Because it can take years to progress to higher levels within the Capability Maturity Model (CMM), many organizations are outsourcing. Outsourcing is an approach for improving productivity and lowering costs by contracting the support or development of one or more software applications to a software services firm. Productivity and quality objectives can be aligned with the CMM and structured into an outsourcing contract.

Software services providers can be significantly effective in assisting the move up the CMM. This effectiveness is gained through the tight management controls, formal processes, and constant measurements that are the hallmarks of organizations high in CMM. IS managers can use outsourcing as a means for obtaining and implementing “best -in-class” processes in their organizations.

Most IS organizations are level 1 organizations — far from the level of flexibility required for today’s competitive business environment. Even with the CMM providing guidelines for process improvements, lower-level organizations find it difficult to implement new processes and advance from their current level. Process reengineering of any kind is undoubtedly challenging, and in an IS organization it can be even more difficult. In fact, it can take years to progress from one level of maturity to the next, and the move from level 1 to level 2 requires the most commitment, effort, and expertise.

Outsourcing is a viable method for introducing and more quickly institutionalizing new processes within an IS organization. This article provides background on outsourcing and discusses how outsourcing can be used to accelerate the implementation of process improvements. The discussion focuses on application outsourcing — contracting a software services firm to manage and be accountable for one or more software applications — as an example of the processes and methods that are available to IS organizations. In this presentation, highlights from the methodology of Keane for application management are included to illustrate the environment and processes required to move up the CMM.

A Note on Terminology Outsourcing is a term used to describe the contractual transfer of an internal corporate function to an external service provider. Typical IS functions that may be outsourced include data center operations, help desk operations, new application development projects, and maintenance and support for applications. The term outsourcing is reserved for situations where the service provider supplies its processes and takes direct responsibility for the daily operations of specific portions of the IS requirements of a corporation according to a predefined

level of service. This mixture of processes, expertise, and accountability is the foundation for the major benefits that can be gained from outsourcing. In this article, supplemental staffing is not considered a form of outsourcing.

OUTSOURCING AND THE CMM

When measured on the CMM scale of maturity, the best outsourcers rank quite high. While a consulting company may be successful in an occasional outsourcing engagement through excellent staffing, it cannot provide reliable and predictable levels of service, quality, and profitability across multiple projects without a wellmanaged set of outsourcing processes documented in a methodology. Highly experienced outsourcers develop a set of world-class processes that they customize and apply to each of their projects. The experience of the outsourcer over many projects allows it to select and combine the best and most effective practices from many organizations. These procedures are documented within the methodolo gy of the outsourcer and are used to train its staff. Since outsourcers tightly manage their projects, process usage is enforced. By using the same processes from project to project, the outsourcer is able to shift its consultants as needed between projects.

IS organizations at the lower end of the CMM need years of effort and massive cultural change to achieve the level of process maturity present in a best -in-class outsourcer. Fortunately, IS organizations can take advantage of the knowledge and experience of the outsourcer to move them up the scale of maturity faster than is possible through other means. Outsourcing engagements offer IS organizations a number of powerful benefits.

Access to Best-in-Class Processes

A top outsourcer will have a separate team that manages its outsourcing processes. This team is responsible for maintaining and continuously improving the processes of the organization using the experiences from all of its ongoing projects. As a result, the processes of the outsourcer evolve far faster than those of most IS organizations. Since the livelihood of the outsourcer is based on its ability to provide its services at maximum efficiency, the outsourcer has considerable incentive to improve its process effectiveness.

Ability to Watch the Procedures in Action

Implementing an outsourcing project within the IS organization provides staff members with the ability to watch the new processes and tools in action. This enables side-by-side comparisons of existing IS processes against those used by the outsourcer. Any doubts or misgivings about the value of more efficient processes will be dispelled by this exercise.

Hands-on Training

Any large-scale outsourcer will have well-prepared training materials, skilled trainers, and training facilities to prepare its own staff for outsourcing assignments. These resources can be applied to training internal staff. IS staff members can supplement their learning by working alongside the outsourcer staff on an actual project.

A Means to Overcome Cultural Resistance

Often, the required cultural change is the most difficult obstacle to overcome. The current practices of the IS organization are heavily ingrained in its staff members, and they often strongly resist changes to the status quo. An interesting paradox is that this resistance vanishes if a staff member takes a new job in a new company. The staff member expects to learn and assimilate new procedures as part of the job move. It is far easier to add staff members successfully to an existing process environment than it is to change the process environment of existing staff members. Outsourcers take advantage of this phenomenon when staffing their outsourcing projects. By putting the process environment in place at the start of the outsourcing project and transitioning staff into the environment, the outsourcer avoids the resistance that occurs when IS organizations attempt to change. The same principle can be applied within the IS organization by allowing the outsourcer to set up the project environment and then transferring IS staff to new assignments within the project.

