Software Delivery in the Digital Era,

for the Now EconomyPlus a peek into Latin America

By Alex Camino, VP Marketing & Communications

Latin America is becoming increasingly connected.

With a 600 million population, nearly 250 million are internet users, a few thousand shy of North America’s 273 million, many of them using their

smartphone as the main connecting device.Source: Internet World Stats

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All of a sudden every company is becoming a technology company. No matter what industry you participate in, I’ll bet that it is being transformed by information technology.

It’s easy to resort to the usual examples of online banking or the travel industry suffering from a major transformation, and we will be spot-on. But think of less obvious examples, like arts and crafts. Hoboken, NJ, the town where I’ve lived for the past 10 years, holds its Arts & Crafts festival twice a year, in the spring and fall seasons. It is a street fair, where locals sell their crafts. It is hard to pass two or three stands without seeing craft sellers using their iPad or smartphone taking credit card payments via Square, and showcasing their websites or their Etsy.com shops.

Look at the taxi industry and how it is being transformed by GPS technology, mobile communication, hybrid automobile technology and now the fast rise of Uber, an app that connects drivers and riders in 35 cities in the world, including San Francisco, NYC and, most recently, Mexico City.

The Brazilian science and technology ministry just launched an initiative to domestically produce cattle-tracking RFID chips, to monitor the health of the cows and ensure the safety of its products. Brazil is one of the largest producers of beef and dairy products in the world, with a cattle population of 200 million cows at any given time. It is not a coincidence that the government is using these assets to boost their domestic semi-conductor industry. Who would have thought that cows could boost a nation’s ability to produce micro-chips and increase their relevance in the digital economy?

Whale Spotter is an app that seeks to protect marine life, particularly whales that are hit by commercial ships off the coast of California. It uses crowd-sourcing to gather data collected by sailors, fishermen and marine scientists who spot whales, and then plot their location on an interactive map, which is then relayed to commercial ships.

Every business is a digital business

“Software is eating the world”- Marc Andreessen

Latin America is becoming increasingly connected.

With a 600 million population, nearly 250 million are internet users, a few thousand shy of North America’s 273 million, many of them using their

smartphone as the main connecting device.Source: Internet World Stats

Mobile payment options growing in LatAm.During 2013 three new mobile payment services were introduced in Brazil alone, including Zuum by Telefonica and MasterCard; Oi, a prepaid mobile wallet by mobile carrier Cielo and Banco do Brazil and PagSeguro.

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A recently released statement by The Wall Street Journal reads: “Technology is the central driver of economic growth and the Journal is committed to being the indispensable global source of news and information in this critical area. We plan to embark on a major global expansion of our technology coverage, which will include adding 20 reviewers, bloggers, visual journalists, editors, and reporters covering digital.” That is a bold statement from a media powerhouse to doubt the relevance of technology as an engine for growth of the global economy.

Software, in particular, is being embedded in every aspect of our lives. This summer’s top two blockbuster movies were software creations: Despicable Me 2 and Monsters University. Smartphones and software are displacing devices and services left and right: pocket cameras, maps, books, fax machines, newspapers, flashlights, TV sets, credit cards, alarm clocks…the phone itself is an app. High-frequency trading is disrupting the securities market. Big data algorithms are helping energy companies to discover deep water oil fields and shale gas deposits. Whatsapp is eroding Telco’s profit margins by eliminating text messaging. Netflix destroyed the Blockbuster DVD rental model, and is disrupting the TV industry with its on-demand service. As Marc Andreessen eloquently explained in his 2011 essay, published by The Wall Street Journal: “Companies in every industry need to assume that a software revolution is coming”. Two years later, we can confirm that the revolution is here.

Growing in mobile banking.Mobile banking usage in Latin America is

expected to see 65% annual growth until 2015, according to a report from Pyramid Research.

Source: Business News Americas, May 12, 2011.

Digital business natives penetrating in LatAm. In August 2013, Amazon launched its Mexico Kindle Store with 70,000 eBooks in Spanish. Other digital-business brands that are banking in Latin America’s potential include Uber, Netflix, Google Play and Spotify.

