January 14, 2014

What to Expect When You’re Outsourcing Software Product Development

In an ideal world, no enterprise would want to outsource any business function, much less their own software product development. Today, however, enterprises are no longer living in a ‘know-it-all, do-it-all’ cocoon. They are expanding their horizons and looking beyond the periphery of their own organizations to forge strategic partnerships when it comes to product development.

The emergence of what Forrester calls the Product Development Services 2.0 space is happening for a number of reasons. The confluence of cost-cutting concerns triggered by an uncertain economic climate, the emergence of complex and dynamic technologies, the need to disrupt markets, the relentless pursuit of innovation, and the need to increase speed to market to gain competitive advantages are just some of the primary drivers that necessitate the need for outsourced product development.

A word of caution, though, to anyone looking to outsource their product development for the first time, or to find a new partner: Not Every Outsourcing Story is a Success! Product development outsourcing disasters like the recent ObamaWare debacle can be a PR disaster for your business or your brand. To avoid finding yourself in a similar outsourcing disaster, below are some important tips that any organization should take into consideration before outsourcing their product development to a third party:

  • Treat It Like a New Hire – Do not treat the selection of an outsourced product partner any different than you would the next hire you want to have on board. Perform extensive due diligence to verify potential partners’ previous work. With a choice that could effectively make or break your business, don’t just take their word for it. And like with any new hire, do not necessarily assume that they will only be around for a time-boxed period. Assume that, like with an employee, they will be with the company for the duration.
  • Understand Your (& Their) Domain Prowess – What are the technology platforms and development disciplines required to bring your product to life? Is the company you are considering engaging with an expert in those technology domains? Ask the critical questions that you would want to delve deep into before investing your dollars.
  • Stress Scalability – The fact that markets are volatile and your needs around the product in question may be uncertain makes scalability all that much more important for an outsourced development partner. Having the ability to ramp your outsourced development team up or down based on current needs can be a major plus. Assess the partner on the basis of the infrastructure they have to meet not just your current but future business needs as well.
  • Product Development Approach – The new partner you are about to engage with should have a well-defined product lifecycle management approach. Whether they are an agile or a waterfall shop, the key question to ask is: can they really manage rapid development to release your product on time?
  • Product Ownership – Distinguishing between product development and project management can be the difference between chalk and cheese. Sophisticated software product development partners will take complete product ownership (instead of time-based project eyesight) and strives to create monetization opportunities.
  • Define Metrics for Success – It’s impossible to know how well an outsourced development partner is doing for you without first defining metrics for success. In a perfect world, you will establish measurable business metrics that can be tied to development efforts.

Once you have zeroed in on an outsourced product development partner and brought them on board, set up an internal team that becomes the primary point of contact and the de facto assessment unit to evaluate the performance of your product development partner on a quarterly, if not monthly, basis. Keep in mind that in this day and age, partnership breeds success! If you stick to these steps in hiring an outsourced product development partner, you will set yourself on the road to success right from the start.