Traditional vs Agile Procurement Methods
Better than business as usual
This year has already produced significant awakenings around the world. Governments are now acutely aware of supply chain resilience, the need for domestic surety in manufacturing and supply, increased impacts of climate change and continued failure of stale procurement mechanisms to keep pace with the rate of change in geopolitical relationships and technological advances.
With Defence projects running for generations in some cases, how can Defence maintain the level of agility needed to keep pace with changes to ensure capability is delivered to the right user community at the right time, in the right configuration to have the right effect? While maintaining the right balance of investment in local R and D and manufacture, keeping within the budget and being responsive to external influences. Recently Defence recognised that doing business the same way over and over again was no longer likely to achieve the right results. 10 years may be a short period of time for Defence acquisition projects, but it is a very long time from a technology point of view.
One way this could be achieved is to put the customer's needs at the centre of the procurement effort. If those needs change (which they will) then the procurement effort must also be responsive. A decision made 9 months ago in December 2019, may not still represent the best plan given circumstances in August 2020.
Agile procurement is clearly needed now more than before because it is built with the client at the centre and plans for change from the outset. Often when projects are several years long, the main goal of the project will most likely have changed or needed changes made to it which is why using the agile method is likely to deliver better results.
Below we look at the main differences between the traditional and agile procurement method.
Linear vs Iterative approach
The quickest path to success is not always a straight line. The traditional procurement method of delivering a project works in a straight line from start to finish but the iterative approach goes through short cycles to deliver small parts of a project to build up to the end result.
The agile approach breaks the project down into “sprints”, which are usually one to two weeks but can depend on the project. Each sprint has a specific goal and a project will have many springs, each with its own scope of work and objective. After each sprint the team will look at what has been accomplished, what caused any delays and what could be changed to make the next sprint more productive.
Improvements in productivity are measured by “velocity”, which is the rate the team delivers business value. Velocity starts slow but gradually picks up speed before plateauing to a predicted level.
Process vs results focused
Agile companies are built to adapt to change. They have a better understanding of evolving customer needs and to respond to those changes by delivering better products and services at a faster rate. While companies who use traditional procurement methods are focused on staying within the allocated budget and delivering the product, they often forget during the linear process of whether the client is happy. Even if the product was delivered quickly, was it the right product? And are you able to capitalise on market opportunities when they arise? That’s why agile companies focus on measuring business outcomes, not process-based metrics.
Building a product that a client is happy with, means they are more likely to recommend you to other potential clients, creating greater revenue for your business. That’s why companies like Anywise, identify what the business outcomes are that their clients want to achieve and regularly track that progress to ensure that those outcomes are being met. Companies that are able to adapt quickly are more likely to last.
Control vs collaboration
The agile method focuses on clients collaborating with developers rather than simply outlining the requirements and deliverables. After each sprint, clients are able to review the work and provide feedback on the product. This allows constant communication between you and the client. Customer feedback allows the development team to prioritise tasks and increases trust between the client and the project team.
Transparency is another advantage of increased collaboration and product reviews. Problems can be quickly identified and fixed to eliminate issues. Agile creates daily dialogues, negotiations and decision making. Having the right people for a project is the key to successful collaboration and this is where good project managers are able to mobilise the right team for the job.
Traditional procurement work has often seen the main contractors pursuing their own self-interests, so that collaborative working has been impossible to achieve. However, this hampers the possibility of improving value on projects. Supply chain collaboration is important because companies that collaborate effectively have seen a reduction in costs, as well as improvements in service levels and client satisfaction.
High flexibility vs low flexibility
The main reason the agile method works so well is that a team can adapt seamlessly to change when required without affecting the ability to deliver a project successfully. Changing technologies and marketing strategies means industries are constantly having to evolve. As some projects take years to complete, often clients will ask teams to change their task priorities based on changing markets and business demands.
In a traditional waterfall model, this would mean more investment and delay on delivery due to the lack of flexibility. The agile method welcomes these changes as the priorities can be done based on the client’s needs. As sprints are time-based the cost can be predicted at the start.
Why is agile more flexible?
There are a few key reasons why agile is more flexible than traditional methods as outlined below:
Agile places a greater emphasis on humans rather than processes. An agile team is able to handle changes promptly, not just at the development stage but also the design and implementation of the product. This has driven some great success in some projects in Defence, such as Diggerworks etc but some others have possibly been consumed by a focus on process rather than outcomes.
Transparency through open communication
One of the main agile values is transparency as part of the team’s culture. It values people and communication over processes and tools. Transparency is done through various ways including:
- Stand-up meetings
- “Metallica moments” (an idea that Anywise implemented from watching a documentary about Metallica where people can openly share how they feel about what people are doing in the team)
Smaller portions of work
In traditional projects, the success of a project is unable to be measured until completion but with agile, success can be measured in a few months or as little as a couple of weeks. Agile projects prevent wasted work effort as sprints are very short. Teams can adapt to change quickly.
The real proof of agile being a more successful project method is that it delivers real value compared to traditional project work. Success of agile projects is measured by product quality, stakeholder value, ROI and timing. Studies show that agile projects are much more likely to succeed and have better outcomes than waterfall projects. Agile projects involve more testing and provide more control over the features being developed.