Traditional sourcing is for turnkey application development and fixed service levels
Traditionally companies that have a need for bespoke and customized applications to enhance and support their business would engage with a SW development and/or System Integration firm to deliver these services. Typically, the SW would become part of the client application landscape and run on their servers. The supplier would take responsibility for outcome-based development projects and supply separate SLA based maintenance services.
One proviso is that despite the outcome-oriented intent of these contracts, in practice up to 70% of IT services contracts are billed on a Time & Material based way. This effectively leads to clients paying outcome-based consulting rates for input-based secondment services.
Modular architectures and SaaS will fragment and reduce demand for bespoke SW
First-of-all system landscapes are changing with the advent of modular and open architectures like BPM. Rather than building integrated applications the landscape will consist of SW building blocks and apps, connected thru middleware and API’s. The need for bespoke SW will reduce as standard SaaS applications and apps will become a key source of these SW building blocks. The demand for development of SW will, as a result, be fragmented in blocks rather than for entire applications. Clients key role will shift to taking responsibility for an increased need for integration and orchestration.
Agile, Scrum and Dev-Ops shift responsibility for planning and delivery of SW
Agile is a great way to leverage the power of multifunctional teams and make these teams responsible for development ánd operations. Typically, the product owner of the scrum teams is a client person and this shifts the responsibility for planning and delivery to the client, where in the traditional model the suppliers committed to deliver the outcomes. The supplier responsibility shifts to just resourcing the scrums teams and possibly equipping them with the right tools and methods. Also, in Agile ways of working, planning of SW delivery is replaced by a backlog of work, where priorities and timing are decided in the teams led by the product owner. This makes the predictability of SW delivery much lower.
SW Quantification tools enable more balanced SW contracts and better planning
By deploying SW quantification tools, like function-points and story-points, a better balance of risks and responsibilities can be established between client and suppliers. The supplier takes responsibility for the productivity in time and cost of the team and the quality of the SW. This is realized by supplying the right mix of resources and tools and methods for delivery. The client retains responsibility for specification and priorities, primarily thru the product owner. With SW Quantification contract discussions can become more competitive for clients and suppliers can better differentiate themselves on their capabilities, tools and resource mix.
SW Quantification tools can also greatly improve delivery predictability in time and cost. By estimating the size of the desired functionality and outcomes and mapping that to available capacity and productivity both time and cost can be forecast. This also benefits the supplier as they will have a better view on demand for their capabilities.
Thus, quantitative tools enable a new contract and collaboration model option between the pure output based statement of work and resource based secondment model. SOS Partners can help select the right model for each situation and realize the right organizational and governance set-up.
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