Changing the Organizational Structure at Pine Software LLC.

Pine Software LLC (PS) is a mid-sized software development firm located in suburban Chicago Illinois. The company was founded in 1992 and focuses on developing and supporting middleware solutions for small and medium-sized businesses in the US. The company has a number of products that are designed to easily facilitate the movement of information across multiple enterprise level software applications such as accounting, CRM and ERP systems.

During the first decade of the company’s existence they were very successful and were able to build a small, close-knit group of employees located out of offices in Illinois and Indiana. The companies three founders are all still actively involved, as are seven of the ten original employees. Because of the demand for more products and integrations with new systems, the company decided that they needed to expand in 2003. Because of the economy at that time, the company determined that expansion within the US was risky. To help avoid this risk and reduce costs the company opened a new office in Hyderabad, India and employed a number of programmers at that location.

Working with the group and India was initially very problematic. While the company had spent a good deal of time setting up the location and all three founders had traveled to the location to assist with training, there were still communication errors as it related to program specifications and timelines. Initially, management at the India location was provided by a local manger with two decades of experience.  He was replaced by an MBA graduate from the University of Illinois, who was originally from India and had moved back two years earlier.  The company felt that this situation was ideal because it allowed a bridge between the two cultures. Because of the ongoing issues they experienced, the company added a second manager who would work directly with the developers. This individual also had a US education but was also originally from India. This combination of the two managers, one working on business issues, and the other directly supervising the developers greatly reduced the problems that were experienced. The company was able to have software developed on spec, and on time; but it did require a large amount of work in the explicit initial development of specifications as well as very detailed timelines for releases.

In the past year the company has identified the need to become more agile in its development methodologies so that it is able to quickly respond to the needs of its customers. Because of increasing competition from both similar firms and the software vendors themselves, it has become necessary for the company to be able to quickly support new versions of software as they are released, as well as supporting new platforms as they are introduced to the market.  Whereas in the past it was acceptable for development cycles to take six months, these new requirements required significantly reduced cycles of two to three months. The development groups in both Illinois and Indiana had adapted to this change by instituting a product-based matrix structure. Within this structure, small clusters of analysts and developers worked in different product niches and were able to quickly respond to the changes demanded by their customers. This often created cycles of heavier and then lighter work, but the teams had adjusted to it successfully.

The company is now faced with the task of moving the development group in India to this matrix based model. The systems used before that required intensive specification development are no longer seen as viable, due to the lead times that they require. The founders of the company are concerned about India’s ability to make the switch to a matrix based organization based on other implementation issues they have had in the past.

Questions

1. Why is the company using a matrix organizational model?
2. What are the benefits and disadvantages of this model in general?
3. What factors do you believe led to the success of this model in the Illinois and Indiana offices?
4. Based on the company history, what issues might the company face when implementing a matrix model in India?
5. What steps could help the implementation of this model in India?
6. Is this model appropriate?
7. What recommendations would you give the owners of pine software?

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