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CMMI: Does Your Supplier Make the Grade?

~ By ExecutiveBrief

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Looking for a sure-fire way to find a highly-qualified outsourcing partner? Learn how CMMI ratings can help you pinpoint the best candidate for the job!

Outsourcing work to offshore organisations has become the latest arsenal in software development over the last seven to eight years. The strongest drivers to outsourcing focus on driving down costs, increasing productivity, reducing time to market, and providing a flexible resource pool.

In the outsourcing selection decision, many organisations use the candidate suppliers' Capability Maturity Model Integration (CMMI) maturity level as one of the decision-making criteria. Suppliers want to maximise their chances of winning business from companies that are pursuing offshore outsourcing services. Since CMMI maturity level ratings serve as a differentiator, these organisations want to position themselves among the elite. Maturity level 5 is the place to be, in CMMI terms.

What Is It?

Capability Maturity Model Integration (CMMI) is a process improvement approach governed by the Software Engineering Institute (SEI) at Carnegie Mellon University. This internationally recognised measure, in turn, provides a way for organisations to have predictable and measurable quality results. Many people perceive CMMI maturity level ratings as simply a badge of honour that distinguishes one potential supplier from another. However, formal CMMI appraisal verifies that at least at this point in time, the appraised organisation is performing at a determined level of process maturity within the CMMI framework. It provides assurance that the organisation has incorporated a stated collection of good practices into their software engineering and project management processes.

Raghavendra Rao, a consultant in the New York office of PA Consulting, says in a process improvement initiative, the process is two-fold, and can't be entirely outsourced to guarantee success. Rao recommends the first step, process definition, must be done internally because the organisation needs to understand the drivers behind the need for process change.

The implementation is the best place to outsource by using outside help to bring in best practices, knowledge and experience of the industry to implement the change, Rao says. There has to be collaboration between external and internal resources, with the backing of internal practitioners.

Benefits of Outsourcing to CMMI-Rated Vendor

Outsourcing to a CMMI-rated supplier provides organisations a number of benefits. First, the supplier can offer their expertise after going through it themselves. Rao says CMMI is not easy, with people challenges, process challenges, and organisational challenges.

Organisations have to have gone through it themselves, he says. Only then can they understand and recommend a solution to an external organisation.

Outsourcing in this manner also provides better communication, says Patrick O'Toole, principal consultant at Process Assessment, Consulting & Training (PACT), a Minnesota-based consulting and training organisation. Developing software in a disciplined way heightens customer confidence that quality software will be delivered as agreed. Overall, O'Toole describes outsourcing to high maturity suppliers as a risk mitigation approach.

Other tangible benefits companies can attribute to outsourcing to CMMI-rated vendors include linking management and engineering activities to the business objectives; developing productive and efficient employees; improving visibility into the product life cycle and engineering activities; making improvements with a defined, measured and controlled process; and introducing new technology and tools.

Natural Hurdles to Avoid

Managing offshore-development activities is significantly different than managing projects where the project team is just down the hall, says O'Toole. Offshore development presents a unique set of communication, coordination, and control issues.

Skilling up your people to manage remote development projects is a good thing to do, O'Toole says. A lot of failures result from the customer not knowing how to manage their offshore suppliers' activities or not having sufficient discipline themselves to maintain proper oversight.

Achieving Success

Many organisations that use high maturity offshore suppliers have been satisfied with the results, says O'Toole. Results in a May 2008 presentation by SEI reveal significant results by outsourcing to a CMMI-rated vendor. The following are median improvements in these areas:

  • Cost: 20 percent
  • Schedule: 37 percent
  • Productivity: 67 percent
  • Quality: 50 percent
  • Customer satisfaction: 14 percent
  • ROI: 4.8:1

In one example, a UK-based utility company outsourced its business process to an organisation with a CMMI-rated maturity level 5. The challenge focused on systems that support mission critical areas of the organisation. Inconsistent reporting and manual escalation processes resulted in a large number of outstanding service calls and high production incidents leading to huge liability payments. The outsourced supplier took over a number of business processes after using a dedicated on-site team to learn the applications. Now it delivers 24x7 coverage for a number of the utility's business critical applications. The new systems maintain well-defined roles, clear processes, and co-ordinated on-site, offshore delivery. Results include a 15 percent to 20 percent year-over-year cost savings as well as a 30 percent reduction in service calls, which correlates to increased satisfaction.

Others, however, have not had such good fortune. The continuum, O'Toole says, ranges from wildly successful to disappointed to never again.

In many cases, those that have not been successful are their own worst enemy, O'Toole relates. If they, themselves, are undisciplined, then their bad habits are amplified through their relationship with a high maturity offshore vendor. O'Toole says high maturity suppliers encounter difficulty when facing a barrage of constantly changing requirements, missed commitments on the part of the customer, and major shifts in system interfaces, architecture, or design.

O'Toole shares that in other cases, customers of high maturity organisations that haven't achieved success maintain too much of a "hands-off" approach, which places an unreasonable level of confidence in the offshore supplier's high maturity rating.

They assume that the supplier must know exactly what needs to be done, so there is no need to provide meddling oversight that might slow them down, O'Toole says.

But lack of success can't be completely blamed on the customer's lack of due diligence. Some people question the validity of the high maturity ratings for both onshore and offshore organisations. In response, the Software Engineering Institute (SEI) introduced changes to address these concerns in August 2006. First, the SEI instituted a certification programme for high maturity lead appraisers. Previously, any of the 450+ SEI Authorised Lead Appraisers could conduct an appraisal at any level of process maturity. Today, only those completing the certification process, which includes a two to three hour oral exam conducted by three SEI staff members, can conduct maturity level 4 or 5 appraisals.

Next, the SEI developed a four-day "Understanding CMMI High Maturity Practices" course to establish a better understanding of the high maturity process areas. This also helps to establish more consistent expectations regarding high maturity. Finally, the SEI supplemented their standard training materials with a number of conference presentations focused on high maturity practices with the objective of raising the bar regarding their implementation.

Problems with Selecting a Non-CMMI Rated Vendor

Outsourcing to a non-CMMI rated supplier provides more risk in the success of the project. Without knowing your supplier's current CMMI maturity level, O'Toole says organisations don't have insight into the level of discipline inherent in their engineering and project management practices.

What can organisations look for to ensure their outsourced vendor is the appropriate choice with CMMI expertise? First, look for a supplier with the ability to tailor generic processes to an organisation's specific needs. It's important for these folks to take into account business drivers behind the initiative, drivers for senior management, and where in the maturity curve the organisation is. Rao recommends this as the No. 1 consideration to selecting an outsourcing partner with a high CMMI rating.

O'Toole says it's also important to consider the maturity level that the organisation has been appraised at, as well as the organisation scope of the appraisal. Another critical component is determining the mechanisms the supplier suggests to get up to speed on your application domain. O'Toole recommends making sure the offshore supplier has insight or a sound way of getting that sound application domain knowledge, a meeting of the minds.

I also want to see things along the way to lower risk and heighten my confidence that at the end of the day, the supplier will actually produce something I can use, O'Toole relates.


ExecutiveBrief, the technology management resource for business leaders, offers proven tips, techniques, and action plans that companies can use to better manage people, processes and tools - the keys to improving their business performance. To learn more, please visit: SoftServe United Blog

© ExecutiveBrief 2008


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