There’s a part of Transformation that’s essential that we don’t talk about as much—expenses. During Transformation, we mainly focus on variable expenses because those costs are negotiable. The most often overlooked variable expense during Transformation is external vendors, likely because they aren’t technically a part of your company.
It’s no surprise that companies don’t want to pay to Transform external vendors, in the risk that the people will leave after the contract is up, or the vendor won’t support the changes. But, even if they don’t make up a significant part of your workforce, they will stall your progress if they are unwilling to adopt your Agile way of working.
The external vendor we encounter the most—especially at large organizations—is contract employees. There’s an obvious benefit to contract employees because you can have a minimum number of staff and contract out the rest. The ratio will depend on the company and how they view their technology: is it a significant competitive advantage to invest in, or more of an expense? A company adopting Agile might be moving from IT being an expense to a strategic differentiator they invest more in during Transformation. It’s essential to understand your needs, how your vendors will fit into your Transformation goals, and what the relationship will look like afterward.
The Weight of External Vendors
Even if your external vendors only make up 20% of your workforce, that will weigh down your Transformation if they aren’t willing to get on board.
The biggest issue is the financial weight of vendors. They’re an expense that you need to run your company, but when you’re transitioning to a new way of working, you’ll have to decide if you’re willing to train them or find new ones. Many external vendors are used to save money in the long run, but it might end up being a more significant investment you have to make. You can’t have your vendors working in opposition to your Transformation goals.
Then, there’s the risk of running into other issues that are common with external vendors. A high turnover rate negatively affects your predictability and costs you more money to keep training new people. If they lack the commitment to the vision and resist the changes, this can tank morale among your full-time employees and leave them questioning, “what’s the point?”.
Overall, it’s critical that you have vendors that align with helping you achieve your goal of Agile Transformation and help you along the way, not hold you back. It should be a part of your Transformation plan to asses current vendors, get them on board, or invest in finding new ones that support your vision.
Turning Vendors into Assets
There are two options for handling vendors.
Train Your Vendors
Even if your current vendors are willing to accept the training, you can encounter struggles there, too. They can be just as resistant to change as your full-time employees, not stick around for the long run, and depending on their current skillset, training could take a long time. This isn’t ideal if your goal is flexibility and saving money.
Find New Vendors
Look for vendors that better align with your needs. This can be tricky to navigate because there are different practices within Agile, and not every organization practices Agile the same way. If a vendor says they have Agile teams to offer, you need to ask detailed questions about how they operate to ensure their Agile mindset is the same as yours.
For example, if you ask how long their sprints are and they say “six months,” that’s not Agile. You need to get to the bottom of their understanding of Agile to be sure you’re on the same page. Unfortunately, some companies only say they do Agile as a marketing tactic and don’t follow the practice. The problem is that you probably won’t find ones that match exactly what you need and align completely with your Agile Transformation strategy.
Work with LeadingAgile & Our Studios Team
An option that we provide at LeadingAgile, we work alongside vendors, help train them, and show them the ropes of any Transformation we’re a part of. But in the best interest of our clients, we’ve found that having people who are well-versed in the LeadingAgile way of doing things is the quickest road to accelerate a Transformation and get our clients the help they need when they need it, and can ramp up that help or taper it off as the Transformation matures. This is why we set out to create a Studios offering of highly qualified developers who are ready to assist you in your Transformation and can hit the ground on day one with little to no onboarding and start adding value immediately.
With that level of experience provided by your external vendors, they become an asset to your Transformation. They have gone through a LeadingAgile Transformation before, so they understand the structure, governance, and metrics of your Transformation and value the same things that you’re trying to get your organization to value. It takes the stress out of finding more vendors and can speed up the Transformation process to work with those who already know what they’re doing.
The Impact on Transformation
If we don’t correctly leverage vendors, it becomes an anchor to Transformation. If you’re only spending time investing in how you want your software to be built and not building expectations with your teams and vendors, it will cause problems.
Addressing external vendors needs to be done across the organization as part of the larger picture of Transformation. Contracts should be updated with current vendors to cover changes made to your operations. For any bids made to new external vendors, be sure that the requirements are understood from the beginning. Get detailed in the contracts you present to these vendors, specifics like you want the code written in a certain language or automated tests in these places. Then, you only pay or accept the code when it passes your tests. The more specific you can get, the better.
Once you’ve built clear expectations, your employees and partner organizations can help you during Transformation. As a result, they will get better at writing software the way you want it written, managing teams and backlogs the way you want, and leveraging that foundation to carry it forward as the organization moves through Transformation and beyond.