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Partnering Software Development

Partnering Software Development. Costco Wholesale No rights reserved – All ideas contained herein are just common sense!!. Costco Yesterday . Costco founded in Seattle in 1983 Success based on: High quality brand name goods Lowest possible prices Low expenses: Payroll & occupancy

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Partnering Software Development

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  1. Partnering Software Development Costco Wholesale No rights reserved – All ideas contained herein are just common sense!!

  2. Costco Yesterday • Costco founded in Seattle in 1983 • Success based on: • High quality brand name goods • Lowest possible prices • Low expenses: Payroll & occupancy No advertising • Extremely high sales productivity • Top line driven

  3. Costco Today • 48.2 billion sales/$882 million profit • Growth 10-15% annually for 5+ years. • Success STILL based upon: • High quality brand name goods • Lowest possible price • Low expenses • - Payroll & occupancy • - No advertising • Extremely high sales productivity • Top-line driven

  4. Costco’s IT View • IT must reflect the business strategy & mission • Do more with less • Be a great value – ‘Absolute lowest price on quality merchandise’ • Systems highly centralized, extremely fast, always available • IT expense less that 25% of other top-tier retailers • New businesses prove themselves before IT support • Get it simple, keep it simple • Our own employees do it better – “secret sauce” = business understanding • Costco does not outsource • No loyalty • Knowledge transfer issues • Win/Lose -- revenue maximized by creating dependence v. teach them how to fish

  5. Drivers to Partner • Quality programmers are very difficult to find & keep • 60+ open programmer spots • Continued to hire & limited to partnering to single digit % of total payroll & benefits • Costco employees mired in low value-add and maintenance work • <30% value-added • Low staff morale • Needed another tool for increasing IT value-added • Create a partnership that supplements our own staff • Start with the low value added work – field sizes – and maintenance – • Not expense saving, but people leveraging decision – highest & best use • Costco employees begin rewrites, enhancements & new technologies

  6. Over-coming Skeptics • Selection process • Get employees to see the need ($100 M project backlog) • RFP by small team with due dilly (look for cultural alignment) • Watch for sabotage • Account management/open communication • Freedom of choice • Managers & team choice the projects and roles for UST • On-site presence & rotation • UST decides who/Costco veto • Work ethic & competence becomes evident • Costco team moves to more fun stuff – new technology & new programs

  7. Costco/UST Partnership Core beliefs and understandings • Treat the people well & create a high trust environment • Orient UST like our own employees – Costco Univ. • Rotate staff into and out of India (UST decides) • Annual Costco visits to India, monthly conference calls • Long term commitment • Right project/account management from each partner – ‘spend the time to be a good customer’ • Keep the team together & fully utilized v. mercenary • Excellence is the measure – SMEs from UST • Sharing & transparency • Learn each others business economics & drivers • Regular business reviews with joint goals • Mutually accountable; create Win/Win or no deal

  8. Benefits of Relationship • On Time, On Budget, Req. Met • Outcome based work • Quality • 99.24% defect free average on all projects • QA/QC effort substantially improved • Flexibility - Ability to ramp up/down as needed • Added 30 people with one week notice • Sarbanes-Oxley – expertise & resources • Work Ethic/Focus on Projects • Average hrs/week worked toward projects 42.5 (excludes training, company calls/initiatives) • UST – Dream Team works on Costco account • Costco mangers want UST for every project and on every team Of over 20,000 hours worked, difference of 391 hours

  9. Costco/UST Conclusion Partnership, not outsourcing or out-tasking • Strong mutual commitment • Go the extra mile to complete on-time and on-budget • Transparency & mutual understanding • Teams work in harmoniously/seemlessly • “Gopi did a fantastic job customizing the AS400 for our department. He was efficient and very helpful.” • “Why did you let Gilroy go?” • Quality of programming & testing has improved • Bugs reduced & code modernized to reduce maintenance • More value-added to complete higher value added projects • Oh, one more thing – expense is lower!

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