Sourcing of application support and maintenance (ASM) services has been mastered by most IT procurement organisations. Over time the sourcing models have matured with some organisations on the second or third iteration of contracts with suppliers delivering mostly commodity services that support ‘Running the Business’.
Application Development (AD) or ‘Changing the Business’ services on the other hand are still in the initial stages of maturity and evolution as the challenges involved in AD tend be more unique to organisations and hence not addressable with a commodity service approach. IT organisations are exploring various models and seeking innovative and flexible solutions from service providers.
One of the key challenges in AD Sourcing is the differing skills required across the various stages of the entire change life cycle. Starting from business planning and business case development through to execution (design, development, testing and deployment). While the former requires domain consulting skills and business knowledge on-site, the latter requires more technical and software product specific implementation expertise and can be successfully performed remotely or offshore. One sourcing approach to this is to engage different (multiple) suppliers for business analysis and consulting and for technology implementation. Another approach is to retain or build in-house business analysis and consulting and to source the technology implementation with offshore factory model AD suppliers where economies or scale and coverage of niche technical/product skills are feasible.
Another challenge is the increasing requirement for organisational agility - changing the business faster and through small frequent changes (incremental improvements) rather than large monolithic change programmes. Some AD sourcing approaches to this particular challenge have resulted in selection of smaller niche consulting and technology implementation partners, almost always near to the organisation and the adoption of lean and agile delivery methods instead of the traditional software development life cycle waterfall approach. This sourcing approach and delivery model is being supported by the ‘move to the cloud’ where applications can be provisioned quickly and implemented with very little configuration/customisation or integration to deliver business solutions. This move to the cloud will also begin to impact on ASM services (and sourcing) once organisations’ applications are operating from the cloud.
In summary, AD sourcing does not yet have a mature model like ASM. The next few years will see organisations exploring various options and depending upon the organisation’s ability and speed in moving to the cloud is likely to see a multi-vendor model with local partners delivering using lean and agile approaches. This will in due course impact on ASM services and sourcing as organisations move more of their applications estate to the cloud.