INDUS NET JOURNAL

At Indus Net Technologies, we have been internally discussing about implementing a more software specific Quality Management system (QMS) since 2004. Capability Maturity Model (CMM) from Software Engineering Institute (SEI) of Carnegie Mellon University (CMU) was on top of our mind as this is a standard quality process followed by all the top offshore service providers.

We started talking to several consultants who can help us in process improvement in a way that it helps us in delivering better quality software to our clients and also benefit Indus Net Technologies by bringing about a much more disciplined way of writing software.

The first thing was to allocate a budget for the whole initiative. If you go by book, it sounds like a big investment because most of the consultancies quoted us around $20K to $35K for their services. However, on closer examination it was clear that the actual cost of “unaccounted” expenses that are supposed to go behind the scene is at least 3-4 times of the consulting fees. And the best part of it is that majority of the expense is an ongoing expense.

It soon became clear that we cannot move in this direction unless we have a set allocated budget of our annual revenue (which we cannot compromise under any circumstances) to go towards our quality management processes, the whole effort will be futile and will not evolve as we expect. The biggest challenge was to make sure that the company can continuously afford the cost year on year!

This whole thing delayed our initiative till mid 2006, when we found that we are ready for SEI CMM model.

The next question was the level that we should target. I had an idea that if the sponsoring organization wants, they can opt for the highest level i.e. Level 5 and achieve that. However the picture became very clear when we spoke to few reputed consultants – all of them spoke that the realistic goal is to achieve Level 3.

So the goal for 2007 was set to SEI CMM Level 3.

Now, I was facing the toughest question – Which consultant to opt for?

All the agencies are so different in their construct, approach, merits and demerits that the entire analysis leaves you puzzled. Add on – a bad headache at the end of the day.

One consultant is providing a very personalized service with a hands-on approach while some have the top consultants who will provide best practices from their experience in several organizations. One consultant was known to almost everyone, whereas the other one was not even known to my peer companies! One consultant will tailor training for individual employees and do 1-2-1 session to make sure that they understand the concepts well, whereas the other one has great trainers and one of the best quality training materials in the industry.

The call is a tough one! As of 29th December, I am still pondering about my choices and doing a detailed analysis. I am sitting and mapping these organizations with Indus Net Technologies and trying to find the best match.

We will collectively take a call on 31st December and sign up our partner for our journey into CMMi. Will definitely keep you updated.

Abhishek

I was thinking earlier today that I have been talking about outsourcing but I have not covered what are the different models of outsourcing that are available to a business when its finally ready to grow. Lets talk about that today.

Basically, when you are thinking about outsourcing, you have two fundamental models i.e. Onsite Outsourcing and Offshore Outsourcing.

Onsite Outsourcing
In this model the design, development and testing teams are allocated on the clients location directly for a particular period of time. This model is particularly useful when:

1. You need access to very specialized skill
2. The nature of the project is very confidential
3. Support is needed on a constant basis
4. Requirements are not defined clearly or they change dynamically

Savings: Low

Offshore Outsourcing
In this model the entire SDLC is executed at suppliers premises which can be located in geographically different location (typically in lower cost countries). In this model the communication is carried out by digital channels such as Phone, Email, Messengers, Video Conferences etc i.e. physical meeting is occasional if at all present. This model is used when:

1. You want to “Follow the Sun“
2. Lower the costs significantly
3. Have adequately defined requirements

Savings: High

Apart from the above fundamental models of outsourcing, there are several hybrid models. They have been discussed below:

Model 1: Offsite Outsourcing
In this model the supplier is located not inside your location but
somewhere near it. This model allows physical interaction with the
supplier when required. This model is ideally suited when:

1. The project is of shorter duration
2. Your office does not have the excess capacity to accommodate the suppliers team
3. The requirements of the project does not change very frequently.

Savings: Low

Model 2: Hybrid Model of Outsourcing
This model offers you the best of both worlds by separating various steps in SDLC into different locations. This model is typically offered by suppliers who have onsite office as well as an offshore development centre. The client is supported locally by a coordinator who in turns interacts with an offshore project manager.

In this model activities like requirement analysis, high level design, acceptance testing and deployment is done onsite where are development, detailed design and testing is done offshore.

Savings: Moderate

I hope the Christmas Holidays was fun and full of gifts for all our readers.

We tried our best to say thanks to all our customers, employees and business associates for the wonderful year that lie behind us. But, I think there is no better way to reach all our audiences, than writing a blog post for it.

