Outsourcing Made Right – Think Big, but Buy Small by Ivar Jacobson

Let’s be realistic.  In a column like this I can only give you a hint of what you as a buyer need to do.  However, it is amazing how many outsourcing agreements would benefit from this basic advice.  But note that basic means that there may be exceptions.

1.       Split the work into smaller, separately defined pieces that potentially can be given to different vendors.

2.       Separate work that is exploratory in nature from work that is mere production.  Production can be calculated at a fixed price, whereas exploratory work can’t reasonably be calculated in advance.  For instance don’t ask for a fixed price until you know the key requirements (say 60-80% of all requirements), and until you know how you want it to be built (you must have an architecture that is implementable). 

3.       It is beyond human ability to specify all requirements for software upfront.  Don’t accept a contractual model where all requirements have to be specified and agreed upon early.  Even worse is to agree on requirements upfront and then pay an unspecified amount for each change.  This is nothing less than horse dealer contracts. 

4.       Outsourcing software development without an architecture is like asking someone to build a house without an architecture.  You would never do that. However, for software, drawings are not enough.  You need to make sure that the architecture can be realized.  All important risks (performance, etc.) must have been eliminated.  That requires you need some executable code – usually 5-10% of the final code must be in place before someone can calculate a fixed price.

5.       As for a house, you need to inspect at certain points to make sure that the work is on track.  Inspection in our case must include executable code to be meaningful.

Now, this is not easy to do.  Still, this is just the basics.  For large outsourcing projects such as building an enterprise wide SOA system, the required competencies are much higher. 

6.       You need to be able to split the work among several subcontractors.  Thus, you need to set a building standard.  Otherwise different vendors will deliver non-compatible software.  It is not enough to specify what platform to use, but you need to specify how to make drawings (UML for example), what design practices to use (use cases for example), when inspection needs to happen and more.

The general advice is to split the work in smaller manageable pieces with fast deliveries.  Think big, but buy small!  Western companies outsourced big M$ projects to India.  Japanese companies are not giving up control that easily.  Their outsourcing contracts to China are in the order of $100k.  Many western companies are now taking back (insourcing) their software to maintain and develop it at home.  The new strategy is to insource the business critical applications, but outsource less critical software.  Reflecting on this, it seems we are going back to where we were before the outsourcing frenzy started.

Again, if you don’t have this competence or you cannot get it, don’t even bother to outsource your software development.  And, competency is not enough.  You need to be smart!

Outsourcing made right is very hard by Ivar Jacobson

Outsourcing is not new, we have done outsourcing for decades.  The only thing that is new is that we are now buying software from companies located in different parts of the world.  These companies have different business culture and their employees speak other languages. 

Let’s not make any mistake: outsourcing done well is very hard.  It is much harder to be successful with outsourcing than to develop the software ourselves.   So why do we then do it?  Because we don’t have the needed competencies or resources ourselves or because we believe we will get the job done for much less money. Unfortunately, many companies discover far too late that they have made themselves fools and don’t get what they had hoped to get.  Since they have given up their own resources they have no easy way forward. And of course they cannot admit it. There is a new trend arising.  Outsourcing companies take back its software development.  We have got insourcing.

However, some companies are successful with outsourcing.  Thus outsourcing will continue to be important, but it won’t be the silver bullet it has been for the past couple of years.  There is no magic. 

Actually outsourcing software is quite similar to building your own home with subcontractors.  The most obvious thing to do is to create a competitive environment.  You want to have alternatives and not be stuck with one vendor – a vendor that may want to give you a low price for the first order and then lock you in for the future.  Competition as we all know is not just about money, but also about quality (in a wide sense) and schedule.  In summary what you want is good software, quickly and at low cost.

In my next column/blog I will give concrete advices on how to succeed with outsourcing.  Until then a few words about project managers.

You will need a strong and competent project manager to succeed with outsourcing.  This person needs a very solid and modern background from the entire lifecycle of software development including maintenance.  If you don’t have such a project manager, don’t even bother to outsource complete software products.  Many vendors will happily tell you that you don’t need to worry, since they have it.  That is a dream scenario for those vendors.   If you don’t have that strong project manager you need to get someone from outside.  Hire someone from a company that won’t be involved in the bidding and that won’t get a kick-back from any of the candidate vendors.  That someone should also understand the basics in negotiations.  You can be sure that the bigger software vendors have experts in negotiations, and, they will know when they are dealing with pigeons.

 The only way to succeed in outsourcing is that you will have to be smart.  Very smart!

