Warning signs of a failing outsourcer

Warning sign

It is 2021 and unfortunately on Friday I felt the need to repost “Dear Customer, The Truth about IT“. Little has changed in the 10 years since I wrote the original – if I was writing it today probably the only thing I would change is “IT”, I’d write “Digital” (I should probably also change Manchester United but …).

Unfortunately the vast majority of supplier’s are engaged on the basis of their marketing materials, sales pitch and promises. This tells you nothing about their actual ability to deliver working software. The suppliers can all hire great marketing people and use the same words. They can hire and incentivise the best sales people, and they can all take you out for a good meal, a round of golf or to a strip-club. (O, and they can all find a few “satisfied customers” to provide a testimony.)

The only real way to know if a supplier can deliver is to see them in action. So how can you tell things might be going wrong? What are the warning signs?

With help from Mike Burrows and John Clapham I’ve came up with this list of early warning signs. We were thinking in the context of a client-supplier (outsourced) relationship but many of them apply if you are working with internal teams too.

Staffing

1) Supplier loads teams up with extra managers: test managers a speciality
1.1) Team members don’t make decisions and defer problems to managers: there is a manager for every problem
1.2) Offshore teams have parallel management hierarchies
1.3) Suppliers feel the need to mark all your managers with their own manager (who is then duplicated offshore)

2) Inverted staffing pyramids (few devs at the bottom, lots of managers, BAs & other non-coders above)

3) People get swapped by suppliers with little notice
3.1) Short term substitutions are made: I once saw a supplier bring in a temporary SAP HR consultant to cover the usual consultant’s 2-week holiday. There was no way the substitute could come up to speed in that time let alone contribute positively.
3.2) People bait & switch: the people you meet first met didn’t last long, they were substituted for inexperienced people
3.3) “I can do that” – you get people new to their role, you get who they have available, people with experience in one role fill another role; a project manager plays coach, a delivery manager plays scrum master

4) Part time assignees (particularly managers): work a few hours a week on the project, see 1.1.

Get ready

5) Long running “set up” phases
5.1) You spend longer pondering the future than the time it takes to create the future
5.2) A lot of time is spent agonising about infrastructure changes rather than just doing them
5.3) Team advocates for, and does, investment in infrastructure and “reusable code” before anything is usable is actually delivered

Reporting not delivering

6) Supplier does not deliver working software

7) Supplier does not deliver working software every two weeks

In 2021 delivering working software to production every two weeks, or at least usable, potentially releasable software, is table stakes. The best teams deliver multiple times a day. If the supplier can’t deliver something by the end of week 4 you have a second rate supplier. Get out now.

8) Reporting hours done rather than demonstrating working software and stories

9) “Watermelon report” Green on the outside when everything inside is Red; impressive looking reports which don’t distract from the fact that nothing, or very little, was actually complete
9.1) Claiming stuff is done when it hasn’t finished testing
9.2) A Definition of Done which leaves work not-done – Mike has a good post at agendashift.com/done.

Other warning signs

10) You invest as much time in their org design as your own, if this starts to include people performance monitoring and management what are you gaining over using your own people?

11) Suppliers always say yes: no push back and no negotiation, feedback and scrutiny of your requests are signs they are paying attention to your needs. It you ask for the impossible it is better the supplier tells you so than accepts what you ask for. Ideally you want a supplier who can highlight the difficulties with your suggestion and work with you to achieve something akin to what you want even if you have to rethink your request.

12) Your own people are disenfranchised/disgruntled/frustrated by the arrangement. Particularly noticeable where people are expected to work in a different time zone to suit the other partly and when outsourcer staff are elevated (faster, smarter, etc) over the existing people.

In most of these cases the supplier is working around their own constraints rather than putting your needs first.


Subscribe to my blog newsletter and download Project Myopia for Free

Dear customer, the truth about IT

An unhappy customer complains

10 years on I feel the need to repost this classic letter from the IT industry to our clients.

