Managing Project Stakeholders

STUDY MATERIAL
Version. Rev Date Remarks
3.0 May-2006 Updated with sample questions
4.0 Sep-2006 Minor changes done based on the feedback
5.0 Feb-2007 Added new sections to incorporate PM forum
feedback, added more content on relationships and
practical guidelines.
6.0 Nov 2009 Name of the document changed from Customer
Relationship management to Stakeholder
management and along with that the contents are
also revisited to include generic sections of
stakeholder management

© This document contains confidential and propriety information of Infosys. It is furnished for evaluation purposes only. Except with
the express prior written permission of Infosys, this document and the information contained herein may not be published or used
for any other purpose.
Table of Contents
1 OVERVIEW ................................................................................................................................................. 3
2 CHALLENGES TODAY.............................................................................................................................. 4
3 CONCEPTS ................................................................................................................................................ 6
3.1 TYPICAL INVOLVEMENT OF STAKEHOLDERS ...................................................................................................... 6
3.2 MANAGING STAKEHOLDERS ............................................................................................................................... 6
3.2.1 Identifying Stakeholders .......................................................................................................................... 7
3.2.2 Analyzing Stakeholders ........................................................................................................................... 8
3.2.3 Engaging Stakeholders ........................................................................................................................... 9
3.2.4 Constantly Monitoring Changes ........................................................................................................... 10
3.2.5 Stakeholders at Multiple Locations ...................................................................................................... 10
3.3 LEVERAGING STAKEHOLDERS FOR PROJECT SUCCESS ................................................................................. 11
3.4 IMPORTANCE OF CUSTOMER SATISFACTION ................................................................................................... 11
3.5 BARRIERS IN STAKEHOLDER MANAGEMENT .................................................................................................... 13
4 APPLICATION IN PROJECTS ................................................................................................................ 14
4.1 STAKEHOLDERS AT DIFFERENT LIFECYCLE STAGES....................................................................................... 14
4.2 STRATEGIES FOR MANAGING STAKEHOLDERS ................................................................................................ 14
5 PRACTICAL TIPS .................................................................................................................................... 18
1 Overview
Stakeholders are individuals and groups who influence and/or are impacted by the outcome of a project.
They may or may not actively participate in a project. Identifying these individuals and groups and
understanding their impact will help in managing their expectations. It also helps in achieving the project’s
stated outcome to the satisfaction of all concerned. Lack of a planned approach to stakeholder identification,
analysis and management could lead to incorrect expectation setting, short-term quick fixes to satisfy few
stakeholders and eventually project failure.

Stakeholders can be classified into two broad categories.

» Internal stakeholders – The stakeholders internal to the group or organization executing the project are
called Internal Stakeholders. These are individuals and groups within the boundaries defined by the
organization structure.
» External stakeholders – The stakeholders external to the group or organization executing the project are
called external stakeholders.

Examples of these categories are provided in the table below.

Internal Stakeholders External Stakeholders

1. Project Sponsor (In case of non linear projects 1. Customer
sponsored by Infosys Mgmt) − Business Groups
2. Senior Management − End users
3. Project Teams 2. Vendors
− Software Development Team 3. Subcontractors
− Software Testing Team 4. Regulatory Bodies
4. Enterprise Architecture Team
5. Other Business enabler groups internal to the
organization
− Communication Design Group
− Client Facing Group / Marketing Group
− Training Group
− IT Infrastructure Group (CCD)
− Human Resources Group
− Finance and other support groups

Table 1. Types of Stakeholders

2 Challenges Today
Project teams face several challenges in managing stakeholders.

» Incomplete identification of stakeholders: Often projects limit their definition of