Learning by example by Ivar Jacobson

In the work that we do people often want a recipe for developing software, a series of steps that predictably produce a result. Recipes are good, whether in cooking or in other areas, but they are not enough, and not everything that is interesting can be reduced to a simple recipe.

Over the years I've had the chance to observe how people learn. Reflecting on how I learn new things as well, I've come to the conclusion that many people, myself included, don't learn very well from following a recipe. In fact I'm rather hopeless at following step-by-step instructions.  As a kid I liked to tear things apart, figure out how they worked, and then put them back together. And most of the time they actually worked when I did eventually get them back together.

Taking something apart and putting it back together is a special case of learning by example where the thing you are taking apart is the example.  Once you've done this enough you can start improvising and designing new ways to solve the problem.

A lot of software development works the same way - whether it is a piece of code or a requirements specification, a lot can be learned from tearing apart a good example, understanding why it is good and how it works, and then, over time, starting to improvise those lessons learned on new problems.  In fact, given the choice between templates and a good example I'll choose the good example any time.  Even if you don't understand all the principles right away, most of us are clever enough to copy the parts that work that we don't understand and be creative in areas where we need to.  Over time we learn and the need to mimic goes away.  This is the way that all of us learned our native tongues, and the approach still serves us well today.

The problem with templates by Ivar Jacobson

Over the years I've come to regard 'templates' as one of the great evils of software process efforts. I was actually leading the Rational Unified Process team about 9 years ago when we made a big push to create templates for all the artifacts.  At the time I thought it was a good idea since a lot of people had been asking for them. I now regard the decision as having done a lot of damage.

 That statement is likely to shock some - surely I can't be arguing against having standard formats for organizing project information!  Of course I am not arguing against this - but I am against the way that templates are used in many organizations.  

In these organizations, people have little idea of the purpose of many artifacts or work products - they don't understand what they are doing or why, they just know (or believe) that they need to produce these work products.  The templates have been provided as a cheap way of rolling out the process - rather than actually building skills the templates are provided and people are instructed to simply fill out the templates to follow the process.

This approach is wholly ineffective. Organizations fail their people when they require artifacts without explaining why they are needed, or helping them to understand if they are needed, or helping them to improve their skills doing the real work that the artifacts merely document.

The usual result of providing standard templates is that people often blindly fill out the template sections, not knowing what to put in them, feeling compelled to fill out every section because it's there.  Mindlessly filling out templates is a waste of time - the results are valueless, albeit standard, and do not contribute to positive project results.  

I am not arguing for eliminating templates, however - there is some value in having a standard way of formatting and organizing information, but there needs to be some real information in the results produced.  The real problem is lack of knowledge and skills needed to do the work - this is where effort should be spent, not in standardizing templates.  Once people have expertise in doing the work, a consensus can be reached in the organization about how to document the work.  "Templates" will emerge out of that.

Outsourcing made wrong – a real case by Ivar Jacobson

A few days ago I wrote about how outsourcing goes wrong.  Now I will explain more in detail a real case.

A couple of weeks ago I was in the US and visited a state government.  They had outsourced the development of their new Enterprise Software to a US based international software house here called Smarty for the nice sum of several hundred million dollars.

  1.  Smarty would develop the enterprise software in three years, then install it, and maintain it for 18 months.  Smarty is responsible for process, architecture, language, tools, and whatever they do will be taken over by the State.
  2. Fixed price from the beginning, but changes after signed off specification would be extra.
  3. Smarty would deliver a specification during the project and agree with the State on this before moving on.
  4. Deliveries were phase based: requirement specification, higher level design, lower level design, code and unit test.
  5.  All difficult tests (integration test, performance test, stress test, system test) would be done by the State.

This is a dream contract for Smarty.  It just cannot go wrong.  The State is locked in early to a fixed price. 

The State has agreed to review and subsequently sign off the requirements once they are thrown over the wall from Smarty.  This sounds OK, but it is horribly wrong.  It is beyond human ability to sign off the requirements for a single product even, yet alone totally impossible for an enterprise system.  No one knows the detailed requirements or can fully understand just papers.  The business people, the users and all other stakeholders have some more or less clear ideas of what they want to get done, but we all know that their detailed requirements always change as soon as they get something to use.  Moreover, one of the most important requirements for the client is to get a system that can be maintained and extended for as long as the business will stay…and that must be thought of as forever.  However, Smarty is protected.

