IBM Innovate, held a few months ago in Orlando, FL was an excellent conference. I was there for four packed days. As a tech sales professional, such events end up being a non-stop series of customer meetings, interrupted by meals and long evening outings at local restaurants. I did however manage to sneak in a few sessions that I was actually able to attend and learn from (other than the keynote sessions). Some of the best sessions I did attend were from the Executive Summit. For those who do not know, the Executive Summit is actually a full conference by itself, held in parallel with Innovate, focused exclusively on IT executives. I spent most of Monday at the Executive Summit.
One excellent session at the Executive Summit was a panel focussed on Trends and Challenges of Software Supply Chain. The panel was moderated by Neeraj Chandra, VP Worldwide Strategy, IBM Rational. There were three panelists:
· Andreas Keis – Head of S/W Engineering Research at EADS
· Peter Rasmussen – Director, IT Development Process and Tools at Danske Bank
· Kazuo Yabuta – Chief Architect – for System Engineering Technology Unit at Fujitsu.
Andreas and Peter are from Europe and Yabuta-san from Japan, so a good mix of corporate cultures was represented. Here are some of the key points that they made. They capture the essence of the challenges that are faced by the IT industry, as it moves to a Software Factory model, with an acquirer dealing with, on a typical basis, multiple suppliers across its Software Supply Chain.
- Outsourcing (and offshoring) is here to stay.
- While there are parallels to the manufacturing supply chains of physical products, the parallel breaks down really fast. (Read my earlier post comparing Manufacturing and Software Supply Chains)
- The Golden Rule of manufacturing outsourcing applies to software outsourcing too:
Trust is an important and necessary condition of outsourcing
Good Contract statements do not solve the problem. Good mutual understanding and trust are key.
- Acquirers need to have a plan for Governance across the entire supply chain.
- Suppliers are being challenged to move from SLAs to ‘Business based’ agreements.
- The lines between suppliers and acquirers need to be dynamic, especially in an ‘Agile’ delivery world.
The essence of the discussion was captured by a visual description given by Yabuta-san of the interactions between acquirers and suppliers. Yabuka-san called out the need for an intermediary – an organization that translates the incomplete requirements coming from the acquirer, to complete requirements – in a form acceptable to the supplier(s). And in the reverse direction, conducts acceptance tests on the components created by the supplier(s) to make sure they conform to the Quality Governance requirements of the acquirer. This organization may be an internal organization or an external third party, neutral to the supplier(s). Their role is to be able to, as Yabuka-san put it – speak the language of both worlds. They would be responsible for ensuring proper governance across the entire supply chain. Their goal should be to take the relationships between the acquirer and the suppliers beyond contracts and SLAs – to good mutual understanding and trust, fostered by ongoing and continuous communication. I have captured this in the diagram below. (I will post my thoughts on how IBM and Rational’s PPM solution can add value in this space in a future blog post.)
In conclusion, I would like to leave you with this statement that was made during the panel:
When working with a software supplier, which would you believe more – CMMI levels they have attained or your last experience with them?
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