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Outsourcing Failures and Six Sigma

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Viewing 15 posts - 1 through 15 (of 15 total)
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  • #25886

    Stafford
    Member

    Hi everyone,
    I recently heard of a Gartner study that says that half of this year’s IT outsourcing projects will be identified as failures by senior decision makers because they didn’t deliver on bottom-line promises. Can Six Sigma help prevent such failures? Which methodology would be used, and are there any examples that you can refer me to?
    Thanks!
    Stafford
    P.S. The study found these to be the root causes:

    communication breakdowns,
    no formal plan for relationship management between company and outsourcing provider,
    lack of schedule meetings and milestones, and
    lack of ability to address changing business needs.

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    #62880

    Steven
    Member

    What I have found is that outsourcing, particularily development can fail to provide the benefits the theory would suggest.  But rather than label the arrangement a complete disaster, the 6-Sigma DMAIC process can potentially be used to eliminate or at least reduce the number of problems.  From experience l would suggest that many problems arise from significant differences in processes between companies, which can be highlighted through 6-Sigma.
    I would start with a statement of why the outsourcing arrangement is so bad. i.e. Excessive time to deliver changes, etc.  From there you can start by mapping out the process, collecting data and looking for potential improvements.  You may be able to define a process that works for both organisations.  A suggestion though it to involve the supplier in the project so they buy into any process changes.
     
    Hope this helps.
     
    Regards
    Steven
    Black Belt – Ford Credit Asia Pacific

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    #62881

    Bruce J. Hayes
    Participant

    One Failure mode of outsourced projects is relying too heavily on the prospective vendor to provide all of the needed functionality. Especially if it is a “canned” solution. Often, in our rush to move to an outsourced solution (usually prompted by a need to show an immediate cost savings) we cut corners we would normally use to assure that all of our needs and requirements are met. One way to avoid this is to apply Voice of the Customer (VOC) tools from the DFSS Six Sigma for Software tool set such as QFD,  KJ’s, Use Cases, Kano, Conjoint, etc. These tools are proven to clearly articulate and document full requirement sets well beyond the contextual level we usually communicate requirements at. Utilizing these tools helps us avoid the pitfall of acting (or in the case of outsourcing) becoming a victim of poorly defined, fleshed out requirements. Much research Data exists supporting that the additional time and money spent up front using tools such as these far reduces the overall implementation cycle time and dramatically reduces the risk of failure.

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    #62882

    S
    Participant

    Bruce,
    Can you please tell me what the “KJ” tool is that you refer to in your previous post? I am not familiar it with it as I am the other voc tools.
    thank you,Pradeep

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    #62883

    Bruce J. Hayes
    Participant

    Pradeep,
    KJ is a method based on the work of a Japanese anthroploogist named Jiro Kawakita (hence KJ). It is a method of developing insight into themes and relationships amoung issues. It helps “drill” from high level issues at one level of context (usually abstract or vague) to a more detailed set of common, reuseable statements. KJ’s are particularly useful in software because people have a tendency to state problems as abstract characteristics that they do not “like” as opposed to making data based statements about what they need. KJ is particularly useful in creating a flowdown of information leading to solid requirements at an appropriate level of context. Hope this helps.
    Bruce Hayes

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    #62890

    Theodore Kar
    Member

    Bruce,
    I think you have brought up a very important point. Many large companies are now targetting off-shore outsourcing to reduce costs. It’s a very short-term minded solution and doesn’t take into account any of the issues brought up in the original post.
    Do you know of any organizations (technical or not) that are performing off-shore outsourcing, but are using Six Sigma and are winning on both the short-term (cost) and long-term (solution) fronts?
    Thanks for your thoughts.
    Theodore Kar

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    #62892

    Sanjeev Verma
    Member

    From Our experience, the biggest factors for potential failures in Outsourcing model are
    1) Looking for one stop shop in outsourcing – The problem with one stop shop is “Any outsourced partner will have limitations on the quality of Human resources. Meaning A company would have 10-15% of its workforce classified as outstanding resources; if we restrict ourselves to one stop shop, we pay for 100% and get only 10%-15% outstanding results, while if we manage a portfolio of outsourced vendors, we can leverage on the top 10% professionals in each vendor company”
    2) Being the sole bread earner of the outsourced partner – if our partner is solely dependent on us, then his response to changes/ upgradation suggested is very slow and does not offer the economy of operations (with outsourcing)
    Besides these factors, I agree that a Six Sigma project could be launched and in this mail thread itself, I think enough leads have been provided to make a good headstart
    Regards
    Sanjeev Verma
    Program Manager – Cisco Systems India
     

