OUTSOURCING

Organizations are increasingly depending on outside agencies
to meet their T&M needs.

There is
a transformation taking place in the traditional, even stodgy,
world of Test and Measurement (T&M). Traditionally, organizations
maintained test teams that would determine what to buy and how
to use them. These test teams would also develop in-house software
or fixtures to enhance their test capability.

More organizations
are increasingly looking outward-usually to test instrument-vendors
or to specialist test-integrators for test solutions. They expect
their suppliers to provide the complete test solutions, instead
of developing it internally. Figure 1 describes the transition
over the years. The trend is to not only outsource the test
(system) development, but also to link the investment to business
results.

Test outsourcing
could be of two varieties-test engineering or test strategy.
Test engineering is an extension of test instrument products
that could involve automation, fixturing, and interfacing the
test instruments to other equipment such as robotic equipment
handlers or telecom equipment. Test engineering requires a lot
of expertise in automation and integration. The test instruments,
in this case, become part of a large “system” and
the entire system must perform to requirements. Test engineering
works when the test needs are explicitly defined.

Test strategy
is a different matter. Here, an organization may just have its
quality or production goals defined, and the test strategy (parameters
to test, periodicity of test, equipment types, etc.) needs to
be defined to meet the goals.

Why
Outsource?

There are many reasons for the shift in strategy. The main driver
is the focus on core business. This is not to suggest that testing
is an unnecessary process to be dispensed with. On the contrary,
it is still a vital part of quality and design validation. The
current thinking is to draw on the experience and knowledge
of external people, specifically whose core business is test,
for these somewhat inter-related reasons:

Lack
of in-house expertise.

This is the most obvious reason. Testing may be a vital part
of the organization”s success but may not fall into the core
activity. For example, an automotive company may use test equipment
to understand the noise and vibration of a vehicle. Their mechanical
engineers can interpret the results of the tests without requiring
a deep understanding of the test instrument or the technology
behind it. The situation becomes more complex if the testing
need is not met by a single instrument, and requires an entire
system. The test engineering capabilities may not be available
in the organization itself.Another example could be telecom service providers. They could
be running complex, hybrid technology networks where it may
not be possible to have a team of engineers covering all the
technologies. A new entrant will need time to have all the in-house
engineers or technicians trained to handle new technologies.
A third example could be a government security agency. Its core
activity would be intelligence gathering. And it may use test
equipment either as intelligence-gathering tools, or to use
them to maintain such equipment. They may not have, indeed may
never need, deep understanding of test technology.

In all these
situations, it makes sense for the organization to let their
test equipment supplier suggest the optimum test strategy or
equipment. It improves the organization”s productivity without
sacrificing quality or business goals.

Focus
on the core business.

An organization”s business success may depend on more than just
quality products or services. For example, a cellular phone
manufacturer. In this case, business success may be a combination
of several factors-faster time-to-market, lower cost, and so
on. In the intensely competitive cellular phone market, cost
is a major factor-phones must be manufactured in large volumes
to achieve economies of scale. It is much simpler for the manufacturer
to specify their needs in terms of parameters, throughput, and
budget, and let their instrument vendors work out how best to
meet their needs.
Another advantage of outsourcing is the spreading of project
risks. When the test strategy is outsourced, part of the risk
involved in making the project successful is transferred to
the test equipment vendor. There is also the added benefit of
using the larger resource pool of the test solution vendor.
That makes sense for organizations trying to create new test
systems or methods within specified timeframes and budgets.

Outsourcing
test engineering or strategy could have several advantages.
The main advantage is productivity improvement. Existing staff
could be deployed where it makes most business sense. There
could also be significant cost benefits. An outside supplier
could deliver a complete test solution that costs less to procure
and maintain. The organization need not spend more money training
the test teams. Depending on the way the solution is contracted,
the test equipment vendor can also be made responsible for completely
supporting the system for a specified period-right down to upgrades
to the latest technologies or features. This could translate
into very significant cost savings over a period.What
Does it Take to Outsource?

While it offers great advantages, outsourcing test to an external
party does have its share of risks. First, it needs an attitudinal
shift. The equipment supplier needs to move from being a vendor
to a strategic partner. Test teams need to work very closely
with the supplier to ensure that the organization”s key goals
are met. The supplier needs to understand the customer”s business
goals well. The level of understanding required spans technology
issues, business goals, market situation, and sometimes even
the needs of the customer”s customers. This is often difficult
as organizations are unwilling to share confidential information
for either competitive or security reasons. Annual production
targets, internal circuitry or design, equipment specifications
are all highly proprietary and confidential information. This
is also just the sort of information a supplier may need to
develop the right test system or strategy.

Outsourcing
becomes difficult when such information is not available to
the supplier. A normal method of dealing with this situation
is a "non-disclosure agreement" with the supplier,
to ensure that confidential information is protected. All relevant
data-parameters, specifications, throughput, user interface,
reporting format, and so on-need to be nailed down and agreed
upon before the contract is finalized.

The second
risk is the supplier”s credibility. When the customer makes
a big shift in business strategy, the key issue will the supplier”s
ability to meet the customer”s business needs. Outsourcing can
be effective only when the customer feels confident that the
supplier has the expertise, financial health, and support capability
to become a strategic partner.

Is
It a Universal Trend?

No. Outsourcing is a key need for some situations and is not
the general shape of things to come. Much of the testing methodology
is still traditional and is expected to continue for some time.
This is especially true for organizations that have large and
competent in-house teams, or where test system development is
an essential activity. Outsourcing is a new phenomenon in very
specific customer situations where in-house expertise is lacking,
where test is outside an organization”s core activities, or
where a test equipment supplier can provide a solution more
economically.

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