Many enterprise software developers globally are now committed to long-term outsourcing partnerships with trusted vendors and are reaping the benefits that such arrangements deliver including stability, flexibility and cost-effectiveness.
Some of these successful adopters are now considering a different strategy with regard to their development resources – the Build-Operate-Transfer model (or BOT). A perfect example is ABB’s Enterprise Software line of business, which includes the EAM and mining software offerings acquired during their acquisition of Mincom in 2011.
The BOT concept is one that has been a mainstay of international infrastructure development for many years. It remains a popular strategy, particularly where government entities wish to partner with the private sector. In a traditional BOT arrangement like this, the private entity would be engaged to create and operate the infrastructure for a fixed period, at which point it would revert to public ownership.
While this is not a strategy that has traditionally been thought of in terms of software development between two private entities, it is a feature that Mitrais are happy to offer, and one that several of our long-standing clients are pursuing or considering.
In many ways, BOT can represent the best of the outsourcing model, but can add some additional benefits to the right organisation. It can result in significant cost reductions when compared to in-sourcing, meaning that the savings can be redirected to the capital acquisition or local recruiting. Having a remote team can also result in faster time to market by having more resources available at a time offset that can be advantageous – potentially more productive hours in each working day across the entire team.
BOT, however, is often regarded as a risk mitigation strategy. BOT can result in a more diverse workforce, less prone to influence by local factors. Every location experiences fluctuations in the recruiting and development environments. By diversifying the development team into a geographically disparate team, BOT can benefit from the flexibility of staffing while also providing a hedge against unforeseen local factors.
In ABB’s case, BOT seemed to be a perfect fit. It enabled them to leverage the experienced team that they had developed with Mitrais since the 1990’s into a ready-made in-house development arm, complete with the trusted and experienced team members that they knew. This represented a win-win for ABB and Mitrais. ABB would acquire a proven and expert team that had been developed by Mitrais, while Mitrais would continue as a top tier reseller with close ties to a team in which there was great confidence.
Looking at it from a BOT perspective, the Build and Operate phases of the cycle had been in operation successfully for years, even though the Transfer phase had never been considered. Having negotiated terms acceptable to all concerned, ABB exercised its option to transfer the team on 1 January 2016, and the team members became official ABB employees on that day.
As Mr Tarang Waghela, Senior Director of ABB Enterprise Software says, “The transition from an outsourcing arrangement to offshoring has been as smooth as we can expect. Team Mitrais was very cooperative, collaborative, and supportive during the transition which helped with the change management process.”
The result is that, more than a year later, ABB has an efficient and experienced team, and Mitrais remains a close partner of ABB globally. Mr Waghela added, “During the months of change, it was clearer than ever before that Mitrais genuinely care about the well-being of their employees.”
The ABB experience is a great example of the creative strategies that world-class software development organisations can use to balance the benefits of outsourcing with those of robust internal capabilities and skills.