Engineering services value chain
Deep expertise, thought leadership and rapid iterations with client control
High agility, expertise and partial ownership with vendor
High agility, expertise and application ownership with vendor
Specific role transition by vendor
Engineering services value chain
Application portfolio ownership with vendor Engagement models Expert talent
Client value need IT vendor value proposition
Team topologies SDLC methodologies
Location models Pricing models Engineering process expertise Learnings and best practices
Delivery quality, stability, predictability and efficiency Cost effectiveness
Engineering services
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What is the engineering services value chain and what are the keys to its success?
Luxoft
delivery expert Balaji Venkatramani takes a deep dive into this critical aspect of software engineering delivery.
value chain success factors
What is the value expected by clients in these engagements? Clients expect to leverage deep domain, technology and execution expertise from IT vendors that help build and maintain their bespoke applications, systems, products or platforms.
These value needs from clients are typically aligned to five categories:
Deep expertise, thought leadership and rapid iterations with client control
Clients in the process of conceptualizing new products and services for their end customers need engagement with IT vendors on their:
• Niche domain and technology expertise
• Thought leadership
• Cross-industry experience in building similar systems
• Ability to rapidly iterate on development cycles, fail fast and help quicken product decisions
Considering the significant investments being made by clients during this conceptualization phase, they wish to retain control over the project and hold decision-making authority.
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Maximum agility, expertise and partial ownership with the vendor
Clients in the process of finalizing minimum viable product (MVP) specifications for their systems and subsequent development need engagement with IT vendors on their:
• Agile development expertise
• Niche domain and technology skills
• Ability to take partial delivery ownership
As the key decisions related to product ideas have already been made, clients see feasibility to relinquish partial delivery ownership to IT vendors. This enables them to relieve their own bandwidth to some extent to focus on other strategic initiatives.
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Full application ownership with the vendor
The most common scenario — clients continuously aspire to optimize their bandwidth on systems that are past the MVP stage. These systems are in the process of their regular growth cycle, during which, a continuous stream of functional and technical enhancements need to be delivered. Clients need a higher transfer of delivery ownership to IT vendors to refocus their own effort on more strategic initiatives.
Therefore, clients need engagement with IT vendors on their:
• Agile development and maintenance expertise
• Niche domain and technology skills
• Ability to take significant delivery ownership for specific applications
• Expertise to design and implement transformational changes to those applications (e.g., cloud migration, user experience enhancements, analytics and insights implementation)
Specific role transition by the vendor
In certain scenarios, clients may carve out a specific set of roles from specific locations for transition to IT vendors. These roles can span across multiple systems, domains and technologies, and may not necessarily be logically related. In such scenarios, clients need engagement with IT vendors on their:
• Knowledge transition expertise to take over specific roles within the scope
• Global presence leverage to transition these roles to desired remote delivery locations; nearshore or offshore
• Expertise to establish secure delivery centers in these desired locations
• Ability to take selective ownership for roles within the scope and establish efficiencies
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Application portfolio ownership with vendor
For systems that are toward their end-of-life and yet business-critical and complex, clients need significant transfer of delivery ownership to IT vendors. This helps them refocus their own bandwidth on more strategic initiatives.
Clients need engagement with IT vendors on their:
• Expertise to manage a large portfolio of systems and keep the lights on
• Ability to establish governance and techniques to minimize development and support demand of such systems
• Expertise to drive stability and continuous efficiencies
• Ability to manage end-of-life projects, especially on technology upgrades
Across these five categories, the common needs from clients are around ensuring delivery quality, system stability, predictability and efficiencies.
The focus on cost-effectiveness, however, depends upon client business objectives. It assumes lower priority in the product conceptualization and minimum viable implementation stages as opposed to the higher priorities of getting the product right first time and on time. It sees increasing focus and prioritization as systems navigate through the post-MVP stages through end-of-life.
These five categories define the value zones across the value chain for clients to derive maximum benefits from their engineering engagements with IT vendors.
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Engineering services value chain success factors
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To break this down further, the value proposition by IT vendors to address these value needs from clients can be categorized into eight core components:
Team topologies
The IT vendor needs to demonstrate expertise in flexible team composition, skill and role mix, proficiency levels and volumes aligned to each desired value zone.
For example, in the product conceptualization scenario, the team needs to be small with niche expertise. While for managing applications with complete ownership, the team needs to be medium-to-large with a combination of niche and commodity skills.
SDLC methodologies
IT vendors need to move away from a “one-size-fits-all” approach and identify a best-fit SDLC methodology based on the value zone requirement.
Investing effort in embracing Agile methodologies may not be recommended when the systems in scope have very clearly defined and predictable requirements or are in their end-of-life stage. However, when a product idea needs to be conceptualized, extensive Agile implementation is desired.
Location models
The IT vendor needs to provide the appropriately aligned team distribution across the desired locations, again, based on which value zone requirement has been identified by the client.
To illustrate, for MVP implementation, a higher co-location of team and client may help to ensure closer collaboration. While in the post-minimum viable stage, a higher percentage of remote teams may help drive enhanced cost-effectiveness and efficiencies.
Engagement models
The engagement model needs to be closely aligned to the engagement needs in a particular value zone.
Transition of carved-out roles needs a managed team augmentation model owing to the possible lack of consistent domain or technology across the roles. In contrast, for taking ownership of an application portfolio, a managed delivery model is the best fit to ensure significant ownership with IT vendors to drive a large-scale transformation.
Expert talent
Across value zones, the expertise levels of IT vendor teams assume a significant importance. The depth and breadth of expertise may, however, vary based on the value zone.
For instance, niche and deep expertise are needed to conceptualize a product, but when managing end-of-life systems, the expertise should be more commoditized and diverse.
Pricing models
The IT vendor needs to demonstrate flexibility and expertise to implement different types of pricing models based on the value zone and the client’s transformational requirements.
Fixed-price models are the best fit for MVP delivery. Output-based models are the best fit for systems in a lifecycle stage post their MVP stage, as they are in long-term continuous development and maintenance scope in this growth stage.
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Engineering process expertise
The IT vendor needs to demonstrate diverse engineering process expertise, including DevOps skills, to best align to the value zone.
Managing systems post the MVP stage needs significant expertise in modern Agile development process delivery and end-to-end DevOps implementation. However, for systems in their end-of-life, the IT vendor needs to demonstrate strong maintenance process expertise along with end-of-life management processes.
Learnings and best practices
Across all five value zones, clients continuously aim to leverage extensive experience of IT vendors in delivering for similar zones, domains and technologies in the industry. The IT vendor knowledge on common pitfalls, mitigation measures and best practices acts as a golden source of reference for clients to leverage.
What are the most important takeaways from this value chain? To sum up, engineering delivery engagements between clients and IT vendors need to be very carefully constructed based on the specific value aspirations set by the clients. And most importantly, the value proposition from IT vendors needs to be significantly aligned to these desired value zones. This establishes a standardized framework for clients to specify their needs and for IT vendors to provide aligned value propositions, leading to a mutual win for both parties.
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Engineering services value chain success factors
