Archive for March, 2009

Mar 12 2009

Go Time & Material Model

Published by xiaoming under Buisness,Howto

What is time & material model and when it applies

A simple definition of “Time & Material” Model is that the purchaser exchange “material” with a service provider’s certain quantity of “daily rate”. The material could be a bunch of document which contains advanced management process, intellectual property, a piece of software or one side of well painted wall. The daily rate could vary from £20 to £8000 depends on how precious of the service.

 

This business model applies when scope, specification and implementation plans of a project are not easy to define at the outset, Time & Material Model becomes an attractive option. Under this model, you pay as per use of the hourly development efforts, making it the most flexible of the three models. [From http://www.continuum-systems.com/price-timeandmaterial.htm]. Time & Material business model is developed for long-term projects, where the total effort cannot be estimated in advance and the scope of work can vary during the implementation. [From: http://www.qarea.com/outsourcing-services/pda-time-and-material.php].

 

If compared with Fixed price model, which is ideal for projects with a detailed technical specification, Time&Material model is the best for scalable projects. This business model is highly efficient in case the project is hard to predict in terms of time and creative effort and in case the development process needs control and improvement upon each iteration. Thus, it allows for cancellation at virtually any stage of the development project[From: http://www.qarea.com/outsourcing-services/pda-time-and-material.php].

 

Corporation old procurement process

So Fixed price model is suitable for purchasing of a physical product or something that has fixed scope or feature. While Time & material model is suitable for purchasing of service or something without explicit feature during the contract negotiation stage. If you have a look at most of the corporation procurement process it is not difficult for you to find comprehensive and decent process for fixed price procurement which is for purchasing of a physical facility, a car or PCs. The problem comes along when corporations plan to purchase service such as consulting service or customized software. As they do not have a process that specialized service purchasing, they tended to use the existing one. So things started going completely wrong.

 

They just do not fit!

Think of that you plan to spend money on something which you have no idea what it is or you only know part of it. How could you decide how much you need pay for it. Decision should only be made with necessary concrete information you require. Clearly, there is no enough information for anyone to make a correct decision. Old software procurement model aligns with the old business model.

 

Low technology –> Business not change so much –> Fix scope/feature –> Fixed price model –> Waterfall software development model

 

I believe that you know how fast and unbelievable the technology and business grow. It is almost not possible to oversee and predict how your business look like in 24 months of time. So business requires a suitable model for software development service

 

High technology –> Business change very fast –> Scope can not be fixed or predicted –> Time & material model –> Agile, adaptive software development model

 

Change is inevitable

The world is not odd. Software development industry has grown from design and development of fixed feature product into customized enterprise application in order to provide better service and survive. So it is much more than just producing a physical product. It is service now. If you disagree, I will encourage you to give me one single example that there was no change of requirement in the development of any large scale enterprise application. I bet you can not. Requirement change is inevitable because business is changing. If your business does not change but others does, it is clear that you won’t be able to survive. Also there is no way to predict or imagine the change of requirement. So you need a more flexible and adaptive business model for this kind of procurement.

 

Solution

Probably you have already figure out the solution. Let me recap
  • Upgrade your corporation procurement guideline and process with Time & material model of service purchasing in it.
  • Develop or recruit professionals to manage Time & material project. It does require special expertise.
  • The key of applying this model is risk management and contractor performance management

 

Change it!

If you still use the old procurement model for service purchasing, you will definitely experience argument, displeasure and waste of investment. So why not change it?

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Mar 12 2009

Who wants to be a product owner?

Published by xiaoming under Tech

Who wants to be a product owner? The answer is “No one”! What a product owner does? In an agile software development project, product owner is responsible for maintaining the Product Backlog by representing the interests of the stakeholders. So this person need work with different project stakeholders who might be from more than one business unit to collect and prioritize the requirement. The typical challenges are  

  • Difficult to coordinate business units and software development service providers to spend time together and figure out the high priority requirement.
  • Difficult to prioritize backlog across business units.
  • Normally corporation does not give enough support to product owner.
  • Business units ALWAYS complain that why their requirement could not be done first.
  • Etc
Ideally product owners should come from business because they are supposed to know business better than IT. Completely concentrating on business value without thinking too much about IT actually leads the whole team’s attention to business value. If a project that involves quite a few business units, ideally there should be someone either in business or IT who knows the business very well and have strong coordination and facilitation ability to take this role. Sometimes, this role was pushed to software service providers, it makes the job even more harder because it is extremely difficult for someone who is not in your corporation to coordinate business units to work properly.
The biggest problem is that because this job is so challenging and not well rewarded in the industry, no one really wants to do it or not so many people have the skills and experience to do it. So, does it mean there is no way out to solve this critical problem? The answer is “NO”. There are
  • Corporate management need understand the challenging of this job and give appropriated reward and support.
  • Business owners need to understand that if you want that your investment is well spent, if you want IT to develop what you actually need, you DO need spend enough time with product owner and software service provider to help them understand your business needs, requirement and problems.
  • Take the ownership, find or recruite someone within your organization to be the chef of your IT investment.
  • Product owner deserves very much respect and appreciation from corporate management and business units because this person is the most important ring of the whole business-IT chain.
After you have done these, there should be more people who want to be product owners who can manage your IT investment much better so that you would get the most return of IT investment.

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Mar 09 2009

My driving instructor knows agile

Published by xiaoming under Tech

My AA driving instructor Jason actually knows agile even better some IT professionals. I started learning “driving in the UK” from him about a month ago. After several classes, I found that he was a really good instructor and always put safety in front everything else. He even surprised me with his understanding of basic lean and agile principles. Let me tell the story.    

We had a class last Saturday, I was quite tired before driving so I could not concentrate on following every instruction or make necessary changes. So he stopped me and said that   

when you drive from office to home, you don’t need think of what will happen along the whole journey. As long as you go for the right direction you only focused on from where you are to the next junction or roundabout. The reason is that there is going to be change ahead so do not think of too much about too far away. Keep watch out what is happening in front of you. Thinking of mistake that you made would not help you to drive better when you are on the road. Concentrate making it right next time rather than thinking it over.

I was surprised because what he said sounds like an agile training session rather than driving lesson. Let’s have a look at how well his thought matches basic lean and agile principles

 

Jason’s thought Lean/agile principles and practices
Drive from office to home, go for the right direction Goal oriented, see the whole system, set a clear goal and direction
Focus on where you are to the next junction or roundabout Iterative development, focus on one iteration a time
There is going to be change ahead so do not think of too much about too far away. Keep watch out Change is inevitable. Continuously communicate and collect feedback, adaptively project management
Forget the mistake that you made when you are on road, make it right next time. Continuously improve the process and plan

 

It is very interesting when you see people from other industry or lead a complete different life actually have exactly the same understanding of how to do things right. I feel that it was valuable to pay a driving instructor’s rate and also get agile consulting service although I do not really need it :-)

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