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Outsourcing: the challenge of a para-startup developing a Web application

By Alex Frasson, Luca Grauso, Michelangelo Maschio, Leonardo Munarin, Giorgio Poggi 

OUTSOURCING: AN INTRODUCTION 

Filling the gap between students and companies has recently become the most recurrent effort made by Ca’ Foscari University of Venice, whose purpose is to provide students with a new and innovative didactics. The Experior Project is an outstanding example of this far-reaching trajectory, by which students, professors and selected companies are all involved into a real-case scenario, where creative ideas are shared as well as the final beneficial outcomes.

During the last three editions, the experience for Master or Bachelor’s students to collaborate with real, physical and motivated organizations has been tangible, albeit it was often translated into a “show me your slides” approach. Most of the opportunities we, as Ca’ Foscari students, have in order to put in practice what we acquired in terms of notions, activities and models, are strictly related to a very straightforward procedure: a problem or challenge is proposed to a group of students, who are in charge of identifying a reasonable solution, which will be presented to the company in 2 or more slides or with a poster.

Global Sourcing and Digital Human Cloud

Conversely, the case-study proposed during the Global Sourcing and Digital Human Cloud elective course held by Professor Giovanni Vaia, as part of the Experior Project Program, went beyond the actual “Experior format”. What we have witnessed as attending students turned out to be a compelling example of how universities and local companies can effectively and proactively work together leveraging on synergies, giving birth to talent identification and triggering students’ inner capabilities that were at first undisclosed.

This is what happened when StevanatoGroup, a multinational manufacturing company of glass packaging for pharmaceuticals based in Piombino Dese (PD), proposed to us a 360-degrees project management experience. Starting from a technical request, we were invited to overcome several obstacles while working in a team composed not only by students, but also by intangible elements that made the difference such as ideas, suggestions, thoughts, concerns and of course diversified competencies and skills. From this idea of an evocative and stimulating environment where collaboration and motivation were crucial, our group of six students teamed up to become an actual “para-startup”.

OUTSOURCING: THE CHALLENGE

During the first meeting, the company’s representatives explained us which were their needs and expectation of the the CoreBound, a Web application. They gave us the main idea regarding its operability and the main characteristics and features of the prototype. The goal to achieve was to identify and materialize an efficient way of managing the relationship between the company employees and their specific attributes. This was based on the fact that, within the different firms of the group every employee holds a role enriched with a specific set of characteristics.

For instance, an Account Manager’s role would require different attributes according to the work process, tasks, location and language skills, such that an employee is entitled with a specific equipment, internet access and email account that are related to that specific role. In order to develop such application, we started by creating a matrix structure that would have been the foundation of the Web app in managing the relationship between roles and attributes. We worked also in creating a hierarchy inside the prototype to enrich the information produced so that it was suitable with the company database.

OUTSOURCING: INITIAL APPROACH

Through the various phases of the project development we encountered not few obstacles, especially during the outsourcing phase on the crowdsourced online platform freelancer.com. Nonetheless, we were able to overcome those difficulties by having understood which risks we would have been facing during our journey. We decided to assess the risks on the basis of their importance, differentiating primary and secondary risks. In general primary risks have a major impact on the success of the final app delivery and result, while secondary risks mainly deal with hidden costs and team management, indirectly impacting on the quality of the project.

Briefly, a first primary risk was the delivery of the project but with a negative result, that is, not meeting our customer expectation. We solved this issue by consulting the company’s IT experts, which guided us through the development of our project. One of the meeting resulted crucial, since it put us back on track after some misunderstanding about the App’s functioning. On the other hand, secondary risks and challenges concerned some unavoidable and “hidden” costs that we identified as transaction costs. Due to the several failed engagements during negotiation with external suppliers these costs were significant as well as unpredictable. They were further needed if we wanted to monitor properly the relation with our developer.

BIDDING PROCESS

The challenge proposed by StevanatoGroup seemed at first particularly tricky, considering that we did not have those technical skills required for developing such complex prototype. Indeed, the external developer to whom we would have finally sourced the app’s technical development must have been carefully selected. That is why our core strategy was to rationalize the outsourcing process following five iterative key steps: Bid Design, Evaluation Criteria, Analysis of Responses, Negotiation and the Final Selection.

Facing freelancer.com for the first time implied an accurately-crafted bid offer, therefore we designed it to be attractive, informative, technical but simple at the same time, unambiguous but most of all enforceable. Some of the bids led to unintended outcomes, and only with the fourth one we managed to award the project. The evaluation criteria adopted with the first two bids, was mainly focused on seven indicators: Rating, Number of Reviews, Timing (of delivery), Country, Price, Interest and Quick Response.

Going through all the responses gathered from the final bid, we initiated intensive bargaining negotiations and revealed interest testing. By means of two hierarchical ranking of factors, namely 2-tier factors (reciprocal better-off scenario, cooperation, communication and budget soundness) and 1-tier factors (motivation, absence of opportunism and professionalism) we finally identified the right supplier and got the prototype developed and delivered within a very restricted time span. What we learnt from the bidding process was its fragility – a single mistake or misalignment of intentions and above all interests could eventually corrupt the entire outcome. Everything must be taken into consideration when outsourcing a given project on a Crowd sourced Labor market platform, from communication skills, culture to instinct and confidence.

OUTSOURCING PROCESS

Many negotiations took place during the outsourcing phase, as many as those developers who approached to us. Some of them turned us down, others accepted the challenge but then failed to deliver the expected result. On the 11th of December at 8.22 am in Italy, and at 2.22 pm in Vietnam (our final developer’s country) we received our completed Web app. The developer we chose was basically a blind shot: no reviews and no signs of past experience.

