Agile Vendor management approach
- The Agile Manifesto values customer collaboration over contract negotiation which sets an important tone for procurement relationships on agile projects.
- The Agile Manifesto sets forth the idea that a buyer and seller work together to create products and governs the entire procurement process.
Determining need and selecting a vendor the agile management way
- On agile projects, procurement starts when the Developers decide it needs a tool from or the services of another company in order to create the product.
- The Developers and the Scrum Master work with the Product Owner to procure any necessary funds.
- The Developers may need to compare tools and vendors.
- After you choose what to buy and where to get it, the process is usually straightforward:
- make the purchase,
- take delivery,
- and procurement is then complete.
- Procuring services is usually longer and more complex than with tools.
- Some agile-specific considerations for selecting a services vendor include
Contracts and cost approaches for services the agile management way
- Evaluating cost structures for an agile project
- Fixed-price projects:
- A vendor works on the product and creates releases until the vendor spends all the money in the budget, or until it delivers enough product features, whichever comes first.
- Fixed-time projects with a specific deadline
- For example, you may need to launch a product for a specific event or to coincide with the release of another product.
- With fixed-time projects, you determine costs based on the cost of the vendor’s team for the duration of the project, along with any additional resource costs, such as hardware or software.
- Time-and-materials projects
- Work with the vendor lasts until enough product functionality is complete, without regard to total project cost.
- You know the total project cost at the end of the project, after your stakeholders determine that the product has enough features to call the project complete.
- Not-to-exceed projects
- Projects in which time and materials have a fixed-price cap.
- Fixed-price projects:
Creating a contract for an agile project
- The Scrum Master is generally responsible for initiating the contract creation, negotiating the contract details, and routing the contract through any necessary internal approvals, including review by a legal or procurement expert.
- At the very least, most contracts have legal language describing the parties and the work, the budget, the cost approach, and payment terms.
- A contract for an agile project may also include:
- A description of the work the vendor will complete
- The vendor may have its own product vision statement, which can be a good starting point to describe the vendor’s work
- Agile approaches the vendor may use, including :
- Meetings the vendor will attend, such as the Daily Scrum, Sprint Planning, Sprint Review, and Sprint Retrospective
- Delivery of working functionality at the end of each Sprint
- The Definition of Done (DoD) — developed, tested, integrated, and documented — per an agreement between the Product Owner and the Developers
- Artifacts the vendor will provide, such as a Sprint Backlog with a Burn-Down Chart
- People the vendor will have on the project, such as the Developers
- Whether the vendor will work on-site
- Whether the vendor will work with its own Scrum Master and Product Owner or if it will work with your Scrum Master and Product Owner
- A definition of what may constitute the end of the engagement: the end of a fixed budget or fixed time, or enough working functionality
- If the vendor doesn’t use agile approaches, describe how the vendor and the vendor’s work integrate with the buyer’s Developers and Sprints.
Working with a vendor on an agile management project
- How you work with a vendor on an agile project depends in part upon the vendor team’s structure.
- In an ideal situation, vendor teams are fully integrated with the buyer’s organization.
- You can also invite vendors to your Sprint Reviews to keep them informed on your progress.
- If the vendor can’t work on-site at the buyer’s company, it can still be part of the buyer’s Scrum Team.
- If a vendor can’t be collocated, or if the vendor is responsible for a discrete, separate part of the product, the vendor may have a separate Scrum Team working on the same Sprint schedule as the buyer’s Scrum Team.
- If a vendor doesn’t use agile project management processes, the vendor’s team works separately from the buyer’s Scrum Team, outside of the Sprints, and on its own schedule.
- The vendor’s traditional project manager helps ensure that the vendor can deliver its services when the Developers needs them.
- The buyer’s Scrum Master may need to step in if the vendor’s processes or timeline becomes a roadblock or disruption for the Developers.
Closing a contract on an agile management project
- When a vendor completes work on a contract, the buyer’s scrum master usually has some final tasks.
- If the project finishes according to the contract terms, the Scrum Master may acknowledge the end of the contract in writing.
- If the project is a time-and-materials project, the Scrum Master should definitely do so to ensure that the vendor doesn’t keep working on lower-priority requirements — and billing for them.
- The Scrum Master may be responsible for notifying the buyer’s company accounting department to ensure that the vendor is paid properly.
- If the project finishes before the contract dictates the end, the Scrum Masterr needs to notify the vendor in writing and follow any early termination instructions from the contract.
- Most large organizations maintain a vendor profiling system to manage the relationships with their vendors.
- This database contains information about skills, rates, and former projects that have been run with each vendor.
- A special vendor management database may help large organizations here — as long as the vendor evaluation is based on « soft » criteria, such as collaboration level and software quality, rather than on « hard » facts, such as rates and willingness to subordinate during negotiations.
- More or less, sophisticated ranking systems categorize the vendors from strategic partners to vendors the company wants to get rid of.
- Used wisely, these systems can establish both a business and a legal relationship with your vendors in which you don’t have to step on the thin ice of contracting a single agile project.
- Therefore, rather than focusing on vendor process certifications, size, and rates, the ranking should focus on criteria such as the following :
- System quality
- Collaboration level
- Beyond a single effort, agile development is about building trust.
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