The "Three Tier" Implementation Delivery Model

In 1996, at Gartner, I wrote (along with my colleague Tom Ryan) about a "three tier" project delivery model that services vendors could evolve towards.  Tier 1 is a small client-site based team which defines specifications, handles client relations, transfers knowledge and coordinates the other tiers. Tier 2 is a network of "domain" specialists - in process or vertical areas, country knowledge, vendor modules - that can be leveraged by phone and video-conference, and occasionally at client site. Tier 3 is at remote solution centers organized by project phases - specialist coding, testing, documentation, training and conversion resources proficient in their specific skill sets and intimately familiar with specialized tools such as the Mercury testing or TIBCO's integration suite. Tier 3 in today's world need not be in a physical "center" - it could be a virtual one.

There were several reasons to recommend such a model. Specialist resources are brought in as needed, there should be less travel to client sites, and clients can leverage economics of sharing specialized resources across projects. Most mature industries have moved to specialization - e.g. psychiatric nurses are trained and certified very differently than orthopedic nurses. If you see credits at the end of any Hollywood movie you see a set of specialized skills - and most of them are working on multiple movies at any given time.

There were 3 underpinning "S' s under my three tier model - specialization, sharing and sitting tight (rather than flying each week to clients).

So, how have things evolved in the last decade?

Most US vendors have multiple "solution centers" and on surface appear to have a strong Tier 3 in place. In reality, many of such centers are primarily used for marketing purposes and often to "park" employees who want to get off the road. In the last couple of years, they have been building offshore centers and GDMs. While they claim to have deep Tier 2 (domain) knowledge specialist firms like Hackett typically offer deeper process knowledge and software vendors offer deeper product knowledge. Overall, they have too many of their staff mix in tier 1 and they still travel to client sites a lot more than necessary.

A number of offshore vendors have developed GDMs which facilitate "lean" Tier 1 and "fat" Tier 3. In fact, some have shown 60 to 90% of work can be staffed in Tier 3 in low cost locations. But their Tier 3s are mostly organized by clients, not by phase. As they try to hedge growing wage inflation in many of those offshore markets, they have the opportunity to develop a Tier 4 to share phase-based specialists across clients. Another area where many offshore vendors have not done as well is in developing Tier 2. While many are developing capability in specific application or business process areas, it is still a work in progress for most firms and many are hiring them and deploying them as Tier 1 like US firms do.

While software vendors have moved at least some of their R&D efforts offshore, their consulting arms have not been that active. Some of them have remote upgrade labs, but for the most part the delivery model is primarily Type 1. In fact, most vendor consulting continues to primarily focus on product specific tasks such as configuration and training, and often not offer to help clients with conversion, integration, testing and other tasks. Worse, in sales mode they pretend those activities do not even matter - that helps them justify that their "implementations cost are only 1:1 to the cost of their software".  It does not matter that software modeling experts like Capers Jones have saying for years that specification and  configuration make up less  than a quarter of most project efforts.  Cleansing and converting data, integrating with other applications, developing new reports, training, documentation, testing - unit, stress, acceptance, certification - this is what makes up most project effort. 

The services industry still tries to staff projects with too many generalists and expects them to be good at a variety of testing, training, product and other skills. This shows up in staff titles like Manager or Director and promotions, compensation and billing rates based on tenure. It should have more titles like Integration specialist and Testing Manager and compensation models/rate cards based on market supply and demand for such skills.  The industry also continues to have too much travel to client sites. 

As communication and collaboration technology improves and clients become more accepting of remote delivery models  there are few reasons to not do so.