Some of our customers also mailed greeting cards and new year wishes. We surely felt touched and closer to them than ever. Here is the card that our design team has created for this holiday season. Hope you like it!

2007 should be an amazing year too and we look forward to lot better blog posting and more in teraction with all our readers. You all are incredibly important to us!

Customers of a small business are no less demanding that of larger enterprises. Thus, speed and efficiency of delivery of services and projects is critical competing strategy for small business owners. You simply cannot overlook this aspect of your business.

Having 24 hours in-house operation is critical but it may not be an option that looks feasible due to operational constraints. “Follow the Sun” model of outsourcing is one tool that you can consider for having a 24×7 operations.

What’s “Follow the Sun” Model ?
The follow the sun model of outsourcing is aimed at creating a 24 hour virtual workday for your organization. In this model when the operations of one center goes off, the other center take over the responsibility for the next shift. Thus, for your customers it means that your organization is online 24 hours a day.

In theory this model creates continuous stream of production and cut down the calendar days required to deliver the project or product. I have discussed two hypothetical scenarios in which you can benefits from it:

24X7 Technical Support
If you are ISV, then you must need to provide support to your customers regularly. Spending too much time in dealing with support issues will deviate your attention from more important activities like feature enhancement or planning new products. On the contrary, not providing support timely will mean loss of credibility and rapport.

Using the Follow the Sun model, you can have your support staff located right here using our Dedicated Hiring Model. At the end of each day, you can compile a list of support issues and send it over to your team over here. While you are asleep, the team works and attends to all the support requests.

Thus, you can offer your customer guaranteed support within 24 hours.

24 Hours Update
How often do you clients send you bug-lists or requests that needs to be delivered the next day? If not much, do you think your clients will be impressed if you were able to do this? you bet !

If you are running a small IT services company then chances are you are programmer-entrepreneur or you have fully occupied technical staff who are already overburdened with work. How do you deliver great service to your customers in this scenario ? Answer is pretty simple: Follow the Sun!

If you have a dedicated team then you can simply let then handle these urgent bug fixes or updates and deliver them to your clients the very next day. This team can also work with your project team to shorten the calendar days that is required to finish a piece of work.

The “Follow the Sun” model has been used by large businesses since a long time now. They have mastered the operational issues involved in the process. Thus, we did not invent “follow the sun”, what we have done is that we have brought the same advantage to small businesses. Starting from the organization structure, policies, processes and prices, everything in our organization has been designed to effectively serve SMBs effectively and efficiently.

Alfred Nobel changed the course of his life when he read his own obituary which said: Le marchand de la mort est mort (“The merchant of death is dead”) and went on to say, “Dr. Alfred Nobel, who became rich by finding ways to kill more people faster than ever before, died yesterday.” After this, he left a sizable percentage of his property for establishing “The Nobel Prize”. Realizing what he was known for was a life changing event for him.

Sometimes getting to hear what people say about you when you are not there is great source of both inspiration and learning. I recently came across a post by Lisa Haneberg and decided to share it with our employees and other readers of this blog. Here are some excerpts:

Imagine that you are a fly in the elevator one week after you leave. Two people are talking about you. What is it you want them to say?Do you want to be known as the queen of exciting meetings (that would be my goal)? Or the king of provocative analysis? Do you want to be known for always being organized and prepared? Creative and innovative? Fun? Think about for what you want to be known and the type of reputation you seek to build.

I think she has a put that down very well. You can read her full post here.

Mr. Daniel Connor, our long time customer from USA decided to pay us a visit this week for a project that he was doing and also for meeting his team members. His trip lasted for 6 days in all and although the first 5 days was all business, we decided to go out and have some fun on the last day.

We took him out for shopping and he bought a lot of ethnic Indian stuff for his family. Here are some key things he was interested in buying:

1. Silk Sarees for his wife and two daughters
2. Statue of Ganesha (Which he referred to as Elephant God !)
3. Decorative items for his House
4. Traditional Indian outfit for his 8 years old son
5. Bollywood movies which are dubbed in English

At the end of his shopping spree, We decided to present him a traditional Indian “Sherwani”. He did liked one – Here are some pictures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It was fun day in all. I think he enjoyed it as well !

His visit was a great opportunity for both our companies to know each other better and strengthen the bond. We charted our plans for future development and his existing team was expanded.

