Globalisation Clinic
The software industry is experiencing a phase of dramatic growth and change through advances in communications, technologies and the globalisation of markets. What and how do businesses need to develop and accelerate towards adopting a global business model in order to reduce costs and deliver faster more effective solutions?
How will the SME ISV for example meet the challenges of globalisation so that they can compete and be successful?
What are the strategies that need to be devised?
What are the opportunities and threats that globalisation introduces?
There is no real framework or model to support or help businesses transition to take advantage of global opportunities. What does this framework look like?
Notes
1. Initial introduction and first thoughts around the room on topic of globalisation:
Audience included a few organisations with extensive offshore experience, a few nearshore providers of application development services to their respective markets, a few who were considering / planning offshore activities and approximately half who had no direct experience.
One noted that their business model had adopted Application Service Provision (ASP) for the supply of many key IT systems, increasing their agility but also dependence on a variety of global suppliers.
One academic/researcher noted that their small firm increasingly acted as part of a globalised supply chain servicing clients around the world.
One supplier working closely with government raised concerns over data jurisdictions and the need to ensure security within critical national infrastructure - seen at odds with globalisation.
Local government and SME representatives were unsure of applicability to their segments.
Interestingly few raised globalisation as a source of new markets or differentiated competitive advantage, and most associated globalisation with offshore/outsourcing of IT functions to third-parties driven by commoditisation or resource shortages.
2. Pursuing this topic Group was asked to reflect on opportunity / benefits/ threats regarding offshore/outsourcing:
A few organisations responded with positive current experiences, although mentioned that these had been reached via some painful earlier learning. Others mentioned that 'factory' style outsourcing to a third party had proved far more difficult than imagined, sighting methodology and cultural factors (particularly with respect to lack of documentation to drive offshore requirements analysis and knowledge transfer) which had resulted in far higher management and governance overheads.
Service providers noted that they saw their core projects, with less than ten team members operating with agile development methodologies as 'secure' from offshore competition.
Many noted that successful adoption of globalisation and outsourcing implied a change to their current business model which in turn would precipitate change in IT processes.
A major bank noted that it was in the process of adopting 'follow the sun' business processing with many staff spread overseas (business and IT).
Nearshore service providers (Ireland, Israel) saw themselves successfully competing versus offshore players using their local knowledge and proximity to clients to tightly integrate with customer practice and management.
Many saw offshoring as a staff augmentation activity, and one organisation had established their own captive offshore development facility to closely integrate culture and working practice.
In particular organisations saw opportunity to outsource testing to third parties.
Several raised issues of security and data privacy/protection (including those under regulatory and governance regimes) as significant limiting factors to the use of external parties, especially in other countries with differing legislative regimes.
3. Group was asked to comment on best practice experience in outsourcing:
Many noted communication and governance, and suggested that an evolved model with common process, 'one team' approach was ideal though frequently difficult to achieve particularly with respect to convincing existing IT staff to participate.
Some mention was made of 'impedence mis-match' between methodology levels, especially with respect to communicating requirements and avoiding hidden assumptions.
Effective knowledge management and transfer was highlighted as key to success and needed to be actively managed.
Where more agile development was required, adopting model driven development and continuous test/integration approaches were seen as smoothing the 'factory' approach to offshore delivery.
One organisation noted that difficulties in testing user oriented functionality had encouraged them to perform this phase onshore where feedback from users was easier to elicit, promoting a prototyping approach.
Microsoft evangelists noted that thrust of information worker and development tools development was to encourage closer communication and common practices across virtual teams.
Several noted that their selection of business partners and service providers had evolved to include factors such as geographic reach, cultural fit and focus on quality of training to suit their cultural and business segment
4. Straw polls:
Only circa 5% of Group saw globalisation as increasing market opportunity
Approximately 10% saw globalisation increasing competition
Only 1 member was currently conducting innovation in offshore centres
Vast majority thought Software as a Service (Saas) from third-parties would never be adopted by their organisation (circa 75%)
Few had seen any distinct change in business model due to globalisation which had in turn changed IT architecture or geographic deployment (one example given in re-insurance industry selecting offshore centres such as Bermuda for taxation/regulatory reasons, driving new IT systems to be deployed there but accessed remotely)
5. Asked how globalisation influenced architectural decisions:
Several organisations, particularly in finance, mentioned data architecture and governance being heavily influence by location/legislative regimes with respect to compliance/storage/sharing.
It was noted that many areas had high 'regulatory flux' such as China, vastly complicating architecture and design processes. Architects mentioned having to conduct first hand discussions with national regulators and extensive peer group contact to keep pace with change as no central source available.
Many saw specification/documentation standards as having to be evolved to keep pace with globalisation.
One mentioned use of thin-client solutions to provide global access but ensure data resided locally due to regulatory restrictions.
Many saw adoption of standards as key, particular within their own IT supply chain (up and down stream).
6. Final round of comments, thoughts across the Group to close:
Both local government and SME organisations saw direct access to offshore solution providers as unlikely.
However when questioned, government bodies certainly saw possibility of using common shared service models across UK public sector, which in turn might be provided or resource globally.
For SMEs they also saw the likelihood of trusted intermediaries (such as telco players) providing comprehensive IT management services which in turn might incorporate third party/offshore elements
