Globalization, digitalization, and advancements in technology, good practices as well as inevitable transformation have driven companies to introduce different styles of highly specialized outsourcing, and to increase the complexity of their efforts and performances to the all-time max. The ability to access the world’s top software developers made companies of all sizes start using software outsourcing to develop their products.
Their mutual goal – developing & sustaining a competitive advantage.
There are several outsourcing models that can be applied to core/non-core businesses when facing challenges in defining the most suitable strategy for going forward. In general, these models are clustered in areas such as:
· Pricing
· Engagement
· Topology
· Delivery
· Transformation
The Outsourcing Pattern in particular, is a part of the Delivery cluster and it is oriented towards the Application Engineering value chain (i.e. software development lifecycle (SDLC)), a widely used framework.
SDLC includes a set (and sequence) of activities that a company operating in a specific industry should perform in order to deliver a valuable product or service to the market of users or consumers.
This chain includes several well-known phases, all essential in adding value and creating competitive advantage:
- Business Modeling
- Requirements Engineering
- Analysis & Development
- Implementation
- Testing, Integration & Deployment
- Support Activities
- Operations & Maintenance
- De-commissioning
Adapting to the pace of customer needs remains one of the biggest challenges today. Luckily, organizations manage to do that successfully by adopting the Agile software development methodology. The Agile approach is all about following and aligning with the constant evolution of technology. It allows developer teams to break the requirements into smaller sections, and then build, and test phases down separately.
While the overall goal is to deliver functional software as quickly and frequently as possible, each phase has different variations needed for the software development and may depend on the specific project or situation.
Based on the specific value chain phase, there are 6 IT Outsourcing Patterns available:
I In-house
In-house Development & Maintenance (SDLC 1-8)
– when building the product/service completely within your own organization for one or more applications
II Single value
Single Value-Oriented Outsourcing (SDLC 1-8)
– when a company is outsourcing one important phase, such as the implementation process (SDLC 4) for one or more applications
III Multiple value
Multiple Value-Oriented Outsourcing (SDLC 1-8)
– when a company is outsourcing several phases, such as Requirements Engineering (SDLC 2) and Analysis & Development (SDLC 3) for one or more applications
IV Value chain
a. Complete Software Engineering (SDLC 2-5)
– when a company is outsourcing all Software Engineering phases, like Requirements Engineering (SDLC 2), Analysis & Development (SDLC 3), Implementation (SDLC 4), and Testing, Integration and Deployment (SDLC 5) for one or more applications
Or
b. Complete Maintenance Services (SDLC 6-7)
– when a company is outsourcing all Maintenance activities like the Operational Service Desk (SDLC 7) and all related Support Activities (SDLC 6), often clustered in three types of Maintenance Service Desk: (a) User Service Desk, (b) Application Service Desk and (c) Infrastructure Service Desk for e.g. Servers, Network, etc.
V Value stream
a. Complete Application Management (SDLC 1-5)
– when a company is outsourcing all Software Engineering Phases, we call it complete Application Management. IT covers all parts of the process: real business modeling (SDCL 1) like Requirements engineering (SDLC 2), Analysis & Development (SDLC 3), Implementation (SDLC 4), and Testing, Integration and Deployment (SDLC 5) for one or more applications.
Or
b. Complete Maintenance & Decom Services (SDLC 6-8)
– when a company is outsourcing all Maintenance activities, like the Operational Service Desk (SDLC 7) and all related Support Activities (SDLC 6), as well as the Decommissioning services, to support the out phasing of an application at the end of the application lifecycle (mostly niche skills required which are rarely used)
VI Full outsourcing
Complete Application Lifecycle Management Services (SDLC 1-8)
– Outsourcing all value chain phases from the whole SDLC, for one or multiple applications
Separated by phases, any organization can adopt, develop, and apply outsourcing to a higher pattern, depending on the requirements of that specific moment. Its precision offers numerous advantages, such as building awareness and perspectives within the company, cost reduction, improved efficiency, risk mitigation, enhancement of the overall security, or concentrating limited resources on mainstream business.
When approaching the application engineering process, it should be assessed with:
1. Current State
2. Future State
3. Target State
1. Current state
It’s the terminology that describes a series of business processes as they currently are, to reflect all the steps in these processes, responsibilities, and the timetable. Basically, the way an organization runs at the moment, “as is” model, used in order to determine changes that will improve its effectiveness
2. Future State
It’s the terminology that describes the direction where an organization is going and does it plan to achieve it. A future state usually involves creating a map that describes the steps to create the product or service. Most often, it looks 6-12 months into the future, towards the ideal state.
3. Target State
It’s the terminology that describes the desired state of the entire business model of a specific organization. If a Current state represents the “as is” model, the Target state is “to be” model. Target operating models provide the vision for the change that is about to be embraced, and they can be done at different levels of detail. Target state also involves a map.
Projected visions of the current, target, and future state of the organization or its project will definitely provide a clear plan and a direction of the entire development journey, but would also help in reaching that sought after transparency and understanding of an application, application cluster, and full application domain. It will significantly help each organization in challenging partners, suppliers, and provide guidance as well.
Application process
Supported by both Outsourcing & Offshoring Transformation Specialists, a Service Manager of the particular organization should ensure that the best-shoring capabilities (considering regulatory requirements) and business needs for the applications in the related states are being met.
Based on the created Future and Target state maps, Application Product Manager is defining a phased Transformation plan.
Based on these inputs, Sourcing Managers should bundle and structure sourcing initiatives over the application portfolio.
In order to achieve the best results commercially wise, each sourcing initiative should be long-term oriented and based on mature Request for Proposals, while each future cooperation scenario should be carefully considered.
Conclusion
As technology continues to progress and businesses remain competitive as never before, sourcing patterns can become one of the go-to solutions for business development globally, as they can be effective for every challenge an organization is faced with. Luckily, there are partners you can rely on, close enough and with all the right tools.
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