Last week, Steve Hall, Partner & Managing Director at ISG (formerly TPI), presented a webinar on the topic of aligning vendor SLAs with long-term value. The discussion focused on the need to not only consider cost savings within ADM (Application Development & Maintenance), but also the importance of risk mitigation and value enhancement of vendor-client relationships.
As businesses increasingly look to shift from a “Run the Business” (RtB) model to a “Change the Business” (CtB) perspective, broader adoption of software tools to provide automated function points counts and technical insights, as well as increase application structural quality, are critical to successfully moving to the CtB model. To read more on the topic, check out Steve’s post.
We enhanced the webinar discussion with real-time polling of the attendees. Here are the polls conducted during the webinar and the corresponding responses:
These findings support one of the trends Steve discussed: multi-sourcing. Organizations are increasingly segmenting their outsourcing strategy rather than using a monolithic approach. The approaches to multi-sourcing vary from functional or business unit to specialties by technology. Nonetheless, the outsourcing landscape is becoming increasingly complex and both clients and vendors must work together to coexist and delineate roles and responsibilities.
More than half of the respondents are looking at measuring structural quality in their SLAs, but only 26% already include quality metrics as part of their formal agreements with their vendors. As the complexity of the outsourcing mix increases and vendors are asked to coexist with each other or as embedded roles within clients, quality-based SLAs can be powerful monitoring solutions that add transparency, accountability and objective assessment of work performed. Transparency is essential for organizations to create mutually beneficial environments for their internal clients and service providers.
Although not institutionalized, the industry is holding vendor deliverables to a quality standard through manual or automated code review processes. As quality-based SLAs become more prevalent, organizations will need to find ways to enforce them. Traditional or manual code review processes will quickly become a bottleneck and introduce subjectivity to a business process that will need to be objective and repeatable to keep pace with today's development environment.
Erik Oltmans, an Associate Partner from EY, Netherlands, spoke at the Software Intelligence Forum on how the consulting behemoth uses Software Intelligence in its Transaction Advisory services.
Erik describes the changing landscape of M & A. Besides the financial and commercial aspects, PE firms now equally value technical assessments, especially for targets with significant software assets. He goes on to detail how CAST Highlight makes these assessments possible with limited access to the targetâ€™s systems, customized quality metrics, and liability implications of open source components - all three that are critical for an M&A due diligence.