An expanded version of my presentation from the EA Forum on March 29th 2012, London.

1. Architecture-Led
Procurement
RICHARD VERYARD
EA Forum, March 2012

2. About this presentation
 This is an expanded version  It is acknowledged that many
of the slides presented at the organizations have outsourced
EA Forum in March 2012. everyone in IT except for the
architects and project managers.
 Following lively discussion at
the event, there was broad  This means there are some complex
recognition of flaws in the architectural risks calling for new
procurement process, and a architectural concepts, techniques,
agreed need for an expanded knowledge and skills.
role for architects in this
process.
 This presentation outlines some of
these requirements.

3. Agenda
 The role of solution  Architecture-based
and enterprise methods for exerting
architecture in the architectural control
procurement process over third parties.
 And vice versa.

4. Perspectives on procurement
Roles Frameworks
 Purchasing, commercial  ITIL / ISPL
and legal
 MSP
 Programme and project
management
These deal very competently
with many of the commercial
 Risk management risks, but fail to manage the
architectural risks.

5. Procurement Risks
Commercial risks Architectural risks
? ?

6. Procurement agenda
General Objectives Architectural Dimensions
Value for money  Short-term // long-term
 Cost-quality optimization  Local // global
Continuity of Supply  Part // whole
 Standard commodity  Integration // differentiation
 Supplier longevity
Total through-life cost of
ownership
 Ease of Use
 Flexibility

7. Why should architects lead procurement?
 The lifetime costs of a  Architectural requirements
complex solution depend should drive supplier
critically on its architectural selection and negotiation, and
qualities. should be clearly specified
 Many organizations outsource and enforced throughout the
development to external procurement process.
companies, but this only  Any organization that fails to
makes sense under strict do this is vulnerable to short-
architectural control. term thinking or cynical
exploitation by its suppliers.

8. TOGAF
Faster, simpler, and cheaper  Customers who design and
procurement: implement enterprise
 Buying decisions are simpler,
architectures using TOGAF are
because the information ensured of a design and a
governing procurement is readily procurement specification that
available in a coherent plan will greatly facilitate open systems
implementation, and will enable
 The procurement process is faster
the benefits of open systems to
- maximizing procurement speed accrue to their organizations with
and flexibility without sacrificing reduced risk.
architectural coherence
 The ability to procure
heterogeneous, multi-vendor
open systems
 The ability to secure more
economic capabilities
TOGAF 9.1 Chapter 1

9. TOGAF
 The ADM is one of the many  Consider the need for …
corporate processes that links to procurement
make up the corporate processes (6.4)
governance model. It is  Assess and define the
complementary to, and procurement requirements
supportive of, other standard (7.4)
program management
processes, such as those for
authorization, risk
management, business
planning and
budgeting, development
planning, systems
development,
and procurement. (5.3)

10. Games people play …
Underbidding Winner‟s Curse
 The supplier puts in an  The successful bidder
artificially low bid for the is driven bankrupt.
initial contract, hoping to
make money from add-on
work and maintenance.
 The supplier benefits
commercially from
inflexibility in the
specification.

11. Calculating Total Cost of Ownership
Depends on Who has this sort of
 IT architectures information?
(legacy, transition and  Bean-counters?
target)  Legal department?
 Capability profiles  Purchasing clerks?
 Usage requirements  Architects?
 Interoperability
requirements
 …

12. Which procurement method?
Traditional Design-and-
Management
Tri-Partite Build
• Design • Designer is • Project
precedes responsible for management
construction construction coordinates
• Complications • Or perhaps design and
when design construction is construction.
runs parallel to responsible for
construction design

13. Multi-Sourcing
Outsource Direct
Manage
coordination to collaboration
interactions
a prime between
inhouse
V contractor V subcontractors

14. Zero-Based Requirements?
Brownfield Zero-Based
V
Requirements Procurement
http://rvsoapbox.blogspot.co.uk/2010/09
/zero-based-requirements.html

15. Outsourcing and Knowledge Managment

16. Hedgehogs and Foxes
one big lots of small
outsourcing deal outsourcing deals

17. Procurement and innovation
Strategy drives procurement Enhanced Services Model
"When it comes to procurement, for the better 'In the current model contractor‟s incentives are to
part of five decades, the trend has gone towards provide the minimal solution that meets the
lower numbers as technology gains made each requirements. As the requirements grow and
system more capable. In recent years these change, Engineering Change Proposals (ECPs) are
platforms have grown ever more baroque, ever required, resulting in real or perceived “scope
more costly, are taking longer to build, and are creep”, and always in cost growth. This results in
being fielded in ever dwindling quantities.“ delays in deployment and fielded capability.
"The issue then becomes how we build this kind Under the enhanced services model, the contractor
of innovative thinking and flexibility into our rigid will be able to exceed the requirements by
procurement processes here at home. The key is to providing expanded or additional services. These
make sure that the strategy and risk assessment could be “sold” to other users as a common
drives the procurement, rather than the other way reusable service that others do not have to
around.“ develop. The additional services could also provide
US Secretary of Defense Robert M. the basis for further development as the system
Gates, September 2008 matures.„
NDIA 2008

