More and more companies are slowly transitioning to a vendor based delivery model. Let it be engagement of a vendor to deliver a project or outsourcing application development to an external agency, this is now becoming quite common.

Running IT as a business is the new approach for private and public organisations. Over the last 5 years, the number of executives that are running IT as a business has grown. So what does it mean really?

IT has been maligned over time as being expensive, slow to respond to change, not reactive enough and not understanding the bigger picture.

For example, lets say business reaches out to IT with an idea/concept and some seed money to explore a viable solution. Based on past experience and preferred solution, can IT come back within a few days with an estimate that will have a final variance of 10%-20% to actuals? Can IT put additional resources to deliver the project way ahead of schedule?

Technical teams do not like to make fluffy statements with regards to effort and cost. They prefer to look at some form of requirements and then provide a knowledgeable advice/recommendation, with the knowledge that if this blows up, then they will be held responsible. So caution is the best approach. Technical teams are also very pragmatic in their approach towards delivery schedule as they know from experience that many things can go wrong. Sometimes that is not what business wants. Sometimes business wants to float an idea and wants to get some indication from IT whether it is even worth pursuing the idea or it will be too complex and expensive. And they want that advice first. Sometimes business wants a solution to be delivered within an unacceptable timeline.

Right or wrong, the commonly held view that IT is slow, expensive and not reactionary at all results in the ushering of operational and delivery model change.

To fuel business change, leading CIOs are redeploying funds previously utilised on running operations toward innovation product portfolios — while transforming the IT operating model to be more agile in response to business and regulatory change.

Part of the operating model change and making the organisation more agile to business demand is to adopt an outsourcing model where delivery can be ramped up as per demand. The idea is that instead of “bums on seats”, engage and allocate additional resources from vendor, only when required.

So when work or project is outsourced to an external vendor, it is important that the technical teams are engaged as part of the tender process. Not engaging on time can have severe consequences, in terms of cost blowout and brand damage.

In past, I delivered a project where a vendor was engaged to develop and host a replacement product. In line with individual team’s deliverable, PM was advised about environments requirements. In this specific instance, we needed a dev, a test, an inter-agency and a production environment for the replacement product. Unfortunately due to a mix up in communication, the contract was signed with provision for test and production only.  No sooner had the contract been signed with the vendor, the project was notified about the missing gaps. However it was too late to modify the multi-million dollar contract. As a temporary measure and to allow SDLC to proceed, the project worked out a temporary solution with the vendor by provisioning 3 temporary environments: dev, test and inter-agency. But once the project went live, as per the agreement, project decided to decommission dev and inter-agency and retain only test and production.

Naturally, this created a significant issue for supporting inter-agency testing as there was no replacement product for the inter-agency testbed.

The organisation proceed to resolve the issue by purchasing two environments: dev and inter-agency from the vendor at a premium. Had these been part of the original contract, then the cost of provisioning two additional environments and annual maintenance cost could have been significantly reduced.

So in conclusion, it is very important to engage technical teams in defining the requirements prior to floating RFQs and signing contracts with external vendors.