stakeholders to those that are immediately visible and influence the project in the nearer term.
This results in surprises during the project lifecycle and at the end of the project when other
individuals and groups are found to be influencing the project and their expectations are
discovered. For example, a software project mandated to deliver a finance application may
miss out identifying stakeholders related to statutory compliance requirements such as SOX.
» Failure to obtain sign-off: Even when all the relevant stakeholders are identified at the
beginning of the project and during its progress, project teams may tend to make
assumptions and take certain things for granted. They may not get a sign-off on the
expectations of the identified stakeholders. Failure to get an agreement on their expectations
and a commitment on their support to the project could result in surprises and conflicts during
the course of the project. For example in a software development project, readiness of the
necessary IT infrastructure is critical for hosting the completed software application. If the
project team fails to obtain sign-off from the IT Infrastructure team on the readiness dates, the
application cannot be rolled out as per commitments made to the business stakeholders.
» Incorrect expectation setting: Sometimes projects make commitments to the stakeholders
that could turn out to be infeasible. This would mean that the stakeholders expect certain
outcome that the project would find challenging to deliver. An example scenario could be a
software project committing to deliver a sales application before a seasonal peak time (such
as Christmas) without validating the assumption that additional IT infrastructure would be
made available to test application performance.
» No track of changes in stakeholder list and their changed expectations: A project that
has identified all stakeholders at the beginning of the project and set the right expectations
could still face an issue if new stakeholders become important or the expectations of existing
stakeholders change. This could be a result of changing business needs and organizational
scenarios. Often these evolving needs result in changes that could range from a simple
requirement modification to complete change in the project scope. For example a project that
uses agile software development methodology should constantly collect expectations of
stakeholders (including requirements) while the software application is built on a continuous
basis. Changes in stakeholder expectations could also result in financial implications such as
budget cuts. A project that is not sensitive to such dynamics will find it challenging to keep
track of all stakeholders and their changing expectations.
» Lack of continuous communication with stakeholders: Another key issue in stakeholder
management is inadequate and unstructured communication. Lack of communication could
mean serious implications to the projects and stakeholders would not get the necessary
visibility into the project at periodic intervals. Without continuous communication,
stakeholders may tend to make assumptions on project progress and expected outcome.
This could lead to wrong decisions at different stages of the lifecycle of a project that could
eventually fail to meet its goals.
» Failure to leverage experience and expertise of stakeholders: Often stakeholders are
perceived by projects as individuals and groups that have certain demands and they would
expect the projects to meet these demands regardless of constraints and challenges. But in
reality stakeholders could be experienced people who are supportive to the projects and are
willing to share their expertise to enable projects in meeting their goals. Failure to leverage
the expertise and experience of the stakeholders would mean that the project is missing out
on valuable inputs that could help in delivery as per agreed terms and conditions.
» Unavailability or out dated project plan: No matter what the size of the project is, project
plan identifying the key milestones, dates, dependencies and responsible team is a must to
 ensure that expectations are set right at the beginning. The Project Manager is responsible
for reviewing the plan and alert relevant stakeholders if any task misses the schedule and
can affect the overall project schedule.
The above challenges are relevant in handling both external and internal stakeholders.

© Infosys Technologies Limited - Company Confidential Page 5 of 19

3 Concepts
Stakeholders are involved in different stages of a project’s lifecycle and they get involved in
different aspects such as setting the goals of the project and validating its final outcome. It is
important for a project to manage its stakeholders on a continuous basis and leverage their
expertise to achieve success.

3.1 Typical Involvement of Stakeholders

Stakeholders are involved at different stages of an IT project and influence many aspects. They
could be playing different roles in a project such as project management, software development,
infrastructure support, software quality assurance or statutory compliance verification.

» During the initial stages of a project, the stakeholders are involved in

Approving the business case for the project

Describing their expectations

Agreeing to their roles and responsibilities

Defining the necessary communication protocols

Determining the processes that should be used to develop the project deliverables

Determining the deliverables of the project

Setting the goals for the project

Understanding and agreeing to the risks, constraints and assumptions

Committing the required resources for the project
» During the progress of the project, the stakeholders participate in

Reviewing the project – Gate reviews to determine current states, expected progress to
meet the goals including timelines and deliverables

Redefining their expectations and making any changes to the objectives of the project and
approving Change Requests

Providing guidance and direction to the project

Making renewed commitments based on project progress and demands

Making necessary decisions and communications related to the project on a periodic basis
» At the close of the project, the stakeholders are involved in:

Reviewing the final outcome of the project

Validating the benefits of the project against the agreed business case

Laying the foundation for managing the changes that the outcome of the project may result
in

Making decisions on rewards and recognition for the teams as found appropriate

Please refer to section 4.1 for more information on the list of stakeholders involved at different
stages of a typical project development lifecycle.