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Digital business natives penetrating in LatAm. In August 2013, Amazon launched its Mexico Kindle Store with 70,000 eBooks in Spanish. Other digital-business brands that are banking in Latin America’s potential include Uber, Netflix, Google Play and Spotify.

Immediacy seems to be the new normal in almost every aspect of modern life. Every so often my Twitter feed displays a rant about the quality of a product or service in a rapid succession of five to ten angry tweets. A lost piece of luggage, a missed connection, a foreign data service fee tend to be triggers for such cyber rants—but airlines and cell phone carriers are not the only industries exposed to the social media wrath of disgruntled customers. Any company today can have their flaws, mistakes and occasional not-so-user-friendly policies exposed through social media. It is as much so that a new breed of companies has risen, like Sparkcentral, which provides solutions for high-volume customer service over social media.

This is happening not just in light of Twitter and Facebook’s popularity and availability; it is happening because we are becoming a real-time society. Our expectation is that everything—every single piece of information— is available almost instantly.

We can reply to e-mails anytime, from everywhere in the world, and we expect a response nearly immediately. We’ve turned email into real-time chat. We now can listen to

a new song at a bar or restaurant, identify it via Shazam, and buy it in less than a minute. We can deposit checks to our bank account by taking pictures of them with our smartphone. We can transfer money via e-mail or SMS. We can watch an entire season of House of Cards at our own pace, whenever, wherever. We can admire a work of art, take a picture of it, and Google Goggles will provide us with all the information we need about the piece. Boy! I miss the old days when the person with the most convincing argument would end up prevailing over a trivial discussion. Now we have Google, and the answer is right there at our fingertips.

But it is not just about information being readily available; the expectation is starting to cross over to the physical world. eBay recently launched eBay Now, which delivers products from local stores in New York City and San Francisco in about an hour. A startup company called Perch has created an interactive display technology designed for use in retail spaces. I saw their technology in a shoe display at a Nordstrom store near my home, and it is

The Now Economy“Social media are tools. Real time is a mindset”

- David Meerman Scott

Sharing overachievers.When asked how much they share online, Brazilians, Argentines and Mexicans admit

to share more than what Americans do. A higher percentage of Latins indicate they share ‘Everything’ or ‘Most Things’ Online

Source: Ipsos OTX. January 1-18, 2013

A valuable e-commerce region.Mercado Libre, the largest e-commerce platform in Latin America, and arguably the region’s most successful dotcom startup, has a market cap of over US$6.4 Billion (10/2013) created in Argentina, the company maintains operations in Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Uruguay and Venezuela.Source: Nasdaq.com

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amazing; the moment you lift a shoe from the table, it starts to display information about the shoe, combining the benefits of online shopping with the unique experience of retail shopping.

The most dramatic example on how this immediacy is crossing over to the physical world came to me when I ran into the “Download this thing button” while browsing through Thingiverse.com, a website by the makers of Makerbot, the “prosumer” 3D printer. Thingiverse is a design community for discovering, making, and sharing 3D-printable things; the site allows you to submit or download the files with the designs to make things at home. The possibilities are endless with a 3D printer at home: Your lawn mower breaks due to a broken part; you can download the file and print the spare part at home. Pottery Barn comes out with a new line of coasters and napkin holders; you can go to an iTunes-like store, and download the files to print the entire collection at home. Need a vase for an extra flower bouquet? Just print it—immediacy at its best!

The expectation of the modern-day consumer is that everything can be solved immediately, and not just when it comes to information. This is the dawn of the Now Economy.

Brazilian men outpurchased women online.

In the first half of 2013 men spent more online than women in Brazil. 62% of Brazilian

internet users accessed e-commerce sites. Electronics is the number one category

of spend, with an average R$1,263 (approximately US$580) per purchase.

Source: IBOPE

Bringing LatAm closer to the Now Economy.According to the World Bank, as of 2012 over 60% of Latin American adults are unbanked. ComproPago a Monterrey, Mexico startup, allows online businesses to accept cash payments using a network of 130,000 retail storefronts that include supermarkets, restaurants and convenience stores.