To deliver a specification to be signed off, to deliver drawings, and code is the simple part of the project, since you just deliver paper-ware.  You really don’t need to be delayed in delivering paper-ware, you just write a little less <grin>.  And, being a bit ironic, the good thing from Smarty’s point of view is that paper-ware cannot be validated or tested, so nothing can go wrong.  Thus everything will go very well until integration test and acceptance test.  However, in our case this was moved to the State.  Here hell will break loose.

First, of course, it will be very hard to get the software to work as specified and this is where projects are delayed.  However, most important, it will be extremely hard if not impossible to validate that the software does what the business and its users want it to do. With this approach, the State won’t know what s/he will get until after the whole huge project is at its expected end.  However, Smarty is protected: “we did what we said we would do”.  Moreover, the requirements on maintainability and extensibility will not be tested, because they can’t be tested.  The State won’t know until the software is taken over and it needs to be improved, but then Smarty is long since gone.

The case I have just described is not unique.  Many companies which have moved into outsourcing feel cheated.  They have trusted that the vendor knows how to make its customers successful, and the vendor believes they can achieve that. Once the deal is underway, there is not much more to do.  The client has restructured the company to have hundreds or more people working for her/him in the way the vendor has specified.  The client has made a bad deal and doesn’t want to make this public.  And, since everyone is doing the same thing, the client is in good company and can say:  We just need to make it better next time.

However, this would never have had to happen if the deal had been structured smart.

Outsourcing made wrong by Ivar Jacobson

Outsourcing is hot!  Every major corporation around the globe is outsourcing all or part of their software development.  Examples come from all industries: banking, insurance, utilities and government.  They outsource to the large software houses in for instance India or in the US and UK which of course have offshore development in India. And unfortunately the result is lots of unsuccessful projects.  However, the failures are often never talked about because the vendor has got a fantastic contract and the customer won’t speak up about poor contracts that they reviewed and approved.  This is wonderful business for the software houses.  This reminds me of the saying: “My grandfather was a horse trader, my father was a used car salesman, I am myself in the software business.”

Why do these types of projects fail? There are many reasons, but they can all be summarized by saying that they were not smart.  The buyer doesn’t know what he is buying and the vendor doesn’t know how to make it work.  If you were as cautious when buying an enterprise system as you were when buying your own house, you would be much better off.  Would you buy a house from someone by just saying “give me what I need”, and then pay them a fixed price?  No, of course not, but this or similar is what many outsourcing deals are about.  After the agreement the buyer just waits to see what he will get say three years down the road. On that path he will have to sign off on requirements that look good and complete, but which due to the ever-changing nature of software requirements are only correct to say 60%.  Following that path you will get drawings that you don’t know if they ever can be built.  At the end of that path you will have to take over the software without knowing for sure that it works for the people who are supposed to live with it.  This is what people do.  The vendors are protected because you agreed originally to sign off after each phase and you did so because you believed it would work.  It doesn’t work for software.  For enterprise systems it is a proven path to failure. 

The vendor wants happy customers, but s/he just don’t know how to do these kinds of huge projects successfully.  Or maybe the deal on the table is irresistible, and since, most often the vendor is more competent than the buyer and they won’t put themselves in a position to lose anything.

What I say here is controversial. However, someone has to say it.  Now, it should also be noted that there are companies that are very successful in outsourcing.  Their approach to outsourcing is very different based on an understanding on the nature of software, on the importance of starting small but scaling up as quickly as possible (but not quicker <grin>).  I will in another column talk about succeeding with outsourcing.  Some of the things I will talk about are:

  1.  Quickly build an architectural roadmap.
  2.  Separate work that can be given a fixed price from work that cannot reasonable be calculated upfront.
  3.  Split the big contract into many smaller contracts.
  4.  Make room for competition by specifying standards and tools.
  5. Deliver early, get feedback early.

Simply you will have to be very smart.

"Earning" earned value by Ivar Jacobson

Traditional project management approaches focus on planning in detail, assigning the resulting tasks to people and then tracking "progress" as measured by completed tasks. The problem with measuring progress this way is that completing a task, while important, is hard to correlate with progress against the overall goal - just because you've completed 20% of the tasks does not mean that you're 20% done - and for tasks that take a long time to complete the self-reported estimates of "percent complete" is often merely "wishful thinking".

My preference is to measure progress in a concrete and measurable way - in the form of tested scenarios, following an iterative project management approach.  In other words, planning works iteration by iteration, with each iteration developing and testing one or more scenarios.  At the end of each iteration, you have a set of developed and tested scenarios, making progress easier to measure: knowing that you've developed and tested 20 out of 100 scenarios is a lot more meaningful than knowing that you've completed 20% of the tasks - especially if those tasks are focused on creating documentation rather than running and tested code.  Scenarios correlate nicely with business value - each scenario should be useful to at least some subset of the stakeholders.  In my view, only when you've successfully tested a scenario can you claim to have "earned value".

