Lean Methods, Application Development and Maintenance Outsourcing

The McKinsey Quarterly has a very revealing article in the May 2007 web edition, "Applying Lean to Application Development and Maintenance" (free registration required).

This should be required reading for both BUYERS and PROVIDERS of outsourced or offshored application development and maintanence services. The authors, Noah B. Kindler, Vasantha Krishnakanthan and Ranjit Tinaikar, all with McKinsey’s IT practices around the globe, do an admirable job in some critical navel-gazing that’s needed in software application development and maintenance.

They are saying that a lot of time and effort is really wasted, and they are absolutely right! Ask anybody experienced in a full cycle ADM effort and they will nod their heads in violent agreement.

The older SDLC, Waterfall models of development are all outsourcing/offshoring legacy pricing model tails wagging the ADM dogs! And a lot of money is wasted even if you are sourcing it from low-cost countries!

The authors identify six kinds of waste in a typical ADM effort. Just three of the six for taste:

The above just gives you a flavor of the different kinds of waste that happens in ADM. This is serious waste considering the facts quoted by the authors - half of IT budgets are dedicated to ADM and 80% of those costs are labor costs. This is true whether the ADM activities are outsourced or offshored too.

What does this mean for ADM service providers? If you want to truly add value to your customers, you can figure out ways of reducing this waste. This is an essential strategy for offshore service providers if they want to ward off competition from even lower cost countries!

What does this mean for ADM service buyers? - Going from one low-cost country to another costs more money just to move already wasteful ADM activities!

SDLC and the Waterfall models are conducive for fixed price contracts and additional money for change requests. But is it really suitable in the long run? The pricing model, simply because it seems to have minimum risk for both parties in outsourcing, should not determine what methodology you use! Particularly one that wastes a lot of time, energy, and money!

Agile methodologies precisely eliminate EVERY one of the wastes mentioned in the article! That’s another blog entry in itself.

Excellent, Original and Timely Article!

The waste of plenty is the resource of scarcity - Thomas Love Peacock