What struck me in particular about Dan was his decisiveness – he was one of those kind of guys who make up their mind instantly about things and then stick to their decisions. Overall, it was a great pleasure to meet him.

Bon Voyage Dan and see you again in June !

I must admit, Christmas is nervous time for me.

Not only new business development is slow but there is very little movement within existing client base as well. This is not just me but the same is true for our clients as well.  Serving SME is hypothetically same as being like a baby within a mother’s womb. We get to feel the effect of any change in environment (both external or internal) almost immediately and there is very little we can do about it. If their sales are improving we need to scale up very fast and if its getting low then we need to ramp-down as well , sometimes at a notice of even less than a week!

Things are even more precarious because we are in the business of providing outsourcing solutions to SME. Thus we try to tread cautiously. First, there are chances of scale down in client’s offshore operations as they are busy in sales (In case of Retailers)  and hence do not want to focus much on ongoing development or feature improvement (In case of ISVs). Second, the billing cycle tends to get delayed which given the scale of our operations means quite a lot. Third, although there will be holidays in US from around 12/22 to 01/02 , in India the holiday will be only on 12/25. This means lot of potential idle time which for our client may mean “paying for nothing”.

The only way we can manage ourselves better is by helping our clients manage themselves better and here are the suggestions we are sending out to them:

Plan in advance
You need to plan in advance for work that is going to be done between 22nd December and 2nd January. If you have a project running or a new project starting during this phase then please ensure that all input resources (ex. specifications, server access, clarifications) are available with your team. From your perspective, during these days the work will be done almost on a autopilot with little interaction from you, so you need to take extra care to ensure that there are no communication gaps.

Identify Current Issues and Stop them from Escalating Further
If any current assignment is stuck or if there is any issue then make sure that you attempt to resolve them ASAP. This is especially true if you have a non-responsive clients or your clients are supposed to get back to you with a feedback on latest updates. Give yourself a deadline of resolving these issues by 21st December because if they remain open after that then will extend much into the middle of January.

Mandate Regular Updates during Holidays
Ask your team to send you an update by email at the end of each day. This will help you in doing a postmortem of what happened during these days.

Leave a method to get in touch with you
Make sure that we have a method to get in touch with you in case there is an emergency. Thus, leaving your mobile number if a good idea!

Trust but Verify!
Try to take out 10 mins at the end of each day to check back on the progress of the work. If you are traveling, then it makes sense to call your Lead developer/ Project Manager/ Account Manager atleast once a week to get a “feel” of things. If you want to review progress with your team then communicate the date of conference in advance.

Let your team handle the support !
Remember, here in India we are closed only on 25th December. So you don’t have to come back from holidays and deal with a deluge of support requests. You can work with your account manager to setup a way of how the support of your product will be handled in this phase. Perhaps, someone from your existing dedicated team can take that up or we can make some other arrangement.

Hello All,

We recently finished a project for Wendy Le Noble. The project went off nicely and we got the feedback from her.

When I engaged your company I was a little unsure about using an offshore provider for this – you know -all sorts of questions – will they be able to get the English right, the spelling etc, will I actually get a web page – so many bad stories we hear about using offshore companies.  After the first time with Tapas on Skype I thought this looks as though it may be ok and by the end of this very extensive page Tapas has surpassed all my expectations and has produced something I thought would be impossible to rely over skype system. He has been patient with my requests for additions and modifications throughout the project and every time I thought I may not be able to achieve what was in my mind he made it happen – this man is a fantastic asset to your company with his understanding and skills for programming from my very basic spec’s to what has been produced.  I have enjoyed working with Tapas all the way through this project and know he has been patient with my requests when something was not working how I had envisaged it to – he came up with something better.

I have to say the design has been exceptional, the programming skills of the highest quality, and the functionality of the web page the absolutely best I can find.

Now I need a marketing department to match this finished product and my web page will compete with the best in years to come if not surpass them.

I have already engaged your company for my second project and am now singing your praises to all who need a web page to promote their business online

Thank you so much for making this project come to a reality for me. It is has met all my expectations and more than words can say.

Look out version 2 it is on its way.

Thank you

Oztrademe.com.au

Thank you; we will do our best again with your next project – Souvit

Small Business Organizations are driven by strong entrepreneurs. The structure of these organizations are very flat and generally they have an the owner who does the sales, client co-ordination and manages a team of 5-7 technical resources mainly developers and designers. The owners are very enterprising people but generally lack management experience. This is specially true for start-up IT services organizations for whom offshoring is of even greater benefit.

