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October 2003

Build, Buy, Port or Stay

How Portfolios and Outsourcing Can Help Transitions

By John Burke

Last of three parts

Last month I delivered details from my HP World presentation by examining each alternative — buy, build port or stay — in detail. This month I finish up with how to make outsourcing and a portfolio approach work for you, and some recommendations.

You can seek to “outsource” some or all of your applications. Finally, you can choose a “portfolio” approach, integrating two or more of the above options. There is no one-size-fits-all solution. Every organization is different. Your challenge is to determine what is the best combination for your organization.

Outsource: Pros and Cons

In the context of a transition strategy, outsourcing can be used to relieve the demands on your talent resources. For example, if you currently do payroll/personnel in-house, either with homegrown or purchased software, consider outsourcing it to free up internal resources. Another example would be e-mail. Basically, any function that is common and easily separated from the whole of your systems is a candidate for outsourcing.

If you have never done it before, outsourcing anything is full of pitfalls. Be very careful qualifying an outsourcing vendor and make sure, as part of your vetting process, to talk with existing, similar customers. Any contract you sign should contain performance clauses with both penalties (to protect you) and bonuses (to entice the vendor). Suppose you have union personnel and you are outsourcing payroll. You may be liable to considerable monetary penalties if payroll is late. Make sure your outsourcing vendor is legally contracted to share those penalties.

If you outsource a port, management becomes much more difficult, and your code, including possibly proprietary business logic, leaves your site, which presents you with potential security issues. HP and its partners are warning that if you postpone porting, it may become more costly because the needed resources will not be available or will be more expensive. Basically, it is a buyer’s market right now for porting services because so many sites have yet to decide on or start on projects. You cannot assume the same will be true two or three years from now.

Portfolio: Pros and Cons

There are two types of portfolio solutions to consider. The first is to create a transition strategy that combines one or more of the build, buy, port, stay and outsource options into an integrated solution. The second type of portfolio solution is a staged strategy, typically involving “staying” for a period of time, followed by one or more of the build, buy, port and outsource options. Note that while this latter example could just be the result of doing nothing, what I am describing is a well thought-out plan complete with budgets and schedules, and leaving nothing to chance. Prepare now and you are less likely to fail.

Portfolio solutions give you the greatest flexibility. For example, you can leverage what you know and do best by combining value-added custom surround code with best-in-industry purchased back office applications. Another example would be to keep non-critical, or highly custom applications on the HP 3000 while building, buying or porting everything else until such time as these applications can be more naturally replaced or ported. A third example, already discussed, would be to outsource standard applications such as payroll/personnel and then use build, buy, port or stay on the rest of the applications.

For all its advantages, unfortunately the portfolio solution is the most complex and the most difficult to manage. For each option you add to the mix, you increase the number of ways the whole project can fail. If you are not careful, a portfolio solution can lead to the highest TCO. In doing a portfolio solution you need to plan for any middleware or integration software needed to glue the various pieces together. This introduces additional potential failure points.

Make the Decision, then make the Business Case

Once you have thoroughly researched the options and made your decision, it is time to present your proposed strategy to your senior management. There is no point in my writing about this since Christopher Koppe, Director of Marketing for Speedware, has already written and given the quintessential lecture on making and presenting the business case for your chosen strategy: “Selling Your Transition Strategy to Your Executives.” Koppe gave his presentation at both the Valley Forge and San Jose Solution Symposia and at HP World 2003. (For those who attended HP World 2003, Koppe’s slides are available online — as are those from many of the talks.) Hopefully you have already seen or heard Koppe’s talk or will get a chance to see him give it in person in the future. If not, you can read the article I wrote describing Koppe’s talk in the May, 2003 issue of the NewsWire.

Conclusion

In these three articles and in my HP World talk, I have tried to present a fair, balanced and objective view of the many options available to HP 3000 users as they transition into the future. What you should take from this is the understanding that you have a plethora of choices and combinations of choices, any of which could be right for your organization. The key is to take the time to properly evaluate all your options and then plan, plan, plan.