Managing Offshore Software Development Projects

1. Managing Offshore Software Development Projects Presented by Orlando Moreno email: omoreno@hotmail.com Phone: 408.656.2498 web: http://members.tripod.com/omoreno

2. What Is It • Offshore Development is the term most often used to describe the outsourcing of software programming and engineering services to facilities located in foreign countries with lower labor costs Business critical: sophisticated new applications, integration Time critical: Y2K, re-engineering Mundane work: mainframe maintenance Early 90’s Mid to Late 90’s Present Offshore outsourcing is a viable sourcing option for IT departments omoreno@hotmail.com

3. Where Is It • India is the major player in offshore development • Ireland, Israel, China, Philippines are also key players • Russia has stepped onto the world stage as a source of highly skilled, low cost developers Each generation of outsourcing countries has its own advantages and shortcomings omoreno@hotmail.com

4. Why Do It • Execute projects at significantly lower cost • Leverage large pool of highly skilled resources • Accelerate project delivery schedule • Reduce on-site contracting • Ability to scale up/down quickly Produce more and faster for less omoreno@hotmail.com

5. Why Not Do It • Language nuances • Cultural differences • Geographical distance • Time difference It is not simple… omoreno@hotmail.com

6. Companies Doing It • Intel, American Express, Lucent, Aetna, U.S. Healthcare, Compaq, General Motors, Home Depot, IBM, Microsoft, Motorola, Philips Semiconductors, Shell, Sprint, 3M, Sun Microsystems, Boeing, Northern Telecom, Target, Xerox, … • Synxis, Videos.com, Smucker, The Principal Financial Group, Farmer's Insurance Group And many more, and smaller ones too omoreno@hotmail.com

7. High In-House Simplify Complexity Offshore Offshore Low High Size What they outsource • R&D • Development • Maintenance • Support • Help Desk • Operations All kinds of projects and services omoreno@hotmail.com

8. Should You Consider It • Do you have a perfect need for offshore outsourcing? • Tight budgets • Not enough people • Backlog of projects • Business is changing • Competition demands agility • Management expects delivery • Technology is evolving AND AT THE SAME TIME Maybe you should… omoreno@hotmail.com

9. If You Decide To Do It • Senior management buy-in • Right offshore vendor/partner • Win-win long term relationship • Clear project scope and requirements • Strong project management • Well defined and documented processes • Effective communication Remember these success factors omoreno@hotmail.com

10. How To Select It • Define requirements for offshore outsourcing • Establish evaluation criteria • Research potential candidates • Identify initial list of candidates • Prepare RFP • Request proposals • Evaluate responses • Check references • Select short list of candidates for face-to-face meetings • Conduct vendor meetings • Visit vendors’ offshore development centers • Make final selection • Negotiate a win-win contract Carefully, with all possible attention omoreno@hotmail.com

11. Evaluation criteria • Are they a viable vendor/partner? • capabilities and services, location, political stability, culture, size, financials, references • Do they have required delivery capabilities? • staff skills and experience, resources availability and retention, ability to ramp up, software development process, infrastructure, knowledge management, quality focus • Is their pricing model competitive? • fixed price vs. time-and-materials, offshore and onshore rates used for estimations Three major areas of assessment omoreno@hotmail.com

12. Relationship Models Benefits Wholly owned offshore subsidiary Joint venture with offshore vendor Offshore development center with dedicated resources Outsourcing individual projects Additional “bodies” Level of Engagement Start small, but think long term… omoreno@hotmail.com

13. Managing Vendor • Senior management champion is critical • Separate vendor/contract management from project work • Put in place an effective process to manage the relationship • Require single point of contact from vendor • Clearly define roles and responsibilities • Start small, learn to work together • Understand cultural differences • Involve vendor in planning process • Measure vendor performance • Provide feedback Establish win-win relationship omoreno@hotmail.com

14. Managing Projects • Assign dedicated project manager • Require single point of contact from vendor • Establish “one team” • Maintain a positive environment • Clearly define projects scope and requirements • Follow well defined and documented processes • Control scope • Use appropriate collaboration tools • Communicate, communicate, communicate It is all about people…communication…and deliverables omoreno@hotmail.com

15. Offshore/Onsite Mix More Small team from the vendor company is located at customer’s site Vendor’s project manager is located at customer’s site Onsite Vendor does not have any onsite presence Offshore More Development team is always offshore omoreno@hotmail.com

16. Offshore/Onsite Mix (cont.) Project management Onsite: 1. Planning 2. Analysis 7. User acceptance 8. Training • Offshore: • 3. Design • 4. Coding • 5. Testing • 6. Documentation ONE TEAM Implementation All good project management practices apply… omoreno@hotmail.com

17. Q&A Are you ready for offshore outsourcing ? omoreno@hotmail.com