Why IT outsourcing needs Agile thinking
by By Philip Black, COO, Emergn
IT outsourcing may have been around for some time, but it has a patchy track record. While some may point the blame at suppliers or their customers, I would argue that it is often the techniques and methodologies that have failed. A rigid adherence to templates, processes and procedures do not fit the very specific needs of IT development projects which by their nature, require support for rapid time-to-market, innovation and the ability to react to change.
To address this, we are seeing more organisations adopt Agile as a means to manage IT outsourcing projects. The Agile methodology – and its variants – has its roots in the software development world itself, so it is a natural evolution to use it for IT outsourcing too. I believe it is a better fit for procurement – and indeed, IT in general – than traditional waterfall approaches. Why? Because waterfall is based on the belief that much can be predicted, but in the world of IT, uncertainty is usually a given. Any IT development project is a journey of discovery and any process that does not recognise this will only hinder creativity and flexibility. This becomes even more important when considering how vital IT has become to customer delivery. Even organisations that are not technology-centric companies often have IT at the heart of what they deliver.
Agile helps to find ways that brings together the whole ‘concept to market’ value stream, enabling fast delivery, tight and short feedback loops that help to keep projects on track and to achieve time-to-market rapidly and efficiently. Agile is all about removing bureaucracy, placing the end customer at the heart of the process and focusing on the highest value work in a fast and reactive way.
Agile breaks a project into small chunks of activity – called iterations – that may be released early in to the marketplace, to maximise learning, generate value and delivering innovation quickly (because it is easier to prioritise). Sometimes, companies find that they do not need further iterations, thus enabling a project to be completed earlier (as opposed to the typical IT project that goes over budget and over deadline).
The iteration process is also great for creating a proper feedback loop (so that it is easier to see where change needs to occur) and making it easier for customer and supplier teams to develop a closer, more collaborate working relationship with greater transparency.
All this is good news for the procurement function, which through Agile, can have a more end-to-end and holistic approach to supplier relationship management. This is a sea-change away from the traditional role, whereby procurement normally focuses on the beginning of the relationships, during negotiations, when there are problems and with a general fixation on pricing as opposed to the ‘bigger picture’. What we are beginning to see is a new breed of procurement manager developing, blending procurement, contract and vendor management skills. With the feedback that the iterative process provides, Agile helps support this new breed of professionals.
This brings me neatly to the fact that any organisation is nothing more than the collective capacity of its people and their ability to make decisions and delivery improvements. Focus on deadlines, pricing and other contractual parameters can mean that the real objectives or outcomes become lost. Only by engendering an environment of trust, where customers and their suppliers can interact transparently, with room to acknowledge failure and to react to change, can companies achieve IT outsourcing that really works. Agile can – and is already – helping organisations to achieve just that.
Philip Black is Chief Operating Officer of Emergn, a global professional services consultancy that blends agile and lean principles to optimize the way organizations develop and deliver solutions across the enterprise. By offering a unique blend of agile and lean methodologies, emergn operates as a thought leader in helping enterprises solve their complex organizational and IT business problems.