Application Management Pricing – Not Easy Ground

While an end-to-end management approach provides a competitive service advantage, it can carry a substantial additional – and often unforeseen – cost and risk. The challenge is that it’s difficult to estimate the costs of all downstream variables and potential problems. It is for this reason most software providers work on a Time & Material basis, whether it’s for, say, creating a custom application or the migration of a set of applications onto a new enterprise platform (e.g. porting legacy accounting, inventory and reporting systems into a new ERP solution).

The inevitable – and frequently unforeseen – management and consultancy requirements that typically crop up during a project are usually charged at a day rate, which can become a very risky exercise as costs and timescales creep higher.

What this service provider needed to know was whether offering a full life-cycle management service and incorporating all aspects of service delivery management (including these unforeseen professional services requirements) made sense as a viable business model.

Could it be realistically packaged on a fixed price basis while safeguarding the provider against loss? Finding the answers to this question was what lay at the heart of the study, and involved an in-depth research and drill-down analysis.

Read all about it here

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Why bother with diversity skills?

The opportunity to get ahead comes wrapped in the challenge. Nothing new then, it always does!

The challenge is both personal and organizational. It is about building cultural proficiency, an intelligence and a skill-set, to thrive in the diversity that surrounds us.

Many terms in our lexicon, such as, remote management, virtual teams, multicultural teams, cross-cultural management, and so on, all have a common root-cause challenge, the diversity amongst us. If only, we could all be alike!

The case for pro-actively addressing this challenge, of building the armour and strengths to thrive in global diversity, is becoming stronger every day, as demonstrated by its brief history.

Consider these arguments:

  1. Diversity is a fact within every large country and continent, be it the United States, Western Europe, India, Canada or Australia. From a few thousand miles it may not appear that way, but market segmentation experts, for votes or pizzas, will tell you about the diversity of their markets. A large enough domestic market does not offer the luxury of ignoring diversity.
  2. The Asian Development Bank projects that the world GDP will shift axis over the next 40 years, with a higher contribution coming from Asian countries. The considerations for such projection are obviously complex and based on several assumptions. However, it is not hard to be convinced of Asia’s increased participation in the world economy with its growing infrastructure, large consumer populations and increasing consumption.
  3. The working age population of the Western economies, Japan and China will decline in the next 20 years, while some countries in Asia and Africa will add another billion people to the global workforce. Obviously there are several implications of this phenomenon the world expects to experience, clearly shifting markets and supply sources, is one such.
  4. Technological changes have impacted our lives significantly in the past 30 years. The rate of technological innovation continues unabated, and the world does continue to shrink. In fact there could well be a common global culture evolving, as researchers study the commonality across our diversity.

The combined impact of these issues is a disruption that we should consider for a minute. The diversity we experience today will accelerate, and, within our own lifetimes. This can present a threat to many, who remain oblivious to the underlying opportunity.

A recent McKinsey survey elicited an overwhelming response that cultural proficiency was a top need for organizations seeking to achieve successful global growth. This is fairly compelling evidence for those who prefer surveys over experiential wisdom.

Let’s address this from the opposite side. What is the threat of inadequate cultural intelligence or diversity skills? This could be long list, but hopefully some of these will strike you as important enough in your situation:

  • Lost business opportunities, customer acquisition and relationship building challenges
  • Unreliable and inadequate supply chain to keep the business competitive
  • Dispersed teams out of sync on critical focus areas, goals, lose empathy and problem solving
  • Unhealthy employee conflict causing loss of productivity, morale and creativity
  • Failed and expensive hiring decisions, supplier relationships, market entries or customer dissatisfaction

In several countries there are statutes and compliance requirements driving inclusion of diversity in business and management. However, the business case for development of the “multi-cultural muscle” is getting stronger. It will increasingly become a critical determinant of success for professionals and companies in the years ahead.

AGILE & CMM : The Marilyn Monroe Connection (Part 2) : Something’s Got To Give

In the first part of the discussion, drawing upon the genesis of Agile and CMM, we were left wondering if the two are “The Misfits”, and most likely to disappoint  the pacifists, or can they become soul-mates after all. The conclusion, much like the of Marilyn Monroe’s last unfinished work, is “Something’s Got to Give!”somethings_got_to_give

Now that we appreciate that these two approaches, Agile and CMM, are prima-facie incompatible, let’s explore some detail about the areas that have gotten us into this debate. The fundamental difference in Agile and CMM begins from the tenets of their methodology and framework.

Agile follows a cycle from Product Visioning, Roadmap, Release Planning, Iterations, Daily Stand-ups, Reviews and Retrospectives. It contains the roles required, the steps in each process at a high level and the exclusions from practice, such as, not using Daily Stand-ups for status, appraisal and so on. It tries not to be prescriptive and allows for flexibility. The CMM also provides the entirety of a Development Lifecycle, and while not explicit, seems to lean towards a “waterfall’ approach. It defines “What” needs to be undertaken, in a prescriptive fashion. Failure to adhere to a “What” specific prescription implies that you don’t satisfy the goals of that particular process area.

Agile recommends embracing and adapting to change. It recommends permitting changes at any time to ensure highest business value and satisfaction. It allows the building of a Release Backlog, which is essentially “product requirements”, further decomposed into Iteration Backlogs, for the purpose of understanding the requirement set being undertaken at the time. CMM, on the other hand, has an entire process area devoted to Requirements Management, prescribing the need to ensure scope creep is contained through Scope Control, which is strictly enforced through the additional rigor of the Configuration Management process area.

Agile uses several planning and monitoring techniques, such as Release and Iteration Planning, Burn Downs and Burn Ups. CMM prescribes a fairly detailed modus operandi for planning through an entire process area, and follows up with a whole other process on Monitoring and Control. It also requires, at Level 3 maturity, that the entire organization follows a common project management methodology.

Agile does not insist on quality assurance as a distinct process area unlike CMM. However, the nature of Agile methodologies, especially Extreme Programming, presume an ongoing practice of Verification and Validation, through the lifecycle of getting to a “Done” product. CMM on the other hand requires a separate SEPG (Software Engineering Process Group) to develop the QMS (Quality Management system) and a QA (Quality Assurance) group to ensure reviews and undertake audits.

Agile relies heavily upon the human component to have it sail through the traditional “trip over” pieces of design and architecture, inter-group co-ordination, functional expertise, and so on. The CMM model calls for a detailed competency skill set, coupled with training, as a separate Process Area to make up for any resource deficits.

Well, sounds rather irreconcilable, doesn’t it? So can the impossible become possible, will “The Misfits” get hitched? What’s more, can their potent combination be used to bust the recession? Sounds like a fairy tale.

Await the last article in the series, after all, “Some Like it Hot”!

Contributor: Pam Ramalingam