Nesma autumn conference - Outsourcing, Agile, Function Points - Alex van den Bergh

© 2016 Quint Wellington
Redwood
v
Outsourcing, Agile, Function points
a wonderful cocktail or recipe for disaster?
Alex van den Bergh – November 2016

Redwood
Who am I to talk about this?
Page 2
Alex van den Bergh
• Partner Sourcing Advisory at Quint Wellington Redwood
• Insourcing, Outsourcing, Shared Services, Software
Engineering, Agile and DevOps
• Speaker and publicist at conferences, universities etc.
Quint Wellington Redwood
• Implementation & Advice on all IT, Digital transformations
• in NL, US, India, Spain, Italy and various other locations
• World’s Best Outsourcing Advisor since 2014

RedwoodPage 3
IT Outsourcing and Offshoring is in decline….?
Agile and Outsourcing do not mix....?
Function Points and Agile do not mix...?

RedwoodPage 4

IT Outsourcing Study 2016 Netherlands © 2016 Whitelane & Quint Wellington Redwood 5
 More than 200 participants of the top IT
spending organisations in the Netherlands
that have evaluated over 550 unique IT
outsourcing contracts
 Whitelane Research has been responsible
for the data collection via an online survey
questionnaire. Participants are CIOs, CFOs
or their direct reports.
 Both Whitelane Research or Quint
Wellington Redwood are completely
independent organisations
Let’s look at some numbers in the Netherlands based on reasearch by Quint
Wellington Redwood and Whitelane Research
19%
18%
13%8%
8%
7%
7%
5%
4%
3%
3% 3% 2%

We don’t know yetThere will be no change We will outsource lessWe will outsource more
2016 2015
49%
39%
7%
5%
49%
36%
6%
9%
IT Outsourcing in the Netherlands continues to grow
What are your organisation's plans for the next years with regard to outsourcing?

‘Focus on core business’ is #1 reason to outsource more; cost the #2
What are the reasons that your organisation is planning to outsource more?
11%
24%
26%
31%
32%
50%
54%
68%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
More transparency on costs
Business transformation
Access to resources
More financial flexibility
Improvement of service quality
Cost reduction
Focus on core business

N=552
88% of contracts have satisfied clients
Very unsatisfied
Unsatisfied
Somewhat unsatisfied
Somewhat satisfied
Satisfied
Very satisfied
1% 3%
8%
28%
50%
10%

Outsourcing Lessons Learned
Page 9
Sourcing decisions are strategic:
• More than a tactical business case
• It is a long-term (5 year+) change.
• Senior management commitment is key
Transition and Sourcing Governance implementation should start early on
• It is a big step from defining ‘the how’ to defining ‘the what’
• It is a big step working with other organizations, locations, cultures
Sourcing is more than procurement
• Services, Architecture, Legal, Finance, Governance, HR is all involved
• Most of the work is in defining the service (servcie levels, PDC, architecture)
Only an agreement that is beneficial to both parties, will last
• Understand the provider’s business case

Redwood
About function points and outsourcing….
Function points are rarely used continuously in outsourcing relationships
They may serve as a way to benchmark in incidental cases.
Page 10

Redwood
About function points and outsourcing….
Function points are rarely used continuously in outsourcing relationships
They may serve as a way to benchmark in incidental cases.
Why?
1. The investment into counting function points (time, money)
2. Discussions about operational issues e.g. “functionality was not well defined” or
“technical quality of existing system was below par”
3. Clients prefer to see detailed hours and planning
4. Clients transition to agile ways of working
Page 11

RedwoodPage 12

RedwoodPage 13
Step 1: choose the right demarcation point between the (outsourced)
utility and the integrated (verticalized) teams.
How to outsource in an Agile/DevOps
environment (1/3)?
Utility infrastructure: managed (virtual)
server capacity. Often outsourced.
Domain 1
Development
Maintenance, Mgt
DevOps & Agile.
Typical IT service (ITO) model
Domain 2
Development
Maintenance, Mgt
DevOps & Agile.
Application, middleware and possibly business
operations are integrated per domain.
Any outsourcing in these areas will be done using
blended teams, scrums etc.
Virtualized infrastructure is a ‘utility’ service.
Any outsourcing in this area will be “standardized,
automated like hell”.

