Like an artist staring at a blank canvas, a politician starting with a clean slate, or a land developer overlooking a new piece of property — the green field that an IT manager faces at the beginning of a new project can be both energizing and scary.
Organizations manage costs with global development teams
Time was when development of a data warehouse had to occur in-house or at least in the backyard of the organization using it. The technology was so complicated and the tools so primitive that there were too many unknowns to let a part of the development go, especially overseas. The minute-to-minute need to coordinate the on-going inputs while building the ETL (Extract/Transform/Load) layer made it necessary for all the players to be in constant communication and close proximity.
Vendor rate does not equal buyer cost
A universally accepted belief in the business press and blogosphere regarding offshore outsourcing is that reducing labor rates should not be the driving force behind it. Of course rate is a factor, but the bottom line is this: however you manage your software development, you need to create a model that produces the best possible software at a financially sustainable cost--in other words, the best value.
A recipe for successful outsourcing
Success in business relies as much on relationship management as anything, and when it comes to outsourcing this axiom certainly holds. The best outsourced team in the world cannot deliver excellence if projects are "thrown over the wall" with little communication or understanding between the parties.
It is not surprising that in a global, virtual world, business people are developing an enormous interest in trust, says Niki Panteli, Director of the Center for Information Management at the University of Bath/UK. In her article, "Trust in Global Virtual Teams" from the University's Ariadne web magazine, Dr. Panteli states, "Trust enables cooperation and becomes the means for complexity reduction in situations where individuals must act with uncertainty because they are in possession of ambiguous or incomplete information."
In Patrick Lencioni's bestselling book, The Five Dysfunctions of a Team, he suggests that teamwork is the ultimate competitive advantage. Yet real teamwork remains extremely rare. In his many presentations, (click here to see Patrick Lencioni on YouTube) Lencioni begins by suggesting that teamwork is not a virtue. It is a choice, he says, and one that requires discipline, accountability, and focus.
And how to avoid them
Talk to anyone who has outsourced IT, and you are bound to uncover a horror story or two. Budgets gone wild. Poor quality work. Deadlines missed. And while much has been learned since the earliest days of outsourcing, there are still pitfalls and bumps to be avoided.
Sudin Apte, Senior Analyst and head of India Operations for Forrester Research, Inc., does not advocate bigger as better when it comes to outsourcing. He suggests that large organizations should incorporate tier two providers into their supplier mix for the diversity and leverage they provide, and for the specializations they can bring. But too often, clients use tier two suppliers for the wrong reasons. Apte says ". . . sourcing teams need to revisit their approach and reasons to select small partners . . . (They) need to understand the character and type of (the outsourcer's) specialization, as well as the situations in which they are most useful."1
IT outsourcing has its roots in one simple business directive: save money. Early users of outsourced IT were looking to either lower their current costs, or undertake new initiatives based on the lower rates of offshore suppliers. As recently as 2005, a Gartner Inc. study found that, ". . . the majority of organizations worldwide are still focused on tactical IT outsourcing to achieve short-term, cost-focused objectives."
Much debate has existed over the last few years on the topic of Agile development processes and their suitability for managing/coordinating offshore development projects. Our experience at Coherent Solutions during that timeframe is that Agile is superior to traditional “planned” methodologies for managing offshore teams (although traditional methodologies can be used effectively as well). This experience, however, is counterintuitive to what one would expect. Intuitively, one would think offshore would require more process overhead, more documentation, and more control and that Agile would be a poor match.