Audio version, read by Allan Kelly.

Dear customer,

I think it’s time we in the IT industry came clean about how we charge you, why our bills are sometimes a bit higher than you might expect, and why so many IT projects result in disappointment. The truth is that when we start an IT project, we don’t know how much time and effort it will take to complete. Consequently, we don’t know how much it will cost. This may not be a message you want to hear, particularly since you are absolutely certain you know what you want.

Herein lies another truth, which I’ll try to put as politely as I can. You are, after all, a customer, and, really, I shouldn’t offend you. You know the saying “The customer is always right”? The thing is, you don’t know what you want. You may know in general terms, but the devil is in the detail – and the more detail you try to give us beforehand, the more likely your desires are to change. Each time you give us more detail, you are offering more hostages to fortune.

Software engineering expert Capers Jones believes the things you want (‘requirements’, as we like to call them) change 2% per month on average – thats close to 27% over a year once you compound changes. Personally, I’m surprised that number is so low.

Just to complicate matters, the world is uncertain. Things change, and companies go out of business. Remember Enron? Remember Lehman Brothers? Customer tastes change. Remember Cabbage Patch Kids? Fashion changes, governments change, and competitors do their best to make life hard. So, really, even if you do know absolutely what you want when you first speak to us, it is unlikely that it will stay the same for very long.

I’m afraid to say that there are people in the IT industry who will take advantage of this situation. They will smile and agree with you when you tell them what you want, right up to the point when you sign. From then on, it’s a different story; they know that changes are inevitable, and they plan to make a healthy profit from change requests and late additions at your expense.

While I’m being honest, it is true we sometimes gold-plate things. You might not need a data warehouse for your online retailer on day one. Yes, some of our engineers like to do more than what is needed, and yes, we have a vested interest in getting things added so that we can charge you more.

It is also true that you quite legitimately think of features and functionality you would like after we’ve begun. You naturally assume something is ‘in’ when we assume it is ‘out’. And, in the spirit of openness, can you honestly say that you’ve never tried to put one over on us? (Let’s not even talk about bugs right now: it just complicates everything.)

Frankly, given all this, it is touching that you have so much faith in technology to deliver. But when IT does deliver, does it deliver big. Look what it did for Bill Gates and Larry Page, or Amazon and FedEx. Isn’t it interesting that when the IT industry develops things for itself, we end up with multi-millionaires? When we develop for other people, they end up losing money.

How did we ever talk you into any of this? Well, we package this unsightly mess and try to sell it to you. To do this, we have to hide all this unpleasantness. We start with a ritual called ‘estimation’ – how much time we think the work will take. These ‘estimates’ are little better than guesses. Humans can’t estimate time. We’ve known this since at least the late ’70s, when Kahneman and Tversky described the ‘planning fallacy’ in 1979 and went on to win a Nobel Prize. Basically, humans consistently underestimate how long work will take and are overconfident in their estimates.

To make things worse, we have a bad habit we really should kick. Between estimating the work and doing the work, we usually change the team. The estimate may be made by the IT equivalent of Manchester United or the New York Yankees, but the team that actually does the work is more than likely a rag-tag bunch of coders, analysts and managers who’ve never met before.

Historical data – data about estimates, actuals, costs, etc – can help inform planning, but most companies don’t have their own data. For those that do have data, most of it is worse than useless. In fact, Capers Jones suggests that inaccurate historical data is a major cause of project failure. For example, software engineers rarely get paid overtime, so tracking systems often miss these extra hours. Indeed, some companies prohibit employees from logging more than their official hours in their systems.

So we make this guess (sorry, ‘estimate’) and double it – or we might even triple it. If the new number looks too high, we might reduce it. Once our engineers have finished massaging the number, we give it to the sales folk, who massage it some more. After all, we want you to say “yes” to the biggest sticker price we can get. That might sound awful, but remember: we could have guessed higher in the first place.

Please don’t shoot me: I’m only the messenger.