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Bringing LatAm closer to the Now Economy.According to the World Bank, as of 2012 over 60% of Latin American adults are unbanked. ComproPago a Monterrey, Mexico startup, allows online businesses to accept cash payments using a network of 130,000 retail storefronts that include supermarkets, restaurants and convenience stores.

Customer service makes companies like Nordstrom or American Express stand out. They have mastered the art of providing an outstanding experience to their customers. Your expectations are high when you talk to representatives of these companies, whether you have an inquiry or are seeking help to solve a problem. The marketing and advertising world calls these interactions “Moments of Truth.”

I’ve seen some of the training that goes on at the call centers of many consumer companies. The best organizations are relentless, and pay attention to every single detail. They pay attention to the language, the attentiveness of the operators and exude a keen ability to listen to the customer. Some go to the extremes of placing mirrors next to the Customer Service Representatives’ (CSR) screens so they remember to smile while on the call, because when they smile it is somehow permeated to the person on the other side of the line.

What happens when the CSR is not a person, but a piece of software? For a variety of reasons, today most interactions between user and company are now through software.

Sometimes it is the company pushing software solutions, mainly for economic reasons, but other times it is the customer making the choice out of convenience. It is easier for me to open the Citibank app from my iPhone, than it is to call, navigate through the different options of the phone menu (sometimes missing the option and going through the options a second time) to finally speak with a representative. Check-in counters at airports are fully automated, if not irrelevant due to mobile or on-line check-in options. Many supermarkets have installed self-service checkout counters. The Apple Store app is a full-service CSR when you are inside a physical Apple Store, allowing you to browse through product features, scan the item, pay for it and be on your way.

To add to an already complex scenario, we also need to consider that the first “Moment of Truth” of a customer may not be when at the time the product is purchased or the app is opened. A couple of years ago, Google started promoting the concept of “Zero Moment of Truth,” aka ZMOT, which refers to all the research that consumers do online before making a purchase.

The App is the new CSR

“The software is the brand” – John McCarthy – Forrester Research

From Colombia with love. Zemoga, a digital innovation agency based

in New York City and Bogota, Colombia creates digital user experiences for top US

brands in Latin America. Recently developed Kreature Kreator, a Halloween gaming app that encouraged customers to customize and share

their own Kmart Halloween costumes.

Round-the-clock pocket-size personal trainer.Softtek developed a mobile solution for a national chain of US fitness clubs. The app allows existing club members, to purchase new services such as memberships to family members, schedule personal training sessions, and buy services such as Kid’s club.

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They search, they watch videos, they read reviews, they ask their network before making a purchase decision. Customers will use the company’s software tools and third parties such as Facebook, Amazon.com, Yelp or TripAdvisor. Engaging with customers in the Now Economy requires a great deal of attention to all these software platforms, company owned or not.

Focusing on providing an outstanding customer experience through software interfaces will prove to be highly profitable for companies, very much has been the case for American Express and Nordstrom with training customer representatives. In the early days of the World Wide Web, at Softtek I used to encourage companies to pay close attention to their websites. Using the CSR mirror metaphor, I’d ask my clients: “Is your website smiling back at your customer?” I guess today the question would still apply, but it goes way beyond a simple website. As John McCarthy, Principal Analyst at Forrester research, said in a February 2013 Interview: “The software is the brand. When I’m using the software, the mobile application, the analytics behind it, that is how I’m experiencing the company.”

There are over 70 apps just for that.

Mexican news group Reforma, operates a comprehensive information network, and

operates three of the most widely read newspaper in the country. The company has

developed over 70 mobile apps for its readers.

