Twenty years ago the dotcom boom popularised the web, and a rush to build websites.
A decade later the iPhone popularised the smartphone, and a rush to build apps. What’s next? Whether it’s smartwatches, AI speakers, connected devices or the next innovation companies must operate with unprecedented agility to meet changing customer behaviours. This is changing the nature of outsourcing.
We are seeing a shift in established companies’ digital strategies, as they seek to avoid becoming the next Blockbuster video or Kodak cameras; former category kings who failed to react to digital. Specifically we are seeing clients move to the ‘headless’ platforms that support rapid innovation and with it an organisational willingness to change corporate culture to support truly agile working.
This points to an increasingly strategic role for marketers. Marketers are increasingly having to collaborate more and more closely with the CTO to drive digital strategy. This is because the digital experience is the product. And it’s also because the release of new products now can be done quickly and cost effectively in days and weeks (like an advertising campaign) rather than months and years (like a legacy IT infrastructure project).
This was the context for an interview with Nicola Smith, extracts of which appeared in a recent Raconteur supplement
in The Times. Interview below in full.
Nicola: How have outsourcing deals changed in recent years and is it true to say they are now more agile/and less clunky/set in stone?
James: “For the last eight years we have been working exclusively in an agile, collaborative way with our clients. Over the last five years we have seen a desire by organisations of all sizes to change the way in which they are both procuring services and working with their suppliers. The relationship dynamics have changed in a more positive direction towards one of greater partnership, rather than an ‘arms length’ supplier relationship.
Agile is typically requested through the procurement approach and it is certainly the case that the majority of RFPs now reference a requirement to work in an agile way, some even going as far as requesting a certain methodology, such as Scrum. However, for agile delivery to be successful it often requires the wider organisation to adjust and that is rarely backed up with a deep knowledge of what is required - in terms of skills, technology and culture - to achieve success. Often it is seen, incorrectly, as a silver bullet to the delivery of a successful project and something that, in the most part, can just be outsourced.”
Nicola: What do successful deals look like today and how important is agility, and use of technology to enable this agility?
James: “The key point is to separate out agile as a philosophy from agile as a process: because you need to embrace both to innovate successfully. It’s rather like replacing your old dirty diesel with a new petrol hybrid, and being surprised that it no longer runs when you fill it with diesel.
"Businesses should see the need for agile business development as a separate thing to the concept of agile software development. Clearly business agility in the modern marketplace is vital. Agile software development is a tool that can help in this but it's a small part of the puzzle.
"Equally, agile software techniques that are employed within an organisation that does not have an understanding of the cultural changes and investments that are required to focus on delivering value to customers and speed to market - and not in terms of how many features can be developed as part of a project's contract - will usually not achieve the initial objectives that were set.
"If the business culture isn’t ready to accept agile, it will throw it out like a rejected kidney.”
Nicola: How can customers improve the way they brief and work with outsourced partners (eg transparency and comms, a clear strategy, better project management skills)?
James: “Clear and detailed briefs are still vital, but the focus should always be on the business need and the key customer requirements rather than detailed lists of functional requirements that are not backed up with user research and testing.
"Understanding the strategy and defining a direction of travel is crucial for lean, iterative development techniques.
"But you can't completely outsource agile development. Done properly, it is by design a collaborative approach. Specifically this means that customers need to ensure they have certified Agile Product Owners as an internal resource to check that what is being delivered is based upon the organisation’s needs.
"This needs to be combined with top-down empowerment for an agile, iterative approach where the detailed outputs are less contractually locked down as these can constrain the ability to change course based on data gained from users during the delivery process.
"Be very clear on the business outcomes you need, but be less prescriptive on the specifics of how the agency should deliver them and be prepared to integrate the agency team properly into your business.”
Nicola: How important is customer culture, and to what extent can the supplier influence this, and educate the customer to work in a smarter way?
James: “A good supplier or partner will have broad experience at delivering agile projects within a wider program and portfolio of workstreams, and be able to identify key challenges for the customer early on.
"Key stakeholders on the customer side can be identified and put through short Product Owner training courses. Senior stakeholders, project boards or even the C-suite can be trained and partake in simulations that highlight the benefits (and pitfalls) of agile to drive top down engagement if it appears to be lacking.
"Customer IT teams can work with supplier DevOps specialists to learn new skills that are vital in the configuration of IT infrastructure that enables rapid releases to market. A key benefit of outsourcing to experienced agile suppliers is the knowledge that they can bring back into the organisation.
"If all of these internal groups start to adjust the way in which they are thinking and working, then this will start to have a direct impact upon the outputs and, in turn, will start to become visible to customers and change the way in which they interact with the organisation.
"Be collaborative and invest in training so your team own knows how things work and what’s going on: the better the understanding, the easier it is to build trust. Technology is too important to the future of your business to be left to sit mysteriously misunderstood in a silo.”
Nicola: What should relationships between customers and suppliers look like today, and what factors are most important for a relationship that works?
James: “Agile development only works if you are able to form a single team between the customer and supplier. Everything has to be 100% transparent to ensure that every individual on the team understands the business challenge and the end user needs so that they can input into the process at every step of the way.
"A strong team culture where the team can openly discuss risks and issues on a daily basis is vital to reduce the risk associated with complex digital development projects. In this case it can be the small factors that make a big difference.
"All of these go a long way to creating an enjoyable working environment for the team and helping to build openness and trust that is so critical to success.”
Nicola: Are you seeing most customers adapt to the need for a cultural change or is there still work to be done?
James: “In most cases, within most large organisations there is a lot of work still to be done. The challenges and the issues are usually unique to an organisation and the way that it has been structured. The traditional departmental silos and business KPIs can create the usual challenges around getting value out to the organisation’s customers.
"The three most important items that are required as a basis for success to overcome the disruption that can come from a number of angles are:
Top-down support and understanding of agile, iterative development techniques which requires an understanding of the benefits from very senior people within an organisation
Project teams trained in agile software development techniques otherwise you outsource your entire knowledge base and essentially what is likely to become your business
IT infrastructure that enables rapid releases to market and enables innovation
"So clear leadership, trained in-house teams and proper integration form the holy trinity of effective outsourcing - and you must have all three of these in place, or you’re at high risk of failing to deliver rapidly in a market where disruption can come from unusual angles at any time.”