Yes, RUP is my baby by Ivar Jacobson

 I often get the question:  “RUP was your baby, but how do you look upon RUP today?”  In an interview a couple of years ago I responded jokingly: “Yes, RUP is my baby, but you know babies grow up and some of them need correction.”  RUP was created in Sweden under the name Objectory.  This was in 1987. 


Objectory was really new since its base could be used to describe all aspects of software development.  Our focus was to identify all of the rules that we use when we develop good software: what are good use cases, good components, good test cases, etc.  The literature in software engineering was totally empty in this space at the time. In order to do this we used object modeling to describe Objectory.  Now we could let the base grow forever – technically speaking.    Any company could make their own new process using Objectory.


Objectory became very successful.  It survived the merge with Rational in 1995.  The next version was named Rational Objectory Process, but after the success of UML, the name was changed to the Rational Unified Process or RUP as we all know it.  In the work of merging the two companies, the process content grew significantly.  However, hidden behind the size, our innovation of how to create a process base and the rules for goodness survived.  The crown jewels of Objectory had survived!


Thus, RUP is one of my babies.  The challenges with Objectory and consequently with RUP were serious. 


  1. Adoption
    Although our way of working in creating a process base was new and great, adoption became quite expensive.  To truly be successful with the adoption and consistent usage was to involve customization, mentoring and consulting which most customers couldn’t afford.  Thus the success rate was too low.
  2. Growth
    RUP was developed inside one company and all new ideas from the outside world had to be filtered by our own people and added to RUP.  It goes without saying that ideas come from anywhere in the world and by having a process be company owned makes it difficult to assimilate these great ideas.  The use of community much like what has been done with open source models would allow for continuous input and improvement.  This also allows for scrutiny. 
  3. Execution 
    All processes are paper-ware and often managed by people who don’t use the process.  This quickly becomes a problem in most organizations because the process becomes a religious document and not a realistic one.  This then has the effect that what teams do and what the process tells them to do is often not in synch.  And since the team is in charge (doing the work) the value of process becomes small.


These challenges paved the way for the agile movement.  The different agile methodologists have one thing in common: they hate RUP.  But that is NOT very smart. There are lots of good ideas in RUP.  Many companies have made the effort in adopting RUP and done so quite successfully.  This has provided them with a very competent staff and something to build on for the future.


However, “the baby needs correction”, and I and my company have done so.  The adoption problem is attacked by focus on the essentials and being light instead of trying to be complete.  We use cards and game boards to describe the process.  Moreover, you don’t need to adopt a complete process all at once, just adopt a practice at the time.  The growth problem is not a problem anymore, since we downplay big process and we make instead practices first class citizens.  Practices can come from any source including the RUP and much of the practice work we have done is in support of RUP adoption. Practices can be composed to create your own way of working.  Finally, the execution problem which is the hardest to achieve, is for the time being our little secret, but you are welcome to learn more about it by studying EssWork and EssUP. 


Trust me, this is very smart.

Everyone wants to be Agile by Ivar Jacobson

During a recent trip to China and Australia I observed that everyone wants to be agile.   It may be that Northern Europe and the USA are a bit ahead but the trend is clear all over the world.  In a round table meeting with CIO’s, I usually ask what people are particularly interested in right now.  Five years ago a common answer was we are trying to adopt the Unified Process.  Now, the same question returns the answer we are trying to move to agile.  Thus you would assume that people know what agile is.     


The last month I gave four public presentations with around 100-200 people each.  I met with about twelve companies.  At every occasion, I asked what really is new with agile.  Here are typical unfiltered answers: “rapid iterations”, “working software”, “coping with change”, “communication”, “flexible”, “adaptable”, “eliminate waste”, “accepting changes”, “small iterations”, “feature-driven”, “continued integrations”, “test driven development”, “no documentation”, “people before process”, “adapt to change”, “the name”, “the team sets their own priority”, “early stakeholder involvement”.


An absolute majority, around 60%, said that agile is about iterations (or sprints to use the Scrum terminology).  It is a bit disappointing that people don’t know that iterative development was introduced more than 25 years ago by Barry Boehm.  He called it spiral development.

