Agile development: converting sales promises to contractual commitments

Technology service providers are quick to advocate the virtues of agile development over more traditional waterfall methods. Agile development is an iterative, incremental approach where features are designed, built, tested and released through a short 'sprint cycle'. The sprint cycle is then repeated to release further features and extend earlier ones. This contrasts with more traditional waterfall development methods that involve a series of distinct stages through which the project progresses (analysis, design, build, test, implement etc), typically over a longer period and culminating in a larger software release of multiple features. The cited benefits of Agile include:

  • Increased flexibility and responsiveness to customer requirements;
  • Greater alignment and understanding of business requirements due to the integration of, and collaboration between, business and development teams;
  • Increased frequency of functionality released, significantly reducing time to market for new ideas;
  • More innovative ideas emanating from the technology function; and
  • Reduction in development costs achieved through increased efficiency, the use of automation tools, and merging development and operations (DevOps) teams.

With the support of the service provider, business cases are developed that promise greater value for less cost and naturally, the service provider positions themselves as the delivery partner leveraging their own capability, capacity and toolsets.

Key challenges

Once the leadership team has bought in to the concepts of agile and its benefits there is a realisation that contracting for agile development in a way that realises the business case is difficult.  How do you contract for the certainty required in a business case for a demand profile that will be out of date before the first anniversary of an agreement?   An inherent challenge with outsourcing agile development, is ensuring that the service provider has a shared and enforceable responsibility for delivering the benefits case.

Key questions that executives should ask their commercial and contracting teams include:

  • How to quantify and hold the supplier to account for the realisation of the business case benefits when the agile development demand profile will change year-on-year?
  • Where development and support resources work side by side in a DevOps context how are roles and responsibilities defined and delineated, performance measured and charged for transparently and fairly?
  • How will the service provider be held accountable to implement enabling technologies, for example automated testing tools and self-service provisioning that underpin benefits realisation?
  • How can vendor lock-in be avoided and commercial options retained in an environment of such close collaboration, including the use of proprietary tools, with the service provider?
  • How much consideration has been given to the time, effort and risk associated with the cultural change required across the whole business to realise the benefits of agile delivery?

Failure to address these points during contract negotiations may increase the risk of a service provider relationship that does not deliver the envisaged business case benefits and a lack of useful commercial controls to ensure performance.

How we can help

Our Commercial Assurance specialists have many years’ experience in both the contracting and delivering agile engagements where the delivery model has a high dependency on third party service providers. We work with clients through the strategy, scoping and service provider selection and provide independent challenge and scrutiny during commercial and contractual negotiations. Our approach combines industry experience, best practice and assurance rigour applied to real life client situations. Our specialists will work hand in hand with client service delivery teams, procurement and legal advisors through these complex negotiations with a view to driving to a contract that converts sales promises into contract commitments.  

Contact us

Richard Gott

Director – Commercial Assurance Technology and Utilities Lead, PwC United Kingdom

Tel: +44 (0)7881 612572

Qadir Marikar

Partner – Commercial Assurance National Lead, PwC United Kingdom

Tel: +44 (0)7718 928 344

Jonathan Calver

Senior Manager – Commercial Assurance, PwC United Kingdom

Tel: +44 (0)7725 445892

Denham Trollip

Senior Manager, Commercial Assurance Technology SME , PwC United Kingdom

Tel: +44 (0)7949 333732

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