Companies should be very specific about the goals and the scope of the project with the offshore outsourcers because the way of representing issues might be completely different at the other end. These cross- cultural differences including communication and time zone cause delays in projects and researches say that 10% of offshore outsourced projects get delayed due to this. It is advisable for companies to see the work environment and location of the outsourcer before making deals.
The implementation of SAAS model will leave numerous benefits, besides cost and time; the burden on the employee will reduce tremendously due to the already available code. The company’s servers can save a lot of space, improving the performance due to a reduction in lines of code.
The Organization must be focused on total cost management i.e., the cost should not be the only consideration but the customer satisfaction should also be a priority. The employee retention should be discussed by making legal contracts with the key employees for retaining until the duration of the project. While offshore outsourcing is a powerful way of pursing high quality software, the companies must be focused predominantly on CMM level 5 certified vendors. This certification represents the level of expertise and practical working knowledge of the company to deliver bug free software. Outsourcing becomes highly profitable if the plan and execution of processes is aligned accordingly.
http://www.articlesbase.com/business-articles/why-offshore-outsourcing-fails-806311.html
Wednesday, April 29, 2009
Thursday, April 23, 2009
Suggested IT Strategies
IT infrastructure plays a key role towards meeting the company‘s objectives. As there is a tremendous growth in information technology, companies need to upgrade their infrastructure accordingly to compete in a global environment. Any issue related to infrastructure that is not resolved can cause loss of customers and productivity. Due to the availability of the World Wide Web there is high flexibility for data transfer, it also has threats like security because maximum data is transferred via the internet when companies work globally, e.g. off shoring. This is a key issue because in most cases 30% of the project is done close at the customer’s location and the remaining 70% is done in India unless it’s a mission critical project where the project has to be done at the customer’s premises.
Organizations must be very particular about having a reliable network for security on data transmission; this can be achieved by incremental outsourcing where both the parties will be agreed upon terms and conditions in the form of service level agreements that includes assurance of the network by the vendor. This is nothing but remote infrastructure management where the network vendor will be responsible for a reliable data transfer. The infrastructure management also involves in monitoring LWAN, WAN, communication networks to obtain a smooth functioning of business processes and storage infrastructure that includes maintenance of storage devices, data centers and servers. The outsourcing companies should have a 24x7 support for infrastructure management to have a continuous functioning of business processes avoiding downtime and troubleshooting. This results in a stupendous cost savings for the clients and vendors.
The companies that deal with hundreds of projects every year need to have cutting- edge technologies to keep track of the projects being executed or still in the development stage or might have failed. To have all this tracked, the company’s knowledge base should be accessible efficiently and this can be achieved by having excellent business intelligence. The business intelligence and data warehousing makes the hidden assets visible and facilitates in decision making.
The project failures can be avoided by
Building a good team - The onsite project managers should have excellent leadership skills and also project management experience. The onsite and offshore resources should be integrated and must operate smoothly.
Defining roles and responsibilities – communication roles and responsibilities should be defined accordingly between the onshore and offshore teams.
Well defined processes and methodologies – implement RUP (Rational Unified Process) based project management methodologies, do not be persuaded by the vendor to have these defined later.
Pay attention to details - The requirements for the projects need to be mentioned explicitly to the offshore team; do not summarize the intent without listing all the parameters and necessary processes clearly.
Metrics – Both the performance metrics and the acceptance criteria should be defined before the project has started. Till the end of the project measure the performance of the offshore team regularly.
Exit strategy – There are possibilities for things to go wrong anytime during the project’s life cycle, make sure that there is an exit from this by involving the offshore to minimize damage.
In outsourcing companies like Infosys where staff turnovers are common, the companies should maintain a proper knowledge base about the customer’s requirements for the projects; this will be helpful for the next employee that takes the position. The economies of scale for a company does not come from assigning multiple projects to the employees but comes from reusing the components already developed. Projects require a variety of software tools for development, Infosys should follow SAAS (Software as a Service) model where the software can be obtained on the internet instead of having it installed.This reduces a lot of costs incured by buying the original software that is used to implement just one project.
The knowledge base can be utilized effectively by having an enterprise resource plan (ERP) software. This system integrates all the departments of the organization fetching data from the knowledge base and data warehouse making it available to the respective department. This will reduce the communication gap among employees working in different departments.
ERP software integrates the functional departments helping the organization in making strategic planning and helps in maintaing management control. This reduces the operational costs that include lower marketing costs, lower help desk support and lower production costs. Another benefit from ERP is the day to day management can be facilitated without any disruptions. The software keeps track of the actual cost of the activity and also performs activity based costing.
