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Time Zone 1 Dev 1 Dev 2
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EXHIBIT 7.7
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Time Zone Locality and Overlapping
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complementary working relationship might pair Development Team Member 1 (Dev 1) with Team Member Dev 4, Dev 2 with Devs 5 and 6, and Dev 3 with Devs 7 and 8. If there were Dev 9 and 10 in Time Zone 1 it would also be possible for Dev 8 to take the lead in a group consisting of Devs 9 and 10 (of course Dev 8 would not be associated with Dev 3 in that case). The sophisticated management challenge involves how to ensure overlapping efficiency and avoid re-creating work done in the previous period. In both methods, the outsourcee benefits from a tighter relationship with the outsourcer and therefore is more likely to see a flourishing and longer-term relationship. Business Continuity As with follow the sun development and/or service and support, an enterprise that leverages time zone and geographic differences also adds a degree of improvement in business continuity to its competitive attributes. Deploying round-the-clock development and/or operations (and therefore probably backup) could provide the basis and/or base of operations for business continuity in the event that either the outsourcee or the outsourcer has a critical failure. For example, Northeastern University20 uses off-hosting where its applications and its hardware reside at a SunGard location. This service provides
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tremendous value for Northeastern. SunGard hosts Northeastern hardware and applications if the primary site is down anywhere in the world they are needed. SunGard (www.sungard.com) is a $4B company whose claim to fame is the ability to provide business continuity with replica hardware that allows customers to run their own application(s) should their own primary equipment fail or become unavailable. The replica hardware, and associated software, can be located anywhere with suitable networking bandwidth, power, and security. In fact, SunGard has facilities in 50 countries. Geographic dispersion means that even when disaster strikes at 3:00 A.M. there is at least one site around the world where it is normal business hours and that staff can bring your applications back online. According to Hoover s International Online,21 SunGard has 14 competitors. In reality, it has an almost infinite number of competitors because many companies do this themselves with their own geographically dispersed sites.
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what can and what should be outsourced
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Just because something can be outsourced does not mean that it should be outsourced. There are many risks associated with outsourcing for both the outsourcee and the outsourcer. A recent survey of more than a hundred senior IT managers in different companies in the United States and Europe identified five key risks associated with outsourcing summarized in Exhibit 7.8.22
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Risks Political Legal, enforcement of intellectual property rights and business contracts Information vulnerability and security Immature business environment Socio-cultural problems
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EXHIBIT 7.8
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Importance 1.17 1.12 1.1 1.05 1.0
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Normalized Ratings of Outsourcing Risks
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Many more risks exist than uncovered by this survey and some may be even more important than the five in the survey. Additional risks include, ordered from highest to lowest risk:23 1. Frequency of interactions required 2. Hearing versus understanding calibration 3. Skills and experience normalization required 4. Time-shifting requirements 5. Equipment handling and management Given the risks and the potential for catastrophic consequences, what means do successful CIOs use to decide whether or not to outsource It would be a significant mistake to outsource the enterprise s core intellectual property. However, to outsource the added support needed for an existing product in a new environment where the new environment is too risky to use in-house resources may be an excellent limited risk scenario. From the outsourcer s perspective, they do not want to take on what can be seen from the beginning as a certain failure. One of the most insightful books in this area is Attracting Perfect Customers: The Power of Strategic Synchronicity 24 by Stacey Hall and Jan Broqniez. They describe that to be successful with each other (as adapted for our purpose), both the outsourcee and the outsourcer need to be clear on their mission and cultural fit: Be clear about who is being served Hire only people truly aligned with the mission Ensure that products, management practices, and organizational structures all align with the mission Measure how well the organization achieves its mission every day Trust that the money naturally follows when work is true to the mission:
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A business that stays true to its mission is an attractive business. An attractive business is one that is standing still and solid, emanating the light of its mission, so that its most perfect customers can easily find their way to the company.25
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