Partnering and outsourcing in product development: Agility and flexibility
Partnering speeds up the product development of data and telecommunications and information security companies. It helps the company grow faster.
Gearshift Group, a Helsinki-based consulting firm, performed an interview-based survey in March-April 2006, to find out about the success, goals, and future outlook of partnering and outsourcing related to software development activities. The target group consisted of Nixu's current and potential clients. The respondents were the heads of product development, technical directors and other persons responsible for product development in medium-sized Finnish data/telecommunications and information security companies.
Jukka Kotovirta, responsible for the survey tells that: "We specifically wanted to interview those product development directors who make practical decisions on partnering and outsourcing. They have their finger on the pulse of these projects and their success."
The sample of fifteen companies was not big enough to be statistically significant. What is of more importance is that the companies interviewed are noteworthy industry players and that the answers project a good overview of the goals of partnering and outsourcing both now and in the near future.
| Reasons for partnering | |
|---|---|
| 1. Additional resources | 1,5 |
| 2. Improved flexibility | 1,9 |
| 3. Faster time-to-market | 2,1 |
| 4. Special technical skills | 3,1 |
| 5. Cutting costs | 3,9 |
| 6. Knowledge of customer environments | 4,5 |
[1=significant; 7=not significant]
Agility counts
The main motivators for the partnering were above all flexibility and additional resources – in other words, agility. It helped to get the product faster to the market. The persons interviewed held it as the most important benefit of partnering. "Cost savings were not the foremost reason for starting the process, and they did not materialize either, on the contrary. In the next steps, more emphasis will be put on the costs because the speed advantage has already been gained."
"The customers want flexible, multi-skilled, and independent partners who know the industry and can create a working product even when the requirements specification were lacking in detail", summarizes Mr. Kotovirta.
Growth from partnering
The Finnish ICT cluster has a growing need for partners that can take full responsibility of projects or subprojects, overcoming any challenges that the technology or the schedules create.
"Through its understanding of solutions principles and its experience, a skilful partner can bring important weak signals to the strategic product management of a company long before practice could teach the same lesson through trial and error."
| Experiences from partnering | |
|---|---|
| 1. Time to market improved | 2,3 |
| 2. Partner can act according to situation | 4,0 |
| 3. Product quality improved | 4,5 |
| 4. Cost of product development reduced | 5,5 |
[1=agree; 7=disagree]
It was found in the survey that the companies with the highest growth rate usually employ much more partnering and outsourcing in their product development than their slower competitors.
"The respondents estimate a growth in using partners for customer specific projects and customization. Agile development for the main version of software and sourcing the tailored customer-specific variants from a partner appears to be the ever more frequent way of working", believes Jukka Kotovirta.