The ERP software has various modules like ERP production module, ERP purchasing module, ERP sales module, ERP inventory control module, ERP financial module, ERP HR module and ERP marketing module, where each module represents a functional unit of the organization. The organizations must implement these modules which are economically and also technically feasible as it reduces risks and failures for projects due to structured coordination provided by ERP.
The following lists the criteria for the software project success in order of importanace:
Organizations must be very particular about having a reliable network for security on data transmission; this can be achieved by incremental outsourcing where both the parties will be agreed upon terms and conditions in the form of service level agreements that includes assurance of the network by the vendor. This is nothing but remote infrastructure management where the network vendor will be responsible for a reliable data transfer. The infrastructure management also involves in monitoring LWAN, WAN, communication networks to obtain a smooth functioning of business processes and storage infrastructure that includes maintenance of storage devices, data centers and servers. The outsourcing companies should have a 24x7 support for infrastructure management to have a continuous functioning of business processes avoiding downtime and troubleshooting. This results in a stupendous cost savings for the clients and vendors.
The companies that deal with hundreds of projects every year need to have cutting- edge technologies to keep track of the projects being executed or still in the development stage or might have failed. To have all this tracked, the company’s knowledge base should be accessible efficiently and this can be achieved by having excellent business intelligence. The business intelligence and data warehousing makes the hidden assets visible and facilitates in decision making.
The project failures can be avoided by
Building a good team - The onsite project managers should have excellent leadership skills and also project management experience. The onsite and offshore resources should be integrated and must operate smoothly.
Defining roles and responsibilities – communication roles and responsibilities should be defined accordingly between the onshore and offshore teams.
Well defined processes and methodologies – implement RUP (Rational Unified Process) based project management methodologies, do not be persuaded by the vendor to have these defined later.
Pay attention to details - The requirements for the projects need to be mentioned explicitly to the offshore team; do not summarize the intent without listing all the parameters and necessary processes clearly.
Metrics – Both the performance metrics and the acceptance criteria should be defined before the project has started. Till the end of the project measure the performance of the offshore team regularly.
Exit strategy – There are possibilities for things to go wrong anytime during the project’s life cycle, make sure that there is an exit from this by involving the offshore to minimize damage.
In outsourcing companies like Infosys where staff turnovers are common, the companies should maintain a proper knowledge base about the customer’s requirements for the projects; this will be helpful for the next employee that takes the position. The economies of scale for a company does not come from assigning multiple projects to the employees but comes from reusing the components already developed. Projects require a variety of software tools for development, Infosys should follow SAAS (Software as a Service) model where the software can be obtained on the internet instead of having it installed.This reduces a lot of costs incured by buying the original software that is used to implement just one project.
The knowledge base can be utilized effectively by having an enterprise resource plan (ERP) software. This system integrates all the departments of the organization fetching data from the knowledge base and data warehouse making it available to the respective department. This will reduce the communication gap among employees working in different departments.
ERP software integrates the functional departments helping the organization in making strategic planning and helps in maintaing management control. This reduces the operational costs that include lower marketing costs, lower help desk support and lower production costs. Another benefit from ERP is the day to day management can be facilitated without any disruptions. The software keeps track of the actual cost of the activity and also performs activity based costing.
The ERP software has various modules like ERP production module, ERP purchasing module, ERP sales module, ERP inventory control module, ERP financial module, ERP HR module and ERP marketing module, where each module represents a functional unit of the organization. The organizations must implement these modules which are economically and also technically feasible as it reduces risks and failures for projects due to structured coordination provided by ERP.
The following lists the criteria for the software project success in order of importanace:
http://www.e-zest.net/Outsourcing_Central/outsourcing_issues.html
http://machrotech.com/Offshore_Outsourcing/Offshore_outsourcing_issues_vendor.asp
http://www.articlesbase.com/outsourcing-articles/software-outsourcing-india-367334.html
http://www.informationweek.com/news/globalcio/showArticle.jhtml?articleID=202801664
http://www.softwareprojects.org/disadvantages-outsourcing.htm
http://www.cio.com/article/31967/The_Risks_Associated_With_Offshoring_Software_Development_
http://blogs.zdnet.com/projectfailures/?p=258
Impact on local and international business
India’s outsourcing sector is contributing 1% of the GDP. Infosys is India’s second largest outsourcer making revenues over $4 billion having a growth of 11.7% in the fiscal year 2009. Infosys created a global footprint with 50 development centers and offices, providing IT services to companies on the globe. In order to strengthen its global delivery of IT solutions and provide world class solutions for its clients, Infosys made a strategic alliance with approximately 19 companies, some of them are IBM , Microsoft, Oracle, Sun Microsystems, etc. Infosys is partnering with Oracle and IBM which is a technology alliance where IBM provides training and product support which includes hardware and software on banking and retailing system. It also has an Oracle Application Center for training, to upgrade its skills and provide the best solution for its clients.
