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Turnaround Unprofitable Software Development Division

by | Mar 20, 2022


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


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


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.


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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About the Author

Bob Salem, MBA

Bob Salem, MBA

CFO Partner

Senior Finance Executive with extensive success driving sustainable revenue and profit growth through strategic control. Former CFO/SVP/VP/Director of Finance of Fortune 100, Private Equity, and Start-up organizations, ranging from $300K to $8.0 billion leading the accounting and financial operations; planning and analysis; risk and compliance; operations; and strategic planning.