People need to talk… and text.The Contact Center Outsourcing industry in Mexico employs over 100 thousand people. 71% of the nearly 100 companies in the sector provide services to the US and Canada. The fastest growing services are email, sms and social media support.Source: Instituto Mexicano de Teleservicios

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People need to talk… and text.The Contact Center Outsourcing industry in Mexico employs over 100 thousand people. 71% of the nearly 100 companies in the sector provide services to the US and Canada. The fastest growing services are email, sms and social media support.Source: Instituto Mexicano de Teleservicios

A couple of years ago I saw former CEO of Burberry, Angela Ahrendts, at a conference talking about the importance of technology during her six-year tenure at the helm of the company. A January 2013 piece in the New York Times paints a great picture of the relevance of technology for Burberry: “From e-commerce to social media strategies, fashion brands are trying to ensure their technological efforts are as cutting edge as the hardware on their handbags. And nowhere has that focus been more profound than at Burberry, the British heritage brand founded in 1856.”

One of my takeaways from Mrs. Ahrendts’ presentation was when she explained the role of her CIO, which she summarized as: “I asked him to move from the back, to the front of the bus.”

The fact is that the strategic intention of technology within the company has been shifting, and companies rely heavily on IT as a core component of their strategy. This is well reflected in Gartner’s prediction that by 2017 the CMO will have as much, if not more budget for IT, than the CIO. Certainly the CMO has a longstanding tradition of being the business

owner of IT infrastructure in areas like Customer Relationship Management (CRM) or Sales Automation, but now the CMO role is extending way beyond defining user specifications and relaying requests to IT. To borrow from Ahrendts’ analogy, I think the CMO is also moving to the front seat of the technology bandwagon. In fact, I think that the CIO and the CMO can create a fantastic team, as pilot and co-pilot of the technology airplane.

For the past four decades IT has fundamentally been focused on building solutions to capture and process data from financial transactions, human resources, order processing, inventory management, supply chain management, and the likes. Collectively, these systems were denominated by Geoffrey Moore as “Systems of Record” (SoR) in a 2011 white paper. These are systems that reside in a mainframe environment or that are integrated into an ERP.

The newer generation of systems is collectively known as “Systems of Engagement,” (SoE) according to Moore. Forrester Research declares that Systems of Engagement “empower customers, partners, and employees with context-rich apps and smart products to help them decide and act immediately in their moments of need.” Mobile apps, Business Intelligence, Social Technologies would fall into this category.

The fundamental difference, according to Forrester, is that SoR touch processes, while systems of engagement touch people. A case can also be made that SoR are designed to support the business whereas systems of engagement are designed to drive and differentiate the business in the marketplace.

Record engagement “It’s a new dawn, it’s a new day, it’s a new life for me”

– Nina Simone

21%of mobile phone users in the US use mobile banking services (62.4 Million users) Source: US Federal reserve

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A good example of an SoR would be the checking account management system in a bank. It is designed to credit, debit and keep a balance of the different accounts the bank handles for customers. The truth is that the financial institution would hardly differentiate itself by how fast this application can credit or debit an account, but it will when this application is interfaced with SoE. These SoEs allow the client to credit a check by taking a picture of it on her smartphone or alerting the bank teller or phone operator that the client can benefit by moving some of her money from checking to a 30-day CD.

Based on her historic debit pattern, this would not affect the liquidity that she needs. Furthermore, the bank’s app can alert the customer that a financial advisor is available to speak with her about the mortgage loan she has researched, the very minute she walks into the open house in her favorite neighborhood.

SoRs tend to be internally focused, very stable, with a long-term lifespan, operating in a standardized environment across an organization or business function. SoEs, on the other hand, are more often externally focused, operated by the consumer, very dynamic, based on open standards, and in most instances they run in smart and geographically aware mobile devices.

Building systems of engagement and bridging them to systems of record requires constant collaboration. Business executives become more tech savvy, and IT becomes more externally focused and much more aware of its own strengths as a change agent and as a facilitator to maintain the business records while accelerating engagement, co-piloting the airplane.

