Top 5 ADM Sourcing Success Factors


ISG logoWhile cost savings remains a top priority for global Application Development and Maintenance (ADM) organizations, businesses are also increasingly looking to shift from a “Run the Business” model to a “Change the Business” (CtB) perspective, whereby ADM resources are focused on enabling transformational enterprise-wide initiatives, rather than merely supporting the status quo and reacting to small enhancements.

The demands associated with a CtB approach, however, can increase the risk of higher defect rates and maintenance costs, as well as poor documentation and weak standards around performance and process measures.

Here are five key strategies to ensuring that a CtB ADM model is implemented with optimal efficiency.

  1. Separate and manage service categories. Delineation of the major categories of ADM is essential to efficient management. As the old adage goes, you can’t manage what you can’t measure -- it is imperative for organizations to understand their application support costs.  Specifically, you need to define three main categories – Maintenance, Minor Enhancement, and Project-Based Work – and manage costs of each of those categories separately. The reason is that cost drivers and performance indicators vary by category, so different actions and priorities may be required for each.
  2. Align the retained organization with the strategy. Many ADM organizations fall into the trap of focusing on what they can do, rather than what the business needs. For a CtB strategy, that’s a recipe for disaster. Key roles and attributes to help ensure that ADM activity stays on track include liaisons whose specific role is to coordinate between business and IT leaders; program/project managers to oversee large programs; client-driven architecture; ongoing business analysis to understand and communicate business needs; service delivery managers; and business subject matter experts to work with developers and testers.
  3. Define end-to-end Service Level Agreements. Multi-supplier environments are the norm in today’s outsourcing environment.  The multi-supplier environment provides significant advantages to clients, but also introduces complexities when trying to govern a large outsourcing arrangement or manage a large software development program.  Service Level Agreements are an effective way to incent the right behaviors in a multi-supplier environment, but they must be built to address the entire project lifecycle and clearly aligned with the responsibilities of the suppliers.
  4. Embrace process excellence. Service Levels and quality goals are often aligned with process maturity – and more mature organizations can be contractually obligated to deliver higher quality code.  Since process adherence drives repeatability and productivity improvements, service providers should be incented to operate at CMMi Level 3 or higher, and to commit to productivity improvements.  Conduct on-going operational assessments to ensure process adherence.
  5. Use Key Performance Indicators (KPIs) and dashboards. Gauge performance on an ongoing basis with tools such as an Earned Value Analysis (EVA) that includes a schedule and cost performance index.  To stay on top of defects, employ other quality metrics such as:
  • Defect injection and probability statistics for software quality
  • Structural Quality tools and techniques to validate the longer term supportability of the code
  • Regression testing, defect detection, and effective test coverage ratios to validate the functional quality of the deliverables

Editor’s Note: On February 16th, at 11 a.m. Eastern, Steve Hall will be the featured guest speaker on a webinar hosted by CAST Software on the topic of aligning vendor SLAs with long-term value.  The discussion will focus on risk mitigation and value enhancement from vendor relationships. Key points will include:

  • Building healthier and transparent relationships with vendors based on practical, meaningful metrics
  • Avoiding vendor lock-in by making sure your applications can be easily transferred and quickly understood from one team or vendor to another
  • Improving production support activities by focusing on application quality
  • Aligning metrics between vendor management and project managers

To register now for this free, online webinar, please click here.


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Steven Hall
Steven Hall ISG Partner | Author "Managing Global Development Risk" | Outsourcing Advisor | IT Strategist
As a Partner and member of ISG’s Executive Board, Steve leads ISG’s Digital Strategy and all ISG Service Lines for the Americas. Steve also leads ISG’s Alliance group and is ISG’s Executive Sponsor to the TBM Council.
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