Starting from today, 17th of December 2009, this blog’s concept will change. Rather than posting lengthy vague articles we will be posting quick thoughts and suggestions on the software development, IT and infrastructure outsourcing on a regular basis. We will also focus on helping people out with advising on the right strategy in their current or future outsourcing projects. Questions are more than welcome!
Archive for the ‘Outsourcing pros and cons’ category
Concept change
December 17th, 2009
open-source myths
November 20th, 2009Let’s just start with setting up correct accents.
Open-source industry is not charity at all. It’s a huge business.
- Why?, some might say. I’m just going to the open-source community website, download the latest version, all free.
And that’s when the fun begins. Marketing rules this world, like the free samples distribution in the supermarket, this is – the first step to winning your loyalty.
The principle of free distribution to those who either want to see and touch before buying, or those who wouldn’t have bought it anyway has two main objectives:
1. Increase brand recognition.
2. Expand to market with a future returns in payments for support/customization activities
Open-source market gives jobs to a huge army of programmers who 8 hours a day, 5 days a week convert standard open-source packages into relatively unique sites, forums, shops, portals, communities.
Why develop from scratch, or pay for a commercial license if your idea matches exactly with the open-source product proposed on market? The answer depends on the depth of your understanding of your future project and whether the business problem you need to solve is relatively simple, not associated with a unique business idea. If you have no clear idea on every single detail of your future project, and the task is simple enough – the answer is – use open source. Just use it.
And this is perhaps the only case you should not invest your time and money into this. It simply never pays off. Why order Custom blog, if there is Wordpress? Why pay for the forum, if there is phpBB? If that is not going to be your profit center or is not intended to directly support any of your profit centers, use open-source.
Let’s turn to the most common myths:
1. Choice of open-source promises substantial savings
As we have seen, open-source products can save money in two cases – when actually spending money at all was unnecessary, and when the required solution to a large extent is covered with an open-source product. In case you need customization, even if it’s minor at first glance, costs can easily run over your budget. Equation gets dozens of new variables which would need a whole book to discuss – the quality of the selected open-source solution,vendor’s experience with this particular solution, the conceptual compatibility of the requested changes with the architecture of the selected open-source solution, the ability to make changes preserving compatibility with open-source solution updates, and so on and so forth.
2. Choice of open-source gives a more stable and predictable result
One should understand that open-source projects and written by the same kind of people as those that are working on your Custom product for the third year, and with each new delivery supply you with a set of new defects. Of course, the level of stability on average is higher comparing to random custom application on the initial stage of project’s delivery. But the fact that the programmers’ work is still used for fine-tuning and customization of open-source solutions, makes me say that stability in the delivery on the initial stage is inversely proportional to the depth and complexity of customization.
3. Most kinds of jobs that are required already exist in the world of open-source
They do. But again and again we are confronted with a situation where the temptation to pay less is so great that one starts thinking – why not collect all the existing solutions as ingredients in the soup, and get a completely custom project at the output, which combines the best of all worlds, and all this at virtually no cost. Well… It does not work, and it doesn’t work SO BAD, that the risks of the project may exceed the original budget. An attempt to integrate solutions written by different teams with different approaches, architectures, or God forbid on different platforms, takes first place in our today’s contest of hopeless projects.
- What do we do then? you ask. Look into commercial products? This isn’t so simple either. Let’s talk about this next time.
On the software development outsourcing.
November 9th, 2009Five years ago, that kind of outsourcing was already at the limit, it was noting new, and all indications were so that it will change. It had to change, but this just didn’t happen…
Who would want to restructure and change the business which earned so much money by applying so little effort? The cost of entry into the market was minimal, the cost of average quality resources – very low, customers stood in line. When crisis hit, that army of semi-professionals rushed to the market, ready to work for food, but not being able to unite and act as a powerful force, covering only the very bottom of the outsourcing market, that service could not be of any serious threat.
Now, when the business once again gained access to money, it would seem everything should be back as before, but attitudes have changed.
Here are three main points that catch the eye:
- Investors are not ready to invest in expensive business ideas without a clear monetization roadmap, and what’s particularly new , they want to participate in selecting a vendor to be confident, not only in idea, but in its implementation.
- Market actively explores and uses ready-made solutions. People are no longer willing to pay for infrastructure, either you have picked a set of open-source ready-made solutions and gained expertise in their customization, or you have built once of your own, or you risk to be out of business.
- Experience in development or customization of ready-made solutions in vertical industries. Previously, who would actually check whether you are a CRM guru, document management or travelling business automation? Times have changed and it’s not enough just to put references from satisfied customers on the table.