Apps can make

or break a business(Actual user reviews on the

App Store in the banking, airline, insurance and

media spaces)

“I’m so jealous of Chase Bank, it has the direct deposit by taking a picture of the check” “Tried to scan boarding pass at TSA checkpoint, kept failing, was sent back to airline counter. Useless” “I wish I had looked at the app prior to purchasing my policy, I would have gone somewhere else” “I don’t mind seeing ads, but they shouldn’t dominate the screen… there is hardly any room to read the article”

Lots of good app choices bring new challenges to customer retention “Simply put, app makers are getting better at holding a consumer’s attention longer. Additionally, we believe usage rates are lower because consumers have more choice than ever and are splitting their time across more applications.“ Source: Furry Blog - App Engagement: The Matrix Reloaded – 10/2012

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Certainly the CMO has learned to rely on and lead the business through technology, and other tech-savvy business leaders are catching on, too. Angela Ahrendts, through promoting business and technology collaboration, has been able to bridge the gap between systems of record and systems of engagement. She led Burberry to double its annual revenue and earnings per share during her tenure at the company, before taking her new job at Apple in the newly created position of SVP of Retail and Online Stores—a statement in itself of the relevance of understanding how to merge the consumer, digital and brand management worlds.

140 million strong.By 2010 Latin America had an estimated 18 million mobile banking users in the region. Gartner predicts that this figure could grow to more than 140 million by 2015. Source: Mobile Connections, Latin America, Year-End 2010, Gartner, March 2011.

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On September 18th, 2013, Apple released iOS 7, the latest version of an operating system that was born in 2007, with the introduction of the iPhone. In six years this OS has already experienced 7 major releases. Microsoft, on the other hand, is promoting Microsoft Windows 8, the eighth major release of the iconic desktop operating system, first introduced in 1985. On average, Apple has released a major version of the mobile operating system every 10 months, whereas Microsoft took an average of 42 months between every major release of Windows.

Just like Apple, Microsoft is also following an accelerated pace to introduce features to its Windows Phone operating system, as is Google with Android. Yet, the contrast between the rate of change in the mobile world and the desktop world illustrates the pace at which software development organizations need to move today. The mobile world today is at least four times faster than the desktop world. In 2012 Citibank introduced its “Citi Mobile” app, and as of September 22, 2013 it is in its version 5.0; this translates into a pace of one major release every 2-3 months. Take a tour around the collection of apps in your smartphone, click on their ‘about’ tabs, and you’re sure to find that many are in their third, fourth or fifth release, despite the mobile world’s relative young age.

Reduced-cycle release times are becoming the new normal. Many may be familiar with the stories of dot com companies like eBay or Amazon.com, and their introduction of new functions every week. As systems of engagement become a tool for disintermediation and business innovation, “traditional organizations” are being forced to adopt similar release cycles.

The pace of change is certainly faster for systems of engagement than for systems of record, but this doesn’t mean that systems of record are exempt from the need for fast evolution. Forrester Research Analyst Kurt Bittner explains in a July 2013 report: “Not everyone needs to release continuously for all system types, but everyone needs to release in very short cycles for at least some of the time for some applications.”

The never-ending software lifecycle“May you live in interesting times” Often referenced as a Chinese curse.

The fast-moving app world.The following iPhone apps have a history of at least 25 revisions made available to the public

*As of 10-22-12. Apple’s App Store keeps records of a maximum 25 versions.

App

Geico AppCiti Mobile

United AirlinesNetflix

ShazamNYTimes

Current version*

2.8.15.11.0.325.0.17.0.04.0.2

Average days between revisions

356826273026

First date recorded on version history

May 24, 2011Feb 26, 2009Jan 5, 2012Dec 13, 2011Sep 19, 2011Jan 4, 2012

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Pressure points in a never-ending software release cycle are many and diverse:

• The astoundingly high velocity of feedback when an application is deployed to the public;

• The need to introduce new and differentiating features is paramount;

• The constant growth in number and variety of interactions with systems of record;

• Security and data protection requirements are constantly increasing in quantity and severity;

• The need for real-time analytics is unprecedented.

It took one day after its release for users to detect at least two bugs in iOS 7, allowing someone to bypass the Lock screen passcode of an iPhone or iPad. Exactly one week after the release, Apple updated the operating system with the release of iOS 7.0.2. to address the security flaws. What a perfect case study to exemplify how responsive application organizations need to be to react to different pressure points!

