Welcome!

Microsoft Cloud Authors: David H Deans, Pat Romanski, Janakiram MSV, Jnan Dash, Andreas Grabner

Related Topics: Microsoft Cloud, Java IoT, Microservices Expo, Agile Computing

Microsoft Cloud: Blog Feed Post

So, You Want to Outsource an Agile Project?

Any contract for agile project outsourcing also needs to answer these points

Irrespective of what the Agile Manifesto says (“Customer Collaboration over Contract Negotiation”) we do require a signed contract for ANY medium to large software outsourcing engagements – and that includes agile projects.

Why? Because when there is a commercial arrangement between two parties for delivery of any service where a significant amount of financial transaction is involved, there needs to be a clear agreement on:

  1. What is the service that is going to be delivered and what will be the charges for those services?
  2. What happens when things go wrong?
  3. Do's and Don’ts of how the interaction will happen

So, any contract for agile project outsourcing also needs to answer these points. But, how will an agile contract be different from a traditional software outsourcing contract?

This post is based on…
Major part of what follows comes from the whitepaper Agile Contract Premier by Tom Arbogast, Craig Larman, and Bas Vodde. I recommend that you read it.

I have also used some ideas from the following posts:

Let us see what these practitioners have recommended.

Is it possible to have Fixed-Price, Fixed-Scope (FPFS) agile contract?

Yes, it is possible but it should be avoided.

  • Requirement specification that is signed off is almost never what is actually needed
  • In an effort to deliver something within the constraints of price and scope, suppliers will often degrade the quality of their work – reduced code quality, do less testing etc.
  • Price include large risk contingency – this premium is usually hidden in the effort estimate

As a result, the customer may not get what they want and supplier may lose out because of changing requirement.

How can the supplier make such project work?

  • Use people with experience of the domain and the technology to estimate the effort
  • Clearly lay out the acceptance definition or the definition of “done”
  • Ensure that new requirements only displace existing requirements if they are of equal effort
  • Decide how additional requirement will be charged

FPFS contracts are common where there is low level of trust between both parties. This may be a starting point in the engagement and it the project is successful more flexible contracts can follow.

What are the options available for Variable-Price, Variable-Scope contracts?

Such contract normally starts with a Master Services Agreement (MSA) which is more like a rate card. The rate may be for people deployed, cost of each iteration, function point or story point delivered etc.

Since we are talking about variable-scope, there will not be any detailed definition of scope. However, there may be an overall cap to the total price of the contract.

Some form of an order may be released for executing the next iteration or next couple of iterations which will have a clearer definition of scope or backlog.

To cover the risk the contract may be terminated after completion of any iteration – agreed termination charges may have to be paid.

Can you have a completely transparent payment model?

Yes, if you follow Toyota. It is called the target cost contract. They follow this five step process:

  1. In collaboration between customer and supplier, identify, analyze, and estimate all possible project requirements.
  2. In collaboration, estimate the cost of change or scope increase during the project.
  3. From these two elements, establish the target cost.
  4. Calculate target profit, based on target cost (for example, 15% of target cost).
  5. Share all details and results with customer.

The idea is to have a trusting relationship where pain and gain can be shared by having a mechanism to adjust the actual cost based on the changing scope.

How do you protect against things going bad?

This is clearly the domain of the contract lawyers. They are supposed to ensure that contracts are drafted in such a way that suitable clauses are in place favoring their clients.

It is essential that non-lawyers involved in negotiating the contract understand the lawyers point of view.

However, one of the key premises of agile methodology is that the project risk is reduced through iterations and early delivery. So, it is strongly recommended that lawyers working on such contracts study and understand how agile method reduces risk.

This can help in significantly simplifying the contract.

Successful projects happen not because of the contract but because of many other things including collaboration, transparency, and trust. There are many natural roadblocks in the path of a successful project delivery – the contract should take care not to add any more roadblocks.

After all under normal circumstances everyone’s number one priority is to deliver a successful project. (There are situations where some people may want the project to fail.)

More Stories By Udayan Banerjee

Udayan Banerjee is CTO at NIIT Technologies Ltd, an IT industry veteran with more than 30 years' experience. He blogs at http://setandbma.wordpress.com.
The blog focuses on emerging technologies like cloud computing, mobile computing, social media aka web 2.0 etc. It also contains stuff about agile methodology and trends in architecture. It is a world view seen through the lens of a software service provider based out of Bangalore and serving clients across the world. The focus is mostly on...

  • Keep the hype out and project a realistic picture
  • Uncover trends not very apparent
  • Draw conclusion from real life experience
  • Point out fallacy & discrepancy when I see them
  • Talk about trends which I find interesting
Google

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
SYS-CON Events announced today that Outlyer, a monitoring service for DevOps and operations teams, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Outlyer is a monitoring service for DevOps and Operations teams running Cloud, SaaS, Microservices and IoT deployments. Designed for today's dynamic environments that need beyond cloud-scale monitoring, we make monitoring effortless so you...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, Cloud Expo and @ThingsExpo are two of the most important technology events of the year. Since its launch over eight years ago, Cloud Expo and @ThingsExpo have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors! In this blog post, I provide 7 tips on how, as part of our world-class faculty, you can deliver one of the most popular sessions at our events. But before reading the...
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists peeled away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud enviro...
TechTarget storage websites are the best online information resource for news, tips and expert advice for the storage, backup and disaster recovery markets. By creating abundant, high-quality editorial content across more than 140 highly targeted technology-specific websites, TechTarget attracts and nurtures communities of technology buyers researching their companies' information technology needs. By understanding these buyers' content consumption behaviors, TechTarget creates the purchase inte...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business. Though, IoT is far more complex than most firms expected with a majority of IoT projects having failed. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, Chief IoTologist at Wipro, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology portfolios and business models to adopt and leverage IoT. He will delve in...
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, discussed the impact of technology on identity. Sho...
There are 66 million network cameras capturing terabytes of data. How did factories in Japan improve physical security at the facilities and improve employee productivity? Edge Computing reduces possible kilobytes of data collected per second to only a few kilobytes of data transmitted to the public cloud every day. Data is aggregated and analyzed close to sensors so only intelligent results need to be transmitted to the cloud. Non-essential data is recycled to optimize storage.
SYS-CON Events announced today that SD Times | BZ Media has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. BZ Media LLC is a high-tech media company that produces technical conferences and expositions, and publishes a magazine, newsletters and websites in the software development, SharePoint, mobile development and commercial UAV markets.
“We're a global managed hosting provider. Our core customer set is a U.S.-based customer that is looking to go global,” explained Adam Rogers, Managing Director at ANEXIA, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
In today's uber-connected, consumer-centric, cloud-enabled, insights-driven, multi-device, global world, the focus of solutions has shifted from the product that is sold to the person who is buying the product or service. Enterprises have rebranded their business around the consumers of their products. The buyer is the person and the focus is not on the offering. The person is connected through multiple devices, wearables, at home, on the road, and in multiple locations, sometimes simultaneously...