Enterprises Are Starting to Outsource Their Application Development. But Isn't That Really Risky? - Part 2
February 27, 2020

Eric Thacker
System Soft Technologies

As application development outsourcing becomes more mainstream, like virtualization, the cloud, and SaaS before it, organizations will embrace it at an accelerated rate. Outsourced projects and processes are nothing new. What is changing is the nature of the things being directed to external vendors to complete.

Start with Enterprises Are Starting to Outsource Their Application Development. But Isn't That Really Risky? - Part 1

The increasing validation of outsourced application development in the eyes of IT professionals is making it a staple of their application development toolbox. And with the growth of sophisticated cloud-accessible tools, application development service vendors continue to expand their value-added capabilities to further justify IT professionals engaging them.

In addition to the general comfort of adopting –aaS solutions and rapid access to expertise and scale, there are other factors driving the accelerating popularity of 3rd party application development services:

Knowledge Transfer

Outsourcing should not be seen as an ongoing dependence on a vendor for a set of applications. Each project should have a model to transfer knowledge around the application for clients to become self-sufficient in many of the capabilities.

From the very beginning, all projects should have a knowledge transfer process to ensure that vendor knowledge becomes client knowledge. Clients should drive the definition of accountability, documentation, and transparency to meet their needs. The goal is to have all learnings shared back to clients for handoff when the project is done.

Rate Of Adoption

Most enterprises don't specifically plan or budget for outsourced application development. Instead they tend to leverage existing application development money to fund any such engagements. The level of reliance on outsourced development depends on a number of factors, including:

■ Adoption of new processes, technologies, and approaches by the organization. As the rate of IT innovation has accelerated, organizations have changed to adapt at different rates. The more an organization adopts advanced collaboration, analytics, AI, ML, modern security, IoT, for example, the more likely they will be to leverage an outsourced approach to application development, since they are unlikely to able to support these rapid changes exclusively with internal resources.

■ Variability in user demand, where to plan effectively requires accurate predictions of need. In situations where need is fluid and/or undefined, internal development resource planning is a real challenge. With market demand changes come new business strategies, new approaches to application development, new customer requirements. Most organizations are frankly ill-equipped to adapt to all of this, so many turn to outside resources to fill the development gap.

■ Shortage of programmers, where we are seeing the rise of non-programmers or novice programmers contributing to application development. As full-blown programmers have grown increasingly short in supply, organizations are turning to non-experts to fill the gap. And that gap is only expected to increase. The rise of no-code/low-code tools and techniques will give organizations the ability to expand both their software development efforts despite a shortage of programmers and their ability to rapidly respond to fluid changes in market demand.

Application Development Service Implications

So, what does all of this mean? What impact will it have on the market?

As outsourcing application development becomes more widely adopted, it is having some significant effects on how organizations operate and service their customers. This is true for both those that are large or small.

Small organizations tend to be nimble and adaptable but lack resources to fully meet the needs of their market and maximize competitiveness. On the other hand, their larger brethren have the resources to deliver on changing market demands but lack the adaptability to respond quickly. Application development services address the different skill gaps and capacity limitations of a whole range of organizations, which enhances its appeal and impact. They can significantly reduce risk by accessing seasoned talent with experience specific to a given need.

While outsourcing has the potential to transform how organizations address the needs of their constituencies, there are pitfalls that must be navigated to avoid failures. Most important is the selection of the vendor-partner. The best of these engagements are well-defined with a collaborative approach to agreement on responsibilities, deliverables, and metrics. Beyond just completing and possibly supporting the initial deployment of an application, the client should also work with the vendor to maximize the sharing of lessons learned and skills so that the enterprise adds to its expertise and doesn't remain totally dependent on the vendor.

As outsourced application development adoption expands, its impact will continue to grow. Organizations will enhance their ability to address both a broader range of requirements and rapid changes in demand for applications without an acute need for risky investments in in-house staffing to address uncertain market needs. It allows them to expand into new markets quickly and cost-effectively and streamline their ability to transform and grow for market success.

Eric Thacker is VP at System Soft Technologies (SSTech)
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