Outsourced Applications Management SIG

Throughout 2012 companies are continuing to place more focus on ensuring software products deliver real impact to business needs and also growth to the business. This NOA Special Interest Group focused on outsourced applications management - key topics including:

 Ensuring Best Practise in Outsourced Applications Maintenance

 Reducing costs of Applications Management

 Leveraging offshore models in development

 Enhancing speed to market through applications development

 What can the UK do to be more competitive in this area?

Saptarshi Routh, Gartner, presented first on ‘Outsourcing Application Services: Key Things You Need to Consider’ and commented that old models will take time to decline, and outsourcing application services will continue to rise under pressure to reduce costs.

Outsourcing Application Services: Five Things You Need to Consider

1. Strategy: Always start by analyzing your application portfolio and defining your application services strategy.

2. External analysis: Understand external markets, including trends and patterns of applications software as well as application services market. Keep a pulse on what is happening.

3. Internal competencies and capabilities: Understand the strengths and weaknesses of your organization's ability to execute. This involves evaluating your internal competencies across the whole application services life cycle as well as management commitment for investments.

4. Measurement based performance management: Performance management is critical to ensuring execution and governance. Determine your scorecard — this includes all key measures and SLAs for application services outsourcing.

5. Manage and govern: Set up a demand-oriented governance model and manage your internal delivery as well as your external service providers accordingly.

Clearly retirement of any application should happen when it costs more to maintain than the value it's providing. New application and demand trends drive efficiency, value and consumer experience. Saptarshi mentioned that some of the key application trends are Software as a Service (SaaS), user experience, mobile applications, social networking, gamification, analytics and application overhaul. The presentation concluded with suggested ‘next steps’:

Monday morning

• Self-assess whether you are getting the desired results from your use of internal and external resources to stay current in the dynamic world of applications delivery to enable the business.

• Revisit the five things you need to consider in application services sourcing to determine where your focus needs to be directed.

Next 90 Days:

• Ensure you have current application "inventory" and understanding of your "service portfolio”.

• Ensure your service portfolio can be expressed as a modern Service Catalogue linking applications through IT Services to Business Services

• Analyze and explore opportunities for adjusting your applications services portfolios

Next 12 Months:

• Focus on execution of application services and timely updates to your application-sourcing strategy.

Juan Crosby, Partner, CMS, followed with a presentation on the importance of due diligence for applications maintenance services based on transparency, transition and performance and relationships.

Transparency of Scope

– Customers & Suppliers invest time and money in outsourcing AM Services- transparency in relation to what is being outsourced is essential.

– DD assessment can help establish AM parameters

• Application characteristics – size, complexity, volatility, interfaces, AD backlog

• Service Characteristics – help desk, problem mgt, release & change mgt, support locations, SLA metrics, current & historic service history

• Organisation Characteristics – structure, staffing, business nature, security & controls, governance needs, reporting/comms, escalation

– Proper DD report can assist properly identifying and addressing issues scope definition, assessment of current application state, service metrics and KPIs, problem areas and offshore suitability

– Helps clarify expectations & protect against the risk of surprises:

• Can involve workshops with suppliers to understand what is expected.

• Helps protect against provider under offering or over promising

• Given reliance for on outsourced services & service provider

• Proper DD can help the service provider understand the needs of the customer which is crucial to the success of the outsourcing

– Also gives something tangible against which the service provider's offering can be measured and whether the provider has the expertise to meet the customer’s needs and continue to do so as the business grows and changes.

Transition Risks

– Reduction of transition periods.

• Being properly informed can help to establish an appropriate transition period and reduce transition risk exposure.

• Assists with effective migration of services.

• Assists with a more realistic and detailed transition plan developed before agreement is signed.

• Informs service level considerations: separate transition period service levels / whether a service credit holiday is appropriate

• Aids consistent service level during transition from previous service provider to new service provider

– Aids flushing out the extent to which assistance will and won’t be given by incumbent provider.

– More informed transition can reduce disruptions to services which can cause serious damage to the business.

– Can help identify knowledge gaps and help plan steps for appropriate protection for disruption events and responsibilities

Establishing Good Continuance Relationships

– Platform for an informed relationship

– Assists in parties knowing expectations and in agreeing acceptable (and achievable) service level agreements and key performance indicators.

– Establish what services are included / excluded from service costs.

– Both parties to an arrangement are aware of their own strengths and weaknesses and this allows them to provide for the management of the relationship and deal with any disagreement during the life of the service

– Allows both parties to set expectations and establish track and measure service levels and distinguish potential priority situations on an informed basis

Juan concluded by stating that due diligence on a potential service provider can help you choose the right service provider, protect against surprises during transition and the life of the agreement and final it can build on informed, lasting and effective relationships during negotiations and thereafter.

Questions included innovative measurement techniques, application definitions, varying maturity models and formulating a sourcing strategy. Please visit www.noa.co.uk for the complete set of presentation slides.