SaaS and Outsourcing

With the financial crunch in full swing both in the US and the global market, it's fair to predict that businesses will find their cost of capital has increased. Consequently many companies will try to stretch their dollars further by moving to technologies or methodologies that deliver greater efficiencies. Two viable options include SaaS and outsourcing.

SaaS

The move to SaaS is of course, not only for financial reasons. Well-designed SaaS enables companies to respond to market changes in a more agile manner. But SaaS can also be less expensive to design, deploy and update then on-premise software.

Outsourcing

Outsourcing is already pretty widespread. The global environment has enabled many organizations to harness outside expertise as a competitive cost advantage for the development of new applications (e.g. IBM and offshoring).

Several of our clients have pursued both options. They decided to migrate their on-premise application to a SaaS model and they outsourced a significant portion of the code development for this SaaS outside of the U.S.

Keys to Success

From our experience, for this approach to be successful several procedures need to be in place:

• Your internal IT department needs to be a strategic and integral part of the business so they can act as an effective facilitator and project manager. If they are just "the gearheads" in your organization with a technology driven ethos, rather than strategic business advisers with a business focus, they will not be able to manage the project.
• The application design needs to be completely vetted, tuned and visually blueprinted, so that it can be implemented by almost any developer - regardless of whether they are internal or external. This means systematically defining and designing all aspects of the application in terms of everything that the user experiences, as well as validating that the UI and database schema/back-end will integrate when the project is deployed. Plan to include on-going user validation at each phase of iteration (see below).
• Regular, on-going dialog is required between the U.S.-based IT project managers, the U.S.-based application/UI design firm, and the outsourced developer. Communication can be done effectively, environmentally friendly, and economically using web-conferencing.
• Development managers need to avoid the traditional analyze, design, code, test, and deploy model where each stage is 100% completed before moving on. Instead, rapidly iterate on development and get working components up quickly. This lets you address ambiguities and resolve problems. Each iteration consists of some development, some testing, some user-validation, and some deployment.

Whether the economy is on an upswing or in the tank, SaaS and outsourcing can act as catalysts for streamlining business operations, getting to market faster, and increasing flexibility.