3.2 Managing Stakeholders

Managing stakeholders on a continuous basis requires a structured approach. The main steps in
stakeholder management can be depicted as follows.

© Infosys Technologies Limited - Company Confidential Page 6 of 19

 Constantly monitor changes

Identify Analyze Engage

Figure 1. Stakeholder Management Process

As can be seen in the Figure1, Stakeholder Management involves the following steps.

1. Identifying stakeholders
2. Analyzing stakeholders and their needs
3. Engaging stakeholders

After identifying and engaging the stakeholders initially, it is important to monitor changes to the
list of stakeholder and the changes in their needs.

The following sections discuss the above steps in detail

3.2.1 Identifying Stakeholders

The first and the most important step in stakeholder management is to identify them at the
beginning of a project. As mentioned earlier wrong or incomplete identification of stakeholders
could potentially lead to surprises during and at the end of the project. The following are the key
tasks in identifying stakeholders:

» Identify and collate the necessary inputs for the project such as project charter, scope
document, communication on sponsorship, budget sanction etc., and relevant historical data
on similar past projects.
» Consider key questions such as the following and gather data related to these.
o Will external vendors be involved in executing the project?
o Is compliance to statutory requirements a critical success factor?
o Will the project team be spread across multiple locations?
o Are changes to the organization structure expected during the project
lifecycle?
» Using the information gathered through points above to identify the potential players in the
project – both internal and external to the organization / group
» Review the initial list of identified stakeholders with project teams, sponsor and other relevant
groups, make necessary modifications to the list and ensure that this list is complete in all
respects in the given project context

© Infosys Technologies Limited - Company Confidential Page 7 of 19

3.2.2 Analyzing Stakeholders

After identifying the stakeholders it is important to analyze their involvement and influence in the
project. The following are the key steps in determining the strategy to manage the expectations of
the identified stakeholders:

» Classify the stakeholders as internal and external

» Determine the impact of each of the stakeholders in the project. The table shown below is an
aid to determine the impact of stakeholders in a project.

Figure 2. Impact of Stakeholders on a Project

» Based on the above classification, determine the potential roles and responsibilities of the
stakeholders. Use a RACI (Responsible, Accountable, Consulted and Informed) chart as
applicable to document the roles and responsibilities. The following table shows some
examples of stakeholders and how their involvement in a software development project.

© Infosys Technologies Limited - Company Confidential Page 8 of 19

 Project Manager
Business User

Infrastructure
Management

Business

Architect
Sponsor

Analyst
Senior

Team
Activity

Understand business problem R

Define high-level scope R R C R
Develop high-level project estimate C R A
Assess and approve business case A I I I I I
Kick off the project I C
Tailor project processes and select development
C R R
methodology
Gather functional and software system requirements R R R
Analyze requirements R R R
Prioritize and review the requirements R C C R
Develop and review test strategy and plan for system and
C R
integration testing
Develop and review test strategy and plan for User
R R
Acceptance Testing

Table 2. Stakeholder Involvement in Project Development Lifecycle

» Determine how each stakeholder’s experience and expertise could be leveraged towards
success of the project
» Prioritize the stakeholders
» Determine the communication protocol as per the prioritization. Refer to the Communication
Management module for further details.
» Define escalation protocol including escalation thresholds and escalation points
» Define the strategy to manage the stakeholders as per their impact on the project

3.2.3 Engaging Stakeholders

After analyzing the impact of each stakeholder and defining the strategies for stakeholder
management, the next step is to engage them effectively at the beginning of the project. The
following steps are critical in securing their engagement.

» To Communicate and get an agreement on their roles and responsibilities. Obtain sign-off on
their commitment and support to the project.
» Engage with them and explain the project’s environment and the potential outcome
» Understand their stated and implied expectations and resolve any mismatch in the
expectations and the project’s ability to meet them
» Discuss with them and agree on the areas in which their experience and expertise could be
leveraged in the project
» Discuss and agree with them on the following
o Goals of the project

© Infosys Technologies Limited - Company Confidential Page 9 of 19

 o Project deliverables
o Commitment on resources for the project
o Gate Reviews and checkpoints and their role
o Project risks, constraints and assumptions
o Communication protocols – frequency of communication, communication
channels, content outline etc.
» Determine ways to measure the effectiveness of stakeholder management. Some examples
are:
o Internal and external customer satisfaction index
o Number of complaints and mean time to close the complaints
o Number of escalations and mean time to act
o Number of outstanding issues and mean time to resolve them

