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Software // Enterprise Applications
12:15 AM

SmartAdvice: Making The Most Of SOA

Focus on making business processes deliver more value to benefit from a service-oriented architecture, The Advisory Council says. Also, measure business risks against established metrics before deciding which IT services to outsource.

Question B: We are planning on outsourcing parts of our IT applications and processes. What would you recommend to help us make better sourcing decisions?

Our advice: By looking at internal applications and functions, and combining their rankings with a matched ranking against the sourcing type, management can develop a clear assessment of relative business risk, enabling the management team to review the entire system portfolio against specific, quantifiable metrics. The steps include:

  • Ranking the suitability of applications to be sourced;
  • Overall risk and cost ranking of each sourcing option; and
  • Application and sourcing type selection.

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Geographic Criteria for Making an Appropriate Outsourcing Selection

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Step 1: Identify and rank the applications under consideration. Assign every application a score of one through 10 for each of the following criteria, to get a weighted ranking for each.

  • Supports core business functions.
  • Proprietary software -- The application has been developed expressly to use company-confidential intellectual property.
  • Strategic function -- Many companies make the mistake of outsourcing the IT strategic-planning function. The best people for this role are staff deeply knowledgeable about your industry and company, with a solid understanding of your IT functions.
  • Regulatory compliance -- Does the system help your organization address regulatory compliance issues (such as Sarbanes-Oxley) or contain information that falls under government compliance regulations?
  • Complexity -- Are the functions supported by the application easy to define within well-known industry standards?

Step 2: Rank the sourcing type.

  • Off-shore -- Sourcing outside of the continent, currently identified primarily with India
  • Near-shore -- Within the Americas, currently identified with Canada, Brazil, and remote areas within the U.S.
  • Retaining -- Having the vendor perform the work on-site
  • In-sourcing -- Doing the job in-house using direct employees
  • Combination -- A mix of the above approaches
  • Bulk sourcing versus "best of breed" approach -- Does it make sense to source to a large, full-service sourcing company, or source to specialized boutiques for specific, highly specialized functions.

Assess the sourcing types against the following criteria:

  • Communications infrastructure -- What is the availability and cost of both voice and data connectivity?
  • Time difference -- When sourcing off-shore, the time difference can be daunting (six to 12 hours). Can your organization and the sourcing organization manage these differences and still meet your business needs?
  • Flexibility -- Can the sourcing organization produce the results you need in time frames that are acceptable? How much lead time do they need, and how quickly can they turn around requests? Who else are they serving; are you their only or primary customer?
  • Language, culture, and management -- How much will miscommunication because of language and cultural differences cost?
  • Travel -- How much time and money will be needed for visits and on-site inspection of vendor?
  • Risk -- What is the risk of intellectual-property theft or other misuse of confidential information? Since other countries don't have the same laws, often what would constitute theft in the U.S. might be considered normal business practice in China, for example. Are they working with your competition?

Step 3: Recommendations and source selection

Once you have the sourcing risk ratings and the application scores, refine your recommendations further. This is an iterative process, so expect to perform several passes until the final recommendations are made.

-- Sue-Rae Rosenfeld

Steve Hoffman, TAC Expert, has more 20 years of experience developing innovative software solutions using the latest technologies. He is founder and chief architect of Forestay LLC. Previously, he was with Active Endpoints and Starwood Hotels. As an independent consultant, he provided technical strategies and implementations for Goldman Sachs, Deutsche Bank, Pitney Bowes, and Dictaphone. He leverages knowledge of Web services, SOA, and BPEL, and uses knowledge of BPEL practices and patterns to solve complex problems.

Sue-Rae Rosenfeld, TAC Expert, has more than 20 years experience as an IT project manager and business analyst, primarily in the financial industry. She has expertise in data analysis, data modeling, and converting systems into new platforms, including mainframe to Internet and intranet server environments. In addition, she trains IT professionals in project-management fundamentals and Project Management Professional exam prep. She's an active member and volunteer in the PMI New York City chapter.

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