18. Twin Track Approach
Mutually Reinforcing
Disruptive Innovation
Platform Agile
“The platform must standardise “For any elements of IT outside
and simplify core elements of the platform, new opportunities
government IT.” should be explored using agile
principles.”
“The platform frees up resource … while successful agile
to focus on new opportunities … innovations are rapidly scaled up
Value for Money
when incorporated into the
platform”
Economics of Scope Economics of Alignment
Economics of Scale

19. On-Demand Services and Open Sauce
What if we could buy individual shots
Situation of Tabasco on demand …
 Millions of homes, bars  Lower (but more regular)
and restaurants have a small revenues from existing
bottle of sauce - just in customers?
case of need  Higher revenues from new
 Sauce not used very often - customers?
therefore very infrequent  Faster impact of any
repurchase perceived taste differential
 Growing availability of between Tabasco and its
alternative flavours competitors?

20. Shared Services and Open Sauce
“Your older brother owns all the bottles of hot Why does your mom grant a monopoly to your
sauce, and your mom makes you buy from him brother?
rather than the kid in the next block ... if you  Because it improves your brother's supply-side
don't like his taste and choose not to have hot economics.
sauce, then he still justifies his existence because
 He needs a critical mass of customers to be economically
he's still the household standard.” viable. She doesn't think he is ready for the harsh realities
of the open market.
 Because it improves your own demand-side
transaction costs.
 Your mom doesn't want you traipsing around the
neighbourhood trying out alternative sauces when you
should be getting on with your homework. Your mom
thinks - argue with her if you dare - that homework is a
core activity whereas sauce-procurement is non-core.
 Because it reduces the overall complexity of the
household, reduces risk and increases
accountability.
 If you get sick, she knows exactly who to blame.

21. Shared Services and Open Sauce 2
Do you recognize these issues
 Who gets to choose the flavour of sauce? in enterprise shared services?
Does the casting vote always go to the loudest
or most awkward member of the family?
 Do some members of the family go without
sauce altogether, rather than use the majority
choice?
 Does trading sauce with the neighbours have
any positive side-effects - for example
relationship-building (trust) or learning new
recipes (innovation)?
 And shouldn't your brother be getting on with
his homework as well, instead of wasting his
time on a venture that is only viable with
Mom's intervention?

22. MOD Procurement
“The Ministry of Defence has a That situation might
substantially overheated equipment sound familiar to a
lot of managers, not
programme, with too many types of just in the defence
equipment being ordered for too large sector.
a range of tasks at too high a
specification. This programme is But often the
corporate response
unaffordable on any likely projection is to go to the
of future budgets.” opposite extreme.
[October 2009]

23. The demand for Agility
Managing three diverging tempos
Divergence of tempos increases costs
Divergence of tempos increases Agility means always able to align
Agility means being being able to
of alignment align composite capabilities to
composite capabilities to
costs of alignment demand at campaign tempo
demand at campaign tempo
Requirement Defence Enterprise
Gap = Need
Acquisition
Demand/
Campaign Threat
Acquisition Alignment
Tempo (Demand)
Tempo Tempo
Operational
Capability
Suppliers
Training Operational
Equipment Capability
Personnel Operational Composite
Orchestration
Infrastructure Capability Capability Effect
Doctrine/Concepts
Organization Operational
Information Capability
Logistics
Adapted from: Appropriate Collaboration and Appropriate Competition in C4ISTAR Transformation, Dr Nicholas Whittall RUSI 2007

24. The Engineering „V‟ and the Alignment „ ‟
supply-side demand-side operational
Results from the acquisition space space The variety of compositions is as
impossibility of separating Capability important as the most stressing
Force
design-time from run-time Requirement gaps use for a particular capability
Structures
Design decomposition
Strategic
Scenarios
Demand/ Effects on Demand/
System Acquisition Tempo Alignment Tempo
Threat Threat
components Tempo
System Synchronization by
integration Mission Command
Solution Orchestration of
Composite Capabilities
Operational
Capabilities
Boxer, P.J. (2007) Managing the SoS Value Cycle, January 2007, http://www.asymmetricdesign.com/archives/85