To respond to these points of pressure, organizations need to adopt models like DevOps or continuous delivery. According to Gartner, “DevOps It is a continuation of some of the predecessor work in the areas of continuous integration and application lifecycle management (ALM); therefore, it is rooted in the agile philosophy, which also attempts to bridge the traditional organizational divide between development and operations teams.”

DevOps and many other approaches are frequently built around concepts like Agile Development which aims for early and continuous delivery of software. The problem is that for the past nearly two decades, most application organizations have been configured into centers of excellence around specific areas like development, testing or maintenance and support. And more often than not, these teams are geographically distributed across the globe—a model that by definition consists of a division of labor and geographically separated silos, which are not necessarily wired to work in a well-orchestrated fashion, and hardly operate in real-time. The question here is: Can these two concepts coexist? Can they benefit from each other’s strengths? Are the outsourcing trends slowing organizations down?

Interesting times, indeed.

App-developing Latin America. Desarrollando América Latina (DAL) is an

annual event that aims to change the way Latin American citizens relate to their community, their city, their country and their region, with

the creation of high-impact civic applications using open data. DAL includes a three week

app challenge that aims to develop several high social-impact applications.Source: Desarrollando America

“The processes for software delivery must change to support a modular, dynamic, agile development approach that delivers software far more frequently than ever before.”Dave West, Chief Product Officer for Tasktop Technologies Inc. and former Forrester Research vicepresident and research director

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Just think that 8 years ago, in 2006, we were happy with the ability to send and receive e-mails on a Blackberry. We didn’t expect to have thousands of mobile apps at our disposal, and the camera on our mobile phone was just a nice add-on that took lousy pictures.

We would have not been able to reach the point where we are today, in which companies can rely on a fast-moving software infrastructure to build competitive advantage, as fast as we did, without the rise of India as a global power in software services. Without a mature IT outsourcing industry and remote delivery models like Offshore or Nearshore, allocating as much talent as we have today into developing the software that powers mobile, analytics and social technologies would have been very difficult.

Of course the invention of the iPhone, social networks, Google’s algorithms, and wireless internet rank at the top on the creation of the technology platform that powers the Now Economy. Yet, I argue that as the true power for organizations rests in their ability to produce

software that turns business ideas into reality; access to a global pool of talent, and the means to work interactively with geographically distributed teams, has been a game changer.

Indian IT service providers did to the IT services industry what Walmart did to retail, and what Southwest Airlines did to air travel. They’ve all helped bring down price barriers and have democratized those markets, totally redefining their industries. Indian IT vendors achieved it by investing in different areas, particularly in process maturity. They had to build trust from their US and European clients, prove that a knowledge-intensive task can be performed remotely, and demonstrate that complex software projects could be managed with remote teams. Back in the ’90s, Six Sigma and CMMi became the proof stamps that an organization had the maturity and ability to deliver, helping service providers in India earn the trust of many organizations to outsource work to them.

In his famous book “The World is Flat”, Tom Friedman included Outsourcing and Offshoring as two of the “ten flatteners” leveling the playing field. Friedman argues that offshore outsourcing allows the split of service activities into

Process rigor and nimbleness “I was in Bangalore, India, when I realized that the world was flat” – Thomas Friedman

Global delivery is a strong component of software

development strategies.According to the 2013 Software Development

Trends survey by ExecutiveBrief over 60% of organizations outsource at least part of their software development process, and 65.9%

of those use global sourcing capabilities. Source: ExecutiveBrief

The ten percent.With a tenth the size of the population of India (112 Million people in Mexico vs. 1.2 Billion people in India), Mexico’s ITO/BPO exports in 2012 stand also at 10% that of India, at US $6.5 Billion vs $69.7 billion for India.Source: Ministry of Economy Mexico. Hindustantimes.com

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The ten percent.With a tenth the size of the population of India (112 Million people in Mexico vs. 1.2 Billion people in India), Mexico’s ITO/BPO exports in 2012 stand also at 10% that of India, at US $6.5 Billion vs $69.7 billion for India.Source: Ministry of Economy Mexico. Hindustantimes.com

components, which then can be performed in the most efficient and cost-effective place of the world. The corporate IT world embraced India-centric delivery as a norm.