KEY COMPONENTS OF A SUCCESSFUL OUTSOURCER

Selecting an outsourcer to assist the IS organization in moving up the CMM is different from selecting an outsourcer strictly for assuming responsibility for a given function. The outsourcing project must be performed on site, and it requires an outsourcer with the experience and desire to share its methods. These requirements preclude offshore outsourcing organizations. Some outsourcers will consider their practices proprietary and will be unwilling to transfer knowledge to the IS organization. The IS organization must find an outsourcer that is willing and able to provide its procedures and the required training. Since claiming expertise is easier than providing expertise, the IS organization must evaluate the claims of each outsourcer carefully for accuracy before selecting a vendor.

The list that follows provides information about the key components of the service offering of a successful outsourcer. IS organizations should consider these components in detail when evaluating outsourcers.

Project Management Experience

Large-scale project management experience is one of the most important characteristics of a successful outsourcer. If the outsourcer does not have a solid track record of achievement, all of the other components in this list are suspect. For example, the methodology of the outsourcer represents the codification of this knowledge. If the outsourcer has limited experience, how strong can the methodology be? While experience in managing ongoing outsourcing projects is crucial, experience in managing the implementation and transition into a new project is especially important when using outsourcing to move up the CMM.

Methodology

The methodology of the outsourcer documents its processes and methods. The methodology describes which processes are used, how those processes are implemented, how they are used during project operation, and how they are managed. It is the primary training and reference document for the project. IS organizations should review the methodology in great detail. The methodology describes how the IS organization will operate if the project is successful. The evaluators must ensure that the methodology meets their long-term requirements and is sufficiently complete to serve as a meaningful training tool. The methodology must support the processes required to move up the CMM. It must also include the supporting metrics, quality reviews, and process improvement activities to ensure that the processes are used effectively.

Central Support Team

A central support team is needed to maintain the methodology and capture best practices from multiple projects. Such teams are a primary vehicle for building continuous improvements into the methodology. The team receives project metrics from each ongoing project and assists in conducting management reviews of project quality. The existence of a central support team is indicative of the commitment of the outsourcer to its practice and to the ideals expressed in the CMM.

Experienced Staff

While training courses are valuable, actual project experience is even more important. A successful outsourcer will have staff members who have worked on multiple outsourcing engagements. These staff members know how to implement the processes in the methodology in a variety of circumstances.

Training Materials

Examining the quality of the training materials of the outsourcer is another good method for determining its value in a process improvement effort. Lack of goodquality training materials indicates poor training on the part of the outsourcer and casts doubts on the experience of its staff. Good training materials will be highly tuned from use on multiple assignments and will provide a strong foundation for training IS staff members.

A MODEL FOR AN APPLICATION MANAGEMENT METHODOLOGY

Highlights of the Keane application management methodology (AMM) are offered below as an example of a methodology that supports the environment and processes required to move up the CMM. The AMM is customized to fit the needs of individual organizations; however, the fundamentals remain the same.

Project Management Processes These processes manage ongoing project operations, personnel issues, and project performance to level of service agreement commitments. There are three major groups of processes in this category: project management, level of service management, and training.

Customer Assistance Processes.The customer assistance function ensures that user support is based on centralized and common practices. This approach enables fast response to requests, management controls on workload, and a collection point for project performance metrics.

Project Operation Processes These processes include those needed to execute the tasks necessary to implement scheduled application maintenance and enhancement projects. They include processes for the estimation, prioritization, specification, and programming of project tasks.

Asset Management Processes Asset management processes ensure the integrity of client application assets and effective project management through release management and configuration management. Application assets include source code, load modules, documentation, test cases, and other application components.

Production Control Processes These processes ensure the quality of project deliverables and the integrity of the client’s production environment. They include processes for system testing, acceptance testing, production turnover, and project close.

Operational Improvement Processes These processes identify methods to improve project operations and implement continuous quality improvements. They embody the principles of continuous process improvement as defined by the CMM. Metrics from all project tasks and from process operations are continuously monitored to identify opportunities for improvement.

Management Review Processes These processes sit above all phases of an outsourcing project. They define the methods used by project management, client management, and Keane management to audit and review the quality of project performance regularly.

IMPLEMENTING AN OUTSOURCING PROJECT

When an IS organization decides to pursue an application outsourcing project, there are many activities that must occur to prepare the environment for outsourcing. Similarly, when a project is completed, there are activities to wind down operations and return the project to the IS organization. As a result, outsourcing projects are usually organized into four distinct phases.

Phase I: Planning and Definition

This is the initial phase of the application outsourcing engagement. This phase evaluates the existing environment to develop a complete inventory of project assets and determine the types of improvements necessary to set up the project. A level of service agreement is created to document the project performance commitments, and a transition plan is created to begin the assumption of project responsibilities.

