Transcript IS 553 Advanced Systems Development Practices

IS 553
Advanced Systems
Development Practices
James Nowotarski
18 May 2004
Course Map
Week
1
2
3
4
5
6
7
8
9
10
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Underpinnings
. Introduction
. Essentials
Content
. Rational Unified Process
. Agile
Implementation
. Metrics
. CMM
. Distributed development
. Tools & training
Briefings (Term Papers)
Assignments
Quizzes
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(RUP)
(Agile) (CMM) (Distr. Dev.)
Today’s Objectives
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Understand distributed development of software
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What it is
Why do it
Benefits
Challenges
Implications on systems development practices and
tools
Understand the type of distributed development
known as “offshore development”
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Today’s Agenda
Topic
Duration

Distributed development
60 minutes
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*** Break
15 minutes

Current Event Reports
30 minutes

Offshore development
90 minutes
4
Today’s Agenda
Topic
Duration

Distributed development
60 minutes

*** Break
15 minutes

Current Event Reports
30 minutes

Offshore development
90 minutes
5
Distributed development of
software
What it is
Software development or maintenance
group that is not co-located
 An example of what is usually called a
“virtual team”
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• “virtual” – doesn’t physically exist, but appears
that it does
• [Side note: Contrast with “transparent” – does
physically exist, but appears that it doesn’t]
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Distributed development of
software
Example 1
Chicago
Release n
Analysis
Design
Build &
Unit Test
Deployment
Maintenance
Project Management
Washington, DC
Project Management
Training Development
Release n
System Test
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Distributed development of
software
Example 2
Chicago
Release 2
Analysis
Design
Build &
Unit Test
System Test
Maintenance
Project Management
New York
Release 1
Project Management
Analysis
Design
Build &
Unit Test
System Test
Deployment
(Releases 1&2)
Maintenance
Distributed development of
software
Drivers
Need resources that are based in multiple
locations
 Can’t afford travel expenses
 Want resources in proximity to their
interface points
 Political
 Others???
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Distributed development of
software
Benefits
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Can tap into greater array of resources
Can tap into existing organizations
• reuse
• avoid need to “team build” at that site
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Reduce travel time and expenses
Improve morale by enabling personnel to work in
their “home” locations
Improve responsiveness by locating resources in
proximity to their interface points
Increase focus through division of labor
Can create healthy competition, spurring each site
to improved performance
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Distributed development of
software
Challenges
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More difficult to build team unity across sites
• Finger-pointing, adversarial relationships
• “Not invented here” syndrome leads to unnecessary,
intentional duplication
• Risk of inconsistent approaches
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More difficult to coordinate activities across sites
• Greater chance of unintentional duplication
• Issue resolution becomes more complex and difficult
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Not as much serendipity
• Difficult to overhear colleagues when you are miles apart
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Distributed development of
software
Implications
Process
People
Technology
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Implications - Process
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Implications - People
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Implications - Technology
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Offshore development of software
What it is
A type of distributed development project
where part of the team is located in a
country remote from the “user” location
 Location examples:
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India
Philippines
China
Russia
Vietnam
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Offshore development of software
Example
On-Site
Release n
Analysis
Design
Training
Development
System Test
Deployment
Maintenance
Project Management
Offshore
Release n
Project Management
Design
Build &
Unit Test
Maintenance
Offshore development of software
Drivers

First, need to explore outsourcing trend
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Today’s Agenda
Topic
Duration