3.2.4 Constantly Monitoring Changes

Throughout the lifecycle of a project, stakeholders will be involved with varying degrees of impact.
Therefore it is critical to continuously review the list of stakeholders and their expectations.
Based on the changes in the list and the expectations a project team has to

» Communicate the changes to the relevant stakeholders

» Resolve any ambiguities and conflicts in expectations
» Make necessary changes to the strategies for managing existing and newly identified
stakeholders
» Make relevant adjustments to project goals, objectives, risks, assumptions etc.
» Carry out the tasks as applicable in the other three stages of Stakeholder Management
described above

3.2.5 Stakeholders at Multiple Locations

In a large software development project, often organizations would engage partners and vendors,
either at their onsite location or at near-shore/offshore locations. In such cases, the organization
would tend to allocate different activities related to Requirements Analysis, Design, Development
and Testing etc. to these vendors and partners. In other words it is common that a project
involves stakeholders from many locations within a country or across multiple geographies. For
example a project could receive business requirements from business stakeholders located
onsite, get the software developed by development teams located in another country and get the
final software tested by testing specialists in yet another country. Thus, it can be seen that not
only the stakeholder locations are different but their expertise, area of interest and stakes in the
project could also be different. In such a scenario it is critical for the organization to identify the
stakeholder groups, closely tie their responsibilities to the specific stages they are involved in,
agree upon checkpoints and the associated reviews and monitor their performance on a
continuous basis.

© Infosys Technologies Limited - Company Confidential Page 10 of 19

Managing these geographically dispersed stakeholders requires a clear strategy that includes the
steps described in the above sections. In addition, this strategy should address soft aspects such
as cultural sensitivity, language and geo-specific requirements.

At Infosys trainings at varied levels from Education & Research department are scheduled to
address these typical problems and avoid common mistakes. It is also mandatory for any
employee travelling onsite to undergo the cross cultural training for that country.

3.3 Leveraging Stakeholders for Project Success

Stakeholders of a project are not always only ‘demand makers’. Leveraging stakeholder expertise
and support is a step more than just engaging them constantly. The difference is in identifying
what more a stakeholder can bring to the table than just his/her requirements. It is proactively
engaging them beyond their mandated involvement to make the best use of their credentials.

Stakeholders are often supportive and help in the success of the project. The best practices in
their own areas of work could bring in vital inputs for the project in context. It is important for the
project to identify this aspect and ensure that the right stakeholders are involved appropriately in
shaping the project’s success.

A project team could adopt the following techniques to leverage the stakeholders.

» Conduct formal project kick-off and involve the relevant stakeholders from the beginning of
the project life-cycle
» Identify the expertise and experience of each stakeholder
» Engage them upfront and get them to agree on the means in which they could make positive
contribution in their relevant areas to progress of the project and the quality of the
deliverables
» Constantly seek their feedback and suggestions on the way the project is shaping up
» Get their guidance in identifying and acting on opportunities for improvement
» Involve them in activities that are not mandated to them and improve their sense of
engagement

3.4 Importance of Customer Satisfaction

Customer is one of the key stakeholders in the entire project life cycle. Only a satisfied customer
provides repetitive business.

© Infosys Technologies Limited - Company Confidential Page 11 of 19

 Figure 3. The relationship between customer satisfaction and the
organization’s business results
Having looked at the impact of high customer satisfaction on the business, let us look at the some
statistics which indicated the impact of having dissatisfied customer.
» The average ‘Wronged’ customer will tell 8 to 16 people.
» 91% of unhappy customers will never purchase goods or services from you again.
» If you make an effort to remedy customer complaints, 82% to 95% of them will stay on with
you.
» It costs 5 times as much to attract a NEW customer as it costs to retain an OLD one.

Customer retention through higher customer satisfaction and thus building a long term
relationship with the customer has become the primary objective of all organizations.
Factors Influencing Customer Satisfaction:
The following figure shows the various elements to be addressed to achieve higher levels of
customer satisfaction.

