Waverley Blog

CIO magazine published this article, Keeping the Cash: IT Leaders Can Slash Costs which recommends steps to take to reduce IT costs. One of them caught our attention:

“Halt the development of certain projects temporarily or permanently. If any of these projects are outsourced and your paying the outsourcer for time and materials, stopping the project, even for just a few months, can immediately save you money.”

This may make sense in some cases, but I can’t think of too many. From the perspective of working on high priority mission critical projects, stopping randomly in the middle of development makes no sense because there is as much or more to lose as there is to gain. Firstly, If you’re working with great people, they will not sit around and wait for you – they will move on to other projects where their skills are useful. Outsourcers can’t leave top talent stagnant for months at a time. Secondly, when you’re ready to get going again, you’ll have new knowledge transfer and ramp up time issues to go through and this will delay the end date much more than just the several months you chose to postpone work.

Here’s a much better way to proceed. Rather than stopping and starting, look at your project and focus on delivering value as quickly as possible. It’s pretty well accepted that most of features of a large IT application are not going to be used and not all features have the same value to the organization. Divide up your features, prioritize each feature, then implement the work in small steps and have the project stakeholders evaluate the results at the end of each small step. Be willing to change priorities to match the organization’s goals. This is classic Agile development at work. At some point, you’re going to conclude that you have enough of the project done to meet critical needs and you can stop development and deliver something useful, rather than stopping development with little or nothing to show for your investment to date. It makes a lot of sense for a lot of reasons to keep development teams running smartly towards a goal unless there is a significant mitigating factor, so get the most from your partners but don’t let your project run on autopilot until a crisis occurs and you have to stop before you have something to show for your hard work.

This article from eWeek discusses the results of survey from VanDyke/Amplitude that found a larger number of network intrusions at companies that outsourced tech jobs. There aren’t a lot of details, unless of course you go and get the full survey, which I don’t have access to. If I were to guess, I would say most of this comes from the requirement for such companies to open network access to their company’s internal network. This of course is fraught with a variety of security issues that I suspect many companies aren’t taking seriously enough.

There are a few ways to mitigate against these kinds of risks. Here are a few ideas:

• Choose an outsourcing partner that has lots of experience working via VPN and SSH with their partners. Their experience can help you ensure the right steps are taken. They will also be able to demonstrate how their own internal networks are kept secure.
• Another option is to find an outsourcing partner that has their own secure network and services distinct from your own corporate network. The best partners have great capabilities for securely working with you without the need to access your internal network. You can then sync work at periodic intervals without full VPN access.
• Specifically contract a network security specialist to assist in setting up access to your internal corporate network.
• Isolate access to the networks and services your outsourcing partner needs. Keep these separate from what your internal people use. This might not be practical in many cases, but it could work in your case.
• Use SSH with public keys as much as possible. It is as secure as a VPN, but offers many advantages to control access at a fine-grained level.

I’m seeing lots of articles in the trade press on reductions in IT spending as growth in the overall economy slows. You’ve probably seen them too.

CIO magazine says IT Leaders Can Slash Nearly 40 Percent of their Spending while ComputerWorld gravely announces 2008 IT spending forecast again cut by Forrester.

Many of the measures that CIO Magazine recommends are focused on operations – reducing telecom spending, renegotiating IT operations outsourcing contracts, and data center consolidation. But they also recommend improving the “efficiency of application development and implementation processes.”

In our work with clients, we’ve found many ways to improve the efficiency of application development, regardless of how the economy is doing. That’s the big advantage of iterative and rapid methods like agile development.