Distributed development
60 minutes

*** Break
15 minutes

Current Event Reports
30 minutes

Offshore development
90 minutes
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IT Outsourcing
Information technology (IT) outsourcing is the use of a third
party to provide services rather than using those in-house.
Drivers
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Cost reduction -- Perception of IT as a cost burden coupled with
availability of cheaper sources of services
Cost predictability
Require improved performance levels (e.g., speed of delivery,
customer satisfaction, quality, etc.)
•
Especially for seasonal businesses
Refocus on corporate core competencies
•
Creates competitive advantage
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Creates clear market differentiation
Desire to have in-house IT resources focus on strategic systems
and/or technology
Lack of in-house skills and/or people
Desire to stay technologically current
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IT Outsourcing
Counterexample: Vanguard has not
outsourced IT
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View of technology as strategic
Standard that they can do it better and more costeffectively than an outsourcer
Do IT development in two sites – Philadelphia
and Charlotte, physical proximity
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IT Outsourcing
A desire to focus on core competencies is
frequently the strongest driver to outsource
“[g]et rid of context and focus on core” - Billy McCarter,
former CIO of Fireman’s Fund, who reduced IT staff from
1,100 to 600 with much of the work outsourced to offshore
workers
“[a]llows me and my staff to focus on fun areas . . . be more
productive, more visible to the business, understand what
the business needs versus worrying about whether one of
the servers needs additional RAM” - Daniel Sheehan, CIO
at Advo, Inc.
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IT Outsourcing
IT is often viewed as a commodity and, thus, not “core”
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IT is like electric power -- a commodity that is required by
all but provides distinction to none
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IT capability is broadly accessible and affordable
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New or proprietary technologies offer opportunity for
companies to gain a step, but this advantage is short-lived
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Further evidence of IT commoditization:
• overcapacity
• price drops
• vendors positioning selves as “utilities”
• bursting of the investment bubble
Carr, N. “IT Doesn’t Matter.” Harvard Business
Review. May 2003.
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IT Outsourcing
Consider business, economic, and technical factors in
deciding whether to outsource
Business Considerations
Insource
Critical
Strategic
Importance
Useful
Outsource
Commodity
Differential
Potential for Differentiation
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IT Outsourcing
Consider business, economic, and technical factors in
deciding whether to outsource (cont.)
Economic Considerations
Insource
Leading
Managerial
Practices
Lagging
Outsource
Subcritical
Critical
In-House Economies of Scale
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IT Outsourcing
Consider business, economic, and technical factors in
deciding whether to outsource (cont.)
Technical Considerations
High
Insource
Degree of
Technology
Integration
Outsource
Low
Low
High
Degree of Technology Maturity
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IT Outsourcing
Give examples of applications that would be good
candidates for insourcing and outsourcing based on
technical considerations
Technical Considerations
High
Insource
Degree of
Technology
Integration
Outsource
Low
Low
High
Degree of Technology Maturity
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IT Outsourcing: Offshore
IT organizations and solutions providers are
increasing their offshore capabilities for both
maintenance and development
IT organizations
• JP Morgan
• Merrill Lynch
• Lehman Brothers
• Ford
• NY Stock Exchange
• Motorola
• Boeing
• Household
• Many unpublicized
Solutions providers
• Accenture
• EDS
• IBM
• HP
• Perot
• Offshore firms,
typically with local
presence
Types of projects
• Legacy
maintenance
• New development
• Projects requiring
specialized
expertise, e.g.,
– Embedded
software
– ERP
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IT Outsourcing: Offshore
Cost and quality are the two main reasons for
going offshore
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Reduce cost
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40-50% savings, according to Merrill Lynch CTO
Higher quality/capability
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As of August 2002, approximately 50 out of 70
CMM Level 5 systems development organizations
were in India
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IT Outsourcing: Offshore
Offshore outsourcing will be an irreversible megatrend
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Research firm Gartner predicts that one in 10 U.S. IT jobs will move offshore by
2004; another 500,000 positions may leave by the end of 2004
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23% of IT services will be delivered from offshore centers by 2007, compared
with 5% in 2003 – IDC Nov. 2003 report
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At least one-third of new IT development work for big U.S. companies is done
overseas – Meta Group, Dec. 2003
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Driving force is need to keep U.S. companies competitive in the global market
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“The CIO with his head buried in the sand, saying ‘This isn’t happening to me,
I’m going to run this internal organization until I retire,’ is probably wrong” -Ralph Szygenda, CIO, General Motors
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IT Outsourcing: Offshore
India is the leading location for offshore
sourcing
Reasons
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Highly capable workforce
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2-3M college graduates per year (will double by
2010)
#2 in world in comp. sci. grads (china #1, U.S. #3)
Focus on process and product quality
Low labor and infrastructure costs
Government commitment and support
English (and other) language skills
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IT Outsourcing: Offshore
India’s advantage is beginning to erode
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Reasons
Competition for talent driving salaries up
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Undervalued currency (rupee) could gain 20-30% against
the dollar
China, Russia, Vietnam, and Philippines are training
armies of programmers to compete with India
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Infosys just raised wages 15-17% (BusinessWeek, 4/26/04)
BearingPoint chose Shanghai for its new software development
center . . . pays $500/month for engineers in Shanghai, $700 in
India, $4000 in U.S.
Increasing competition from multinationals on their own