A lot has changed since the publication of “The World is Flat.” Since the dawn of the Indian IT industry, Apple surpassed Coca-Cola as the world’s most valuable brand, a token of the relevance of technology for today’s consumer world. Salesforce.com became the most widely used Software-as-a-Service platform, evidence of the rise of Marketing as a fundamental driver of IT investment and pervasiveness of cloud computing. The role of IT evolved into Business Technology, a term used by Forrester Research to describe “the relentless revolution in which the business is sourcing and managing more and more technology outside IT’s direct control.”

Through process rigor India proved its value for Enterprise IT 1.0, as Geoffrey Moore refers to the pre-existing breed of systems of record, which are designed to automate processes. But today, we are facing the rise of systems of engagement, which empower organizations and individuals through context-rich apps, situationally aware devices and real-time analytics. These have brought forth a totally new dimension to the requirements of a sound global delivery capability; rigid, process-centric structures are insufficient for the nimbleness

required today. Remote service delivery remains strong, to the effect that almost every software project is a global project, although not necessarily an India-centric project anymore. Nearshore and onshore components are much needed complements for today’s demand for both process rigor and nimbleness.

Retaking the Walmart and Southwest Airlines analogy, we can say that nearshore is to global services what Target is to retail, and what JetBlue is to discount airlines. Nearshore services may be smaller in scale, but tend to be more aesthetically driven; they compete in price, but are not necessarily cheaper. Perhaps the most relevant feature of nearshore is seen in what JetBlue does with its free DirecTV in every seat offer; it allows the client to stay in touch with what is happening on the ground. All these are key features in a world increasingly driven by systems of engagement, and in great need for nimble structures.

Offshoring in Latin America: Do Argentina, Brazil, and Mexico offer attractive opportunities? “Global delivery models (GDMs) continue to mature and diversify both from the supplier side — with suppliers offering an increasing range of services and delivery locations — as well as from the buyer side — with buyers looking to countries beyond India as they seek to expand and differentiate their GDM.”Charles Green, Forrester Research, January 2013

As Technology becomes core to the business, optimizing offshore strategy is key. Charles Green, Forrester Research

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The center of gravity of IT is shifting from systems of record, towards systems of engagement. During this year’s Sapphire, SAP’s marquee event, executives of the German company made the statement that SAP is no longer a B2B company, but a B2B2C company. Their explanation comes from the acknowledgement of the consumerization of IT megatrend, and SAP’s focus on helping their clients introduce new consumer offerings.

According to Bloomberg BusinessWeek, “SAP has spent more than $12 billion on Silicon Valley takeovers since 2010.” The portfolio of acquisitions includes Sybase, Syclo and Hybris, a clear signal of the relevance of mobile computing and consumer-oriented technology within SAP’s strategy.

The reason why I highlight this is because if there is a company that can represent modern-day systems of record, that would be SAP. Today, nearly all of the world’s leading brands are running SAP. And for the past few years, this company has been sending clear signals that the evolution is happening at the front end of the business. The back-end is under control and systems of engagement are setting the pace.

This reality needs not only new technology, but different structures within the organization. These new structures span from the adoption of lean thinking, and even applying Lean Startup methodology to established companies, to configuring operating models like DevOps, or adopting methodologies like Agile and Kanban development.

Organizations realize that they need to develop more software at a faster speed than ever before. But in order to comply, they have also realized that hiring more software developers may not be the answer, for three main reasons. First, there is a scarcity problem; according to Dice.com, in 2012 this sector had a 3.8% unemployment rate. At half the national average, this rate is consistent with an expanding economy. Second is the aspect of cost; “U.S. technology salaries rose last year (2012) more than they have in a decade, with the average tech professional earning a 5 percent increase, from $81,327 to $85,619,” as stated by Dice.com. Third, the fact is that most companies lack the experience and skills to be an efficient software product development organization.