Yet, he was looking for a sure positive review to get started as a freelancer developer, therefore his motivation and undemanding attitude led us to award him the project The deliverable he made available to us was supposed to be compatible with XAMPP (a free and open source cross-platform web server consisting mainly of the Apache HTTP Server). The issue was to learn how to run the app given the lack of informatics know-how. A very thorough tutorial provided by our developer and further trial-and-error attempts, we successfully managed to check the functioning of our web app. The budget was respected and the outcome was more than positive.

OUTSOURCING: TEAM WORK ASSESSMENT

Time and budget constraints, lack of know-how, inexperience – these are just few examples of how many issues we had to deal with in order to complete the assignment. Through this experience, we surely enhanced our critical thinking and team management skills within an extremely stimulating context, in which real expectations and requests from a real organization exerted a beneficial pressure upon us and our decision making.

Facing this challenge, we had the chance to experience also transversal skills and capabilities such as integration, coordination and relationship management – something that a traditional education provider is not required to teach. Each member of the group put at disposition his or her expertise, even if limited, to pursue a strategy based on recombining each member’s diversified stack of knowledge to establish a collective, shared, and interconnected silo of resources.

We developed a flat organizational structure, tailored to resemble a network, or in a broader sense, to act as a holocracy (peer-to-peer communication and self-management). Daily communication, both virtual and physical, collective problem solving and finally a democratic exchange of doubts, advices and recommendations – our team has been and still is geared towards empowering each member’s personality, attitude, know-how but also skepticism, judgment and concern. An experimental project such as the one suggested from Professor Vaia during the Master’s course Global Sourcing and Digital Human Cloud is a prominent example of how universities and organizations can cooperate in future for encompassing disruptive technological and digital innovations by working side by side.

OUTSOURCING FINAL CONSIDERATIONS

University Ca’ Foscari of Venice, as previously said, is investing heavily in these new forms of experiential and learning opportunities in order to lay out the foundations for a new innovative didactics. Along with the Experior Project, new inter-curricular experiences have made the boundaries between students and firms thinner, as well as more accessible. Recent trends thus are now shifting towards a fully embodied involvement of companies into new disruptively innovative collaboration with universities and its students, but are there the right institutional and cultural assumptions for make it happen here, locally?

The Veneto region’s economy is characterized by the traditional self-made success mindset that is strongly embraced by most of local entrepreneurs. More than 90% of the region’s companies are SMEs, consequently having a small number of employees performing a wide variety of tasks who are directly supervised by the entrepreneur, who in turn is involved in all the operations and processes.

What we have achieved through the collaboration with StevanatoGroup might be something that could be disruptive for Veneto’s firms, since it would broaden their possibility of finding cheaper ways to perform some routine tasks, finding specific competences and of course to improve their market knowledge. Nevertheless, unless a shift in the entrepreneurial mindset will happen, the path we have taken will not be embraced by other firms due to the lock in situation of the Region.

OUTSOURCING AND THE ENTREPRENEURIAL FRAMEWORK IN VENETO REGION

The entrepreneurial framework is composed by a myriad of firms that poorly rely on the huge possibilities given by new technologies and digital tools mainly due to a lack of control and monitoring concerns – the Internet seems to be still underestimated. Even if transactions can be secured through mechanisms such as Milestone Payments, small entrepreneurs lack confidence with these tools since most of them are familiar neither with digital technologies nor with English-based services. These are some of the main obstacle to be overcome if local firms are willing to penetrate new markets, to improve their opportunities of being part of the current globalized world.

While working at this project we understood how advantageous is the outsourcing process of a Web application. The question that arose is why local firms are not embracing this innovative approach? The new technologies tend to open an infinite number of possibilities for firms, from outsourcing tasks to hiring new people, from gaining market knowledge to raise funds through crow-funding.

All of these opportunities and even more might be achieved by Veneto’s firm right now by lowering costs, fostering innovation and improving information flows. However, unless the region’s entrepreneurs will cut the Maya Veil made by the pre-conception that the work has to be performed only in a certain way, they will probably lag behind the Industry 4.0 rush.

Firms tend to focus mainly on product innovation (engineering) rather than process innovation, without completing the Industry 4.0 transition. Accordingly, firms’ focus lies mainly on profitability and volumes. Process innovation through digitalization is not recognized as a must-to-have performance differential but rather a nice-to-have (not-indispensable), catching companies’ attention only if the innovation explicitly affects firms’ operational, but most of all financial performance.

GLOBAL SOURCING AND THE ROLE OF UNIVERSITIES

Instead of directing massive amounts of capital in established tools and systems, firms should boost partnerships and experiences with universities to provide value for both students and the firms themselves. We believe in a team-based approach where students with interdisciplinary skills and competences can attempt a practical experience linked to the SMEs environment.

We believe that University Ca’ Foscari of Venice does have an outstanding competitive advantage over other Business Schools. The combination of computer sciences and informatics know-how of students coming from the Science and Technology department with the business and economics expertise retained by Economics and Management students of the same University, could eventually set out a consortium of cross-functional teams made by students under the same roof. This might be a remarkable source of innovation for collaborating firms looking for transversal competences needed to work comprehensively on a specific project that involves both a technical and commercial realization.

In our view there is a two-fold solution as follows: on one hand building a university-based hub for skilled students from different academic backgrounds; on the other hand, managing the top and bottom decision making to reduce the middle-management inertia on digital process innovation.

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