The following post is an excerpt from The Iterative Engagement Model: A Calculated Risk and a Whole Lot of Reward.
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.
You might say that signing vendors to large contracts follows the pattern of a bad marriage: After a couple of months of honeymoon, there is a period of trying to make it all work with good intentions, followed by an increasing rate of disagreements and, ultimately, a big argument and the decision to see other people.
The problem is the very premise that an organization needs to be “married” to its vendor. In fact, long-term vendor commitments are a burden for most organizations.
The only way to prevent surprises from a vendor relationship is to not commit to a relationship. This can be done using an iterative engagement model, where an organization signs a vendor to a sequential series of short-term engagements, each of which has a clear scope, deliverables, and benefits.
Iterative engagement will improve vendor performance.
Here is how iterative vendor engagement works: The most manageable iteration lengths are between two and four weeks. The first engagement is planning-heavy, and the biggest outcome from it is a first version of the backlog. Subsequent iterations start with reprioritization of backlog opportunities and selection of the top few as a scope for the iteration.
As the iteration draws to a close, the backlog is updated and plans are adjusted. At the end of the iteration, the organization gets a chance to hand the next cycle to the current vendor or assign a different mix of resources. An organization also can choose to put the project entirely on hold and switch valuable resources to a more critical project.
Can you think of a better way to keep a vendor on their toes?