Infosys has a strategic alliance with Microsoft to improve .NET technology as it has a joint enterprise architecture lab that was inaugurated by Bill Gates. This was established among the two to research on new features that can be implemented in .NET technology which was introduced by Microsoft earlier.Microsoft and infosys are together working on building a common platform for developing SOA and SAAS applications which is named as "OSLO" by Microsoft. Technologies like Windows communication Foundation(WCF) and BizTalk Server by Microsoft are used for developing SOA and SAAS applications, but there should be a simpler way to develop these distributed applications and this can be achieved by OSLO. The areas where OSLO is targeting are, on .NET framework 3.5, enhancement of Biztalk server 6 for deploying and managing distributed systems and visual studio 10 for supporting these distributed applications. It is also one of Microsoft’s global systems integration alliance partners. The outsourcing companies like IBM and Oracle are more focused on cost leadership as they are outsourcing a major part of the automated systems like the banking and retailing system to Infosys under service level agreements. The impact on business operations of these two companies is much smaller when compared to that of Infosys because most of the work is being outsourced and the major part of it is developed by Infosys.Therefore IBM, Microsoft and Oracle are taking the support of this huge outsourcer to satisfy their clients with world class technology offerings.
Infosys is leveraging Sun Microsystems to provide support on software and hardware of Sun's product suite, by exploiting its expertise maximum, to offer technology based solutions and quality service delivery capabilities. This huge outsourcer has a tough competition with china but the only advantage over china is due to the proficiency in English. It also expanded its operations in china to achieve a competitive edge.
Among the 509 clients, Infosys made deals worth $1 million from 285 of them and 113 customers of $5 million each, it also has one customer that is paying more than $200 million. The North American companies constituted 62.6% of the revenues of Infosys and Europe accounted to 28%. The rupee problem would diminish if Europe contributed a considerable proportion of revenues for Infosys, as the currency value is larger than that of the US dollar.
Infosys has a strategic alliance with Microsoft to improve .NET technology as it has a joint enterprise architecture lab that was inaugurated by Bill Gates. This was established among the two to research on new features that can be implemented in .NET technology which was introduced by Microsoft earlier.Microsoft and infosys are together working on building a common platform for developing SOA and SAAS applications which is named as "OSLO" by Microsoft. Technologies like Windows communication Foundation(WCF) and BizTalk Server by Microsoft are used for developing SOA and SAAS applications, but there should be a simpler way to develop these distributed applications and this can be achieved by OSLO. The areas where OSLO is targeting are, on .NET framework 3.5, enhancement of Biztalk server 6 for deploying and managing distributed systems and visual studio 10 for supporting these distributed applications. It is also one of Microsoft’s global systems integration alliance partners. The outsourcing companies like IBM and Oracle are more focused on cost leadership as they are outsourcing a major part of the automated systems like the banking and retailing system to Infosys under service level agreements. The impact on business operations of these two companies is much smaller when compared to that of Infosys because most of the work is being outsourced and the major part of it is developed by Infosys.Therefore IBM, Microsoft and Oracle are taking the support of this huge outsourcer to satisfy their clients with world class technology offerings.
Infosys is leveraging Sun Microsystems to provide support on software and hardware of Sun's product suite, by exploiting its expertise maximum, to offer technology based solutions and quality service delivery capabilities. This huge outsourcer has a tough competition with china but the only advantage over china is due to the proficiency in English. It also expanded its operations in china to achieve a competitive edge.
CRM projects are mostly left unsatisfied by the vendors and result in failures. The most common reason behind these failures is having an improper CRM business case implementation. The visibility of the business case is another cause of failures as the person who prepares it often different from the one who executes it. The business case should be referenced regularly during the process of requirement gathering and executing to have a proper alignment. This has a high impact on the project mile stones because once the milestones are crossed and the project is not in pace with the business case, it gets delayed and will end up in a disorientation among the two organizations where the project is carried out. This has a major affect on the company's further contracts.
