Enterprises Are Starting to Outsource Their Application Development. But Isn't That Really Risky? - Part 1
February 26, 2020

Eric Thacker
System Soft Technologies

Application development used to be relatively simple. You built one application to solve one problem that users accessed through one type of interface on one type of device. Requirements, data types, and formats were all pretty static. Development was linear and predictable. Skill sets and the expertise of developers and user expectations were well-defined, not too diverse, and stable.

Today, organizational innovation as fueled by digital transformation (DT) has completely changed this model. A tremendous variety of enterprise users (internal and external) demand a user experience that deliver flexible functionality that they can access across a number of interfaces, using a plethora of access pathways, such as cloud, mobile devices and apps, wearables, digital assistants or browsers. Their needs and expectations are fluid and the applications built must accommodate a much wider spectrum of requirements.

For organizations to effectively service their customers in this new environment in a differentiated way, they must develop and innovate around DT in three separate yet interconnected areas: expertise, speed and agility.

Expertise

To meet user demands that grow ever more complex and dynamic, organizations must have access to the latest technologies and methods for application development. Given the variety, depth, and changing nature of these capabilities, organizations increasingly struggle to deliver them solely using internal teams. It is nearly impossible for an in-house team to maintain enough competence in cutting-edge DT technologies and methods to deliver applications that meet modern user requirements and/or have sufficient expertise in AI, machine learning, Big Data, advanced analytics, responsive design, and a multitude of programming languages.

Outsourcing some or all aspects of application development gives organizations access to a wide variety of experts and experience to fill in any gaps in their existing DT teams. This provides the opportunity to tap into the global technical pool and leverage broader capabilities that help ensure they can build and iterate applications that accommodate changing user demands.

This is the same strategy that was adopted with many of the "as-a-Service" offerings in the past. To avoid having to develop, integrate, and maintain IT products and services, organizations shifted over to SaaS, PaaS, IaaS, for example. In some cases, the shift was complete and long-term, such as with Salesforce.com. In others, such as some AWS subscriptions, usage was only temporary or as needed to support unique requirements or demand spikes. Application development outsourcing follows the same vein of tapping into external capabilities to augment those that are internal in order to solve problems quickly and cost effectively.

Speed

Given DT demands frequent and sometimes dramatic updates, delivering those changes rapidly is a tremendous challenge for most organizations. Yet doing so is essential to competitiveness and market success.

As DT has evolved, application development cycles have moved from years to months to weeks. Agile design methods and "fail fast" mentalities replaced traditional linear, extended workflows to address accelerating release frequency driven by market demand and competition.

But even with these approaches to shorten development cycles, organizations can still be constrained with the variety of applications they need to develop and the rates at which they need to be developed. Internal teams can only be worked so hard and so fast, and overstaffing to accommodate spikes in demand is not typically practical or fiscally prudent.

Application development outsourcing, like cloud infrastructure, provides short- or long-term rentable and scalable capacity to address competitive forces without risk of cost-prohibitive investment in development team growth. It is a short- to medium-term solution that helps organizations gauge what longer-term application development needs will be and design a staffing strategy accordingly. Applications can be released as quickly as needed while still optimizing labor costs around underlying demand trends. If organizations see fundamental need for greater development capacity, they can bring that in house when needed. This gives organizations the best chance of maximizing their market success.

Agility

Complementing expertise and development speed, agility allows organizations to address rapid shifts in market requirements quickly and effectively. Gone are the days when 'modern' applications spent years going through individual design cycles that included small updates and optimizations. In the DT era, that's a recipe for failure.

DT is dictating that truly modern applications must be developed quickly, adapt in real-time, incorporate the latest advanced capabilities, and be accessed through whatever channels a user prefers. Users have come to expect products and services to cater instantly to their needs and preferences. Those that don't are doomed to be abandoned.

Competitive demands from these market forces are pressuring organizations in unprecedented ways to respond quickly to rapid changes in requirements. But most organizations lack the agility to align with these changes on their own. They have to supplement their internal capabilities with external expertise and application development capacity.

Application development outsourcing fills the need for agility in application development by acting as a fungible asset that responds to shifting and ever-expanding market demands. Organizations get access to a far broader pool of expertise and development management than they could access on their own and can scale as needed in response to market requirements. They are able to mix and match capabilities on the fly and roll out new or updated applications on a much shorter timeline, giving them significant competitive advantage without the risk of large and fixed investments in personnel.

Go to Enterprises Are Starting to Outsource Their Application Development. But Isn't That Really Risky? - Part 2

Eric Thacker is VP at System Soft Technologies (SSTech)
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