By establishing a relationship of domination in the customer-supplier relationship, the commitment package pushes operational staff to the antipodes of the agile state of mind, made of sympathetic listening and transparent collaboration. Companies must experiment with new types of contracts and acculturate their purchasing departments to agility. Can we reconcile agility and outsourcing? Update with Alain Sacquet, DevOps practice manager and trainer at ORSYS.
Agile methods are a method of project management that favors dialogue between the different stakeholders. The business lines and IT teams collaborate continuously by granting each other the possibility (if necessary), during implementation, to modify the content of the project as long as the delivery time remains unchanged.
By prioritizing exchange and dialogue, agility breaks with traditional practices. These are rigid and demanding in terms of contractual specifications. Agility aims in particular to combat the famous tunnel effect introduced by V-cycle project management, also called “cascade” or waterfall. Indeed, a project lasts months, even years... Also, between the time of developing the initial specifications and the final result, the business need and/or the economic and regulatory context may have evolved.
However, the values of agility such as adaptation to change or the spirit of collaboration (brought together in the agile manifesto), are confronted with the rigidity of the dominant contract for service outsourcing, which is the commitment package. In this contractual mode, the service provider makes a commitment to results on the basis of an overall cost and a delivery date.
Exceeding WaterScrumFall
This relationship of domination in the customer-supplier relationship contradicts the very principles of agility. In fact, it presupposes a completely different state of mind. In a project in agile mode, client and service provider will inevitably encounter difficulties and periods of uncertainty. This requires working collaboratively as part of a long-term partnership.
Instead, the lump sum commitment leads to conducting a series of mini-packages. We are talking about V-shaped microcycles applied to the different iterations of the project. In this diagram, which we can call “WaterScrumFall”, the service provider commits to the result of the next iteration. This depends on the additional needs transmitted at the start of the sprint. In a way, the customer commits to the “input” and the supplier to the “output”.
Except that between these two contractual milestones, client and service provider do not work together. So that the supplier's responsibility is fully engaged and that the latter does not hide behind a possible imprecision of the initial request, the customer will not interact with him.
Projects within the project
The expectations of the sprint (which can be understood as being a sequence or a mini project over a short period at the heart of the overall project), then become a contractual element which seals the supplier's commitment. It is up to the latter to provide the expected final result at the end of the two or three weeks of the sprint.
With this diagram, we reinstall a work organization of the type waterfall. An organization in successive phases, with different teams taking on exclusive responsibilities. One takes care of the design, the other the recipe while between the two the coding is outsourced.
This organization in no way responds to the philosophy of agility. Agility is about working together and simultaneously trades and IT professionals. Here, the teams of IT specialists do not even work together under the pretext that some are employed by the client, others by the supplier.
Faced with this observation, we must review the spirit of contracts so that agility can develop, establish new governance and acculturate the purchasing department to agility. The client must trust its IT teams to appreciate the quality of the work carried out by the supplier and not just the resulting result.
Le new ORSYS seminar (Editor’s note: led by our expert trainer Alain Sacquet) presents the conditions for agile, collaborative and partnership contracting as well as the details of the three types of indicators at the heart of the new generation of agile contracts at scale. These new, engaging contracts allow customers and suppliers to collaborate simultaneously on a longer sequence of activities, from design to production, as agility at scale now requires. The evolution of the spirit of contracts is then gradually accompanied by more complete indicators. These indicators serve business satisfaction and IT operational performance.
Y2K bugs and the euro
The original sin which explains the rise in power of the commitment package dates back to the turn of the 2000s. With the famous bugs of the year 2000 and the euro, IT services companies were handsomely remunerated. This has generated, on the part of business leaders, a distrust of service providers and internal IT specialists. They then wanted to put their IT outside by resorting to massive outsourcing contracts. Even as agile methods emerged.
Outsourcing on the rise
With this development of outsourcing, IT project managers have been replaced by young people from business schools to manage contracts. This purely contractual logic freed companies from IT skills. At least, that's what they thought. In order to secure their purchases of service provision, they have overwhelmingly opted for the commitment package.
This contractual logic also created pressure on prices. In response, service providers have, to maintain their margins, recruited junior profiles and turned to distant outsourcing with offshore. With this price war, skills have been dragged down, both on the customer and supplier side.
Conclusion
This era, which paid little attention to user experience, was also that of king software packages and IT services companies converted into integrators. Today, renamed ESN again, the service companies' mission is to support their client companies on the path to digital transformation.
The latter requires that business and IT produce effective solutions together, in small increments. Only innovative contracts driven by a new contractual mindset will make it possible to keep this promise of value creation.
Also read, from the same author: agile outsourcing has gone astray