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    #63011

    Ramaswamy
    Participant

    TCS is one of the organizations that have worked with GE for more than a decade and have done a number of Six Sigma Projects – Many of them are “At the Cusotmer – For the Customer initiatives”.
    Several of the projects that have been done by TCS for GE and other key customers have been focussed on bringing in both the Short Term Cost benefits and a long term startegic benefits.
    If you need further details, you can contact [email protected] in TCS.

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    #63038

    Vikas M. Valsang
    Member

    Outsourcing to one vendor and multi-vendor has their own pros and cons. However, I believe in one-stop shop to a large extent but then they need to be qualifie
    1. Vendor Reputation (Globally)
    2. Public listed
    3. Vision and Mission of the top management – Committed to delivery and quality ?
    4. Services – offerings
    Further, going with one or two would help essentially because, it reduces the overhead for the management (technically as well) for the company outsourcing.
    Software industry is not as standardized as any manufacturing industry to outsource, say for example Steering parts to one company, Headlamps, tyres to another. If this concept has to be driven into software industry, then one has to look at “Software Design Center” concept whose sole responsibilities lie in Understanding the requirements and Designing. Implementation / testing can then be looked at outsourcing to multiple vendors !!!
    Otherwise, I don’t believe in having multiple vendors for same product development.

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    #63275

    Mary Muller
    Participant

    Where I can find more about KJ Analysis and also about Kano Model?  Here in Brazil it is difficult to find how to apply these metods…

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    #63276

    Bruce J. Hayes
    Participant

    Hi, there is a brief description of Kano on this site if you go to the “Tools and Templates” item under “Quality Directory” in the left hand navigation bar. KJ is not here. I will see about having it added for future reference.  KJ are the initials of a Japanese anthropologist named Jiro Kwawkita. This tool helps teams to construct insight into themes and relationships among issues to build a reuseable and common understanding and focus. It is most often used in the requirements gathering phase (Define Phase). A KJ is constructed by getting a team to dialog in a structured way around a question (theme) that might be indicative of a user or customer issue or requirement. These themes are then decomposed into context, requirements and weaknesses around data and uses. The tool makes use of “Post It” notes and may also be trapped in an electronic format. Simply put, it helps us to fully explore high level questions and translate those into low level accurate requirements. Often the lack of understanding requirements fully drives bad decsions later in a development process.

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    #63303

    Clay Nelson
    Participant

    I think everyone would agree that Six Sigma by itself can not solve these problems. It can however foster an environment where a search for the root cause of failure can be ferretted out. The root cause of the failures that I have seen have been:
    Poor or ambiguous requirements specification, a plan-driven waterfall process that delays confirmation of risk mitigation (i.e. integration and  testing are done too late), a false sense of security in CMM Level 5 status (that doesn’t guarantee success), focus on documents as a way to validate design, too much emphasis on inspection.
    Depending on the size of your project, I would suggest you look at the Rational Unified Process (http://www.rational.com), SEI’s TSP, or some other commercial software development process. Then incorporate content (tools and techniques) from Six Sigma into that process AND/OR use Six Sigma to help you adopt that process.

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    #64448

    Will Ross
    Member

    As I recall from a prehistoric (well, early 90s) stint as Quality Manager, the KJ method works well if you stick rigidly to a script and discipline that is not always obvious. Is there anywhere I can find a step by step guide that covers all the disciplines? Is that what you are offering to post?Thanks,Will

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    #64462

    McD
    Participant

    Will,
    You realize you are replying to a two year old posting?
    Dave Hallowell (who happens to work with Bruce) did post a pretty decent article on KJ in the library on this site:
    http://software.isixsigma.com/library/content/c050622b.asp
    Hope this helps
    –McD
     

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    #64465

    Will Ross
    Member

    …and yet I got a response!!
    Thank you so much.
    Actually, I had seen this.  And I agree:  it is the best summary I have seen.
    What I was looking for was a step by step guide.  Eventually I tracked down the “Language Processing” method documented by CQM.  They appear to have simply renamed their earlier material on KJ.
    Not bad for $15!
    Regards,
    Will

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