Many companies have embarked on a digital transformation of their business in an effort to increase sales and support customers through online systems, apps and social media.
Many companies have embarked on a digital transformation of their business in an effort to increase sales and support customers through online systems, apps and social media. IT organizations are encouraged to develop a “fast” or “second gear” mindset capable of operating at internet speed and being focused on a digital transformation. Carrying out this shift while simultaneously supporting legacy systems that cannot be changed as rapidly is a tall order for many IT organizations. In-house IT departments must either learn to reinvent themselves so they can adapt to the fast-paced evolution of technology or outsource these efforts to quickly gain the expertise needed. IT outsourcing, or more specifically, outsourcing the creation of innovative and dynamic software apps and systems, is a reliable way for companies to ramp up a development team for the required fast gear.
My previous article focused on outsourcing the slow speed of two-speed IT. The two-speed IT strategy is popular because it helps companies understand the difference between the traditional “slow” focus of IT, centered around maintaining internal business-critical systems, compared to the “fast” UX design and DevOps focus needed to create dynamic online and mobile, customer-facing apps.
The rapid growth in new technologies such as the Internet of Things (IoT), mobile apps, big data analytics, and seemingly unlimited cloud storage and compute power has profoundly changed every industry. Companies like Amazon, Facebook and Google have aligned their technology and IT systems with their business goals. They limit the size of their software engineering teams to support efficient agile and Kanban methods of development. Product managers think about entire user experiences instead of single features. Leading internet companies rely on frequent testing, experiments with the user interface and collecting data about consumer behavior in their products to learn what works and what doesn’t, even at the risk of failure.
The building blocks of digital enterprise architecture
According to McKinsey & Company, a digital enterprise architecture needs to include several elements to facilitate digital transformation:
- Two-speed IT architecture – as described here
- Instant cross-channel deployment of functionality – using microservices for small features or functionality that are deployed in minutes or hours
- Zero downtime – using test-driven development (TDD), continuous integration and deployment (CI/CD) that enable the update of individual pieces of functionality without disrupting the entire system
- Real-time data analytics – analytics that become an integral part of the app and not just a stand-alone process
- Easy process configuration – business users are able to change features without custom coding
- Automated scaling of IT platforms – scalability across redundant private and public-cloud environments to eliminate potential slowdowns and downtime
- Secure architecture – cybersecurity as an integral part of the overall application
Outsourcing provides these elements and accelerates the transition to a two-speed model. The agile culture required to think of software as a product, created in a factory-like manner with continuous improvement is achieved much more easily in an outsourced software development shop that is an expert at product development, rather than building a “fast” IT team and culture in a historically “slow” IT organization.
What are the risks in outsourcing the faster portion of IT?
For most technology executives, the question is not whether to outsource but what to outsource. There are two popular models of software outsourcing for fast IT:
- Team extension – your developers work together with the outsourced developers
- Autonomous team – the outsourced team(s) do all the development and you provide a product owner(s)
In both cases, the outsourced team has a significant responsibility to perform and there is a risk they won’t rise to the occasion.
To start, there is a risk you will select the wrong IT outsourcing firm. For example, the company you hired for slow IT maintenance of your legacy systems is probably the wrong choice for fast IT. You also face internal risks, as well. You will need one or more knowledgeable product owners who will be in frequent contact with your outsourced teams, and you may have to watch for declining employee morale. Underperformance and passive/aggressive behavior are common with employees who think their jobs are at risk.
Fast IT outsourcing benefits
There are also many rewards you should expect to see when outsourcing:
- Access to the latest technology – good software outsourcing companies keep up with the latest trends
- Cost savings – IT outsourcing to some locations has a lower cost structure, even when factoring in travel
- Expert developers – it’s difficult to hire great developers, but IT outsourcing firms are constantly recruiting in under fished markets for the specific qualifications and certifications needed by their clients. Good software outsourcing companies have a pipeline of qualified candidates available to them
- Flexibility – even if you can hire developers, you have limited ability to ramp up and ramp down teams as your needs change
The two-speed IT architecture is a good model for enabling the digital transformation of your company’s business in an agile and dynamic manner, while also delivering the positive user experience expected by customers. Fast or slow, there is a role for IT outsourcing in any company that is serious about digital transformation. There are many great software outsourcing companies to choose from in several convenient global locations. It is important to select a partner for your fast-mode outsourcing that is an expert in the technologies, methodologies and best practices of UX design and DevOps that you need.