The dedicated hiring service that we offer appeals to them as it promises to improve the profits immediately by 30% – 70%. The typical logic works like this :

Annual Cost of In-House Designer: $25, 000 (Average low salary in US as per Salary.com)

Annual Cost of Offshore Designer: $17, 400

Savings: $7, 600 or 30%

Thats alright! But soon they complain that they have to spend too much time in interacting with the offshore team. A typical expectation is that they will send off the project description (Not specification!) and get the expected output. As trivial as this may seem but it a harsh reality that we have live with.

The next stage of this complain is that they begin saying that the project is not profitable enough for them. Although the whole loss of profit is attributed to the offshore team, there is a critical missing point over here:

These organizations don’t have a project manager at their end. Here is what a project manager supposed to do for you:

The project manager is responsible for the coordination and completion of projects. Oversees all aspects of projects. Sets deadlines, assigns responsibilities, and monitors and summarizes progress of project. Prepares reports for upper management regarding status of project. Familiar with a variety of the field’s concepts, practices, and procedures. Relies on limited experience and judgment to plan and accomplish goals. Performs a variety of tasks. Leads and directs the work of others.

Spending too much time with the offshore team
A typical cost of hiring a local project manager in the US is $35, 000 – $100, 000. If you are not employing the services of project manager then this is your opportunity cost i.e. by doing the job of a project manager you are incurring this cost but since you are not paying this out of your pocket, you don’t seem to realize it. If you are spending all your time on project management activities then you are paying yourself money which is equivalent to the salary of a project manager. You realize this money as the sum of profits that you accumulate over the year for all the projects.

Thus, either you have to stop complaining about this or you need to appoint a project manager who will do this for you while you can concentrate on client facing activities and generating sales.

Low Profitability of Projects
In a typical contract, the cost of project management is about 15% – 50% depending on the size and complexity of the job. Thus, you a making a big mistake by not factoring this in while you are quoting your clients. Apart from this there are several hidden costs that lower the profitability rate.

Thus in order to achieve the maximum benefit out of dedicated hiring services, you need to increase your billing rate by atleast 15% or at worse spread the cost of project manager across average number of projects. Thus, if you are planning to accept 50 contracts an year at an average cost of $2000 each, you can hire a project manager at lets say, $36, 000 and then increase the average contract value to $2720.

There are not many companies around that can either explain you this or suggest a way out. I can, because over the years we have accumulated great deal of experience in working with small IT service organizations.

Last week, during an informal discussion with one of my prospective client, an interesting question came up. To put it word-to-word, it was:

How do we do branding on internet? Is it true that Internet is a global media which brings businesses at the same level playing field? If yes, then it should not cost “a lot” to build a brand online? How much will you charge me for my online branding efforts?

My answer was:

You are right. It does not cost an-arm-and-a-leg to create a brand on internet. If-

• you are innovative in designing your offering,
• present the offering in an easy-to-understand way,
• spread your message in a viral way,

Innovation makes you stand out
Most of the companies try to simply put the same “old offering” in a new bottle without any adding any value or adapting it to a particular niche market. This makes the product or service a “me too” type. The consumer do not need to really “remember” such a offering, as they can get it anywhere.

Communication is the key!
In my opinion, communicating the product/service benefits or not doing so, determines the success of any marketing campaign. Effective communication of the “very basic facts” can make you look much better than your competition.

For example if the packaging on a loaf says – “Our breads are made in the best automated plants and are never touched by hands from start till end” – it does not mean that the other bakeries in town make breads with hand!

However it will communicate to the consumer that one brand of bread is better than the other one, even if the process of making them is the same.

Customers are the best viral marketers!
Deliver the best to your customers and let them know that you will be extremely happy if they can recommend you to their friends as a token of appriciation. Your customers can be your brand ambassadoors. They can spread messages in minutes. However it is important that they spread the right “unique selling proposition” that you have associated with your product / service. On internet it is very easy to spread the word, as everyone is virtually connected and an email is more than enough to recommend a given business.

So, if you are keeping up your “brand promise” to your customers, you can be rest assured that you are gaining a solid brand image in the given “niche market” for the “niche innovative product/service” that you are offering.

I call it Internet branding on a shoe-string budget!

Spending millions of dollars on advertising and not meeting your “brand promise” is a waste of money – something that caused the infamous dot com bust!

Abhishek