why the outsourcing world needs cmmi for acquisitionwhy the outsourcing world needs cmmi for...

By: Paul Iredale

28 June 2012

GPI Asia

Annual Conference 2012

Why the outsourcing

world needs CMMI for

Acquisition

Agenda

• Why Acquisition process is necessary

• Applying to business – CMMI through the Product Lifecycle

– Process Areas

• Conclusion

© 2012 by GPI Asia. All rights reserved. 2

WHY ACQUISITION PROCESS

IS NECESSARY


Outsource and Acquisition

To outsource – to move an activity or package of work you

already do to a third party provider

------------------------------------------------------------------------------- This line may not always be very clear

To acquire – to commission a new package of work or

project on a third party provider

Who Acquires Products and

Services


Large Government and Financial Institutes

Examples:

• Department for Work and Pensions (DWP) UK

Government

• JP Morgan Chase

• Lloyds Bank

• Barclays Bank

• DHL

• Eurocontrol (Air Traffic Control for Europe)

Acquirer/Supplier Relationship

Capability

Lo

w A

cq

uir

er

H

igh

Low Supplier/Partner High

MISMATCH

Acquirer may

mentor supplier

PROBLEM

Little discipline

no process an

exciting ride

MATCH

Good probability

of success

MISMATCH

Acquirer may

Bring down

supplier

Reasons for Failure: • Mismanagement

• Inability to Articulate Customer Needs

• Poor Requirements Definition

• Uncontrolled Requirements Changes

• Inadequate Supplier Selection

• Contracting Process

• Insufficient Technology Selection

(Responsibility is shared by both supplier and acquirer)

20 – 25% of Large Information Technology Acquisition Projects fail

within 2 Years 50% of Large Information Technology Acquisition

Projects fail within 5 Years (Dun & Bradstreet)

Why acquisition process is necessary?


16

16

19

19

30

31

31

38

49

51

0 10 20 30 40 50 60

Vendor Complacency

Vendor Employee Turnover

Lack of Flexibility

High Switching costs

Lack of Transparency

Formal Escalation

Issues with Knowledge Transfer

Change Management

Complex Governance Problems

Quality of Service

% of responses

Source: IDC’s Apps Outsourcing Survey, 2006




• If you acquire Products and Services this model focuses

on Acquisition of Products and Services unlike CMMI for

Development which focuses on Application

Development

• Better synergy between Client (CMMI Acquisition) and

Suppliers (CMMI Development)

What is the purpose?


“Failure could be avoided if the Acquirer learned how to

properly Prepare For, Engage With and Manage

Suppliers”

CMMI for Acquisition provides you with the model and

information to help you do this !

APPLYING TO BUSINESS


CMMI thru the Lifecycle

- 12 -

CMMI (v1.3) Core Process

CMMI CMMI

Acquisition Acquisition

CMMI

Development

CMMI Service

Business

Partners

Engagement

Plan &

Requirements Acceptance Operations Develop Development

CMMI for Acquisition


Acquisition Validation

Acquisition Requirements Development

Solicitation & Supplier Agreement Development

Acquisition Technical Management

Agreement Management

Project

Management

Acquisition Verification

Guidance to supplier design

Reviews at appropriate stages

Fewer scope changes

Product Acceptance

Validation at acquirer’s environment

Right sizing Acceptance Criteria

Why CMMI for Acquisition • Do I acquire Products or Services from a third party?

CMMI for Acquisition

• How do I ensure I’m never surprised when I receive a final product from a

supplier?

Acquisition Requirements Development, Technical Management

• Can I prevent receiving a product that doesn’t perform as I or my customer

expects?

Acquisition Verification and Validation

• Do I know how to prevent a product or service costing more than I expect?

Solicitation and Supplier Agreement Development

• Can I ensure that products and services are delivered to me on time?


• Am I satisfied with my suppliers’ services?

Solicitation and Supplier Agreement Development

• Do I have control of the relationships I have with my suppliers?



Level 2 – Process Areas

•Acquisition Requirements Development

•Agreement Management

•Solicitation and Supplier Agreement Development

•Supplier Agreement Management

•Requirements Management

•Project Planning

•Project Monitoring and Control

•Measurement and Analysis

•Product and Process Quality

•Configuration management

Black – Common

Blue – Acquisition

Yellow - Development

Agreement Management (AM)

Specific Goal SG1: The terms of the supplier agreement are met by both

the acquirer and supplier

• SP1.1 - Execute the supplier agreement

• SP1.2 - Monitor selected supplier processes

• SP1.3 - Accept the acquired product

• SP1.4 - Manage supplier invoices

Can I ensure that products and services are delivered to me on time?

Do I have control of the relationship I have with my suppliers?

