SME requires different approach in product strategical, management, and development process: why?
Generally small and medium size Enterprises (SMEs) have limited resources compared to a large company. It is hard to allocate all the resources for software process improvement (SPI) and tailor existing standard process models, such as Capability Maturity Model (CMM), for their needs due to excessive overhead for the full implementation. The average project duration of SMEs is short. For the success of software product business, it is required to deliver the right kind of product to the market at the right time. Managing release contents, timing, and roles for future product releases based on available market information is a prerequisite for the delivery of high quality product on time. But a systematic approach is often missing in SMEs because of lack of resources, missing end-to-end product development experience, time-to-market pressures, and the lack of process infrastructure such as requirements management. Consequently, SMEs face the risk of extensive rework and market failures in product business. In general SME faces some typical challenges like:
1. SMEs usually have limited financial resources compared to a large company. Often it is hard to finance the standard model for software process improvement (SPI) activities. They try to avoid excessive overhead for the full custom standard process implementation.
2. The proven best practices for the large companies might be too expensive or time consuming to perform in SMEs because of their limited resources and business model.
3. The majority of small companies are independently financed. That causes a tight financial situation for many small businesses. So they can’t always afford to buy required expertise that possesses the skills required in a particular position.
4. A first step toward process improvement is identifying the strengths and weaknesses of organization software processes. For this, an assessment to examine the processes against a reference model which helps to determine the processes capability to meet the required quality, cost, and schedule goals is required, but small companies have difficulty running those.
5. The small size of a company not only causes for the challenges of networking, marketing and business issues for small software companies. It also creates problems for gaining and leveraging technological know-how.
6. Large companies can improve the work efficiency using all needed toolkits. Small company also need these tools in every step of software process but high licensing costs often put their project cost over expectable levels.
7. SMEs suffer from the lack of literature and publications describing efforts on an improvement initiative. But adoption of internationally accepted software process practices is essential for the success of all software companies to compete in the global software development market.
8. Many SMEs have multiple business operations like service, product, and consultancy. A given employee may have to change the projects more frequently. This leads to additional challenges to improve the required level of competence for different projects with different technologies.
9. A given employee of SMEs may simultaneously play multiple roles. For that, he may ignore tasks or consider many tasks as low priority. Thus many important tasks may be left undone. In some cases, these tasks may be contradictory or mutually exclusive (e.g. A person is responsible for product cost reduction and improvement of customer service simultaneously).
10. In SMEs the average project duration is shorter than in large companies. Manager faces challenges to reallocate employees more frequently to different projects.
But generally the success of software product business depends on:
1. Developing high quality product
2. Building product at right time with the right set of features
3. An effective and continuous process for defining, evaluating, and prioritizing the set of current and planned product development activities that has been identified as crucial for long-term success of product-oriented software companies.
The brief requirements for successful software business strategies are the integration of business strategies into management of product development and maintaining the so called ‘big picture’ as pre-product development strategic decisions. The ‘big picture’ can be maintained by deriving product development strategy from the overall business strategy. It can be achieved by proper portfolio management assuring appropriate quality management and competence management of the resources. To overcome these challenges, instead of traditional best practices which are generally applicable for large companies, SME needs different approaches for the product strategy, management, and development process. In future we will discuss about the state-of-the-art new approach for SMEs.