While Agile Software development thrives on small, co-located and dedicated teams, it is often challenging when features or capabilities end up outsourced to a third party provider. Can Agile truly work when part of the team is contracted? What options are there to facilitate success for everyone involved?

1. Enlightened Agile Teams
and Heathen Vendors
MAKING AGILE WORK WITH OUTSOURCED DEVELOPMENT

2. Today’s Presenter… Steve Nunziata
20+ Years Project Management Experience (PMP)
15+ Years of Agile Experience (CSM, PMI-ACP, SAFe SPC)
5+ Years of Agile Training Experience
Electronic Data Systems (EDS), Nike, adidas America, USAA
Co-Founder of the Alamo PMI Agile LIG & Alamo Agilistas
Speaker, Agile Development Conference East (Nov 2014)
Native of New Jersey; have also lived in Portland, Oregon
Bass Player extraordinaire…

3. Why Are We Here?
MYTH: Agile
cannot be
adapted to
manage or
control vendors.

4. Let’s Frame the Problem
Start this
project
immediate
ly!
… The
Boss

5. Why Outsource Software Development?
 Increase Speed to Market
 Improve Quality / ‘Best of Breed’
 Reduce Costs
 “Just in Time” Resource Appropriation
 Foster Innovation
 …Can you think of others?
Identify Assess
Review Respond

6. Procurement
 The Decision is made to
move forward with procuring
resources for part of the
software development for the
new product.
 What contract options do
are we offered?

7. Time & Materials Contracts
Payment is based on
actual time billed/
worked, plus cost of
any associated
materials necessary to
complete the work.

8. Fixed Price / Fixed Price & Scope Contracts
 Payment is not a factor of
resources, or time expended.
 Fixed Price, or Fixed Price /
Fixed Scope contracts work
best when the scope of the
work is well known and
understood.

9. Question:
 In your experience, what
prevents Customers and
Vendors from being able to
work effectively?

10. Top ‘Concerns’ in Outsourcing
 Vendors insist on a traditional execution model; unconcerned about ‘Your Agile’
 Procurement processes tend to be very formal and Waterfall-ish
 Lack of trust between Customers and Vendors
 Customers want risks shifted to the Vendors; Vendors don’t want to take on risks
 Vendors may hide critical information from Customers, whether good or bad
 Customers seek monetary penalties for non-conformance from Vendors
 Customers and Vendors don’t see work as being ‘done’ in the same way(s)
 Customers and Vendors just don’t speak the same language!

11. A Quick Review - The Agile Manifesto

12. Agile: Iterating Solutions via Feedback
 Nebulous Scope – on purpose
 Frequent reviews to maximize
profitability/ROI, while minimizing
costs
 Product markets move at
‘internet speed’

13. So…. Is There Anything We Do?

14. Agile with Vendors: Opportunities
1) Agile Contract Models
to facilitate Agile
outcomes
2) Team Practices to build
relationships, trust, and
sustainability

15. How Can I Succeed with Contracts in Agile?
“A good Agile contract establishes the
framework for collaboration to occur during
the project while providing appropriate levels
of protection and risk mitigation for both the
customer and the supplier [vendor], without
having to resort to negotiation too
frequently.”
Kent McDonald, “Create a Vendor Contract While Keeping Agile”

16. Graduated Fixed Price Contracts
 Incentivize early delivery
and benefits realization

17. Money for Nothing / Change for Free
Hybrid FPFS model whereby:
◦ The Customer may terminate
the contract early; and
◦ The Customer may change
Scope with no penalties.

18. One Statement of Work; Two Contracts
Hybridized T&M, FPFS Model
FPFS FPFS
Time & Materials
contract for
‘Iteration 0’ type
activities –
developing Stories
for the next
Release Increment
Fixed Price
contracts for
execution Iterations
to deliver the
Release Increment

19. One Contract; Two Statements of Work

20. Fixed Price Contracts via Story Points
 Define and Point a Backlog
of work
 Vendor payment then based
on ‘X’ Dollars per Story Point
delivered (Working Software)
 Allows for flexibility in the
work delivered
Card
Conversation
Confirmation

21. Contracts are only Half the Battle…
Teams
Contracts

22. What about People?
 Minimize vendor resource
isolation as much as reasonable
 Embed outsourced resources on
existing Agile teams; preferably, no
more than 2 per team
 Ensure outsourced resources
feel part of the team, and are
responsible for achieving the same
goal

23. Leverage Agile Ceremonies
Opportunities to facilitate collaboration and team building in Agile:
 Daily Standups
 Pair Programming
 Iteration Planning
 Demonstrations
 Retrospective
 Others….?

24. Facilitation Tools
Don’t forget to leverage technology!
 Webcams for participation in ceremonies
 ‘Open Line’ (speakerphone always on)
 Collaborative tools/software
 Instant Messenger
 Common Toolsets & Plans
 Bring them onsite if all else fails…
 What else?

25. Enabling Success with Vendors: 3 Steps
Contract for a process that leads to results
Focus on Vendor productivity and collaboration
Contract for short durations (release increment)
1
2
3

26. A Quick Summary - The Agile Manifesto

27. Questions?

28. Sources…
o Gareth Richardson and Ian Spence, ‘Agile Outsourcing – Making it
Work for Customers and Suppliers’.
o Jens Coldewey, Senior Consultant, Cutter Consortium –
‘Contracting Agile Projects’
o Kent McDonald, “Create a Vendor Contract While Keeping Agile”
(May 2013)
o Alex Adamopoulos, “Must Haves for Agile Contracts”
o Nick Malik, “The Tyranny of Waterfall in RFP’s”