In this article, we'll discuss the challenges of modern software development outsourcing and how data can be used to overcome them.
More Bang for Your Buck!
For years, companies have boosted their productivity and scaled their software development using outsourcing. While outsourcing can be a powerful tool in complementing one's own corporate software development, oftentimes CIOs are left wondering if they've been bamboozled or if they've gotten the promised value out of their quite expensive investments–and it's a fair suspicion to have! It is not rare that software development vendors cut corners, deliver subpar code, or run past deadlines.
That's why nearly 50% of enterprises are dissatisfied with their current software outsourcing company, according to the Everest Group.
The Status Quo of Software Outsourcing
In many companies, it's common practice for the purchasing department to receive specifications and requirements from their internal IT department, select the cheapest vendor, and then negotiate a contract. Software is often delivered past deadlines. Code quality is often unknown. Budgets may be exceeded. There is little accountability. All of these can endanger larger, strategically important IT projects.
It is not rare that companies look for outside help with the software development because they do not expect to be able to produce the code quickly and efficiently enough themselves. This could have to do with the fact that 30%+ of software development resources are needlessly squandered on things like technical debt, through knowledge monopolies, and code complexity.
This is why before deciding on outsourcing development it may be helpful to instead invest on something to make your corporate software production more sustainable, affordable, and scalable. The Seerene software process mining platform helps large companies achieve efficiencies of 30%+, which means, after implementation, you may have become efficient enough that expensive, unaccountable outside help is no longer needed.
But should you decide for outsourcing parts of your software development, have no fear!
Achieving Accountability Through Data
In order to tackle the challenge of accountability, the contract model needs to be modified. Rather than being based on fixed fees or "time and materials", contracts should tied to outcomes. This presents a challenge for many companies that outsource, because they lack the data and tools to adequately define desired outcomes. You can apply software analytics to determine past vendor performance and compare it to both other external and internal teams. Through this, you gain a solid foundation for further negotiation with vendors and to argue for choosing the higher quality, more costly provider.
Beyond just measuring past and present vendor performance, the KPIs from Seerene's Digital Boardroom can also be integrated into the service level agreement (SLA) to determine how success is measured and what tradeoffs you're willing to make.
While it may be easy to dream about outsourcing risk, it's just not possible to achieve. Companies need to take control of their software delivery and apply data-driven strategies to the management of their outsourced development. It is only through transparency into your vendors' code and development that you are able to guarantee operational excellence and optimized software production so that your business strategy can be successfully realized.