Turnaround Unprofitable Software Development Division

Challenge

Multibillion dollar Technology Division continued to be unprofitable with utilization at 98-99% annually.

Solution

Review of the contract pricing, Statement of Work (SOW), and actual software development work compared to SOW was required to determine the root cause.

Implementation

For multiple contracts, there was a detailed review of (a) the processes associated with completing the bid to final contract award, (b) the subsequent Statement of Work (SOW) related to the contracts, and (c) the actual work performed compared to the SOW. The analysis indicated a lack of specifics in the contract leading to additional add-on work within the SOW not contemplated within the contract pricing. In addition, due to this lack of specifics, out-of-scope work was performed after development started and without appropriate management approval or compensation.

Results

Future contracts were specific to the work to be performed, subsequent Statement of Work (SOWs) submission were reviewed to determine if out-of-scope requests were included, and management approval required before accepting customer requests impacting the SOW efforts. Improved reporting provided management the ability to react to changes in business drivers before financial/operational results were materially impacted. The division became profitable within 18 months of implementation.

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