Infosys is a CMM level 5 and ISO 9001 certified company that delivers efficient and assured software which becomes a destination for outsourcing to these multinational companies. The other advantage is the significant difference in the currency where 50 rupees is equivalent to one dollar which is a huge cost saving for the outsourcing company and it clearly shows, dollar is much stronger than the rupee. In 2007 the company made 46 cents on a share generating revenues $928 million and reported a 40% increase in revenues from the preceding year. The company was earning revenues in US dollars and paying its employees in rupees which resulted in a considerable profit margin.
Among the 509 clients, Infosys made deals worth $1 million from 285 of them and 113 customers of $5 million each, it also has one customer that is paying more than $200 million. The North American companies constituted 62.6% of the revenues of Infosys and Europe accounted to 28%. The rupee problem would diminish if Europe contributed a considerable proportion of revenues for Infosys, as the currency value is larger than that of the US dollar.
Sunday, April 19, 2009
Issues of offshore Outsourcing
“Offshore outsourcing” is the most advantageous and a strategic move taken by the MNC‘s in today’s world. Outsourcing is widely done from the west to the east primarily to reduce the operating and development costs i.e. it maximizes the revenues and reduces the costs. India is one of the best destinations for outsourcing in today’s IT market. There are many issues and benefits that these development centers experience due to the huge distance in spite of having access to the best technologies. The following are the benefits from offshore outsourcing to India:
Cost Advantage - Operational costs are cut down by approximately 50% when compared to the development of similar products in the west. The most recent studies say that the by 2010 the US companies will save $390 billion in IT industry by offshore outsourcing.
Faster Lead Times - Man power is mobilized quickly by providing training to start a new project. These trained teams can be assigned tasks quickly, shortening the project start-up time.
Leverage Expertise - The organization’s most valuable assets is the employee. This brings about the best quality and innovation of new products. Investing on personnel here is the most cost effective strategy.
Access to state of Art Support facilities - It has a 24-hour service model that provides support to any time zone in the world.
Faster time to market - By leveraging the organizations with diverse and discriminatory talent in this remote location will help in executing the IT solutions faster.
Offshore Outsourcing Model:
In spite of having numerous benefits there are issues related to the above model .Some of the benefits can also become issues mainly the time zones and the other issues are crossing the deadlines and so on.
Issues related to outsourcing
There are various issues related to outsourcing like country related issues where integration between two completely different entities from unique socio political environments needs to be done .Vendor related issues include the ownership and security of the information as both the parties should be confidential about the information being exchanged. Personnel related issues relate to the coordination and communication between two teams and in - house flexibility is another concern where the outsourcer should prepare his team to work with different work environments.
Today most of the companies are outsourcing software to India due to the availability of skilled, trained IT professionals and nonetheless factors like on time completion of the project which is the most important factor as this has an effect on the company’s competitive advantage because the entry of the software to the market will be delayed. According to the recent study, companies have increased their net savings by 40% to 60% by offshore IT outsourcing.
Companies face many issues when they outsource software projects as each company follows its own software development life cycle (SDLC) and this becomes an issue to coordinate with the offshore team if it is following a different life cycle model. SDLC is nothing but a set of pre defined methodologies used in software engineering for planning, designing, coding, implementing and testing a software project. The mismatch of SDLC between the client and the outsourcer may lead to project failures and crossing deadlines that drive the company’s revenues and profits down. The following are the most commonly faced issues by the companies,
- Insurance - the outsourcer has to do an insurance against loss, liability or damage of the software.
- Contract duration and commencement - A minimum term of three years is mostly seen. The start date of the contract should be decided in advance to reduce the complexities that arise when the contract is signed between the two parties.
- Service level agreements (SLA) – These agreements are made to test the performance of the outsourcer, this includes quality level agreements and response times. These agreements are revised with respect to the changes that occur.
- Access and security to the system – the outsourcer should have access to limited information on the purchaser‘s system. There are risks associated with outsourcing for example the payroll system where the confidential matters like the employees salaries are being disclosed.
- Personnel Issues – employees are the most valuable assets of the company, it becomes an issue retaining personnel once the project has started. The companies need to maintain employee contracts to avoid disruption when the project is in a transition period.
- Loss of flexibility – There is no complete managerial control over the remote location where the project is being developed. This will cause a slowdown in the rate of software development process and it many eventually fail due to lack of understanding project requirements with the communication barrier.
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