Application Solution – Outsource, Incubate Potential Providers, Fund Startup or App Challenge

This is a question where I have no knowledge but would appeal to organizations of all sizes, and in all sectors.

You have identified a need for software based solution for a project, however at the stage that you are, the details of the solution implementation are not known at the time, and you do not have sufficient internal resources to develop the solution. However you have a window of time to refine the potential solution, but only have one shot to get it right.

The options that I see are:

  1. Outsource – to a potential long term partner to develop and implement the solution. Of course this has an inherent risk in that costs may spiral out of control, you do not have much insight into the development process, and well you depend on all their processes
  2. Hold an App Challenge – these have become very common, however in this case you would define some requirements for and leave the problem solution to the competitors – I am yet to see this done
  3. Hold a Start-up Weekend – I am not sure how this is different from an app challenge but I would like to be educated
  4. Fund Start-up – question is how do you select the start-up, from app challenge or start-up weekend? How is this much better than outsourcing to an established company with prebuilt processes.
  5. Incubate potential start ups – Is this is an extension of the Fund start-up option, where by instead of owning the start-up outright you provide a space where start-ups can innovate and grow around your problems

Please comment and let me know what pros and cons for each of the options are.

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5 responses to this post.

  1. Posted by Sarel van der Walt on April 19, 2012 at 12:30 pm

    These are great options, indeed. Not going into the pro-s and con-s of each, one option that we opted for was to look at the business value of the software that we wanted to write. We ended up realizing that the project would take us about 3 months to write (for one software developer), but the value that we’ll get out of the final solution amounts to roughly an entire year worth of a salary of the appropriate developer. We then basically opted for the solution “Hire Resources”. We hired the necessary resource/developer. He started a month later. 4 months after that (there was some scope creep and learning curves to overcome) the project was done. And before you knew it, we NETTed out a profit within 8 months from conception to showing a positive flow of money from the solution.

    Reply

    • What would you recommend for an organization without the technical capacity to “Hire Resources” since they are more on the business side of the solution?

      Reply

      • Posted by Sarel van der Walt on April 20, 2012 at 10:40 am

        If they have the money to, definitely Outsourcing to professionals. However if they don’t then go with “Hold an App Challenge” – this way you don’t say “everybody has to be there this weekend”… you rather say “do it on your own time, and submit your app in 3 weeks”. It takes the pressure off people who are doing something for essentially nothing (except if they win)

        Reply

  2. My only advice would be option 1, outsource since in this tech world you donot need to have your own resources to get something done. Usually when clients come to my company with software ideas I way the complexity of the project and give them a rough cost. We then rush to the drawing board and create for them a prototype this takes between 1day and 7 days for the very complex ones. The client can then use the pro type to secure the contract and sub contract us.

    Reply

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