Cost Estimation of Transition Projects in Application Outsourcing: An Empirical ModelIWSM Mensura 2014 – Rotterdam

Nanne Wams, MSc.

Frank Vogelezang, MSc.

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2What is this about?

Transition Projects in Application Outsourcing

4Application Outsourcing

IT Service for an application portfolio

− application management and support

− application enhancement

− systems maintenance

Est. market size 2014: € 49 Bln. (Gartner)

5Transition Project

Old situation− tasks performed by customer’s employees

− informal working process

− knowledge in peoples heads

− applications hosted by customer

New situation− tasks performed by IT service provider

− formal working process (controlling costs)

− knowledge transferable (documented)

− applications hosted by IT service provider

Estimation parametersTwo key cost drivers for transition projects explained

7Application Portfolio Size

No detailed information about application portfolio size is provided

Example portfolio 80 applications Complexity: Low 40% Medium 50% High 10%

(2)(5)(8)

: 0,4 x 80 x 2 = 64 : 0,5 x 80 x 5 = 200: 0,1 x 80 x 8 = 64

Total: 328

Cost estimation based on number of functional modules

8Team Experience

Team experience determines efficiency

Team experience Efficiency factor

Team has experience in similar projects 1,5

Individual members have experience in similar projects 1,0

Team has shared experience in similar projects 0,7

Proposed model for cost estimation

10Work breakdown structureOverview

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

11Work breakdown structureWork processes

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

How will we work together? Document templates For team and customer

Not dependent on portfolio size

Extremely dependent on team experience

12Work breakdown structureApplication transitioning

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

Is dependent on portfolio size

Is dependent on efficiency factor, based on team experience Knowledge of applications

Out of heads, on to paper Learning

13Work breakdown structureApplication transitioning: efficiency factor

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

Is dependent on portfolio size

Is dependent on efficiency factor, based on team experience

14Work breakdown structureSupporting organisational change

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

Is dependent on the needs of the proprietor

Can differ from one application to another

Is dependent on team experience

Communication Explaining new processes Involving stakeholders

15Work breakdown structureSupporting organisational change

Transition Project

1. Defining and organizing work processes

2. Application transitioning

3. Supporting proprietor’s organisational change

4. Installation and delivery of environments

5. Installation and delivery of software licenses

6. Project management

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