It's important that vendor can work within agile framework. Sometimes, it's the contract that doesn't allow both parties to be agile, and instead drive the opposite behaviour. However, from my personal experience it's usually not about agile contract or not. Fix-contract can be more profitable, while T&M can minimize risk and time for changes.

1. Modern Procurement:
Beyond IT Project Contract
Ray Rizaldy - GITS.ID

2. I am Ray
I might be biased
● Co-founder of GITS.ID - a Google Certified Agency for Apps Development
● Developer
● Project Manager
● Salesman

3. Which sides are you?
Clients
Users
Sponsors
Finance - Procurements
IT
PMO
Vendors
The Salesman
The “Expert”
Project Manager
The army that will involved later

4. If you are a client, what do you expect from
your vendors?

5. If you are a vendor, what do you expect from
your client?

6. What clients want from their vendors?
Source: SoDA Forrester Research - Global Digital Outlook 2019

7. Hypotheses:
Procurement Cycle Time > Development Time

8. Procurement KPI
● Procurement ROI & Benefits
● Supplier Defect Rate
● Rate of Emergency Purchase
● Supplier Lead Time
● Purchase Order Cycle Time
● Vendor Availability
● Price Competitiveness

9. Manifesto for Agile Software Development
We are uncovering better ways of developing software by doing it and helping others do it.
Through this work we have come to value:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on the right, we value the items on the left more.
BUT...

10. ...There’s Too Much at Stake to work with
just verbal agreement
Does the right contract guarantee success? No. But it makes life easier

11. Purpose of Contract
● Drive both parties to achieve the project goals
● Set basic playing rules
● Risk management and reflect trust between parties

12. ● Set the incentive right. What
motivates the vendor (and also
stakeholder)
● Rewards and penalties can
drive certain behaviour
● Be clear with what your goals,
KPI, OKR, metrics. Focus on
that without getting too much
on details
Contract aligns stakeholders to
achieve goals

13. Set basic playing rule
● Client-Vendor is not
competitive game
● The process
● Who’s in charge

14. Risk Management & Trust
Reflection
● What happens if something
goes wrong? Mitigate risk as
often as possible
● Who pays if project gone
south?
● Who benefits if the project is
finished earlier

15. Contract Forms
Fix-Contract Time & Material
Agile-Contract?

16. Hypotheses:
Stakeholders are happier with Time & Material >
Fix-Contract

17. Fix-Contract
The problem is not the fix budget, or fix
time.
The problem is fix-scope
● Fix is not fixed
● My fixed is not your fixed
● Obvious is not that obvious
Both parties tend to hesitate to
confirm the scope

18. MVP another point of view

19. What information should included in
contract?
● Objective of the project
● Outline of the project structure
● Key personnel
● Payment & billing, bonuses, penalty
● Termination clause
● else?

20. Detailed “Requirement” are actually
solution design, it’s responsibility of
solution designer (vendors)
- Mary Poppendieck, 2011

21. Andy Grove Modes of Control

22. Key Takeaway
● Clients already seeking for better pricing models & more flexible/nimble
working models -> more opportunity to use agile
● Procurements have KPI for maximising ROI & benefits, usually it turns to
number of features -> Focus on project objective (HEART metric might be
helpful)
● Don’t just see the price/benefits, partners with vendors who has the same
value with your company

23. Further reading
● http://agilecontracts.org
● http://www.flexiblecontracts.com
● Peter Steven, Scrum Breakfast

24. Thank You!
www.gits.id @gitscreative gitscreative