turf
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SDM Methods - Location
Offshore – Typical Work Split
Program Management
Project Management
Analysis
Design
Build &
Test
Deployment
On-site or Shared
Activities
Offshore
• Analysis
• User involvement is critical in the early planning stages and requirement definition
• Typically, off-site resources will participate in requirements gathering on-site to have direct contact with the users
• Program and Project Management will be conducted at all locations
• Program Management will be heavily concentrated on-site (provide overall direction and work within the framework of the user’s
governance model)
• Project Management activities will be conducted in all locations; with heavy emphasis on coordination and communication across the
multiple sites (status, communication, schedule management, progress tracking, issue and risk management, etc.)
• Design, Build & Test
• The program/project management team will determine where the specific activities and tasks will be done
• Location of activities/tasks will be determined based on skills required, maturity of application, risk, and resource availability
• Handoffs and entry/exit criteria are critical in managing the flow of work; cross-site reviews will often be used as part of the handoff from
one stage of work to another (and may involve users or on-site personnel as appropriate)
• Deployment
• Deployment will be conducted at the user site
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IT Outsourcing: Offshore
Need to manage risks of offshore development
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English or language difficulties
Culture clash between offshore and onsite personnel
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Time differences
Political (e.g., U.S. backlash; India political instability)
Lack of technical or industry-specific knowledge
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Ideally, can’t tell difference between the two
Dell customers fed up with being routed offshore to deal with a support
representative reading from a script, Dell brought support for large customers with
Optiplex/Latitude computers back onshore
Security, Privacy (e.g., financial or customer data shipped overseas)
Legality (e.g., copyright law, potential loss of proprietary rights)
Breakdowns in communication/coordination
GM’s model -- small project-management team coupled with big development
team overseas -- requires fair degree of process maturity
Added liaison time required (e.g., Business Analyst shuttling between onsite
and offshore)
Visa issues
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It takes 3-6 months for offshore IT project managers to gain authorization to visit
the [client] company’s US offices
IT Outsourcing: Offshore
Offshore outsourcing creates added risks
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Losing skills in functions/processes that are outsourced
 Don’t give best work to outsiders
Overpricing on contract additions/extensions
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Resistance from internal staff
Loss of control over quality, responsiveness, innovation
Overbilling/Underperforming (“shirking”)
Provider may sell or leak buyer’s solutions to competitors (“poaching”)
Remote management by service provider, thus limiting face-to-face
communication and jeopardizing coordination
Poor management of overseas employees
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Salaries in places like India and the Philippines are growing by 10% to 15% a
year, meaning that terms can potentially change during annual contract
renegotiations, which are typical with multiyear outsourcing agreements
Most common problem
Cost savings end up 50% lower than projected -- Gartner
Many companies also don't realize that they'll spend 3% to 11% of the cost of
the outsourcing contract on management
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IT Outsourcing: Offshore
Offshore outsourcing creates added risks
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Assignment 4: How to mitigate these risks
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Offshore Trends
Indian service outfits rapidly opening sales offices in the
West and amassing skills to handle complex consulting
projects
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Three years ago, just 125 of top 500 U.S.
companies placed work with Indian companies
In 2003, the number hit 285
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Source: Nasscom, India’s software-services trade
association
Wipro has 13 offices and development centers
in the U.S. to keep in close touch with
customers
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Outsourcing:
OffshoreITTrends
Offshore
Cross-Border competition is roiling the
$578B tech-services industry like never
before
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In recent weeks, Accenture said it may hire 5,000
people in India this year
IBM will hire more than 4,000 people in India and
China
Giants moving up the food chain, boosting
technology innovation and consulting expertise
“Biggest reshaping of services in decades” – John
Parkinson, Cap Gemini Ernst & Young
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Offshore Trends
Indian software companies opening centers
in China, Philippines
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Infosys experimenting with a large softwaredevelopment center in China
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“so much less expensive in China”
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Offshore Trends
There’s “blowback” from offshore to near
shore
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Wipro opened a development center in Windsor,
Ontario in 2002
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Offshore Trends
IBM’s purchase of Indian service provider
may trigger wave of acquisitions
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$150M for Daksh eServices
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third largest Indian call center and back-office
service provider
$60M in revenue
more than 6,000 employees
IBM is getting business in India, too
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$750M outsourcing deal with telecom player Bharti
Tele-Ventures
Business Week, April 26, 2004
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Offshore Trends
Some view China as the greater long-term
threat to U.S. competitiveness
“If
we put our head in the sand, we will definitely
lose out, particularly to China. India is a great
intellectual place, but it never got rid of the British
bureaucracy. China, on the other hand, is going to
be a fierce competitor. Intellectually, off the wall.
You have an energy. You have a drive that’s off
the unsurpassed . . . We’re going to have to do an
incredible job of moving up the technology curve”
(Jack Welch, 3/8/04)
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Keeping Up
http://www.isyourjobgoingoffshore.com/
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Today’s Agenda
Topic
Duration

Distributed development
60 minutes

*** Break
15 minutes

Current Event Reports
30 minutes

Offshore development
90 minutes
44