 million yen, and we are regarded as an independent software compan.
At the present moment, we employ between 180 to 190 persons, out of which 130 are full-time, and 50-60 come from our business partners from outside. Out of the 180 or 190 people working for our company, at least 80-90% are engineers. Our main business can be divided into three business categories. First is system development on consignment basis, then consigment sales of products for general use, then system integration. At the present moment, I am acting as the general manager for operating system department, which has 5 department working. I am in charge of consignment department 5. Within our app sys dept, curr we have 58 person working, out of which manager and leader number go up to 13, and we also have business partners. Altogether we carry out around 30-40 projects a year. Most projects carried out by a team. So the kind of work we carry out within our org is the joint work together with the major sys integrators, including NTT, etc. development of system, including CRM, sales force automation... And also we carry out various other kinds of operations within our org, including product dev for manuf, like a packaged type of project, as well as business systems directly aimed for the end-users. And from now on I'd like to share with you the kind of prob and issues we are confronting, and some of the solutions that we came up with. So maybe you already know, but the business ienvironment surrounding ourselves is facing difficulty every year, and it is getting worse. So what we do within the organization to try to break up the number of the issues and problems into different categogories and try to come up with countersolution for each problem. The first is how to obtain the stable orders.
The first thing that we keep in our mind is in order for the company to stay in the market, it must keep receiving orders. So one of the way to make the survival and try to receive the stable order is differentiating ourselves from our competitors and letting our customers know about that. One of the ways to achieve this is to keep the price so that the customer is happy with us, and to make sure to improve our productivity as well as to involve ourselves in offshore development because everyone wants to have the reasonable price. The next one is to acquire ourselves with the highest skill engineering ability as well as the technical performance so that our competitors are unable to carry out specific business work, by improving our skills and performance. Another important factor we keep in our mind is make sure to bring customer satisfaction to our clients, in terms of delivery date and quality. In order to survive the competition, this is an important factor. And also another important factor is obviously I belong to the application systems department and most of us are engineers, but we will always constantly communicate with the sales department so that we can understand the needs of the customer and the market.
The second problem we are facing is the deterioration of profitability. So I am very unhappy to admit but the profitability of the company is slowly going down. Not to mention some of the proj are unable to make any money, but that is a fact. It is going down. So why are we losing our profitability? It comes from a number of reasons. One of them is that the order price is going down. The manpower amount is decreasing. We are facing very severe competition from offshore development. And not to mention our product delivery is becoming shorter and shorter in time. Our technologies are becoming diversified, and there even came about this open source system requirement. So our countermeasure is to make much more stringent personal relationship with the business partners not only from japan or domestic market but also from overseas, as well as project management, which you will be given a detailed explanation of later on from Mr. Hisai.
And third problem we are facing is something I personally don't want to mention. Long hours of work which naturally decrease the motivation of the team members. And another difficult factor for the team members is that often your work has to be carried out not in the company you work in, but in your client organization, which gives you another kind of tension. And another factor is that when the project size becomes larger and one simple project needs 40 or 50 team members, you have to work within this difficult human relationship involvement that might give you additional stress. And countermeasures for this particular problem is that we will try to pay attention to what kind of communication level that people are in, and you will look after each other's mental state, and you will care for others and they'll care for you. Another way that the company is paying attention to is to make sure to have multiple number of meetings with different level of the members, and this is the place where you can openly talk about things. We are also promoting individual meetings, including appraisals. Your mental status will be closely checked and taken care of.
The fourth problem we are facing is human resource development. As a part of the human resource development way of doing things, since we are a software dev company, it is essential for us to continuously improve our ability in things that are considered essential. We must always accumulate as much information as is useful, and we encourage our members to attend seminars. Team members must have time to learn new things and share them with others. And also, it is essential to improve the performance and skill of the managers and leaders, so they need to learn about how to manage the project as well as to improve their skills on a daily basis.
So all these activies in order to provide solutions to the issues and problems we are facing, we will try to summarize all these problems into one problem and we will be sure to set a target, and this target is broken down into the yearly action plan, and you should set goals, and check how you are progressing. make sure you are achieving the goal. So for those department who fail to reach the monthly target which was broken down from the yearly target, you will be reprimanded not only by the president but also by the management team.
From now on, I would like you to listen to what kind of way we are working for projects. First phase is even this first phase, before you even you start the project. When you go and get the project itself is considered to be phase one. we engineers pay attention to how the other department will go and start the negotiations for receiving orders until the sales department receives the firm order from the customer. During this phase one, befor ethe company will decide whether to take this order, or whether this kind of quotation is adequate or not, it will be discussed with members from all companies including engineers and salespeople so as to ensure that the project will bring profit into the company. This decision will be made by measuring the capacity as well as the level of the project itself, whether it will be difficult or not. By doing this kind of comprehensive discussion among all company members, we make sure there will be no project that will bring no profit into the company, as well as manage the risk of the company. Once, during the meeting or other area, you found out that this project may bring some kind of business risk to the organization, the company will make a proposal to the client asking for longer time, or dividing the development phase into two or three different phases.
Second phase after you have received a firm order from customer or client, then the project plan will be established by the team member, including the assistance, schedule, cost... If necessary, they will place the order for the outsourcing. We will always keep in our mind how to manage the project execution. First, we will establish a milestone, and we will check where we are now and how we are with regard to schedule. We will spend quite an amount of energy checking that.
The third phase is the actual operation and execution of the project itself. DUring the execution and development of the system, it is important to clearly understand how the operation is progressing in the correct manner, because we have so many different kinds of development models. We have to make sure we know what is necessary to do. In order to find the problem and issues before it becomes too late to tackle, we will periodically have meetings, and in those meetings we will review our progress. Once the problem or issue is detected, then we will try to make one step ahead before things become too serious, so it includes notification to customers. We may need to change our project plan. All of these things will be carried out during phase three.
The fourth phase is the actual delivery of the product. Our highest priority is to make sure to deliver the system on time, as well as to make sure to supply the quality product to the customer. And depends, case by case, some cases even after we deliver the product to the customer, we need to provide the other kinds of operational support as well as training during the implementation phase.
From phase 1 to phase 4, this is so called standard procedure to be followed in any software development. We are quite unique because we offer post-project review. What we do first in order to carry out this post project review is that we will establish a so called evaluation field containing TQCS. T: Time (delivery, shipment). Q: quality. C: cost, S. Customer satisfaction. We will make the evaluation sheet as well as the sheet for each member in the project. All these outcome from these evaluation sheet will be reflected for the future project, as well as whether you will take similar project or not. And also, the outcome of the member evaluation sheet may be used as part of the company's appraisal, to measure the performance of each worker.
So, well, thank you very much, it was very nice of you to listen to what I have to say. I have mentioned a few things coming out of the department of which I am in charge, but all these things are shared by other departments. The kind of countermeasures I have mentioned to you this afternoon, we still believe it is not efficient. We hope you can have a good time with my explanations. I think I have overspent the time allocated to me, but once again, thank you. My last word is that I wish each one of you good luck for your future, since all of you seem so very young, and I myself felt privileged sharing time with you today.