Whenever I hear the expression “one throat to choke,” it makes me cringe. The phrase, in most cases, refers to contracting with a single vendor to help with every aspect of a technology project. Another variation is, “a single wringable neck.” Either way, it sounds like an explicit threat to the vendor: If this project fails, the blame will be placed squarely on your shoulders.
In reality, if a project does fail, it is very difficult to go after a vendor. Most organizations don’t. Lawsuits are risky, costly, and time-consuming. The only practical concession you can expect from a vendor is free labor, hardware, or software. But it’s from the same vendor that botched things in the first place.
Let’s face it—setting up a one-throat engagement is not really a threat. It’s a bluff. And it stems from an attempt to outsource accountability.
The Agile methodology has been widely accepted and implemented in many organizations for various goals. Most use Agile for project execution and product development. We even advocate using an Agile-based iterative engagement model for vendor management to minimize the risk of getting locked into long, inflexible contracts, and to prioritize outcomes over arbitrary task lists.
Many executives still think an Agile methodology would never work in their organization. Some have even attempted to implement Agile and were not happy with the results. Agile flops tend to fall into one of two categories: The organization either did not implement the actual Agile methodology, or was not ready for it.
We are big believers in an iterative model for vendor engagements. It’s a novel concept for some organizations. To determine if the approach is right for you, familiarize yourself with the potential risks and rewards for both the client and the vendor.
Agile is now being used far beyond its original purpose, which was software development. We see organizations apply Agile methodology to any project or program where the end result is a continual work in progress.
Come to think of it, my son and I use an Agile approach when we go fishing. We know we want to catch a bunch of fish, but we don’t know what kind or where, so we move our canoe around the lake all day based on our success in each spot, wind direction, time of day, and other factors.
Abraic exercises an Agile approach for our internal innovation program. Our R&D group is working strictly on a high-frequency, trial-and-error basis in one-week sprints. This minimizes cost exposure and allows us to make adjustments based on the latest findings.
Another area where an Agile approach is very effective is vendor engagement. The predominant practice to date has been to take an ambitious high-level scope and hand it off to a chosen vendor by means of a complex, long, and expensive contract. Yet, there are many cases when the project requires a significant redirection, including changing the vendor, utilizing in-house resources, re-scoping the project, putting the effort on hold, and so on. We end up having a to make a tough choice: make minor tweaks and complete as planned even if it doesn’t match our expectations or try to renegotiate – a lengthy and painful endeavor that may involve legal and oftentimes damages relationships.
Vendor management is an internal IT function that often has room for improvement. A maturity model is a helpful tool for evaluating the state of any given vendor relationship, and determining the overall balance of your organization’s dependency on vendors.
Situations abound where a business could use supplemental C-level IT expertise to get through a transitory period of change. Maybe you’re between CIOs, or your senior IT leader needs some temporary executive-level help. Maybe the executive team needs some strategic IT advice, or the IT department needs a “shot in the arm” to get to the next level or deliver a new capability.
Flexible access to CIO-level expertise on part-time or temporary basis can serve to strengthen your IT function. Staffing services or consulting firms will provide a resource to cover strategic and/or tactical IT leadership needs. The resource can help with a short-term transition, organizational change, or other executive-level responsibility. Such a solution provides a viable and affordable option when an expert IT Leader is needed to augment the IT team or the business executive team.
You’ll invest a significant amount of time and resources defining your needs, seeking out promising candidates, and evaluating options. You’ll need to clearly communicate what the organization needs, and what level of performance you will expect.
Then, if you start working together and feel like it’s not a good match, the relationship could turn sour. And if you can’t turn it around, getting out of an outsourcing commitment is not easy—especially once the resource has amassed an in-depth knowledge of your processes and systems.
Quantitatively, 50% of companies feel their outsourced suppliers are reactive, not proactive; 40% experience a lack of innovation and underqualified resources; and 30% suffer high attrition and costs. (Source: Deloitte)
To mitigate risk, I recommend the following systematic approach to ensure you pick the best outsourcing vendors for your organization. I have used this process on many occasions with great success.
The traditional vendor engagement model is flawed.
Technology initiatives are only getting more and more complex, time consuming and costly. Consequently, the risks associated with technology investments continue to pile up.
Complexity increases the number of weak links, prolonged timelines introduce changes to landscape and priorities, and budgets are inevitably blown by vendors that offer unrealistically low costs that they cannot later sustain. While some organizations may feel that the problem is the result of selecting the wrong vendor, the challenge may in fact be the typical vendor contract.