The inexorable march of cloud computing is increasingly leading it to mainstream media coverage. Recently Rzeczpospolita, a daily newspaper with one of the highest circulations here in Poland, ran a large article on the demand for cloud computing in Poland.

According to the article, analysts predict that cloud computing will grow at a rate of 27% over the next 4 years to reach $73m by 2015. It seems that businesses everywhere are considering the cloud as a strategy and many are asking their IT suppliers about cloud.

For many IT outsourcers, cloud computing is just a new iteration of their business and many businesses view it as another form of outsourcing – essentially that is what it is, hardware and system platform outsourcing,  and it is following the same pattern of adoption as other types of outsourcing. However, despite all the media hype, cloud computing remains far behind other, more mainstream forms of outsourcing on the maturity curve.

Companies first looking into outsourcing, particularly software development outsourcing,  usually choose simple, often stand-alone projects that do not impact on the day-to- day running of their business. As they become more confident with outsourcing, they outsource more complicated work and finally move to mission critical items.  It seems to me that businesses are following the same pattern with cloud computing: many using it for website hosting, or for hosting part of their website, before moving to  e-payment engines or business applications like corporate email and ERP.

The vast majority of companies are at the stage of either still researching their cloud options or simply trying the technology out. While most of the businesses that I have spoken to in the past four months have mentioned cloud computing and their intentions to use this type of virtualisation, very few of them have an actual live deployment.

As for us, while we are happy to use the cloud, none of our clients have requested this yet. However, as the rise of cloud computing continues, I expect that twelve months from now we will be working with more than one customer using the cloud to host our development.  In the way that C++ has largely been supplanted by .NET, cloud computing will soon be in the project spec that most of our clients deliver. In the meantime down at FP Lab, the team is starting to work on a project of its own that uses the public cloud…..

Recently I read a blog post by Martyn Hart, chairman of the National Outsourcing Association in which he reported on a conference he had attended where the speaker purported that “ in the outsourcing market there tends to be two types  of client.” One is a company that is experienced in outsourcing and the other is new to the market and therefore needs more of a partnership approach with their outsourcer. (more…)

Recently the National Outsourcing Association conducted some research into innovation in outsourcing.  What surprised me about the results is the fact that while customer and outsourcers are both interested in innovation – 70% of respondents consider innovation to be very important – only the outsourcer seems to be willing to actually commit to it. (more…)

Yesterday, I met a prospective client who is looking for an offshore company to look after the QA for a particular software development project. Describing his requirements, he said, “I am looking for a QA team that does more than they are asked for.”

Probing a bit further, I found that actually this was a very reasonable request. He is looking for a team that aren’t just automatons – completing just the exact tasks they are asked to do by their client – but that actually apply the specialist QA knowledge and experience that they have to the requests they receive.

Any decent QA team should be doing this. In essence what this man is looking for, and in fact what any client should want, is a testing team that understands the technical and functional specifications of the software. And based on this knowledge continually checks that the software is meeting these and the overall aims of the project.  This will involve the team doing some level of analysis of the errors that occur, rather than just sending them back to the client, notifying of the problem.

For example, I heard recently of a bank that outsources its testing. In this instance the bank was capacity testing a new piece of software that analyses trades. The pre-capacity testing had been completed but with the capacity testing, no matter whether 5,000, 10,000 or 25,000 trades were run through the software, the outcome of the analysis was always impossible. The outsourced QA team simply flagged this as a major issue. Had they looked into what was causing the problem a bit further, they would have found that it was because they were using the same trade 5, 10 or 25,000 times, creating a completely implausible situation that the system would never need to handle and therefore is not designed for.  Instead it was the customer’s in-house development team that discovered this, leaving them wondering why they were paying QA experts….

In my last post I blogged about Future Processing’s success in 2010. In this one I’m going to examine the Polish IT outsourcing market.

Future Processing wasn’t the only offshore development company to do well in 2010. Many other Polish software companies reported good results. In fact IDC reported the total value of the Polish outsourcing market in 2010 was approximately $500m which represents 7% growth on the previous year.  This growth means that the percentage of the total IT market made up by outsourcing services now lies at 17%. Put another way, nearly one in every £5 spent on IT in Poland last year was spent on outsourcing. (more…)

2010 was a very busy year for Future Processing and one in which we broke many of our own records.

While many companies reported poor results due to customers tightening their belts we found the opposite. Not only did most of our customers increase the scope of their work with us, we also won clients in new markets, like France and the US. Consequently we ended up doubling the size of our workforce and setting new, markedly different, growth targets. (more…)

In my last post I talked about how what seem like fantastic cost savings can actually be a false economy.  Now I want to talk about another important part of IT outsourcing best practice, one that really can save you money in the long term. (more…)

IT outsourcing is not a new concept and you would hope that suppliers and customers alike have learnt from the mistakes of previous deals. However, reading the trade press this is not necessarily the impression one gets. On both sides of the outsourcing contract companies seem to be making the same mistakes again and again.

It appears that one of the biggest slip ups is around achieving real cost savings. (more…)

A few years ago I met with a potential client who had a great product idea, but was unable to do the required programming himself and therefore was looking for an offshore software development partner. However he was rather worried that the partner he might choose could abscond with his intellectual property, leaving him with nothing – think of the accusations the Winklevoss twins laid at Mark Zuckerberg’s door with regards to Facebook. (more…)

One of the most commonly cited barriers to offshoring or outsourcing software development is ‘risk.’ I have been pondering what this really means. What exactly is this ‘risk’ that companies are so concerned about?

I have come to the conclusion that what they mean here is ‘things going wrong.’ They worry that the project will fail or will stray irretrievably off course.  In essence they are afraid that the communication between outsourcer and client will break down. I say this because  ‘risk’ or ‘things going wrong’ really stems from communication problems.

So to avoid risk, customers need to ensure that they are able to facilitate great communications. One way of doing this is to assign the entire communication process to one person on each team. On the customer side, that person should have bought into the idea of offshoring, so they start out wanting the project to succeed. In addition they should be willing to make themselves available and understand the value of partnerships – as opposed to client- supplier relationships.

It is not just the customer that is responsible for communication in an offshore partnership. So, when selecting an outsourcer to work with it is vital that customers consider their company culture. Two companies that have a similar culture will have a higher level of compatibility and this in turn should lay the foundation for good communications – you start with both parties singing from the same type of hymn sheet at least.

Often customers are concerned that their outsource partner will not understand their project – particularly if it is large or complex. If this is a worry, then you need redouble your efforts to ensure good communication and to take the time to explain the project, otherwise the outsourcer’s team will not be able to fully undertake the work and it will all go wrong. The outsourcer’s developers are likely to be at least as skilled as the in-house ones – they just lack the access to the project knowledge.

Equally, the outsourcer must hold up its hands when it doesn’t understand the project and must press to have it properly understood. Dare I say, it is not worth taking the contract if you cannot fully understand the project you need to complete.

The onus on good communication is on both sides of the partnership. Invest the time to get this right and ‘risk’ involved in outsourcing is minimised– issues will be discussed and resolved before they become problems and your project will be on track for success.