Solicitation and Supplier

Agreement Development (SSAD) Specific Goal SG1: Prepare for Solicitation and Supplier Agreement

Development

• SP1.1 - Identify Potential Suppliers

• SP1.2 - Establish a Solicitation Package

• SP1.3 - Review the Solicitation Package

• SP1.4 - Distribute and Maintain the Solicitation Package

Specific Goal SG2: Select Suppliers

• SP2.1 - Evaluate Proposed Solutions

• SP2.2 - Establish Negotiation Plans

• SP2.3 - Select Suppliers

Specific Goal SG3: Establish Supplier Agreements

• SP3.1 - Establish an Understanding of the Agreement

• SP3.2 - Establish the Supplier Agreement

Do I know how to prevent a product or service costing more than I expect?

Acquisition Requirements

Development (ARD)

Specific Goal SG1: Develop Customer Requirements

• SP1.1 - Elicit Stakeholder Needs

• SP1.2 - Develop and Prioritise Customer Requirements

Specific Goal SG2: Develop Contractual Requirements

• SP2.1 - Establish Contractual Requirements

• SP2.2 - Allocate Contractual Requirements

Specific Goal SG3: Analyse and Validate Requirements

• SP3.1 - Establish Operational Concepts and Scenarios

• SP3.2 - Analyse Requirements

• SP3.3 - Analyse Requirements to Achieve Balance

• SP3.4 - Validate Requirements

How do I ensure I’m never surprised when I receive a final product from a

supplier?

Level 3 – Process Areas

•Acquisition Technical Management

•Acquisition Verification

•Acquisition Validation

•Requirements development

•Technical Solution

•Product Integration

•Verification

•Validation

•Organisation Process Focus

•Organisation Process Definition

•Organisation Training

•Integrated Project Management

•Risk Management

•Decision Analysis and Resolution

Black – Common

Blue – Acquisition

Yellow - Development

Acquisition Technical

Management (ATM)

Specific Goal SG1: Evaluate Technical Solutions

• SP1.1 - Select Technical Solutions for Analysis

• SP1.2 - Analyse Selected Technical Solutions

• SP1.3 - Conduct Technical Reviews

Specific Goal SG2: Perform Interface Management

• SP2.1 - Select Interfaces to Manage

• SP2.2 - Manage Selected Interfaces

How do I ensure I’m never surprised when I receive a final product from a

supplier?

Acquisition Verification (AVER) Specific Goal SG1: Prepare for Verification

• SP1.1 - Select Products for Verification

• SP1.2 - Establish the Verification Environment

• SP1.3 - Establish Verification Procedures and Criteria

Specific Goal SG2: Perform Peer Reviews

• SP2.1 - Prepare for Peer Reviews

• SP2.2 - Conduct Peer Reviews

• SP2.3 - Analyse Peer Review Data

Specific Goal SG3: Verify Selected Work Products

• SP3.1 - Perform Verification

• SP3.2 - Analyse Verification Results

Can I prevent receiving a product that doesn’t perform as I or my customer

expects?

Acquisition Validation (AVAL) Specific Goal SG1: Prepare for Validation

• SP1.1 - Select Products for Validation

• SP1.2 - Establish the Validation Environment

• SP1.3 - Establish Validation Procedures and Criteria

Specific Goal SG2: Validate Selected Products and Products Components

• SP2.1 - Perform Validation

• SP2.2 - Analyse Validation Results

Can I prevent receiving a product that doesn’t perform as I or my customer

expects?

CONCLUSION


Why CMMI for Acquisition

• If you acquire Products and Services the model focuses

on Acquisition of Products and Services unlike CMMI for

Development which focuses on Application

Development

• Better synergy between Client (CMMI Acquisition) and

Suppliers (CMMI Development)

Why CMMI for Acquisition

• At level 2 - two new process areas focus on Supplier

Management and Requirements Development with the

Supplier

• At level 3 - two less process areas the focus is now on

management of and acceptance from Suppliers not

about development

Why CMMI for Acquisition Project/

Division

Supplier1

Supplier2 Supplier3

Supplier4

Project/

Division

Supplier5

Supplier6 Supplier7

Supplier8

CMMI-ACQ “Process Bus”

• Consistent process

• Consistent supplier interfaces/interactions, deliverables, measures

• Consistent supplier scorecards

• Consistent architecture design standards

• Fewer problems with system integration

• Better supplier collaboration

Target

• Target CMMI for Acquisition Level 3

• Drive all Suppliers to be at least :

– CMMI for Development Level 3

– CMMI for Service Level 3

Benefits for Suppliers • Promotes continuous improvement in acquirer - supplier

relationship

• Better stakeholder management by acquirer

• Helps suppliers in understanding end user needs clearly

fewer scope changes/change requests. (50% reduction)

• Reviewing supplier deliverables helps validate early and

reduce risk in the later part of the life cycle

• Standard supplier agreements with formal defined criteria

helps reduce ambiguity

• Overall reduction in Costs - 30%

• Overall reduction in released defects – 60%

- 28 -

Q&A

- 29 -

References

• CMMI Library http://www.sei.cmu.edu/library/


http://www.sei.cmu.edu/library/

THANK YOU

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