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Runtime - The Software Outsourcing Newsletter
for Executives and Investors
from Accelerance and Steve MezakOutsource Your Process Of Outsourcing
Using outsourcing to develop a major part of your software feels risky and requires a big commitment. That’s why software companies often run a pilot project with an outsourced team before embarking on a long-term outsourcing journey. Even the effort of starting a pilot project seems risky and expensive when you do it yourself. But using an experienced outsourcing advisor like Accelerance, as a "prime contractor", saves you a whopping 75% in time and money when you are getting started with outsourcing.
Outsourcing software development is often thought of as a major project utilizing tens to hundreds of engineers in order to gain huge cost savings. Are you ready to select an outsourced team and have scores of outsourced programmers writing your software? If you have not outsourced before, you should first learn how to handle the potential risks, and how much extra time and overhead are required for managing any new business process.Experienced business people know, when embarking on any new business process, it is often prudent to start with a small (isolated) pilot to decrease the overall risk and the impact on the overall project. This allows a safe trial and a chance to move up the learning curve over a reasonable time period while minimizing risk – making, and learning from, small mistakes rather than large ones.
There are three goals for running a pilot. First, you can test the outsourced team’s communication abilities. You can find out how well they create software from your specifications. You can also leave specific information out of your specification to see if the outsourced team comes back to you for clarification.
Similarly, you can make changes to your specification in the middle of the pilot to see how well they handle it. An outsourced team should embrace change as a natural part of the software development process.
The second goal of running a pilot is to test technical skill. You want to confirm the outsourced team has the experience with your software technology. For example, as a mini-pilot, one Accelerance affiliate did a study of several Java database persistence techniques before paid work for the client began on one project. This demonstrated the affiliate had the required experience with Java and gave the client complete confidence in the team’s technical abilities.
As the third goal, you can implement a small set of non-critical features that you need in your software. At the end of the pilot, you will have your new features and will have a good sense for how well the outsourced team works.
Sometimes, the outsourced team will carry out a short pilot for free. This will be done in a highly competitive situation. This kind of pilot is better characterized as a "benchmark" activity to judge specific capabilities of the outsourced team. It usually lasts no longer than a week.
When it comes to outsourcing, the up front time and effort of finding outsourcing resources, developing project specifications, communicating and managing the outsource relationship seems like too much trouble.
But with a "prime contractor" like Accelerance, you can explore the benefits of outsourcing without investing in the risks or overhead of the up front management learning curve. Indeed, Accelerance can help you try a pilot project WITHOUT the risk, learning curve, hidden costs or management overhead that may have held you back from the huge benefits outsourcing can offer.
You select a small pilot project and Accelerance will do the rest.
The result: you will quickly gain the experience and advantages of outsourcing, at a fraction of the in-house cost, without the extra expense of the “learning-curve” or the risk. Once the first pilot project is completed you'll be ready to work with Accelerance to outsource larger projects with confidence – on-time, on-scope, on-budget and risk free.
The Seven Steps for First-Time Outsourcing - On Your Own or with a Prime Contractor
1. Decide on a pilot project
A pilot project is a sensible first step to a larger outsourcing project. It decreases the overall risk while moving you quickly up the learning curve – learning from small mistakes rather than large ones.
2. Locate outsource resources – technical skills, domain expertise and style fit for project
Do it yourself: 4 man-weeks and $10K salary cost for the person doing the search. Steps: determine team requirements (technical and domain skills), search for possible development teams by surfing the Internet, contact colleagues, contact firms, check references, etc.
Prime contractor: 2 days, no charge when the team is selected from the Accelerance Affiliate Program.
The Accelerance Affiliate Program represents a dozen firms, and over one thousand engineers, from around the world that have been screened and pre-qualified.
3. Create MRD, high-level product specs, “use cases”, development methodology
Do it yourself: 6-8 man-weeks, including start-up and rework, $20K salary cost
Prime contractor: Accelerance advises you on spec creation, 2 man-weeks and $5K salary cost for client team, with no extra charge when Accelerance is managing the overall project -- or -- $10K for Accelerance to take the lead and create your MRD in 2 weeks.