Figure 4. Drivers for Customer Satisfaction (5 levels)

© Infosys Technologies Limited - Company Confidential Page 12 of 19

While the high quality core product is absolutely essential for customer satisfaction, the support
processes built around the same, meeting the promises made, quality of interactions really would
help the organization achieve the higher levels of customer satisfaction.
As we move from the ‘core product’ to ‘delivering positive emotions’, we are addressing
progressively higher order of customer needs and adding more value to them, thus establishing a
good relationship with the customer.

3.5 Barriers in Stakeholder Management

Typical barriers in stakeholder management are:
» Power centers – A few individuals or groups in an organization could be very powerful and
may demand that their expectations are met despite challenges. These power centers may
therefore influence the project towards their own course, making the project team
compromise on key outcomes planned for other stakeholders.
» Vested interests and conflicts – Some stakeholder groups may have interests in their own
areas and may want to use their involvement in the project in context to achieve their
interests. These groups could also be the power centers described above. The project
teams may find these interests conflicting with their own objectives or the expectations of
other stakeholders. The project team may end up in a challenging situation.
» Spheres of influence – These are groups that directly or indirectly influence the project
teams and other stakeholders. Though not always negative, these influences could pose
potential challenges to the project team. For example the procurement team could influence
the infrastructure team in favor of a specific hardware vendor.
» Complexity in organization structure – The culture of the organization, complex reporting
relationships and elaborate decision making process are some of the issues that the project
teams have to consider while defining their stakeholder management strategies. These
aspects, if not given enough attention, could potentially ruin the eventual deployment of the
solutions in the organization.
» Multiplicity of communication channels – Communication overload may result from too
many communication channels active at the same time. As part of initial understanding and
engagement of stakeholders the project teams may define the communication protocol.
However, during the course of the project, if cross-communication and updates to
stakeholders through multiple formal/informal channels are not controlled, stakeholders may
get confused and the project team will have an issue in providing clarity on the project’s
progress and outcomes.
» Expectation mismatch – This is an issue often faced by the project teams during the project
lifecycle stages. While initial expectations could have been described and agreed upon,
changes to these and expectations from new stakeholders could result in conflicts and the
inability of the team to meet the initial and/or changed expectations.

© Infosys Technologies Limited - Company Confidential Page 13 of 19

4 Application in Projects
Now that we have learnt stakeholder management, at Infosys, how do we apply these concepts in
a project? The following sections provide some pointers to the types of stakeholders, their
involvement in a typical project and strategies to manage them.

4.1 Stakeholders at Different Lifecycle Stages

Stakeholders get involved in a project at different stages of its lifecycle. Their involvement could
range from setting directions for the project through active contribution in the software
engineering activities. The following table shows the list of stakeholders in a typical project.

Project Lifecycle Stage Typical Stakeholders

Project Initiation • Business Sponsor
• Business Analysts
• Project Manager
• Project teams
• Vendor partners as suitable
• Training team
• Quality Assurance team
Project Execution • Identified Business Senior Managers
• Business Analysts
• Project Team
• Enterprise Architecture/Design Team
• IT Infrastructure Team including Tech Support and System
Admin
• Procurement Team as required
• Software Testing team
• Software Build and Release team
• Vendor partners as suitable
• Quality Assurance team
• User Acceptance team (Eg. Business users)
Project closure • Identified Business Senior Managers
• Business Analysts
• Project Team
• Quality Assurance team
• Deployment team
Table 3. List of Stakeholders at Different Stages of a Typical Project

At Infosys when any new project is initiated, list of stakeholders are entered in IPM+ -> PM Plan
section to ensure we identify the right stakeholder at the beginning of the project.

4.2 Strategies for Managing Stakeholders

The table below shows the typical strategies to manage some of the stakeholders who get
involved at the different stages of the project.

