Redecard Transforms its Process of Outsourcing System Development

The Process Changes Paradigms about Relations with Software Factories and Introduces a Fundamental Concept in Service Level Agreements: the Function Point.

Redecard is one of the leading companies of the payment card industry in the Brazilian market and creditor of MasterCard and Diners International. Responsible for the accreditation of establishments, as well as capturing, transmitting, processing and settling transactions made with credit cards and debit cards, it has just completed one of the last steps of its outsourcing project of development and support systems. In a bidding process involving 17 companies, including some of the major market players, Redecard chose only two partners. One of them is the Resource Group, responsible for the development and maintenance of mission critical systems of the company.

The outsourcing model, which began four years ago, is now in line with the IT corporate governance model adopted by the company. "Building software is not part of our core business and therefore the best option was opting for outsourcing, indeed," says Alessandro Raposo, CIO of Redecard.

But the path to get to the stage where the company is today required much study, effort and a paradigm shift. The central question was not outsourcing not just the code building, but most of the stages of software development without the risk of losing control over business intelligence. Another challenge was creating a new model of service agreements that could really be a solid foundation for managing the relationship with development partners.

The CIO says that the first move in this direction, around the year 2004, was the gradual replacement of the existing model. "We noticed that the development area was still growing. This fact forced us to make more space available, plus the costs of this, let alone the demand in people management. There were already companies in the market trained to serve us, so growing internally made no sense," Fox recalls. At the time, Redecard decided to send a good part of the services to software factories.

After the transition to outsourcing, Redecard chose to expand the process of outsourcing development. "One of the reasons that led us to further outsource is IT governance, because we want efficiency, speed and quality," he said. The CIO notes that the restructuring of the outsourcing process lasted 12 months. At the beginning, Redecard hired an independent consultant for structuring the bidding process and helping shape the new service arrangements, new contracts and their mode of payment.

"We got to interview 36 companies and, on that basis, the bidding started with 17 candidates and at the end were just two; one of them was Resource. The most important thing regarding Resource, was its flexibility and the rhythm Redecard needed."

Alessandro Raposo emphasizes that they were looking for flexible companies able to adapt to Redecard, but that, at the same time, could mature quickly, focusing on excellence in development and maintenance of software. "We stayed away from overly rigid companies and with a pure model of code factory."

Function point and Business Intelligence

According to the officer, this new phase of outsourcing in which Redecard is today brought to the company new important parameters in terms of service agreement models. "Our governance area established guidelines based on COBIT and CMM and mapped points that we should prioritize in the restructuring of our processes and controls," he informs.

He explains that the outsourcing contract, with respect to services development, is now related to Function Points. Agreements in the past were based on the knowledge that practitioners at the factories had about Redecard code. In this new model, the idea was distancing from the code in favor of added functionality to all of company's systems, measured in Function Points.

"Redecard is saying to the outsourcing market that the most important thing for companies that contract software factories is the number of system features and not the detail, the code," Fox warns. He believes that this new model brings another level of governance, another level of operational service excellence in processes and at the same time, frees the internal team to provide greater focus on the design of the solutions required by the business and on management aspects of the suppliers. Redecard is one of the first companies in its industry to embrace this model.

SLAs - Service Level Agreements were adjusted too, in order to be clearer and simpler. "The goal was to have a more rigid services agreement, which took Redecard and partners to another level in processes management. We were able to design a very good model," he says. Another issue addressed and solved was the control of business intelligence. "All solutions are conceived within Redecard and an effective knowledge management is being established. We keep the mapping and designing solutions for our businesses, developing them through our outsourcing or buying ready-made solutions at the market," he admits.

For the executive, all these developments would not be possible without the transition in the choice of the partners. "The success of this project depended on the choice of the right suppliers that were capable of providing a differentiated service, speed in meeting the demands and efficient means of sustenance," he says. Asked about the relation between cost reduction and outsourcing, Alessandro Raposo explains that the core of this process was gaining speed, efficiency and quality. "The cost reduction was also a target and was hit," he concludes.

About Redecard

Redecard is responsible for the capture and transmission of transactions with credit cards from MasterCard® and Diners Club International, and MasterCard Maestro debit cards. The company accredits and promotes the relationship with shops, besides being a business partner of several banks and retail segments. Developer of advanced technology, Redecard also takes care of installation and maintenance of an electronic network that provides speed and security in the capture of more than 1.8 billion transactions per year. Redecard operates a network of more than 1.3 million affiliated merchants, and is present throughout the country.