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Business Technology: Don't Drive Right Past GM's Latest Idea

Let's reflect a moment on all the things we'd rather do than think long-and-hard about business-computing standards.

Ahhh, laundry day.

Critique my boss' PowerPoint presentation? Thanks for the swell opportunity.

But when standards become more than a thankless job of The Committee With A Really Long Name, when they start to become the language in which a business topic is discussed, when they start to represent a concept that's far more than the steps for doing something, it's time for IT strategists to take careful note.

It doesn't hurt if such a standard/concept has $15 billion of momentum behind it.

There's just such a standard brewing. General Motors and the Carnegie Mellon Software Engineering Institute last week said they're working on standards to make buying and using IT outsourcing services a more-predictable, disciplined, and uniform process across the industry. "A lot of us realize that when we have inefficient processes, we end up paying for this," says GM chief technology officer Fred Killeen.

GM needs this. For the past decade, EDS has been its main provider of IT outsourcing services. Next year that contract ends, and GM will move to using more vendors, divvying up IT-service contracts worth about$3 billion a year for the next five years. GM is asking anyone bidding for those contracts, so that's most major IT services vendors, to use common standards for tasks such as how, when, and how often a vendor communicates about defects. The Software Engineering Institute has sat in alongside the vendors in some of those meetings. It's those metrics and processes, combined with an existing model called the CMMI Acquisition Module, that are the starting point for these proposed standards.

It's tempting to dismiss this as a narrow development that a company like GM needs but one that won't land in the lap of many other CIOs. Yet there's reason to think this concept--even if not these exact standards-- will grow to the point it can't be ignored.

Think of Indian IT outsourcing firms such as InfoSys, TCS, and Wipro. Today, their influence is undeniable, growing sales at double-digit rates, adding thousands of employees a quarter. Not that long ago, their image was that of order-takers, companies that could knock out code cheaply, if you could stomach the time zone differences and poor quality. That view has changed, as the world's largest consumers of IT services now find their work good enough to entrust vital projects to them.

One step many Indian firms took to get there was to pursue software CMM Level 5 certification, a process for standardizing development practices aimed at improving quality. And they marketed the ever-loving by jimminy out of that certification. Level 5 certification doesn't win any contracts. The right price and quality mix does that. But the concept CMM Level 5 represented--that Indian firms had quality and would go toe-to-toe with developers anywhere--rewrote the rule book for how software is developed. Even for those who don't believe it.

A CMMI approach (it stands for Capability Maturity Model Integration) to buying IT services could tap into a similar pressing business trend, shining a harsh spotlight on just how good a company is at working with its IT suppliers. "For many organizations, they'll only focus on the capabilities of the supplier," Killeen says. "This is focusing on the process of the acquirers. It's making sure that when they work with a high-performing supplier, they can get the full benefit from that."

It's tempting to dismiss this as just another jargon-driven transformational paradigm shift at the tipping point of crossing the chasm of excellence. It's possible this language and these standards might not stick. But the idea--that the heat is turning markedly up on how efficiently companies buy from and work with outsourcers--is here to stay. And if you're not speaking the right language, you're not being heard.

Chris Murphy,
Senior Executive Editor

(Bob Evans will return next week.)

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