However, the failures are often never talked about because the vendor has got a fantastic contract and the customer won’t speak up about poor contracts that they reviewed and approved. This is wonderful business for the software houses. This reminds me of the saying: "My grandfather was a horse trader, my father was a used car salesman, I am myself in the software business."
Why do these types of projects fail? There are many reasons, but they can all be summarised by saying that they were not smart. The buyer doesn’t know what he is buying and the vendor doesn’t know how to make it work. If you were as cautious when buying an enterprise system as you were when buying your own house, you would be much better off. Would you buy a house from someone by just saying "give me what I need", and then pay them a fixed price? No, of course not, but this or similar is what many outsourcing deals are about. After the agreement the buyer just waits to see what he will get say three years down the road. On that path he will have to sign off on requirements that look good and complete, but which due to the ever-changing nature of software requirements are only correct to say 60%. Following that path you will get drawings that you don't know if they ever can be built. At the end of that path you will have to take over the software without knowing for sure that it works for the people who are supposed to live with it. This is what people do. The vendors are protected because you agreed originally to sign off after each phase and you did so because you believed it would work. It doesn’t work for software. For enterprise systems it is a proven path to failure.
The vendor wants happy customers, but s/he just don’t know how to do these kinds of huge projects successfully. Or maybe the deal on the table is irresistible, and since, most often the vendor is more competent than the buyer and they won't put themselves in a position to lose anything.
What I say here is controversial. However, someone has to say it. Now, it should also be noted that there are companies that are very successful in outsourcing. Their approach to outsourcing is very different based on an understanding on the nature of software, on the importance of starting small but scaling up as quickly as possible (but not quicker *grin*). I will in another column talk about succeeding with outsourcing. Some of the things I will talk about are:
- Quickly build an architectural roadmap.
- Separate work that can be given a fixed price from work that cannot reasonable be calculated upfront.
- Split the big contract into many smaller contracts.
- Make room for competition by specifying standards and tools.
- Deliver early, get feedback early.
-- Posted by Ivar Jacobson
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Mick B - 16/06/08
I totally agree with your comment of starting small. By getting a base system in front of the end users the system can begin to evolve towards what are the clients real business needs. This is good business too for the vendor as by getting some quick wins hopefully confidence is built and interest in the system by the client increases.
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2
cloudster - 17/06/08
There is a basic problem with outsourcing, particularly off-shoring: the tax money that the employer would pay local programmers leaves the locale and possibly the country.
It is frighteningly simple. Money flows. It circulates in the city, state, country, and world. By removing it from the city and shifting it to the world, you're reducing the amount flowing in the area closest to your business. That will ultimately begin affecting the tax base and the services that government provides.
I am not a fan. And no, I've never lost a job due to off-shoring, though it is possible that I have failed to get a job due to it, kinda hard to prove a negative.
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3
johns - 17/06/08
Cloudster, that's an overly simplistic view.
We do live in a worldwide business environment which is interdependent. You're computer, for example, was probably built with overseas labour. Don't worry, the government knows how to get taxes still, they charge the local retailers.
Same with software, whether developed for internal or external clients. While the labour might go overseas, it's only part of the overall picture.
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4
Graphic Designer - 17/06/08
Yes, I agree that failures in outsourcing is not an issue because it definitely the clients have a good contracts.
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