What Do Standards Have to Do With Nearshore Vendor Management?

By Joerg Stimmer

The main drivers for Nearshore services delivery are well known from many sources. More experienced, outsourcing customers expect their service providers to deliver more value, e.g. increased transparency and flexibility – at even lower costs. This requires innovative solutions.

Software as a Service (SaaS) as well as Cloud Computing are two of the presently widest discussed topics. It is my opinion that, in combination with a maturing standardization in IT services delivery, usage of innovative tools as “SaaS, out of the private Cloud” will provide significant benefits to users.

Let us take Nearshore software development: The “currently common” set up when connecting external service providers entails operating systems at customer’s site, and the external service provider gaining access via a dedicated VPN connection. This set up has significant drawbacks:

–          Customer needs to bear all costs

–          Integration, support and maintenance is sole responsibility of customer

–          Security risks due to opening of own systems for service provider

–          Service provider needs to work with “X different systems for X customers“

–          In general no use of “Best Practices“ with respect to systems and processes

–          No synergies between different projects of the service provider

In theory, another alternative would be to operate the systems at the service provider’s location. Due to even further significant drawbacks, this is already ruled out in most cases by customers, e.g.

–          Lack of control and no secured access to source code, data etc.

–          Several systems to be used by each customer, “X systems for X service providers“

–          Change of service provider complex, strong “lock in”

–          Security risks due to operations at service provider (India, Russia…)

–          Low interest of service provider to provide customer full control and transparency

–          In general no synergies or Best Practices

Being convinced that standardization combined with widely accepted best practices will take place soon, I see a central (SaaS, out of the private Cloud) set up as most beneficial to users and – in the long term – to well performing service providers:

–          One system, no complex integration with local systems required (“in final stage”)

–          Cost effective usage of SaaS, no ramp up costs

–          Change of service provider possible without change of systems or data

–          No security risks due to certified operations in a trusted country

–          Full transparency and control of data and of the service provider

–          Systems optimised for global services delivery and its governance, best practices

–          Synergies concerning processes, interfaces as well as costs or best practices

Significant savings can be generated through standardization across all phases of the outsourcing lifecycle. Clever combination with centralised SaaS tools can provide significant value propositions, especially to SMEs as customers. It will be interesting to see who will adapt to the new opportunities first.

Dr. Joerg Stimmer is Vice President of the German Chapter of the European Outsourcing Association and a regular speaker at sourcing conferences. He is also Founder and Managing Director of pliXos GmbH, a venture capital funded start up. Stimmer previously headed the central European business of Tech Mahindra. He can be reached at joerg.stimmer@plixos.com