If you don’t remember a time when you could pull into any filling station and have the option of “full service” in addition to the now universal “self service,” then you’re probably not old enough to be a CIO.
The full-service gas station went the way of the dinosaur because the cost of keeping extra resources to do the things that most customers actually didn’t mind doing themselves (filling the gas tank and washing the windows) or didn’t think was necessary (checking the oil level and tire pressure) was simply cost prohibitive.
Over the last few years, many of the outsourced IT resources available to CIOs have gone the way of the full-service filling station. Specialization by platform, or by phase, gave rise to internal IT “general contractors” who put together the combination of internal and external resources necessary to create a finished IT product. But the ubiquity of the Internet has created a new opportunity for CIOs to take advantage of a new breed of full-service outsourcing companies (FSOs) that can take projects from cradle to grave and do so affordably.
So what does an FSO do?
An FSO works with an organization's development team to create and support a complete application, including the definition, design, development, testing, implementation, and support phases. The FSO experience is similar to how a marketing firm designs an advertising campaign for a customer.
In that scenario, a marketing firm first helps the customer define requirements and results. It then manages the complete process to a conclusion that includes delivery of the message to the end customers and tracking of the end solution. It's analogous to the final operation and support of an application done by an FSO on behalf of a client company.
The classic outsourcing equation
Most decisions to outsource are made for some combination of three basic motivations: to save money, reduce fixed costs, or reduce time to market. Companies save by outsourcing operations for which they don’t have sufficient internal expertise and the cost of building that expertise outweighs the benefits.
You can keep fixed costs low by not hiring additional developers or engineers to complete a project with an aggressive budget and satisfying the project deliverables by using temporary help instead. Outsourcing firms, with expertise in specific technologies or problem domains, can develop software or engineer solutions in a fraction of the time it would take to develop that knowledge internally. They can also help a company get a product or service to market faster (if not always cheaper) than using existing internal resources.
In a classic technical outsourcing venture, the CIO or other technical managers typically provide their own product management function (determine functionality of the product) and, a majority of the time, provide the program management, which involves determining technical implementation of the solutions, including design specification and platform architecture.
Here’s where most of the classic outsourcing plays begin. Once the specification is completed, the company interviews and selects a development outsourcing company to take the system design and turn it into a working product using the predetermined product architecture. Now companies have the ability to outsource not only development talent but also the testing and documentation services over the Internet. This capability, for example, could allow a company to have developers in one time zone pass off unit-tested code to testing resources in another time zone, who could then perform their work with no "real" time lost. These developers can then move the final system-tested code to a support organization for documentation and usability tests. If your company has the talent and connections to create this 24-hour development cycle, you can get a dramatic decrease in both cost and time to market.
Although large companies like GE and Microsoft have such resources, most companies don’t. And as technologies, like XML Web Services, begin to morph monolithic applications into federations of interconnected applications and services, more and more midsize to large enterprises will be seeking outside vendors that can deliver a complete hosted and managed solution—a solution defined not by its specific implementation but by the interfaces it exposes and consumes.
Companies themselves will have to focus more on the interoperability of their legacy applications and developing the interfaces that make outside connections efficient and cost effective.
How to be successful with an FSO
A successful FSO engagement requires that a company have a deep understanding of their problem domain and an expectation of a final system with predefined interfaces but no bias toward a particular platform or toolset.
Once the company defines the customer need as well as the interfaces for returning collected information or process back to the company, the FSO needs latitude to develop the solution in the most efficient way possible.
An FSO will typically have its own product and program management teams (similar to the client managers in an ad agency) and will have contracts with outside development, testing, help desk, and hosting organizations that fulfill the necessary contractual requirements. In fact, a chosen FSO vendor should be able to provide as many of the development and deployment services as possible in order to minimize coordination costs.
More FSO choices on the horizon
Although the concept is relatively new, the companies evolving into FSOs are not. On one end of the spectrum, there are ASPs and ISPs that have been asked to manage the entire process of Web design, development, and implementation and now are moving into full application life-cycle management. On the other end, there are consulting firms that are aligning or competing with the same ISPs and data centers to create one cradle-to-grave outsourced application management.
The thrust during the first phase of the Internet was specialization and fragmentation. Now we’re seeing new entities, created by the reintegration of the parts into new types of organizations with new efficiencies. CIOs that find and utilize these new FSOs effectively will find the rewards to be enormous.
Have you hired a full-service outsourcer?
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