Forrester estimates product development services will generate $15 billion in revenue in 2016. In the same report, Forrester indicates the percentage of revenue generated by PDS 2.0 is increasing, meaning VCs, ISVs, and enterprise organizations are beginning to value more strategic, long-term partnerships with outsourcing providers.
So, how can development leaders ensure they’re choosing the best PDS 2.0 partner? Like most business decisions, there is no easy answer. That being said, it is possible to mitigate the risk of failure with careful forethought and an understanding of your organization’s unique needs.
Of course the most beneficial partnerships begin as early as possible in the product development lifecycle and continue through the end of a product’s life. Whether or not you’re choosing a partner before a product development begins, there is specific expertise a partner needs at each stage in the process to ensure the product is a success. Though it’s tempting to focus on meeting your immediate needs, it’s important to consider the skills you will need in the future as well.
Here are a few to keep in mind for each phase:
For the idea generation and screening phase, you need a partner that can help you identify problems or opportunities and be able to internally and/or externally validate those ideas. Various product management methods (including Design Sprint by Google and IDEO U Design Thinking) with a focus on digital transformation are necessary to start off on the right foot.
The business solution definition phase is closely integrated with the previous one and usually accomplished in tandem. The goal of this stage is to develop a business level solution that would have problem/opportunity oriented features, and, where necessary, a prototype of your future product. Again, an ideal a partner will have expertise that would allow them to lead this phase and take a product through development. For complex solutions, industry and software domain subject matter experts are also necessary. And these days UX expertise can’t be overlooked.
During the technical solution definition phase, detailed technical requirements and software architecture start to take shape. If you are going to use new technology to address a problem that has not previously been solved, make sure you have established a proof of concept before you dive deep into an implementation. Precise and realistic estimations are the key to product success at this stage, since the next stage is implementation and both sides need to understand what they are committing to. You should be looking for mature software architects and system analysts as well as experienced project managers to estimate your needs and provide plans for risk mitigation.
The technical implementation phase is where your product comes alive. Without highly skilled software development and QC engineers, DevOps experts, and other software DLC roles, you won’t be able to move forward, even with the previous stages perfectly executed. Look for a partner with best in class and experienced experts that can “make it happen.” Thought cost is always a concern, don’t be cheap here. You need extensive engineering capabilities and proven practices that are continuously controlled and improved by respective Centers of Excellence.
Next, you’ll tackle commercialization and pricing. Unless you have a partner with significantly better marketing and sales expertise than you have in-house, you’re better off not handing off responsibilities here. This might be a viable option for start-ups and smaller companies, but as a rule, you wouldn’t outsource this phase.
Operations and maintenance is very important, especially when you have a long-term product where cost effectiveness becomes a key consideration. An outsourcing partner should provide resources that will enable you to keep up with new change requests and fix bugs cost efficiently. If your product operations and maintenance will require extensive personnel involvement, clarify your partner’s future hiring strategy.
Last but not least, the disposition stage might seem far off at the beginning of the engagement, but be sure that you haven’t overlooked it, since it can become a huge issue in the future if your outsourcing partner doesn’t know how to do it right. This is especially crucial for products in regulated industries (e.g. healthcare, finance etc.). Look for a partner who has proven experience with IT security practices from NIST or ISO. Third party certifications are an efficient way of verifying such expertise.
Interested in a real-life example? Learn how SoftServe helped develop a healthcare application in partnership with Outcomes Based Healthcare (OBH) in this case study.