Let’s consider these three points in more detail.
- It is clear with the monetization, people become less willing to invest in bright heads, hoping to attract the enterpreneur and get their profit on the second or third project. People who are willing to get into this business should think about multiplying each dollar invested. New trend here is that investors, successful business people, believe that their business experience, plus the enterpreneurs motivation will result, all together, in a more predictable and high quality result. It covers all areas from design to marketing the product, all channels of promotion, logistics, etc.
- With the rapid technology development and a qualitative leap every two years, it was easy to convince the customer that the ready-made solutions are not the panacea that the rapid development of technology market will make outdated in a year, only fresh thoughts and ideas are good for their business. But let’s face it, properly designed applications can remain at the peak for a very long time, simply by substituting low-level processes and technologies with more modern, without modifying or rewriting the business logic of applications. Are there new improved methods of working with databases? New ways of dealing with Rich User Interface? Rewrite database and presentation layers, and live on. And when it comes to this, the question arises whether or not the developer with whom you have worked a year ago will be willing to understand their old approaches to revitalize your product and make it up to date, and all that for a modest fee? He has gone far ahead, he is ready to offer you a completely new, advanced solution (all that you have already heard a year ago, right?). Picking right solutions (whether open source or commercial), customized properly (maintaining backward compatibility and upgrades) is the key to solving this problem.
- Marketing does wonderful things. Especially online marketing where no one can make a person responsible for what’s written. Enterprise management software? Here you are! We just take that CRM, bolt this document management here, online planning tool, duplicate remover for outlook and where was that accounting and warehousing? Here you go. All on different platforms? So what … Having experience with each of these solutions may not even represent what you could face by tying to stick them all together, both in technological sense and in terms of processes / business. Vendors who are able to show a commercial solution, or a set of compatible open-source tools that solves specific problems of the customer will be more and more preferred over those who just talk.
Selection as before remains with those who are holding the money. Just now it is a more balanced, more reasonable choice, it is result-oriented rather than process-oriented. Outsourcing is increasingly becoming a working tool, with its pros and cons. The fewer conditions taken into consideration when choosing a vendor, the more it resembles a professional tool, not an amateur, suitable for a narrow range and able to cripple, if not properly used.
Next week will continue to develop the idea of working with ready-made solutions and talk about different approaches of using open source and commercial products for the custom works.
Tips to Avoid Possible Risks of Outsourcing. Disadvantages of Outsourcing
September 2nd, 2009The advantages and the importance of outsourcing these days are simply obvious. There are many reasons why businesses, notwithstanding their size and budgets, consider outsourcing. Some businesses, especially small ones, very often simply have no choice but have to outsource some of their business processes. However, there are some risks and disadvantages of offshoring that have to be considered. Of course, much depends on the company you’re dealing with. As a rule, the better the reputation of an outsourcing company, the fewer risks you may face during the collaboration with them. Let’s try to outline some possible negative aspects of outsourcing than can be potentially encountered.
- When offshoring and trying to save money, don’t overdo it: verify particular business processes that can be done by yourself rather than outsource them.
- Always remember that with outsourcing some of your services the portion of your very confidential information will be known to the outsourcing company you’re working with. Always consider the security of your confidential data.
- There’s always a risk that your offshore service provider may become bankrupt automatically leading to troubles, extra spendings and waste of time searching for another outsourcing provider.
- Managing offshore provider is always much more complex than managing business processes within your organization. Remember, that the outsourcing company you’re working with may be responsible for several projects of different companies, thus there may be not complete devotion to your project.
- Remember about the hidden costs when signing a contract with your offshore provider. The initial costs and final costs often differ.
- Remember, that such factors as contract misunderstanding, renewing contracts, lack of communication and delay of the services often accompany the outsourcing process.
- Never neglect your customers. With outsourcing your company may suffer from a lack of customer focus. For instance, if you outsource the service that used to be done on your site, some of your customers may feel embarrassed that you no longer perform this or that service and reject it. Take the interests of your customers before starting outsourcing.
Always remember about your in-house employees!
- Many of your employees may not be happy with the fact that some of their duties are being outsourced. Nobody likes feeling that their skills can be replaced and as a result they may show the lack of interest to their work and that may cause the harm to productivity. When consider offshoring never forget to cater to the needs of your own valuable employees. If not, outsourcing may lead to redundancies for your company. Take the interests of your employees before starting outsourcing.
There’s a well-known adage that in business you get what you pay for. A quarter of all outsourcing contracts are never renewed. You may not experience any of these disadvantages of offshoring if you’re working with a trusted and respectable outsourcing company.
