The Software Engineering Institute's (SEI) Capability Maturity Model (CMM) identifies levels of maturity for a software organisation.The Institute evaluates software processes for development, re-engineering and maintenance across enterprises and assesses them at levels from one to five; with five being the highest.
According to Infosys, organisations at Level Five are at a stage where they are optimising processes. It indicates a very high level of process maturity, which the Infosys claims is key to ensuring predictability of software solutions and has only been attained by approximately 1.5 per cent of software companies in the world.
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In September 1998, consulting firm Headstrong (formerly James martin and co) opened a new 24-hour Global Development Centre (GDC) in Manila, Philippines. The GDC's mission is to deliver large scale, time critical solutions to clients anywhere in the world as an extension to in-house development teams. Employing over 200 IT professionals, the GDC provides development and testing through to outsourced maintenance. Developers use the videoconferencing facilities in the centre to design and demonstrate new applications.
For example, Headstrong's clients may need a customised demonstration rapidly. Having already invested in offshore development, which Headstrong admits is often difficult to get them to do at all, they may not have the time to fly all the way to Manila and back. So Headstrong demonstrates the solution via video.
According to Headstrong's principal, Michael Dobrijevich, the GDC currently has no Australian clients. However, Paul Smeaton, AllFinanz program director, Suncorp Metway has never found the need for videoconferencing in his dealings with Infosys. After a few standard phone calls in the early stages of the project, he says he dropped out of the loop and left it to his internal project manager to communicate with the Infosys project manager.
Franklins did have videoconferencing facilities, says the company's former IT director Hemant Kogekar, but he also did not use them for offshore projects. Rather he made extensive use of the Internet to communicate and share documents, backed up with standard phone calls.
Gartner analyst Rolf Jester does think that managing projects is a bit more complex when some of the people involved are remote. He says language is not an issue in most cases of offshore outsourcing, but that there are cultural issues for both sides when they're dealing across countries, even when they purport to speak the same language.
Kogekar agrees this can be a challenge but has found that good communication in itself and having the provider's project manager onsite can bring down the cultural barriers. He advocates no more than 80 per cent of the project taking place offsite.
Although quality is a big differentiator for Kogekar in choosing offshore service providers, skills shortage can play a part, and he considers cost to be the major driving force for most people. This is still the case in Australia where employment costs are much higher than, say India. In fact, according to Kogekar, the following salary comparisons apply between the two countries. His figures come from a feasibility study he conducted in his present role as a management consultant on establishing offshore operations for a local company.
"The up-front costs are lower, even taking into account travel and local expenses, but you also get better results because [Indian companies] concentrate on getting it right first time," he says.
Despite this, Kogekar concedes that the cost difference is still much smaller for Australian than US organisations and is one reason they are less keen to engage offshore companies. The other reason, he believes is attitude. Australian companies, he says, are very relaxed about speed-to-market and lack the results orientation and urgency about getting things done. Coupled with this is an unwillingness to accept that Indian companies can actually deliver what they promise, a misperception he stresses.
"Indian software companies have the drive and the access to resources to deliver. A lot of them are at the high end of the Software Engineering Institute's Capability Maturity Model (CMM). They have invested the time and effort in good quality management and consequently don't suffer so much if there's staff turnover, because if the processes are in place, someone else can step in," he says.
Indeed, it was Infosys' CMM Level Five ranking that led Paul Smeaton, AllFinanz program director, Suncorp Metway, to choose the Bangalore-based IT services company to assist Suncorp Metway in developing a customer indexing system. The system is a complex one, says Smeaton, and his main concern was to bring it in on time and to budget, while providing a quality deliverable.
"Infosys [with its Level Five ranking] could provide predictability around that and back it up with fixed pricing. That was its key value proposition," he says.
Infosys came on board in mid 2001 and according to Smeaton, has taken on primary responsibility for the application development in what is the first project of its kind for Suncorp Metway. Infosys specified the requirements at Suncorp Metway's head office in Brisbane, from which Smeaton says they were able to negotiate a fixed price and a reasonably fixed timeline. Payments are made when predetermined milestones are hit and as Smeaton points out, under this arrangement, Infosys has relieved him of much of the associated risk.
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