We don’t know which number is ‘right’, but to make it acceptable to you, we pretend it is certain and we take on the risk. We can only do this if the number is sufficiently padded (and, even then, we go wrong). If the risk pays off, we get a fat profit. If it doesn’t, we don’t get any profit and may take a loss. If it’s really bad, you don’t get anything and we end up in court or bust.

The alternative is that you take on the risk – and the mess – and do it yourself. Unfortunately, another sad truth is that in-house IT is generally even worse than that provided by specialists. For a software company development is a core competency – such companies live or die by their ability to deliver software, and if they are bad, they cease to trade. Evolution weeds out the poor performers. Corporate IT on the other hand rarely destroys a business – although it may damage profits. Indeed, Capers Jones’ research also suggests specialist providers are generally better than corporate IT departments.

Sales folk might be absent, but the whole estimation process is open to gaming from many other sources and for many other reasons. The bottom line: if you decide to take on the risk, you may actually increase risk.

I know this sounds like a no-win scenario. You could just sit on the fence and wait for Microsoft or Google to solve your problems with a packaged solution, but will your competitors stand still while you do? Will you still be running a business when Google produces a free version?

Beware snake oil salesmen selling off-the-shelf applications. Once people start talking about ‘customisation’ or ‘configuration’, you head down a slippery slope. Configuring a large SAP installation is not a matter of selecting Tools, Options and then ticking a box. Configuring large packages is a major software development activity, no matter what you have been told. The people who undertake the configuration might be called ‘consultants’, but they are really specialist software developers, programmers by another name.

There really isn’t a nice, simple solution to any of this. We can’t solve this problem for you. We need you, but you have to work with us. As the customer, you have to be prepared to work with us, the supplier, again and again in order to reduce the risk. Addressing risks in a timely and cost-effective manner involves business-level decisions and trade-offs. If you aren’t there to help, we can either make the decision for you (adding the risk that you disagree), or spend your time and money to address it.

You need to be prepared to accept and share the risk with us. If you aren’t prepared to take on any risk, we will charge you a lot for all the risk we take on. Sharing the risk has the effect of reducing the risk, because once the risk is shared you, the customer, are motivated to reduce risk. One of the major risks on IT projects is a lack of customer involvement. You can help with that just by staying involved.

Ultimately all risk is your risk: you are the customer, you are paying for the project one way or another. If it fails to deliver value, it is your business that will suffer. When you share risks, when you are involved closely, risks can be addressed immediately rather than being allowed to fester and grow.

Finally, you may have grand ambitions, but we need to work in small chunks. I know this may not sound very sexy, but software creation works best when small. Economies of scale don’t exist. In fact, we have diseconomies of scale, so we need to work in tiny pieces again, again and again. If you are prepared to accept these suggestions, then let’s press ‘reset’ on our relationship and talk some more.

Yours sincerely,

The IT Industry


Dear Customer was first publishing this blog nearly 10 years ago, a polished version became famous in Agile Journal (now Agile Connection) a few months later and forms the prologue to Xanpan, 2015.


Subscribe to my blog newsletter and download Project Myopia eBook for Free

My story, my why

I thought I’d open 2021 year with a personal story of how I got where I am today (no, I’m not in San Francisco, although that is the Golden Gate in the picture)

Allan Kelly on the north side of the Golden Gate bridge, 2001.

I started programming when I was 12 (ZX81 then BBC) and then led a very successful career into my 30s – including a spell in California. Increasingly I found the code was not the challenge, I could make the code do what I wanted. The problem was the way we were managed, or mismanaged, the things we were ask to do and the way we were organised.

So began my journey into “management”. Determined to be a better manager than those I had worked for I took myself back to school. During a year in business school I learned a lot of good stuff, I discovered “organisational learning” and I reconnected with my dyslexia.

“Agile” was just breaking at the time and in agile I saw the same ethos of learning I was getting so excited about. The reports of agile teams I read described the best aspects of the developments I had worked on. For me, managing software delivery and enhancing agile are the same thing.

