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Get Ready for Application Development Outsourcing
Info-Tech Research Group, Oct 2010
Is this the beginning of a beautiful friendship or an ugly enmity?
Your Challenge
- Many organizations enter into outsourcing arrangements without understanding the inherent risks and the internal changes they will need to make to their own staffing, infrastructure, and policies to support the outsourced projects and keep them under control.
- When organizations decide to outsource application development, they are faced with various options, each with their own challenges, risks, and benefits. Deciding which method and which projects to outsource can be confusing.
- Outsourcing contract negotiations can be tricky, and many organizations neglect to include important checks and controls that allow them to maintain control of the project and ensure vendor accountability.
- It is easy to forget about projects that have been outsourced, but it is still the organization's responsibility to ensure the project succeeds. Organizations need to track project progress and have issue resolution processes in place.
Critical Insight
- No application development outsourcing arrangement will be exactly like another. Offshore, onshore, and on-premise arrangements all present different advantages and challenges. IT managers need to understand the risks and match the arrangement with the project type to ensure success.
- The decision to outsource application development impacts the organization's internal environment. From people to infrastructure, adequate preparation of the organization is required to enable the smooth transition of the project work to the vendor.
- Vendor non-performance can be the result of its negligence or yours. Application outsourcing contracts often inadequately cover or provide remedy for either party, resulting in disastrous project results and broken relationships. A successful win-win negotiation should result in a detailed contract that stipulates the responsibilities and expectations of each side.
Impact and Result
- Prepare for outsourcing contract negotiations by leveraging the experiences and insights of industry peers who have done this before.
- Understand the benefits and challenges of the outsourcing options available and pick the right project and outsource arrangement to achieve the objectives.
- Understand the internal changes needed to support the outsource arrangement and the implications of these changes to the organization.
Get to Action
1. Understand all the factors that make an application development outsourcing arrangement a success.
Achieve stated project and organizational goals through application development outsourcing.
- Storyboard: Get Ready for Application Development Outsourcing
- Application Development Outsourcing: Getting Ready
2. Understand the risks and benefits associated with the various application development outsourcing options.
Select the best fit application outsourcing arrangement.
- Application Development Outsourcing Success Estimation Tool
3. Determine the best criteria to use in selecting the outsourcing vendor.
Make the right choice when choosing an application development outsourcing vendor.
- Application Development Outsourcing Vendor Selection Criteria Guide
4. Negotiate the contract terms and assess the risk of omitting items that could derail your project.
Cover all the bases and negotiate a win-win contract.
- Application Development Outsourcing Contract Risk Assessment
5. Employ effective project management and vendor performance metrics tracking.
Ensure the outsourcer is living up to the contractual obligations and the project expectations.
- Application Development Outsourcing Performance Metrics Tracking Tool
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