Should your company 'crowdsource' its next project?

Whether it's to increase loyalty among customers speed up development time or cast outward for innovative ideas, companies are trying on many styles of 'crowdsourcing'

Submissions -- which continue to roll in -- are rated using a standardized scorecard, and winners are rewarded anywhere from US$500 to close to US$2,000. When all the components are complete, TopCoder will work with Constellation to integrate them into a functional system.

"At any given time, four to five competitions are going on for those 250 components," says Ken Allred, managing director of IT in Constellation Energy's commodities group. For each component, anywhere from 10 to 30 people submit code, he says, including developers from as many as 14 different countries. "It's an incredible virtual workforce that is literally always on task," he says. "It's almost like a sport, where people see each other as competitors, and that's what drives what we've seen as high-quality code."

TopCoder itself uses a crowdsourcing model to compile a catalog of reusable Java and .Net components that it uses to supplement developer efforts. Its members compete to produce the best code for the catalog, and winners continue to get paid royalties every time the code is reused. The company also uses crowdsourcing for ranking and testing code, with members grading each other's efforts.

Crowdsourcing benefits

Although Constellation's system is not yet complete, Allred expects to save both time and money using TopCoder's crowdsourcing approach. Part of the cost savings comes from using TopCoder's catalog of reusable components. As for time savings, Allred estimates coding to be about 50% faster than it would be if he used internal staffers.

Of course, the components still need to be assembled to create the final system, which is a step that wouldn't have to be taken using a traditional approach. Still, Allred says, "I'm confident it will be faster." Development cycle time is very important to the Constellation Energy commodities group, which Allred says requires a high degree of agility and speed.

Fast-moving businesses are exactly the types of companies that Carey Schwaber, an analyst at Forrester Research Inc., sees using crowdsourcing for systems development. "They're willing to take a risk using a totally different process because the way they usually build is too slow," she says.

Another less quantifiable advantage, Allred says, is code quality. "Clearly some of the people doing this are top guns who bang C# 18 hours a day, seven days a week," he says. "Even our top developers have to sometimes say, 'Wow.'"

And because the programmers are global, Allred is also finding their perspectives to differ from those of US developers. "The creativity and innovation of how people are rationalizing these designs and building components enables us to interject a perspective and approach that normally we wouldn't have access to," he says.

Crowd control

Of course, crowdsourcing is not all upside. For one thing, Edwards says, you can't allow the inmates to run the asylum when soliciting customer opinions as Dell is doing. "When you open the floodgates, anyone can hop on there and talk about anything," he says. "There may be people who don't like the brand or are unhappy with the stock performance."

To get around that, he says, it's a good idea to focus the discussion around one area and clearly define what you're trying to achieve and what the community is all about. "The dialogue you get will only be as intelligent as the wisdom of the crowd," he says.

Another idea, he says, is to create a private community, which you can do through platforms from companies such as Think Passenger Inc. and Leverage Software. According to Edwards, Hewlett-Packard Co. and Salesforce.com are using Leverage Software to create private social networks for customer, partner and developer relationship-building and have threaded discussion and poll functionality for information-gathering.

Other crowdsourcing models limit audience participation by natural selection. People who join InnoCentive's "open innovation marketplace," for instance, tend to be scientists, engineers, inventors and business experts because they're called upon to respond to highly complex challenges posted by organizations, or "seekers."

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