Finding the Right Service-Level Measure

David HerronThere is a recent trend in outsourcing towards smaller, shorter-term deals and an increase in using multiple vendors (usually referred to as multi-sourcing). But, while outsourcing arrangements may be changing and customers continue to look for greater efficiencies, there is still much that remains the same in regards to contract governance challenges. Proper service-level measures are a necessary in outsourcing (and especially in multi-sourcing) contracts to mitigate such challenges.

Typically, these contracts are priced on the basis of labor cost. But an effective contract takes other dimensions into consideration as well. A successful outsourcing arrangement is one that delivers a high quality product that meets the needs of the business (value) for a reasonable price. Thus price, value and quality should serve as the focus.

If you're interested in learning more about these measures and how to create a successful outsourcing arrangement, download "Finding the Right Service-Level Measure in a Changing Outsourcing Landscape" here.


David Herron
VP, Software Performance Management

Written by David Herron at 05:00

Everything You Need to Know About Cyber Security You Can Learn From Your Plumber

Cash Is KingIs it me or do the headlines regarding compromised Point of Sale (POS) systems keep increasing in frequency? Let’s not kid ourselves, there have been some pretty big breaches …Target, Home Depot, Apple iCloud, and as of today, Jimmie John’s. To cyber attackers retail is the new banking sector!   

One of my best friends, Don, is a plumber and also a Captain in the Newark, New Jersey Fire Department. This guy works harder than anyone I know, and he’s probably one of the brightest guys I know. I always tease him that he should write a book called “Everything You Need to Know in Life You Can Learn from Your Plumber.” 

Interestingly, his solutions are always equated to how he would approach a technical problem from a plumber’s standpoint. 

FLY ON THE WALL

A conversation with Don:

RC: “Did you hear about Home Depot getting breached by a cyber attack?”

Don: “I don’t understand what’s so difficult. Let me tell you what we do in plumbing. When a home owner doesn’t like what’s coming through the pipes, like the way the water looks or tastes, we test the water. Based on the water test results, we can put on layers of water treatment solutions to eliminate the threats, and then we can offer periodic testing. In fact, there are systems now that can do real-time monitoring of water quality and alert us when there is a change.” 

RC: “First it was Target, and now it’s Jimmie John’s … who’s next?”

Don: “In plumbing, water finds the path of least resistance, even the tiniest of holes in a pipe or structure will, over time, be found and exploited. Next thing you know, the hole gets bigger and things get ruined. There is always constant isometric pressure of water inside your home or business, and if it’s not contained properly, it will run amuck. This cyber problem sounds no different to me than what I deal with daily.” 

RC: “It’s scary stuff and every time I pull out my credit card to pay for something at a store, I think twice now.”

Don: “Rob, that’s why cash is king. Let those cyber idiots try to interfere with that transaction. If I don’t have the cash, guess what? I don’t buy it. Cards are for convenience, at the cost of security and trust, and it’s obvious to me that stores aren’t smarter than the bad guys, so why should I entrust them with access to my identity, which could lead to my money. The hackers always win.”   

Don: “I don’t understand why everyone doesn’t use PSC’s software security service. No plumber is allowed to self-inspect his or her own work. There are companies out there building pretty cool and important stuff with software, and I don’t understand why they trust themselves more than your company to offer an outside opinion. I don’t get it.”

RC: “It’s not an easy answer. Companies do what they feel is right, and oftentimes, that decision is tied to how it impacts revenue or competitiveness in the marketplace. Our customers realize the software security and quality battle is about data and not what technologies are used to identify the issues. Once they make this shift, it begins cascading through the culture of their company to be driven by data instead of opinions. I’m sure in your business there are homeowners who install their own under-the-sink filtration systems and then never check their water again or don’t change their filters regularly. They feel safe because they have purchased the “tool” that is supposed to catch the harmful things. Essentially, they are making their water potentially worse for their family. There will always be someone out there that you will never convince that you can do a better job and approach their water problem from a different perspective and provide better tasting water beyond their imagination. To them you’re just the plumber that only fixes pipes and not water quality problems. It’s no different in my business.”     

