befi dec 10 outsourcing beyer
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8/8/2019 BEFI Dec 10 Outsourcing Beyer
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IT Outsourcing for StartupsStrategic and operative issues of IT
outsourcing in a startup situation
Timm Beyer - skilldeal
Berlin, 10.12.2010
The Founder Institute
8/8/2019 BEFI Dec 10 Outsourcing Beyer
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IT Outsourcing for Startups
Situation analysis
Sourcing strategy
Vendor selection process
Vendor handling
Risks and Trouble-Shooting
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Situation Analysis
What are your priorities? What is your next and most
important goal? Examples:
±
Next financing round ± Time to market
± Innovativeness and solution uniqueness
What are your competencies? Do you have all the
necessary know-how?
What can you afford? Do you have to adjust your
goals depending on your budget?
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Sourcing Strategy - Priorities
If your main priority is your next financing round you
should ask yourself: What do you need (on the
IT/software level) to convince your investors: ± Is a prototype sufficient that demonstrates the general
idea of your product?
± Or do you need a fully-fledged application?
± Is there a very specific date/deadline when you want topresent anything to investors?
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Sourcing Strategy- Priorities
Is IT/ software your MAIN differentiating factor from
your competitors?
If YES, your main questions may be: ± Which in-house expertise do you have?
± What should you do in-house?
± If you outsource, who (in your team) is able to evaluate
technology expertise and the quality of work of yourpotential suppliers?
± Can you make sure that your solution will be able to
handle high performance requirements?
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Sourcing Strategy- Priorities
Is IT or software your MAIN differentiating factor
from your competitors?
If NOT, you should rather ask yourself: ± Who has done something similar before?
± What technology/framework did they use? Are there
open-source solutions?
± What did they pay? How long did it take?
± What went well/wrong?
± Who can I ask? Who could give me good advice on
suppliers?
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Sourcing Strategy
A possible outcome of a situation analysis could be:
± Your budget is limited, so is your internal IT know-how
± IT is important but not decisive for your success
± Your next financing round is approaching soon
Your sourcing strategy could then be:
± Find outside help (friend, IT consultant, ) for selection
and evaluation ± Optimise price-/delivery ratio by considering off-
/nearshore
± Build well-designed prototype and rebuild the whole thing
after your financing round
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Sourcing Strategy Case study
Startup AbraC wants to create a web-based B2B
marketplace. Their in-house IT know-how is limited.
They assume that their main success factor is salesand marketing. They secured 150.000 Euros in their
first financing round.
What do you suggest they should do?
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Vendor selection
Long list/ short list: Large vs. Small, Techie vs.
Creative, National vs. Offshore (and if offshore: far
vs. near) Specification: Can you judge how good your spec
really is? How flexible need it be?
Request for Proposal: Can proposals be comparable?Are risks covered?
Evaluation: Weighted Criteria, customer interviews
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Vendor selection
You say The vendor mightthink
What you could do is
Our deadline is December
24rd!
We will try hard but you
know that IT projects are
almost always late.
Include sanctions in contract
Careful with your payment
plan!
We are a startup wework night and day! We
expect that from our
supplier, too!
Sure guys. Our peoplehave families and their
lives. We see what we
can do.
Make sure they fit to yourstyle, work hours and
ambitions!
Motivate or adjust?
Our specification is super-
detailed. You just have to
code it down!
Your specification is crap
but we will work
something out.
Improve specification
(external help?)
Or: Use agile methods withquick feedback rounds
We want a 25% discount
for the same quality!
Hm - we substitute some
of the programmers with
younger ones.
Include names/CVs of
programmers in your contract
Be reasonable about
prices/discounts
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Vendor selection Case study
Startup BetaBarata has sent out RFP to 12 suppliers.
They met some of them in person, others were
called. They receive 12 offers which vary heavily inprice and timelines. Since budget is their priority,
they tend to invite the three cheapest and discuss
their proposals in detail. What would you do?
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Vendor handling
Apart from basic project management such as
± Have a proper project kickoff
± Establish rules, availabilities and contact data
± Be on top of things
± Have regular status updates
± (And so on)
there are some lessons learnt that areoutsourcing-specific ->
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Vendor handling Lessons Learnt
Formalism works! Write stuff down instead of just
expressing your wishes over the phone
Use tools, e.g. ticket systems, instead of emailing orchat (unless it is just handling day-to-day stuff)!
Make the suppliers project manager personally
responsible, as your partner (not your slave)! Motivation works well with suppliers, too make
them feel as a part of the team!
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Vendor handling off-/nearshore
Offshoring or nearshoring can be an alternative.
Some things might be important to know:
±
It requires more coordination (and, usually, more time)than a national supplier
± Language (how good is your English? Or Russian?) can be
an issue, on both sides
± Cultural differences depend on country and company size
± Price discounts can be huge, but depend on the region
(not necessarily the country - Moscow is more expensive
than Berlin)
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Trouble shooting
If something is not working well - Change it fast
(either processes, documents or people)
Cultural differences may occur Sit at a table withpeople and speak with them
Change of important team members may require a
Re-Kickoff Dont rely on supplier-internal updates Supplier change often means rebuilding the whole
solution Try to bring in an external expert instead
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Risks
Main risks include:
Quality
Budget
Timeline
Property rights
To handle these risks, you probably need ->
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Risks and how to deal with them
at least these things:
A good selection process
A good contract
And a good project manager
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Handling/Trouble shooting: Case study
Startup CesarCity has started an IT outsourcing
project with an offshore supplier. The project started
well, but the alpha-version shows severeperformance problems with the (critical)
database/search functionality of their web software.
Since their IT know-how is limited, they think aboutchanging the supplier.
What would you do?
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IT Outsourcing for startups
Thanks and good luck!