Study On Software Outsourcing Project Total Process Risk Management

Software outsourcing is becoming increasingly popular among software manufacturers because it has many advantages: lowering and controlling development and management costs, increase market response flexibility, reducing high-tech investment and making possible for software manufactures to focus on core competence and strategic goals.Since there exist inevitable differences between outsourcers and outsourcees regarding geographical environment, cultural and legal environments, management and value systems, software outsourcing has inherent risks throughout product development life cycle, such as extra transaction fees and management costs, unable to realize cost reduction plan, lock-in passive contracts, losing competitiveness and control over core technologies and low employee morale.The goal of software outsourcing is to achieve potential profitability that is hard to guarantee in any outsourcing project. Some risks and challenges in software outsourcing are similar to those encountered in-house developments; some are different and much higher. These risks can result in more failures than in-house development unless they are under better controls and managements. However, traditional risk managements only manage risks in isolated processes such as time, cost or quality managements without taking into account the total processes of software outsourcing. More and more practice in risk managements tell us that we must take a comprehensive holistic approach in risk managements: choosing the combination of single risk treatment and total risk treatment for specific situations in software outsourcing risk management.In order to solve the problems in software industry and software outsourcing risk management, we investigate the total risk management issues in software outsourcing through literature review, empirical analysis and management decision methods.First, we proposed total process standardized management philosophy in software outsourcing and built a life cycle based framework for software outsourcing which is composed of eight phases including outsourcing preparation, outsourcee selection, software planning, demand analysis, resources verification, concept design and detail design, coding and debugging, testing and acceptance, project evaluation and conclusion. We also proposed three modes monitor and control in software outsourcing: milestone monitor and control, IDEF0 based flexible modular control mode and third party monitor mode. We also give detailed description of various stages in each model.Second, we built a three dimensional software outsourcing risk management structure made up with target, element and body dimensions and an integrated framework for software outsourcing risk management. There are nine elements in this framework, among which theoretical basis, internal environment, information and communication, software outsourcing management information system constitute the foundation and system guarantee; risk identification, risk evaluation, risk assessment, risk treatment and risk monitor are implementations of the main framework. Risk management, incorporated with milestone management, activity module management, becomes an integral part of management process and an influential component in the implementation of outsourcing strategy.Third, we identified risks using Delphi methods, sorted risk importance using group nominations,built software outsourcing gradual layer structure using ISM methods,and provided effective support for analyzing multivariable, complex and unclear risk relationship.Fourth, most outsourcing failures and risks come from inappropriate outsorucee selection. Therefore outsourcee evaluation and selection is an important step in outsourcing implementation. We built an integrated software outsourcee evaluation metric system using AHP and group cluster decision methods. This system avoids inconsistency during decision process due to the expert's difference in technology and knowledge background, preference to certain metrics or personal prejudices. This system is proved to be a scientific evaluation system and model for choosing qualified outsourcees.