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in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from ISG, Inc.

Presented by:Steve Hall, Partner

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Creating the Optimal Global Delivery Model

There are multiple levers to drive efficiencies in an ADM environment, but

they have to be aligned to organizational goals .

Determine Target Operating Model – Plan, Build, Run; RtB-CtB; Supply/Demand

Determine Application Sourceability Index – Are apps supportable in a global

model?

Determine Sourced/Retained roles – what roles and apps should be fully retained

and how does that impact approach?

Validate the Business Case – what levers can be used and how does this impact the

goals?

Select optimal sourcing model – align suppliers by technology, business unit,

development lifecycle, etc.

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3

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High defect rates and poorly constructed code results in higher

maintenance costs (Technical Debt)

Lack of standards and ITIL processes result in poorly defined scope

for maintenance activities

Lack of clear measurements to determine size of portfolio (e.g.

Function Points or Use Case Points) results in over-estimating

maintenance effort

There are challenges shifting to a Global Delivery Model

The goal is to increase Productivity and Improve Software Quality…

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But there are Four Levers to Improve Application Productivity

Rate Card Improvement

Rate Card Conformance

Reduced Vendor

Utilization

Increased Location

Economies

Increased Delivery

Model Efficiency

SLA Driven Managed

Services

Reduction of Rework /

Increase in Quality

Supplier Role & Cost

Optimization

Supplier / Contract

Rationalization

Improved Operating

Processes

Reduced Headcount / Managed Attrition / Increased Skills / Increased Longevity

Improved

Application

Spend is the

Goal

$$

Time

Application Rationalization / Increased Quality / Improved Maintenance Efficiencies

Financial Levers Operational Levers

Resource Levers

Application Levers44

22 33

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A Managed Service Model typically yields the best results

• Defined Services (SOWs) and SLAs –

Statements of Work specify the “What” not

the “How”. Defined Service Levels with

measured performance goals aligned to the

Services

• Defined Pricing - Fixed Price models

w/variable component that allows ramp-up

and ramp-down of costs based on volume

and need

• Defined Risk Model - Manage overall

sourcing risks via Product Quality risks (is it

supportable in a production environment),

Contract terms, Skill mix, Onsite/offshore

ratios, geographical locations, etc.

Attributes of an ADM Managed Service AgreementAttributes of an ADM Managed Service Agreement

There are multiple operating models used when implementing a managed service in the

ADM environment. Though the operating models are important to the overall strategy,

each contain three (3) basic components that support the managed service model.

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1. Clearly define the ADM Services into three (3) main categories and,

from a cost perspective, manage these categories separately

• Maintenance

• Minor Enhancement

• Project Based work

2. Define a retained organization that is aligned with the strategy

• Business liaisons – coordinate between business and IT leaders

• Program/Project Managers –retain to manage large programs

• Architecture - client driven

• Business Analysis – understands business and requirements

• Service Delivery Managers - manages the sourced relationship

• Developers & Testers – support retained applications and some subject

matter experts

Top 5 ADM Success Factors

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3. Define end-to-end Service Level Agreements to incent suppliers to

work with each other in a multi-supplier environment

4. Embrace CMMi – process makes a difference

• Service Levels and Quality goals are often aligned with process maturity –

the more mature organizations can be contractually obligated to deliver

higher quality code

• Process adherence drives repeatability and productivity improvements –

incent Service Providers to operate at CMMi Level 3 or higher with

committed productivity improvements

• Conduct on-going operational assessments to ensure process adherence

5. Use Key Performance Indicators (KPIs) and dashboards

• Earned Value Analysis (EVA) using Schedule and Cost performance index

• Defect injection and probability statistics for software quality

• Structural Quality, regression testing, defect detection, and test coverage

ratios

Top 5 ADM Success Factors

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