eleks.com IT-outsourcing: Retrospection & opportunities Michael Kramarenko, PhD, CSO
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eleks.com
IT-outsourcing: Retrospection & opportunities
Michael Kramarenko, PhD, CSO
The mists of time
Ancient HistoryDeep roots:
● Publicani - Roman taxes collection(1st century BC)
● Domestic system (18th century)● Impact of Division of labor.
Adam Smith (1776)
Modern HistoryRoots:● Vertically integrated organization of General Motors.
Alfred Sloan (1930s)
● “ Do what you do best and outsource the rest! ”.Peter Drucker
● Blue Cross of Pennsylvania agreement with Electronic Data Systems manage its data processing services (1963)
● Kodak’s agreement with IBM to outsource the management of its data center facilities (1989)
Key DriversCommon reasons:● Reduce and control operating costs
● Resource shortage
● Enhance capability to newproduct/service development
● Speed up time-to-market
● Improve service quality
● Focus on core competencies
● Access to new technology/skills
Triggers:● Y2K problem
● Dot.Com bubble(1997–March 10, 2000)
1995
1000
2000
3000
4000
5000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Ukrainian OutsourcingBlack Hole
1987
Cooperativestage
Product setup stage
Outsourcingstage
Our Modern History
1988 1989 1991 1992 1993 1995 2000 2001
LaNiT ELEKS1c
SoftServeEPAM
Luxoft InterObject Lohika
Joint ventureLaw
Law on Cooperative
UARNETUTEL
Our DNA
Key capabilities:
● Entrepreneur mindset
● Product thinking
● R&D
● Value over processes
● Universal Soldiers
Turbulent times
Current stage ● Disruptive technological innovations
● Ukrainian IT outsourcing market
● Startups
○ New financing sources
○ High level of uncertainty
○ Constant readiness for pivoting
○ Domestic startups
Venture Investments Q4 2015
Domestic Startups
Customer Expectations ● Partnership vs captive
● Business value vs performed tasks
● Time-to-market speedup
● Craftsmanship vs resources
● Flexibility & readiness for changes
● Size matters
Cooperation model decision ● Image
● Trusted relationships
● Adoption lifecycle
● Risk sharing capability
Possible cooperation models ● Low risk
○ Dedicated Team
○ Time & Material
● Medium risk○ Payment for feature
○ IP as an asset
● High risk: “Shared risk, shared success”○ Bonus for success○ % of shares
Discovery SoWSoW
Shared success probability
New focus of discovery phase● Customer validation
● Idea validation
● Feasibility study
● MVP reverse order:○ what we need to learn?○ what we need to measure?
○ what we need to build for hypothesis validation?
○ who we need to engage?
Cooperation challenges ● Funding shortage
● Team reduction
Discovery SoW SoW
● Short SoW
● Pre-payment
Capability challenges
● Cross-discipline & cross-technology knowledge
● Evolving architecture
● Connectivity, scale & volume
● Optimal design and technological decisions
● Measurable deployability
● Testability and operational resilience
● Routine automation
Universal Soldiers
● Business understanding
● Holistic view
● Design Thinking
● Background matters
Mindset matters
Empathy
Passion
Creativity
Commitment
Passion
Commitment
Creativity
EmpathyEntrepreneur
Curiosity
Commitment
Speed
Summary
● Startup as a new opportunity
● Consider your capabilities
● Cooperation model matter
● Don’t forget about mindset and culture
● Don’t lose our DNA
● New turbulent times are possible
Thank You!Q&A
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