It is even more disappointing to hear that people think that RUP is not iterative, but based on the waterfall model.  In fact, if you wanted to use RUP for waterfall development you would have to make a real effort to restructure RUP.  We clearly said that everyone should move to iterations for the same reasons that people now like about agile: rapid, working software, change, flexible, risks, etc.


Given that around 60% think that agile is about iterations, and RUP was designed to support iterations, is RUP agile?  My answer is that RUP can be applied in an agile way but RUP itself is not agile.  Thus there need to be something more. 


20% of the answers were about technical ideas such as feature-driven, test-driven, user stories, etc.  However, none of these ideas would have created a revolution on their own.


10% of the answers were about light process – light to understand, light to use and light on documentation.  Now we start to come to the core of agile.  I truly believe that in the past we have been too ambitious in describing process, in adopting too much process and in documentation.  The reality is that even if people write a lot, very few people will ever read it.  Thus the trend towards light will sustain.  However, it is easy to be light.  The trick is to be as light as possible but not lighter.  I believe you will find our work on EssUP and EssWork new and fresh.


The last 10% were about how to work together daily, weekly, monthly, etc.  It is about communication, people and teams, about how to organize teams, how to take decisions, how to protect the team from the outside.  This is what we call social engineering.  Agile has put the finger on the fact that we need highly motivated and competent people to be successful with software development.  No process has ever developed software.  It has always been done by people.  We have of course always known this, but we have not pushed it as much.  The focus on people is really what makes agile unique, and this is why agile originally broke through.


Now, it doesn’t really matter what people think agile is.  Agile has become more of a philosophy.  It appears that everything good is now agile.  Thus it is not really easy to tell what agile is.  However, one thing we know.  Everyone will subscribe to being agile (as they should) so one day agile will go without saying. 


Let me though make a cautious reservation.  There is an obvious danger that as it continues, agile will be discredited because the concept is sometimes used as an excuse for doing shoddy work, for having no requirements, for developing whatever the developers feel like doing.  This is not in the spirit of "true agility" but if it continues it will give agility a bad name.


Whatever happens we will one day get a new fashion.  I can’t tell you what it will be but be sure of one thing: it will be smart, very smart.

Software development a la mode by Ivar Jacobson

The style in which we develop software is as fashion influenced as the clothing style, maybe even more.  We don’t dress ourselves dramatic different more than every five to ten years, but when it comes to software we change our development style dramatically every five years. Just a few years ago the Unified Process was a la mode and every software organization was adopting UP one way or the other.  Just 2-3 years ago the hottest style was Extreme Programming XP, but now I hear very little about XP.  Now, everyone is running after the next “silver bullet” Scrum.


But what about Scrum, isn’t it fantastic?  When I for the first time met Ken Schwaber, a father of Scrum, I said: “What I like about Scrum is that it describes how really good project managers motivate people and run an iterative project.”  I continued: “…and its beauty comes from being agnostic to how you actually do things…you can pick your own way to do requirements, design, code and test.” I summarized: “Can I label Scrum ‘a common sense project management approach’?”  “Yes”, said Ken, “that label works”.  After this introduction we had a lot to talk about.


I can assure you that the founders of Scrum didn’t view their baby as a silver bullet, but with all the pressure from people who love fashion and want to create buzz, they may very well have to accept that they have created a silver bullet.


I think Scrum is a great project management practice.  It also includes some good social engineering work patterns which make it agile. 


However, that is all it is. 

  • You still need all the other practices that a good master of software needs to excel in, such as requirements, tests, architecture, components, modeling, configurations, and tools, etc.  This is all quite basic but important stuff. 
  • You also need to know how to build complex architectures such as SOA, PLA, EDA, and EA, architectures that are not just paper-ware but executable. 
  • Finally, Scrum is not enough if you want to know how to scale to large distributed organizations which may have outsourced projects.


What would make sense to do?

  • If you already are a Scrum fan you can say that you need Scrum++ where the Scrum stands for the tip of the iceberg and the ++ stands for the bottom of the iceberg which constitute all the other good practices that you will need.
  • If you are not a Scrum fan, you could consider replacing your current project management practice with a Scrum practice.  You can still work as you did before so you don’t need to throw out the baby with the bathwater.  However, you would use Scrum for project management for smaller projects.  For larger organizations you will need more.
  • In both cases you need to use modern social engineering work patterns as you need to be agile.


The ability to mix and match practices from different camps is what I and my company have been working with over the last four years, and now we can do it.  That will allow us to move forward and stay away from the silver bullets, the hype, the buzz and the fashion and treat software with the respect it deserves.


This would be smart.  Smart by the industry. 

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