My mission became to help my younger self: help technologists deliver successful products and enjoy satisfying work. Most of what I do falls under the “agile” banner but really it is about creating the processes and environments were people can learning, thrive and excel.

When people are getting satisfaction from their work delivering great products, businesses succeed and grow. And as software has come to underpin every digital initiative my work has expanded.


For my latest blog posts, give aways and special offers on books and training subscrbe to my newsletter – and as a thank you download my Project Myopia eBook for free

Programmer’s Rorschach test

The picture above, I recently added this picture to Continuous Digital for a discussion of teams. When you look at it what do you see:

An old style structure chart, or an organization chart?

It could be either and anyone who knows of Conway’s Law shouldn’t be surprised.

When I was taught Modula-2 at college these sort of structure charts were considered superior to the older flow charts. This is functional decomposition, take a problem, break it down to smaller parts and implement them.

And that is the same idea behind traditional hierarchical organizational structure. An executive heads a division, he has a number of managers under him who manage work, each one of these manage several people who actually do the work (or perhaps manage more manager who manage the people who do the work!)

Most organizations are still set up this way. It is probably unsurprising that 50 years ago computer programmers copied this model when designing their systems – Conway’s Law, the system is a copy of the organization.

Fast forward to today, we use object oriented languages and design but most of our organizations are still constrained by hierarchical structure, that creates a conflict. The company is structurally decomposed but our code is object oriented.

The result is conflict and in many cases the organization wins – who hasn’t seen an object oriented system that is designed in layers?

While the conflict exists both system and organization under perform because time and energy are spent living the conflict, managing the conflict, overcoming the conflict.

What would the object-oriented company look like?

If we accept that object oriented design and programming are superior to procedural programming (and in general I do although I miss Modula-2) then it becomes necessary to change the organization to match the software design – reverse Conway’s Law or Yawnoc. That means we need teams which look and behave like objects:

  • Teams are highly cohesive (staffed with various skills) and lightly coupled (dependencies are minimised and the team take responsibility)
  • Teams are responsible for a discrete part of the system end-to-end
  • Teams add value in their own right
  • Teams are free to vary organizational implementation behind well defined interface
  • Teams are tested, debugged and maintained: they have been through the storming phase, are now performing and are kept together

There are probably some more attributes I could add here, please make your own suggestions in the comments below.

To regular readers this should all sound familiar, I’ve been exposing these ideas for a while, they draw on software design and Amoeba management, I discuss them at greater length Xanpan, The Xanpan Appendix and now Continuous Digital – actually, Continuous Digital directly updates some chapters from the Appendix.

And like so many programmers have found over the years, classes which are named “Manager” are more than likely poorly named and poorly designed. Manager is a catch all name, the class might well be doing something very useful but it can be named better. If it isn’t doing anything useful, then maybe it should be refactored into something that is. Most likely the ManagerClass is doing a lot of useful stuff but it is far from clear that it all belongs together. (See the management mini-series.)

Sometimes managers or manager classes  make sense, however both deserve closer examination. Are they vestige from the hierarchal world? Do they perform specialist functions which could be packaged and named better? Perhaps they are necessary, perhaps they are necessary for smoothing the conflict between the hierarchal organization and object oriented world.

Transaction costs can explain both managers and manager classes. There are various tasks which require knowledge of other tasks, or access to the same data. It is cheaper, and perhaps simpler, to put these diverse things together rather than pay the cost of spreading access out.

Of course if you accept the symbiosis of organization and code design then one should ask: what should the organization look like when the code is functional? What does the Lisp, Clojure or F# organization look like?

And, for that matter, what does the organization look like when you program in Prolog? What does a declarative organization look like?

Finally, I was about to ask about SQL, what does the relational organization look like, but I think you’ve already guessed the answer to this one: a matrix, probably a dysfunctional matrix.

%d bloggers like this: