Ever thought why SLA is needed when one of your IT initiative is being executed and delivered via global delivery model ? Is it worth fretting about SLAs?
My understanding is that people still see outsourcing projects as a consumer product and suffer from "give me a perfect piece else I will ask for money back" syndrome. You have selected a service provider whom you consider is a specialist in the service you want. Instead of tying them down with stringent SLAs, it needs careful management of this relationship. SLAs should not be assumed as something that will meet its levels automatically regardless of how the relationship is managed.
Surveys shows that more than 50% of the IT outsourcing projects fail to meet customers’ expectations , which eventually makes it apparent that in most cases SLAs simply aren’t working. It is obvious to conclude that stringent SLAs may actually be part of the problem rather than the solution.
By pressuring service providers to meet strict time limits you may be encouraging them to cut corners or in no time at all the service provider may start to feel that they can’t win and a quasi-adversarial relationship develops between the customer and service provider.

It is more about customers placing greater trust in the professionalism of their IT service providers. So when you're out there looking for a specialist to do your job, do judge if they are professional enough to cater to your needs.

SLAs are not going to be abolished for the simple fact that it would be needed for some sort of legal recourse when deals go wrong, however, the stakeholders from both the sides should understand that SLAs can not be a replacement for the close monitoring and co-operation. Thereby, see if your service provider has means and tools that would allow you to collaborate with them, get regular visibility into whats going on 10,000 miles away from you so that you can continuously monitor the progress and avoid the need to resort to SLAs.
In one of his interviews, Chairman/CEO/Co-founder of Syntel, Mr Bharat Desai said that "A strong governance model is critical to communication. Syntel's model uses an Engagement Management Office (EMO). The EMO is staffed by both the customer and vendor and manages the relationship, user satisfaction, operations, quality, forecasting, reporting, contract compliance and more. As part of the EMO process, a steering committee with members from both the vendor and client side meet monthly or quarterly to ensure the engagements remain focused, on track and meeting the established service level agreement points."

If you are one of those who started programming 2 decades back, at that time project management was easy and there were hardly any collaboration & process challenges -- ofcourse the programming was the only difficult task. Fast forward.... I was pondering today that how do people see software lifecycle management now? Heard the Disney Song: "It's a whole new world"? Read a few interesting articles on ComputerWorld by Mitch betts. Here are the highlights:

1."Project team members would be thousands of miles away because the business is forcing the organizations to get the best talent, wherever it resides. It is resulting in nightmare in managing the project without the right tools and processes in place."

2. "Time to market is the key to success for business managers but my team that is executing the projects are fretting about the extra 15-20% time they spend on compliance/process related work."

3. "IT would focus on end-to-end processes rather than functional stovepipes, application development would turn into business process delivery. IT would collaborate with the business to design improved business processes, capture the process in metadata that would drive the design and operation of composite applications. Composite would pull together SOA-based business services and modular user interfaces to meet the specific needs and workflow of each business process, giving users integrated, contextual, multichannel access to transactions, content, collaboration, and communications. Business intelligences would close the loop, using process metadata to report process metrics, driving analysis for the next round of business process improvement." -- Randy Heffner, analyst, Forrester Research Inc., Cambridge, Mass.

4. "As application development deals with the pressure of cost reduction and productivity improvement and grapples with compliance issues, development shops will focus more on development planning and process management. They will look at establishing and automating predictable processes and enhancing project management capabilities. As more application development shops fine-tune and improve processes, they will focus on effectiveness factors that impact development projects like communications. In globally sourced development projects there will be an emphasis on global project management like developing cultural intelligence to deal with different cultural, language and communication challenges; and requirements and relationship management skills that will impact project productivity." -- Jack Duggal, managing principal, Projectize Group LLC, Simsbury, Conn.

5. "True globally distributed development shops will require teams to use agile processes to remain competitive. Within the next two years, large corporate IT shops will turn to agile development processes as a means to deliver value to the business and be more responsive to their customers. Drawing largely on experiences from open-source projects, corporate IT managers realize that their traditional approaches aren't cutting it, and that they need to make some pretty significant changes if they are to keep pace with competitive demands. One interesting twist: Outsourcers, and offshore firms in particular, will be pressured to adapt to agile processes as well -- a huge challenge for firms that have made their money on highly productive waterfall processes that meet CMM Level 4 and 5 requirements. Not all will be able to make this transition." -- Liz Barnett, vice president, Forrester Research Inc.

6. "Pressure for increased agility and faster time-to-market will drive the continued focus on agile methods -- though IT organizations will struggle with the shift in development, project management and operational management practices. Rapid, incremental and test-driven development to reduce delivery cycles, with refinement/refactoring, over time will predominate in successful organizations. Integration of agile methods with distributed teams will further force the hard conversations regarding how best to accomplish both." -- David Moore, director of North American branch operations services, Keane Inc., Boston

I also wanted to take this opportunity to comment on my earlier post Perception and results of the Indian IT success story has a gap. Despite all the perception gaps, the success of Indian Services players are primarily because they have understood the above mentioned 6 points very early and very clearly, which indeed is giving them an edge over their contemporaries (ESPs) -- setting up the right tool in their organization that would take care of their collaboration challenges, process standardization, reduced cycle time, and have multiple readymade process templates on various methodologies (waterfall or agile). Digité surely is playing a key role in this business transformation for some of the Indian IT services companies.

"So how is the company doing ?" -- many of you would ponder before thinking of hedging your bet on us. Here are 5 facts you would consider in inviting us for a discussion:
1) The number of user licenses have gone up by over 400%
2) We work with 2 of BIG FOUR and 4 of top 5 Indian Services giants
3) The product is scalable and our largest installation has over 20k users
4) Gartner has noticed us in their Magic Quadrant report last year and recently talked about us in their "Hype Cycle for Application Development" report.
5) Watch out for the fifth accolade which we will announce in a few weeks time.

Digité is announcing its latest release this month end that would facilitate quick and smooth implementation of CMMI Ver1.2 level 3 processes. The product will expedite the attainment of maturity, allow SEPG/PMO to model process templates, perform process appraisal, collate process improvement requests and develop action plan for them. Monitoring process performance against organization / process / project / phase level goals would get a lot easier where Hard & soft checks would enable compliance of individual projects with a process template.
On one hand Gartner is emphasizing that software lifecycle management activities are being refined and strengthened to drive more predictability and to meet the challenges of global sourcing, Digité is offering CMMI Ver1.2 automation to emphasize the alignment of the process improvement objectives with organizational business objectives. A quality system being followed manually has higher error margin because each team and Project Manager can have their own interpretation. Maturity attainment is slow and subsequent maturity maintenance is a Herculean Task. Manual, paper-based processes creates silos, which is no way in line with the principle of Global Delivery of Software and Services. Ask for a demo to see how Digité new release would take care of your CMMI Ver1.2 compliance so that you dont have to distract from your primary business -- Application Development, thats where your revenue comes from.

Software Lifecycle Management is challenging when people work in the same office. Imagine what happens to complex projects in global delivery model? In December 2006, Gartner published report on “Hype Cycle for Application Development 2006” in which James Duggan, Joseph Fieman and Matt Light commented on Collaborative Tools for the Software Lifecycle Management. The report says that tools like Digité would cater to significant cost savings and revenue and mitigation of the risk posed by the globally distributed teams and globalization of application delivery. Read More . . .

I was going through a recent research by Gartner wherein they presented some interesting facts about Indian IT Service providers, scanning through the outsourcing lens:
1. Indian companies scale up to 70% when it comes to business expertise.
2. Off-site communication effectiveness is 46% (surprisingly on-site communication effectiveness is 78%)
3. Security Risk is 54%
4. Legal and Regulatory Risk is 60%
5. Foreign Trade and Payments Risk is 54%
6. Infrastructure Risk is 75%
7. Capacity for innovation is 3.75 on a scale of 7
8. Ethical behavior of companies are rated at 4.2 on a scale of 7
9. Government's priority for IT has been rated at 5.7 on a scale of 7

You might be wondering that with so much of not-so-positive flags, the growth in the industry has altogether a different story to tell -- outsourcing is at its peak if you look into some of the biggest deals that Infosys, TCS, Satyam & Wipro have cracked in the last 3-4 quarters.

Where is the gap ? It just can not be the cost advantage. Would look forward to hear from what people have to say.

In a recent Application Development (AD) Summit, Gartner talked the various factors that influence Application Development in a collaborative environment including the AD Sourcing cost Model, Inhibitors of globally distributed AD, Communication and Effectiveness of globally distributed AD etc. They have talked about availability of numerous tools from vendors like IBM, Microsoft, Oracle, Borland, Mercury, Compuware, Serena, however, mentioned that such tools havent transformed into a seamless platform.
They have talked about the requirements for distributed AD and have identified Digité as one of the "cool vendor" among 4-5 other players. Write to me if you would be interested in knowing more about it or even contact Gartner.