Systems of engagement are shifting weight towards nearshore“Individuals and interactions over processes and tools” - The Agile Manifesto

Natural strengths.“The natural strengths of Latin America, with regard to beneficial time zones for Agile and other iterative development methodologies, as well as softer elements such as cultural affinity, will contribute to companies increasingly looking to Latin America,” says Charles Green, Forrester ResearchSource: Global Delivery Report

“Offshore, onshore, nearshore and rural sourcing. It’s time to rethink your delivery location and vendors. #GartnerOUT.”

Helen Huntley, Gartner Analyst via Twitter @helenahunltey

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Natural strengths.“The natural strengths of Latin America, with regard to beneficial time zones for Agile and other iterative development methodologies, as well as softer elements such as cultural affinity, will contribute to companies increasingly looking to Latin America,” says Charles Green, Forrester ResearchSource: Global Delivery Report

Outsourcing seems to be as valuable a tool as ever to meet the increase in volume and speed imposed on IT. In fact, a July 2013 study by Forrester, indicates that global IT consulting and systems integration budget will see an annual increase of 5.7% in 2014, trailing only to the software category (6%) within the IT budget. Furthermore, a January 2013 survey by HfS showed that a whopping 85% of respondents plan to start, maintain or increase the volume of application development and maintenance outsourcing.

Given the scarcity factor, global outsourcing seems to be a good solution for U.S. based corporations, yet because most of the workload is in systems of engagement, India-centric outsourcing may not be sufficient.

Enter nearshore outsourcing. The features that have been touted about nearshore with regards to proximity, same-time zone, and real-time

interaction have met their moment, and here are three reasons why:

Integration. Systems of engagement require more cross-functional collaboration than any previous generation of IT systems. Marketing, sales and operations need to work in sync and in constant communication with IT. And these interactions cannot be constrained to pre-determined time-tables and work schedules. In many cases stakeholders in all of these entities need to work in unison as one, and respond to impromptu interactions and continuous iterations.

Risk management and compliance. When the end user of a system is the actual consumer, risk escalates exponentially with every person using the system. Everything needs to be under control, from what would otherwise be trivial aspects like password-reset functions, to system availability, customer information privacy and crisis management.

SOA, SaaS and mobile driving software app integration at top-of-mind of software pros.“Application integration problems are a top reason why businesses — and their enterprise architects and project managers — can’t deliver business innovation at the speed demanded by customers using all these application platforms.”Dave West, Chief Product Officer for Tasktop Technologies Inc. and former Forrester Research VP and Research Director

Source: Tech Target

Constant security assessments“In a standard enterprise environment, where it might be recommended for you to do the assessments once every year, I would say in a mobile banking and payment ecosystem, every six months or even every quarter wouldn’t be too much,” Tom Wills, Senior security and financial fraud analyst at Javelin Strategy & Research

Source: Bank Info Security

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Active and on-demand interaction between constituents is vital to mitigating an increasingly wide range of threats and compliance issues.

Customer experience. Empowered consumers expect seamless interactions, powerful and user-friendly software, personalized and context specific information, as well as constant evolution of the applications they use to interact with the company. These types of systems of engagement can only be created through tightly integrated software development teams, reliable backend integration, proactive software validation teams and thorough understanding of the concepts behind good user experience.

These three key requirements can be addressed by robust nearshore delivery models. Similar to SAP, the center of gravity is shifting from systems of record, towards systems of engagement, and the global outsourcing center of gravity may likewise be suffering some adjustments. Although it will hardly shift too far away from India, it is certainly experiencing counterweights in places like Latin America and EMEA, while making the global delivery of services more distributed.

It’s about aesthetics.“The work that I see done in user interface, mobility related... Everything that touches the human aesthetic – the way we view things, is very well suited for nearshore”Esteban Herrera, Outsourcing Advisor at ISG and former COO HfS Research – April 2012, Softtek Application Innovation Summit

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It’s about aesthetics.“The work that I see done in user interface, mobility related... Everything that touches the human aesthetic – the way we view things, is very well suited for nearshore”Esteban Herrera, Outsourcing Advisor at ISG and former COO HfS Research – April 2012, Softtek Application Innovation Summit

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