© Infosys Technologies Limited - Company Confidential Page 14 of 19

 Stakeholder Type Typical Involvement Strategy
Sponsor • Approves project scope and • Provide periodic
approach updates on project
• Sanctions budget status highlighting
key
accomplishments,
Internal risks and issues
• Discuss progress
plans
• Use face-to-face
and email
communication as
appropriate
Senior • Provides direction • Provide periodic
Management • Makes key decisions updates on project
• Removes roadblocks status highlighting
• Supports in obtaining key
commitment from all accomplishments,
concerned risks and issues
• Discuss progress
plans and seek
guidance and
direction
• Involve in key Gate
Reviews
Project Team • Manages and executes • Update them on
project project status on a
weekly basis
• Highlight issues
and risks and
obtain inputs on
resolution of these
• Involve them in
creating status
updates to senior
management and
sponsor
• Recognize and
reward their
achievements
appropriately

© Infosys Technologies Limited - Company Confidential Page 15 of 19

 Support Teams • Supports the project by • Involve them in
providing the necessary early stages of
inputs and resources for the the project
project during its lifecycle • Update them with
the relevant
details of project
progress in order
to seek
continuous and
additional
commitment
• Recognize their
contribution to the
success of the
project
Customer, End • Provides business • Involve at the start
User requirements of the project and
• Participates in relevant throughout the
reviews project lifecycle
• Tests and accepts the • Provide updates on
project deliverables project status and
• Uses the solution delivered progress plans
by the project • Seek support in
External resolving issues
related scope,
requirements
changes etc.
Vendor • Delivers • Involve at the
products/components/servic appropriate stages
es to the project of the project and
• Participates in relevant obtain commitment
reviews • Set expectations
and document it
• Maintain history of
all documentations
and Meetings
• Seek continuous
updates on the
progress made
• Provide relevant
updates on project
status
Sub Contractor • Delivery of products / • Involve at the
components/ services appropriate stages
of the project and
obtain commitment
• Seek continuous
updates on the
progress made
• Provide relevant

© Infosys Technologies Limited - Company Confidential Page 16 of 19

 updates on project
status
Regulatory Body • Publishes regulatory • Identify in the early
standards and stages of the
implementation project
requirements • Keep track of
• Provides clarification on changes to the
implementation regulatory
requirements
• Seek clarification
where required

Table 4. Stakeholder Management Strategies

© Infosys Technologies Limited - Company Confidential Page 17 of 19

5 Practical Tips
In addition to the concepts explained in the above sections, the following tips could help project
teams in managing stakeholders.

» Understand the stated and intended expectations of the stakeholders.

» Use tools effectively to monitor stakeholder involvement in the project. Integrate data
gathering, analysis and reporting features to ensure consistent and timely communication
with the stakeholders. Limit communication channels and minimize cross-communication.
» Use automated methods, as feasible, to alert stakeholders on potential risks and seek their
inputs to mitigate the risks.
» Identify the communication needs of the stakeholders and devise the suitable communication
mechanism – formal, informal etc.
» Proactively involve stakeholders and communicate to them information about the agreed
aspects of the project through periodic status reports.
» Highlight risks and issues clearly in the status report. This will ensure that the attention of all
stakeholders is brought to the issues and risks in the project.
» Convey potential problems proactively; however, always ensure that it is accompanied with
possible alternatives.
» If agreed updates from some stakeholders are not received as per timelines, use formal
communication channels to remind them. Include the appropriate senior team
members/managers in such formal reminders.
» While communicating with customers, do not define too many touch points within the team.
» Make sure that the team understands the norms of customer communication.
» Make sure that critical communication is reviewed by a peer/senior before it is sent out to the
relevant stakeholders. Examples of such important communication could include
communication related to scope changes and timeline changes.
» Where required, involve the appropriate collaborating teams in the communication loop.

© Infosys Technologies Limited - Company Confidential Page 18 of 19

6 Sample questions
Q1 (Multiple responses– 1 or more correct)

Select the option(s) that will help maintain good relationships with the customer

a. Keep the customer updated on the project status including potential schedule slippage
b. Share all in-process data with the customer
c. Try and agree to most of the customer demands
d. Keep the customer informed about new products and services your company is
introducing

Q2 (Multiple options – only 1 correct)

In the context of customer relationship, select the FALSE statement from the options below

a. Winning a new customer is significantly costlier than retaining an existing customer

b. Customer retention is not a primary objective of CRM initiatives
c. CRM is a business strategy to acquire and nurture customers to optimize long term value
to all stakeholders
d. You would address a wider base of customer issues, as your depth of customer
relationship increases

© Infosys Technologies Limited - Company Confidential Page 19 of 19