In this article, Adam Ripley looks in to how outsourcing is a necessity for business these days.
With the proliferation of outsourcing, there is little doubt that it has become the business byword of the last few years. Organisations of all sizes are realising the benefits of using suppliers to handle processes such as technology, HR, finance and procurement. Lured by the cost savings and the ability to harness external expertise much more economically than providing that experience in-house, more and more organisations believe outsourcing to be the cure all for business ills.
However, this is not necessarily the case. The rush to outsourcing that has been endemic over the last five years or so has been followed by a number of monumental outsourcing disasters. This has served a purpose in the sense that organisations now realise they shouldn’t be blinkered by the promises of cost savings–outsourcing is a very tricky and subtle process and needs to be broached as such.
Outsourcing can fail for a number of reasons, from contract issues to relationship breakdowns, from clashes in working practices to soaring costs. But recently it has been reported that failures in quality assurance and inadequate testing have been behind some large scale outsourcing failures.
The Child Support Agency is a prime example. Dogged by innumerable problems, the CSA's £456 million computer system caused havoc with the organisation’s attempts to track and secure child support payments from absent parents. The government threatened to pull the plug on the system and the supplier, EDS, also blamed the government for ordering 2000 changes from their original requirements. However, it is evident from the government reports available that there are many defects outstanding in the IT system and incompatibilities with the CSA business processes. A more stringent process would have ensured changes were correctly managed and tested and that the changing requirements did not impact the quality of the system.
However, whilst public sector outsourcing disasters get more headlines, this is not to say the commercial sector is any more on the ball where it comes to adequately testing outsourced services. A high profile example of this is online bank Cahoot. At the end of 2004, Cahoot suffered a security lapse, when a failure to adequately test an upgrade resulted in a breakdown to the password system, exposure of customer account data and significant brand damage.
Government failures just receive more press attention, as they tend to be more publicly accountable. The private sector tends to be more skilled at smoke screening when things go wrong. However, with outsourcing rising in prevalence in every sector with the financial services sector leading the way and Kable estimating that the public sector is due to spend £20 billion on outsourcing in the next few years, the need for sound quality assurance and testing in outsourcing has never been more apparent.
With the litany of testing and quality assurance failures that litter the outsourcing space, why is this not a problem that is being addressed by both the user and supplier audience? Testing shortcomings in outsourcing projects can be down to a number of reasons:
- Lack of strategic perception around testing: testing and quality assurance is often considered a tick box, operational function, when it should be about the verification of a solution to fit the business. It is not simply about checking that the system works. Testing needs to be thought about in terms of the whole organisation because if any problems do arise, it can seriously affect the business. In terms of the whole outsourcing environment, the complexity of testing can be doubled–problems and potential scenarios need to be thought of from every perspective.
- Leaving it too late: a problem that was cited in the research was that testing was often left too late–49 percent of respondents alleged that testing was generally only conducted prior to go live in outsourcing projects. This could be highly detrimental to the business as any problems are only flagged up at the latest possible stage. This makes them extremely expensive to rectify. If problems are detected at an early stage, they can be corrected straight away minimising their effect on the contract overall.
- Deadline pressure: suppliers are often under serious pressure in outsourcing contracts. Having to adhere to deadlines, fall within budget and meet stringent SLAs often means that testing takes a backseat. Pressure from the end user to push systems out on time, often means that testing is compressed into a reduced time period to decrease delays in implementation. Suppliers are also often paid to deliver on time–if they fail to do so, they forgo payment. How suppliers are incentivised to adhere to deadlines has to be carefully thought through, or the customer could have problems with what is delivered.
No blue print exists for any aspect of outsourcing as all projects are so completely different. It is the same for testing and quality assurance in the outsourcing space. With the nuances and particularities of these projects, every testing strategy should be designed with the project in mind. However, there are still some key considerations to bear in mind when approaching testing and quality assurance in the outsourcing environment.
- Test with the business in mind: it is essential that all testing procedures are considered from the wider business spectrum–this will help to minimise risk at an early stage. From capacity testing to regression testing, every element of the testing strategy needs to be planned with the business in mind.
- Testing as a strategic planning tool: as mentioned, all too often testing is left until too late in the outsourcing lifecycle. If it is used upfront, as a strategic planning tool, it will detect system flaws earlier and prevent bigger problems from occurring. Testing should be involved right from the outset.
- Where the responsibility lies: the outsourcing environment can also cloud where the responsibility for testing lies. Should the end user rely on the supplier’s judgement? Or should the responsibility for testing lie with the end user? There is no definitive answer as no two projects are the same. As a customer, there is often a temptation to devolve all responsibility to the supplier–however this can leave the customer in a vulnerable position. The realms of responsibility must be decided at the outset, at the contractual level, and there should be secure testing procedures in place on both the end user's and supplier’s sides that are undertaken from the beginning of the project. This will ensure that problems are detected early on and the earlier they are spotted, the more easily and cheaply they can be rectified.
Another issue is at the end user site and the supplier site, who is responsible for overseeing and managing the testing and quality assurance procedures? Most organisations tend to employ a test manager–whilst it is recommended that there is a person or team solely responsible for testing, it is also essential that testing and quality assurance have the buy in from the wider outsourcing team and also from the board (from the end user organisation). It is imperative that testing and quality assurance are considered from the wider business perspective and to do this, strategic business input is required.
- Define the business requirements: the primary bug bear for suppliers in the outsourcing environment is often that the customer's requirements can change vastly from what was originally requested (in the case of the CSA, the supplier alleged that the customer had ordered 2000 changes from the original requirements). Constant changes to the system can have repercussions on the testing programme, so all changes have to be monitored carefully and appropriate testing procedures amended in accordance.
- Testing and quality assurance in the contract: one of the key findings in the research that was conducted showed that all outsourcing professionals believe that outsourcing contracts should detail testing at each stage of the lifecycle linked to formal acceptance criteria. This will ensure that testing practices are conducted at regular intervals and adhered to throughout the course of the contract. If applied to the CSA scenario it would have verified the continued alignment between the CSA business processes and the IT system being developed.
Outsourcing is now very much a board level issue. As it is so contentious and can provide an organisation with so many benefits it has become a regular fixture on boardroom agendas from an operational and a strategic perspective. As the success of outsourcing can hang on the thread of the robustness of testing procedures, this should be reason enough to propel testing onto the same agenda. Testing failures can result in reputation damage, lost customers, organisational disruption, not to mention the huge cost. As every organisation is urged to get their houses in order before embarking on outsourcing, testing is another area, which should be urgently addressed.