Achieving lightning speed in the contracting process
- By Michael Hong, Johnathan Tanner
- Jun 05, 2020
The volume of U.S. government proposals and contracts are reaching new levels with lightning speed needed to secure them, especially for the Department of Defense.
Whether you are procuring for DoD government agencies or a company pursing their business, there is real pressure to keep up with rapid IT deployment and spiraling customer needs. A flexible way of procuring eases that pressure. We call it agile IT procurement. It focuses on acquiring software and IT solutions faster, using repetition of proven methods for speed and efficacy.
Those methods include micro-buys executed in sprint cycles. Procurement breaks big, complex requests for proposals into smaller ones that address a few requirements at a time. There is a wider set of partners, instead of reliance on a single, mega partner, as purchase volume and touch points escalate.
Adopting this new approach may sound complex at first but the benefits are significant:
- Reduced time to market with new products and capabilities gained through the regular launch of new software and IT capabilities
- Less risk of procuring an inadequate or outdated solution
- Decreased acquisition time
- Minimized investment in unwanted long-term implementations
- Freedom to pivot quickly and often (if an implementation strategy, program, or vendor does not meet the organization’s needs, it can change direction) and better adjust to changing market needs.
As with any change, there are challenges. Procurement has to let go of bureaucratic decision layers and give teams the power to make rapid, local decisions as they arise. It will take a little time to become comfortable operating with a large number of unknowns, because the set of requirements found in the traditional process will no longer be there to lend a sense of visibility into purchasing decisions. Agile procurement also requires continuous tending of the broader set of partners for the fluid collaboration you will need.
All of this is attainable using these 12 steps we refined across countless agile projects across industries globally.
1. Use-case and journey mapping. Rather than use a long, static list of requirements based on functional or technical aspects, for example, we identify a core set of use cases. This often begins with adopting a customer’s or user’s point of view to determine the new experience and journey they will have. It’s about agility. We typically consider feasibility, impact to mission or business, and desirability (a safety initiative may take precedence, even though immediate impact to mission may not be as high).
2. Architecture and concept of operations. Make your architecture flexible and scalable, so that new technologies and capabilities integrate as smoothly as possible. We see more platforms based on microservices architecture now. It relies on loosely coupled services that users deploy and maintain themselves. They also communicate with other services through simple application programming interfaces. This way you can readily “plug” evolving technology and vendor capabilities into your system. Agility, once again.
3. Make-vs-buy. Strategically invest in areas of technical competence and capability instead of outsourcing en masse to third parties, especially for competitive advantage and differentiation. Base your decisions on empirical metrics and make them early in the acquisition cycle, ideally in the pre-RFP stage.
4. RFP modules. When you identify use cases and the journey experience in step one, map them to bursts of outcomes. These can be grouped together based on similarities and packaged for solicitation incrementally. Prove or disprove initial use cases and pivot if/as needed to build towards the end solution. Instead of relying on a single mega vendor, procure with fewer requirements, which can be added to or refined later. Ensure flexibility to make adjustments along the way.
5. Partner maintenance. Partner relationships take careful planting, watering, and pruning, just like the garden that will grow wild around the edges without attention. It is important to establish partnerships with a list of goals that identify the right vendors. Then continuously expand the scope of partners as situations grow. For instance, building a prototyping lab calls for one set of partners, while maintenance support providers call for another. Should new ventures or start-ups appear that spur more digital trends, you may need yet a new set of skills and capabilities.
6. Execute and Pivot. Repeatedly procure the solutions you need during sprint cycles. Use key performance metrics to gauge progress and learn from mistakes and successes, applying those lessons to future sprints, when you pivot accordingly. For instance, a microbuy you made for a proof-of-concept may not turn out as hoped. Agile procurement helps you see the shortcoming fast so that you can halt it and move onto the next priority.
7. Communication and governance. These permeate all steps. Given the faster speed and decisions made with limited information, it is important to communicate and collaborate in real time so that everyone is on the same page. With high-speed governance, it will behoove you and your people to get comfortable with failing fast, minimum viable products, and stage-gated funding. These are concepts that venture capitalists use. Once a micro-buy proves successful, proceed to the next one until all RFP modules are complete.
We walk this talk, by the way, using a more detailed set of points for procuring IT in agile ways. Each point is time-tested and based on the impact it has on both buyers and sellers we’ve worked with around the world. For example, micro-buys could require buyers increase purchase frequency, decrease RFPs’ cost (which could be no more than $100,000 per purchase) and narrow requirements (to, let’s say, three from five). “Invention on demand” is another example, where we develop solutions in real time to avoid strenuous patent negotiations.
There is no doubt the rapid pace of innovation fueling digital change today calls for more nimble ways of procuring. Agile IT procurement is indispensable for supporting quicker, more effective digital transformation. It is at the heart of preventing acquisitions and procurement from becoming inadvertent hindrances. Instead, it can be a force for rapid innovation.
Michael Hong is a principal at A.T. Kearney Public Sector and Defense Services LLC, and leads digital transformations efforts across the U.S. government. He can be reached at email@example.com.
Johnathan Tanner is an Associate at Kearney with expertise and knowledge in aerospace and defense technologies and procurement best practices. He can be reached at firstname.lastname@example.org.