Phase II: Transition In

This phase addresses the turnover of the project to the application management team. In some cases, Keane introduces its employees to the application environment, whereas, in other cases, Keane acquires client employees to form the application management team. During this phase, depending on the team makeup, members either focus on acquiring the business and technical knowledge necessary to support the application(s) or they focus on learning and implementing the Keane process model. Team members also begin high-priority improvement activities. At the end of this phase, the application management team has full responsibility for the project, and the processes of the project are fully implemented and operational.

Phase III: Project Operations

This phase covers most of the outsourcing engagement. The application management team is totally responsible for the support of all aspects of the outsourced applications following the standards agreed upon in the level of service agreement. In addition to supporting the daily support activities for the application(s), the project team also focuses its attention on increasing its efficiency at supporting the project. The team will implement any necessary procedural and technical improvements in the early stages of this phase to reap the benefits over the life of the project.

Phase IV: Transition Out

This is the final phase of the outsourcing project where the outsourcing team returns control of the application(s) to the IS organization. As part of the transition, the IS staffers are trained in the new processes and tools that were established during the project. At the end of the transition out, the IS organization is supporting the application(s) in the new, higher-level operational environment.

CONCLUSION

Businesses are finding that strong processes are critical to their efforts to improve organizational flexibility. This article was developed to provide insight into how process improvements can help IS organizations face the challenges of a growing application portfolio, new technology shifts, and an increasingly fast-paced business environment.

The CMM is an excellent vehicle for assessing the quality of existing processes and determining the steps needed to improve those processes. Organizations can use the model to identify deficiencies, adopt practices, and meet specific goals through evolutionary steps. The CMM does not require any specific software technology, organizational structure, life-cycle model, or set of documents. In addition, unlike other mechanisms for establishing processes, the CMM can be used to create an organization where processes are not only defined, but practiced, shared, and continuously improved.

Moving up the CMM is not without its challenges, especially for lower-level organizations. Once processes are redesigned, it is much more critical, and difficult, to get the practices adopted throughout the organization. Under continued pressures and project deadlines, IS professionals do not have the time to familiarize themselves with newly defined procedures. As a result, the adoption of new practices is slow and, in some cases, impossible. Because it can take years to overcome such barriers and progress from one level of the maturity model to the next, organizations are forming outsourcing agreements with vendors that are willing to transfer their processes.

Outsourcing is a valuable tool for IS organizations seeking to accelerate their move up the CMM. The following section details some of the services a major software services firm provides to assist clients with their process improvement objectives.

IS Productivity Assessments (ISPA)

Before attempting to improve their process maturity, IS organizations need to understand their current situation. Through a detailed assessment of the IS organization, IS managers can ascertain where improvements are needed, determine which improvements would provide the greatest value, and establish a baseline from which to measure future improvements.

Keane offers a comprehensive evaluation of an IS organization through its ISPA service. This service is based on the principle that productivity is ultimately a synthesis of people, processes, and technology. An ISPA goes beyond typical process maturity evaluations by including people and technology factors in its evaluation. Evaluations of issues such as application software quality and staff training enable Keane to develop an improvement strategy that will maximize the benefits of the recommended process improvements. This strategy is documented, along with the current status of the IS organization, in a complete report that also includes a project plan for implementing the recommended improvements.

Outsource Full Responsibility to Keane

This is the traditional outsourcing model. The IS organization increases its process maturity by outsourcing areas of low maturity. This arrangement allows the IS organization to concentrate its resources on its strengths. Keane takes responsibility for all aspects of the project, including staffing and process improvements. Keane operates the project following CMM principles, as contained in its AMM, and the corporation receives the benefits that ensue from more mature processes.

Outsource and Transition

This method is similar to the outsourcing service described above, except that the application(s) is transitioned back to the IS organization after the new project environment has been put into place. This method is useful for overcoming cultural barriers to change. Keane takes responsibility for the project using its own staff. The project team members implement the Keane process model and operate the project until all processes are fully tuned. At that stage, the IS organization can continue to outsource or it can reassume responsibility for the project. During the transition-out period, project team members fully train the IS staff members in all aspects of the project and the new processes. Cultural resistance is reduced by effectively moving IS staff members into a new assignment rather than attempting to change familiar processes on their current assignment. The IS organization can use its newly trained and experienced staff members to seed other projects in its portfolio.

Outsource a Pilot to Keane

A pilot project is used as a proof of concept. Keane assumes responsibility for the project and fully implements its outsourcing model. The IS organization observes the process and can compare its operations against those used by Keane. It enables the

IS organization to see precisely how the new processes will operate in its environment. When the organization is ready, it may decide to outsource additional projects, or it may seek assistance from Keane to implement the model for internal IS projects. This method provides the IS organization with the methodology, staff, and training necessary to improve its processes successfully. The pilot project provides a demonstration of the benefits that can be gained when the new processes are fully implemented across the organization.