Accelerance provides the right level of specification that clarifies the technical requirements and desired results without restricting the value added by the creativity of the development engineers.
4. Develop a contract (development agreement) with cost-and-time estimates and project milestones
Do it yourself: Attorney Fees from $1K - $5K to create a contract with a non-US outsourcing firms
Prime contractor: Leverages time-tested contracts, at no extra charge when Accelerance is managing the overall project
With Accelerance as a prime contractor, your contract is with Accelerance not an overseas group. The terms are straightforward and complete, protecting your IP and ownership of the developed software.
5. Outsource Software Development Costs
Do it yourself: Hourly or per man-month cost for time of each engineer working on your project
Prime contractor: Same out-of-pocket cost to you as the do it yourself approach
Accelerance’s arrangements with outsourced affiliate teams provide the financial return for its services without adding to client’s costs.
6. Manage the project and the relationship - provide project oversight, communicate regularly with outsource team, deliver management progress reports
Do it yourself: Approximately 3 hours per day, $1000 per week salary cost for four weeks
Prime contractor: Accelerance manages the day-to-day program and communication and provides management level reports with no extra charge when Accelerance is managing the overall project. Your team spends 1.5 hours per day, $500 per week salary cost for four weeks
7. Project completed to your satisfaction?
Do it yourself: Three possibilities (1) No – redo, (2) Yes – after unanticipated time and cost to make fixes, (3) Yes – sometimes you can make it work.
Prime contractor: Assures milestones and project requirements are completed.
Accelerance assures you have received your desired results – on time, on-scope, on-budget.
Summary of First-Time Outsourcing Costs
Client Days
Client Days
Client $
Client $1 2 3 4 5 6 7
75% of time
78% expenseFor example, one Accelerance client created a 20 page spec to carry out a pilot with a new outsourced team. The pilot was originally estimated to complete in 3 weeks, but was finished in two and a half weeks. In addition, the outsourced team contributed improvements to the user interface (for entering the state and country in the address pages) based on experience in projects with similar functionality.
The client saved about $8K developing this software using the outsourced team during the pilot, compared to what they would have paid to the onshore programmers they were using. In addition, Accelerance saved many weeks of time of the client's executives (worth at least $10K) by quickly selecting an affiliate team uniquely qualified to develop their software.
In reality, outsourcing a small project can be cost effective if you’re not burdened with the extra time and expense of the learning curve and management overhead. How do you do that? By working with an experienced expert advisor already familiar with the ins and outs of the outsourcing world - a prime contractor like Accelerance.
By outsourcing the business skills needed to leverage the management of outsourcing, as well as the software development itself, you can afford to outsource projects as small as 3 to 4 weeks in length using only a couple of outsourced engineers. Using outsourcing even for small projects can save you thousands of dollars and help you get valuable projects completed without tying up your own internal resources.
Vision Resources
Are you wondering how you will select an expert offshore team
to develop your software?Use the Accelerance Vision Resources(sm) outsourced vendor
selection service and cut the time of your vendor selection
process by as much as 90%.Vision Resources leverages members of the Accelerance's 17
teams in 14 countries around the world.Click here to learn more about Vision Resources
Accelerance, Inc. delivers impartial & expert strategies and services
for risk-free outsourcing of your software development.
Visit our web site at www.Accelerance.com
Until next time,
Steve Mezak
Accelerance, Inc.
Risk-Free Outsourcing213 Garcia Avenue
Half Moon Bay, CA 94019
1-650-712-8990(c) 2005 Accelerance, Inc. All rights reserved. You are free to use material from the "Runtime" eZine in whole or in part, as long as you include complete attribution, including live web site link. Please also notify me where the material will appear.
The attribution should read:
"By Steve Mezak, CEO of Accelerance, Inc. Please visit the Accelerance web site at http://www.Accelerance.com for more information and resources on outsourcing and creating great software products."