If priorities change in the middle of a project (like when the economy turns South and budgets get cut), you can go back to the Four Dials Exercise and change your priorities. And if that means modifying the project deliverables and schedule, here are some ways that agile methods make it less painful:

• Focus on strategic elements. Essentially, this means you’ll have to generate a list of requirements and then carefully prioritize them. Work on your highest priority items first. It will limit distractions. Resist the temptation to make everything a number one priority. By definition, only one priority can really be number one. Figure out what it is and then stay focused on getting it done.
• Adjust priorities. Periodically look at your priority list and make adjustments. Some things may become more important to do, others less so depending on business needs and what drives your organization. Elapsed time can also factor into your prioritization. Keep focusing on the top priority items and make sure they are done before you move on and look at the list again.
• Remove waste from the process. For each task at hand, focus on what needs to be done to make that task successful. Make sure the requirements are defined and all the inputs needed for success are satisfied. If you don’t know exactly why the team is doing something or don’t have the inputs needed to make it successful, then stop that task and do something else. Ask if the task is still needed and what needs to be done on the input side to complete the task on the second try. Make sure your team and outsourcing partners have clear direction and know what they need to do. Spend the time to make sure questions are answered promptly so that efficiency is kept to a maximum. Driving efficiency and productivity through good management are key to removing waste and squeezing the most out of your resources and time.

Eventually the economy (and your budget) will pick up again. When it does, you can re-examine the items that were postponed and evaluate whether it makes sense to bring them back into the project.

Finding great programmers is almost an art form. It takes years of experience in the software business to really know what to look for. It also takes a team of great programmers to recognize and attract more great programmers. This article does a very nice job covering the kinds of things you should be looking for. These are also the same traits you should be looking for in a potential outsourcing partner.

Continued strength for the 2008 outsourcing market is described in this article about a recent Gartner report. The increased focus on innovation is a topic we’ve covered many times in this blog.

This article from CIO Magazine discusses the Five Steps to Take If Your Outsourcing Service Provider Is Sold. This is not something most companies consider when they are starting an outsourcing relationship, but it’s something worth thinking about given the consolidation going on in the industry. If you’re in the process of selecting an outsourcing partner, try asking these questions up front.

This article on Poland As A Top Source of Engineers shows how some of the top tech companies (Google, IBM, and Siemens) have found high quality offshore teams that really work well. The very low attrition rate and excellent cultural and communications fit contribute greatly to this high level of quality. You will also find these benefits in other locations such as Bulgaria and Romania.

Rising costs is another reason outsourcing projects to India is looking less and less like the best way to go as detailed in this article on Looking Beyond India for Outsourcing. Quality and long-term partnerships with great teams is much more key than claiming you can hire 17,000 new graduates and make them deliver with minimal training. Make sure you hold your outsourcing partner to a much higher standard.

This article on the advantages of Bulgaria as an outsourcing option is a great read. It’s an excellent location when it comes to offshore software development teams that really shine.

This article on The Seven Deadly Sins of Outsourcing covers some important areas you should be considering in any outsourcing relationship.

• Feeble governance – It shouldn’t be any surprise that poor management is a guaranteed way to kill any project, whether it’s in-house or outsourced. Look for an outsourcing provider that can demonstrate a highly disciplined structure and process when working with their clients. Providers that excel at outsourced software development typically have the strongest abilities in this area.
• Overblown expectations – A great reason to follow the walk first, run later philosophy. Your outsourcing goals must be built on a foundation of trust. Learn from your initial engagements and set expectations accordingly.
• Blindly banishing projects – Choosing what work makes sense to outsource should be considered carefully. Don’t outsource problem projects, and look for a partner that will really complement your local skills in specific areas. We’ve found Eastern Europe to be an outstanding location for software development work.
• Dumbly disowning projects – You must understand what components of your business must be handled within the company, but I disagree about not sharing strategic information with your partners. Your outsourcing partner is much more than a vendor. They can help you achieve your goals, so work hard to treat them as one of your own.
• Bad assumptions – Flexibility to adapt to changing business goals is a fact of life. If your outsourcing partner is locking you in at contract signing, they aren’t really your partner. Look for companies that are as nimble as you are.
• Sloppy service levels – This flexibility extends to service levels as well. I don’t think punishing your partner is the right way to go, but make sure you’re both aligned and motivated to succeed together.
• End-game myopia – Any partner you find should offer a transition path if needed. Look for someone to remain your partner even after the work is completed.