Don: “Hm … but my customers aren’t building things that could potentially kill someone, cause the market to crash or cause damage to their brand in the market. You won’t find me shopping at Home Depot anymore.” 

Don makes a valid point, right? This, of course, is why I have been urging him to write a book – believe me, his brilliance doesn’t stop at the current state of cyber security in retail. 

THE FUTURE

I don’t know if Apply Pay will save the day or Bitcoin or Zerocash. What I do know is that companies need to put aside more of their budgets to address cyber security on an ongoing basis. An unbiased opinion can provide valuable information that could make or break the future of your brand and the loyalty of your customers.

 

Rob Cross
PSC Vice President, DCG Sales

Written by Rob Cross at 05:00

Balancing In- and Out-Sourcing

AlanRecently, Hugo Miseur, a former colleague of mine, started posting a series on outsourcing on LinkedIn. I recently commented on one of his posts, and this blog post expands on what I said there.

Every company that wants to hive off its IT via outsourcing should have a discussion surrounding the question, "What remains in the company if we outsource our IT?" There is no doubt in my mind that the most successful organisations retain enough expertise in-house to: Manage strategic requirements, to thoroughly test and accept new software and services, and to successfully manage their introduction into the client organisation.

Hugo and I met for the first time on a major government contract where, arguably, they kept too much of their development in-house, resulting in the mirroring of roles at architectural levels. This led to unclear decision making and a lack of freedom of the outsourcing supplier to be more innovative as the brake was put on by risk-averse clients. This led to some conflict and a number of decisions were forced by the client on the delivery team, leading to poor package selection, amongst other things.

Contrast that with a major client with whom I'm currently working, where the realisation has come some five to six years after outsourcing that they sold off their strategic expertise, as well as the technical skills to deliver huge change on a regular basis. The result was that suppliers, some of whom were delivering the software, were making business design and architecture decisions for the client. They are correcting that now, but it will take some time to re-build the coherent expertise.

I think that the balance between what to keep in-house and what to outsource is fraught with difficulties, but that should not stop outsourcing. Some outsourcing arrangements fail, not because the supplier failed, but because the client did not know how to manage the interface. Insourcing is sometimes the panic response, as is changing suppliers without analysing the reason the contract failed.

To me, the key is to keep enough expertise in-house to enable the retained IT organisation to play a key decision making role as part of executive management.  Once the baggage of outsourcing is done, the organisation must shift its mindset and stop treating IT as a necessary evil or merely as a support service.

The challenge of the retained IT function is to become the visionary enabler of business development. Outsourcing enables that change of purpose, but how many companies actually make that leap of faith?

 

Alan Cameron
DCG-SMS, Managing Director

Written by Alan Cameron at 05:00
Categories :

What Should Every Client of Outsourced Software Know About Mitigating the Risk of Project Failure?

IT Governance is key for any effective IT program or team. It's important to define what decisions need to be made, who should make them and how they should be made. This process helps in reducing risks, setting priorities and increasing communication.

One of the biggest areas that business and IT providers need to exercise strong governance over is outsourcing. Managing vendor relationships and deliverables can be a difficult process, as most of us already well know. 

But, we've got you covered! This month's Trusted Advisor report reviews the most significant risks of outsourcing software development and offers up some mitigation strategies.

Read the Report

Written by Default at 05:00

Function Points: The Real Software Currency

DavidA successful outsourcing arrangement is one that delivers a high quality product that meets the needs of the business (provides value) for a reasonable price. You want to measure your outsource providers level of service to ensure the delivery of real value at a reasonable price. So, an ideal scenario would be to have one single measure that would serve to measure both cost and value.

Function Point Analysis is an industry accepted software sizing method that does just this. Read David Herron, Vice President of Software Performance Management's, paper: Successful Outsourcing: Measuring for Price and Value, to learn why Function Point Analysis is the most appropriate measure and how it can be applied.

Join David for a webinar on January 21, "Function Points: The Real Software Currency," for an expanded look at this topic. David will explain how IT outsourcing contracts can use function points as a default currency of value for improved governance.

Register for the webinar now.

Written by David Herron at 08:30

"It's frustrating that there are so many failed software projects when I know from personal experience that it's possible to do so much better - and we can help." 
- Mike Harris, DCG Owner

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