Small outsourcing company pays off for Compaq.
When Bryan Jones looked to outsource the maintenance of Compaq Computer Corp.s TCP/IP software for OpenVMS, his first two choices turned out to be "false starts." But the thirdthe selection of little-known Array Inc.was a charm.
Jones, director of OpenVMS engineering at Compaq, in Nashua, N.H., found himself dissatisfied with a mid-tier company facing financial straits as well as with larger outsourcers such as Electronic Data Systems Corp. His effort to farm out bug fixes and other routine maintenance work eventually led him to the small company with a unique business plan.
Jones reward for taking a risk on a smaller service company was to free up Compaq software developers to focus on new functionality while achieving a significant productivity gainand ultimately helping to keep more customers using Compaqs software, he said.
"Weve seen more customers who are migrating [from DECnet] to our version of TCP/IP on VMS compared to our competitors. And were increasing our usage of IP. The increased quality of it has been a draw," Jones said.
Array, a 50-person outsourcer that specializes in software maintenance, porting and testing, was founded on a simple idea: Hire only software engineers who enjoy the detective work involved in fixing bugs; treat them like first-class citizens; and give them the opportunity to broaden their skills, according to Charlie Palmer, co-CEO of the privately held company in Westboro, Mass.
In most software development organizations, "people that do maintenance are looked at as second-class citizens," Palmer said. "We work very hard at hiring just those people that like to do this, and we provide them with growth opportunities and diversity and tender, loving care."
At the same time, in-house maintenance groups tend to "stovepipe" engineers who are good at a certain technology or part of a product, while Array engineers work as a team, Palmer said.
Ironically, that diversity wasnt what opened the door for Array at Compaq. It was the expertise the service provider had in TCP/IP for OpenVMS. "They had experience. They had seen the same problems in other efforts and could quickly identify solutions for us," Jones said.
But it wasnt long before Array expanded its work with Compaq. After its initial work on TCP/IP for OpenVMS, Array was called on to provide testing for a port of Apache Server on OpenVMS and provide porting of some Unix code to VMS for a government project, according to Jones. "They proved they could get up to speed quickly," he said.
Both Array and the OpenVMS engineering organization have a penchant for productivity metrics that helped to cement the relationship and prove Arrays claims. "I develop a norm on what my own employee delivers and measure Array against that. They run about 140 percent of our norm. When you do the math, it becomes cost- effective," Jones said.
Array said its engineers can be from 50 percent to 100 percent more productive than an in-house maintenance engineer at the same or lower cost.
Palmer attributed Arrays superior productivity to its team-oriented methodology.
"When you assemble the team, you have different roles in it that all work together to execute the methodology," he said. "We go slow to go fastwe dont go charging down a path until weve done a triage, hypothesis setting, and based on that, determine what strategy is most likely to succeed. We gather all the data and access to equipment before we start down that road. Then we deploy the resources and dispatch the work to teams. Every task is specified and dispatched to a team."
In Arrays work with Compaq, Jones was able to document that Array reduced the development testing cycle times by 50 percent.
Most companies do a mix of in-house and outsourced maintenance work. "It depends on the life cycle of the product," Jones said. "Three years ago, there was a lot of direction toward offshore outsourcing that was initially geared more toward maintenance than toward development."
Palmer said he sees inertia and offshore outsourcing companies as Arrays primary competitors. "Because software engineering groups have done maintenance the same way for so long, we run into a certain amount of intransigence thats tough to overcome," he said.
In tough economic times, when CFOs (chief financial officers) look to reduce costs, that could be less of an issue, however, said Stephen Lane, an analyst at Aberdeen Group Inc., in Boston.
"Inertia may have been the case when it was within their clients technology organization, but when CFOs make the decision, there is a lot less inertia if you can show them cost savings," Lane said.
Despite the cost advantages that offshore outsourcing companies can provide, Array can compete because of its superior productivity. "With an offshore company, your goal is to reach the norm. If you can get the same productivity per person, youve reduced your cost," Jones said.
The different measurements stem from the fact that its often harder to find the right expertise with offshore outsourcers, Aberdeens Lane said. "In the past, their approach was more brute force. Thats how a lot of them did their work. They may not have the productivity level, but they still had the numbers [of low-cost workers]."