Redwood
Utility
platform
environment (2/3)?
Page 14
Vertical Domain with
outsourcing
Utility infrastructure: managed (virtual) server
capacity. Possibly outsourced.
in blended team
How to deliver?
1. One team with daily stand-ups,
sprints, retrospectives
2. One set of tools
3. Functionality is determined by
product owner
4. Actual ‘production release cycle’
may be slower than sprints; also for
Continuous Delivery
How to contract?
1. Shared KPIs means shared
blame/fame/bonus/malus…..
2. Time & Material contracts may not
stimulate productivity and require
clients to manage individual directly
App or Business
Services

Redwood
environment (3/3)?
Some challenges require case-by-case solutions:
1. Dependencies with other services / teams (internal / external)
2. Multiple providers in one team may lead to ‘body shopping behavior’
3. Current outsourcing contracts require changes
4. Culture change impacts client organization but must extend to provider’s
team
5. Typical version and lifecycle management challenges like:
 (utility-) infrastructure may not be 100% utility after all
 patches may need to be part of one shared change calendar/management
Page 15

RedwoodPage 16

Redwood
A good mix?
Page 17
FunctionPoints/TraditionalOutsourcing
AgilePhilosophy
One standard measure
for size / productivity
Measure fixed to one team
Velocities should not be compared
How to measure productivity when outsourcing?

Redwood
A good mix?
Page 18
AgilePhilosophy
Functionality determines effort Effort determines functionality
What effort should be planned when outsourcing?

Redwood
A good mix?
Page 19
AgilePhilosophy
KPIs
measure quality and retain control
Empowered teams
not burdened by KPIs
How to retain control when outsourcing?

Redwood
A good mix?
Page 20
AgilePhilosophy
Separation of responsibilities
Shared responsibility
Multi-disciplinary teams
So how can I show it is the vendor’s fault?

Redwood
A good mix?
Page 21
Function Points mix reasonably well with ‘traditional outsourcing’…
….but encounter serious challenges in Agile.

RedwoodPage 22

Redwood
www.quintgroup.com
Alex van den Bergh
a.van.den.bergh@quintgroup.com

N=552
We have evaluated 550 outsourcing relationships
Other; 142
Capgemini; 50
KPN; 46
Atos; 34Vodafone; 23
Centric; 20
IBM; 20
CGI; 19
HP; 18
Ordina; 18
Accenture; 17
BT; 17
Fujitsu; 15
Cegeka; 14
TCS; 13
Infosys; 12
Tele2; 12
Cognizant; 11
T-Systems; 10
Wipro; 9 AT&T; 8 HCL; 8 Orange Business
Services; 8 Verizon Business; 8

8% is unhappy about nearshore 23% is unhappy about offshore
How satisfied are you with the nearshore and offshore component?
1%7%
2%
15%
6%
21%
14%
37%
46%
4%
6%
15%
26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Offshore component
Nearshore component
Very unsatisfied
Unsatisfied
Somewhat unsatisfied
Somewhat satisfied
Satisfied
Very satisfied
I don’t know

Less near/offshoring
No change
More near/offshoring
N/A – We don’t know yet
Nearshore and offshore will continue to grow
Are you planning to use more or less nearshoring and/or offshoring?
13%
7%
8%
17%
62%
76%
70%
44%
21%
7%
17%
33%
4%
10%
5%
6%
0% 20% 40% 60% 80% 100%
End-user services (workplace, helpdesk...)
Network & telecommunications
Data center / application hosting
Application development / maintenance /
testing

Nesma autumn conference - Outsourcing, Agile, Function Points - Alex van den Bergh

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (15)

Similar to Nesma autumn conference - Outsourcing, Agile, Function Points - Alex van den Bergh

Similar to Nesma autumn conference - Outsourcing, Agile, Function Points - Alex van den Bergh (20)

More from Nesma

More from Nesma (20)

Recently uploaded

Recently uploaded (20)

Nesma autumn conference - Outsourcing, Agile, Function Points - Alex van den Bergh