Software's Coming Home

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Outsourcing software delivery capability has been a trend over the last few decades. Even outsourced Agile models have seen successes. However, with more focus on dynamic digital software products, rapidly evolving customer needs and empowered product teams, has the outsourced software model run its course?

For a number of my clients, there has been a shift towards bringing software development capability back in house. For sure, the development partner model works well when the relationship is good and requirements stable. But the team behaviour often ends up being driven by the commercial contract when the relationship gets tense. Delivery then typically moves back to a restrictive waterfall model. Which is fine, if that’s what you need.


But a digital solution is more than just building software on a known, stable platform. You are likely to be aiming to deliver an innovative product and continuous value to your customer involving many elements of different solutions and business processes. There is a move away from project teams with a specific set of tasks to complete, towards product-focused teams working end-to-end to deliver everything a product needs throughout its evolution. The result is that the lines between product owner and software supplier are getting blurred.


You could do this with outsourcing partners – but it requires a very mature relationship. You will need to define contractual terms which allow the whole product team to operate as one, minimising handoffs. A very difficult contract to draft for both parties. The buyer wants to make sure her supplier is held to task. The supplier wants to make sure he is paid for agreed work. But if the business genuinely needs to shift course mid-contract, things can get sticky.


More organisations (and some big ones at that) have recognised that to create your own great market-differentiating products, it is better to bring the talent in-house. If you create a product team that builds a deep understanding of your product, it will in turn become a great asset to your organisation.


So how do you create the best product team? Your focus should be to use techniques that allow your team to grow their knowledge. Allow them to be daring and explore options. Encourage them to think of innovative solutions and deliver regular change as a habit. If you can instil this way of working into your own teams their delivery potential will far exceed anything that can be achieved by an external supplier.


Of course, there is still a place for supplier build of digital products. But you should think carefully about how these are outsourced. Don’t just contract for software delivery. Get your supplier to deliver the whole product. Just as you would with an internal team.


The next big question is: what digital products do you want to own, and which are you happy to be owned by your suppliers? Outsource standard products that you need to deliver only as well as your competitors. But build strong product teams in-house for those products that delight your customers and bring new customers to your door. 2016 really is the time for software to come home. Let’s hope this time football comes home too!


Good luck to Wales, Northern Ireland and England in Euro 2016  !


Talk to This email address is being protected from spambots. You need JavaScript enabled to view it. about how we can help you create and grow the right product teams in your organisation. 

Peter Weare

Industry leader in digital transformation. Passionate about delivering a frictionless consumer  experience. Regular commenter on getting delivery right.

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