Agile Contracting in Banking using Lean-Agile Procurement
In this case story, Rivo Head of Procurement at Candriam shares how Lean-Agile Procurement was used to procure a complex solution in banking, in the matter of weeks not years.
In this case story, Rivo Head of Procurement at Candriam shares how Lean-Agile Procurement was used to procure a complex solution in banking, in the matter of weeks not years.
Panelists
Rivo RANDRIAMANANJARA
Head of Procurement at Candriam
https://www.linkedin.com/in/randriamananjara/
Mattias Skarin
Lean & Kanban Coach, crisp.se
https://www.linkedin.com/in/mattiasskarin/
Source of video: https://blog.crisp.se/2022/04/04/mattiasskarin/agile-contracting-in-banking-using-lean-agile-procurement
Rolling out Lean Agile Procurement at BNP Paribas: A retrospective.
GUEST Blog Post: We’re proud to co-publish and share with you a very honest retrospective by Reeve Randriamananjara rolling out Lean-Agile Procurement at BNP Paribas. He described his journey from being infected by the LAP virus in one of our public workshop, over convincing his stakeholders at BNP Paribas to actually executing a first pilot. Thanks so much for sharing your story and we’re keen on your further developments with LAP@BNP Paribas :-)
GUEST Blog Post: We’re proud to co-publish and share with you a very honest retrospective by Reeve Randriamananjara rolling out Lean-Agile Procurement at BNP Paribas. He described his journey from being infected by the LAP virus in one of our public workshop, over convincing his stakeholders at BNP Paribas to actually executing a first pilot. Thanks so much for sharing your story and we’re keen on your further developments with LAP@BNP Paribas :-)
The training
1 March 2018: Snowstorm in Switzerland. All planes going to Geneva had been grounded. Luckily my plane was heading to Zurich. However I only had confirmation that I was going to fly a couple of hours before the check-in at Brussels airport. From Basel, I had to take the train to Rotkreuz, home to the pharma giant, Roche. Rotkreuz was also where my one-day Lean Agile Procurement training was going to take place on the following day. But what was I exactly looking for?
Well, I was on a mission to challenge myself and take my 15-year IT procurement experience to another level. For over a decade, I had always been facing the same challenge: lengthy sourcing processes (request for proposals or RFP's, that is), poor alignment with project teams and, occasionally, conflicts with the vendors around the signed contracts.
There was a permanent debate between us, buyers, who demand that our IT colleagues wrote down 100% of their requirements as a condition to send out an RFP. My colleagues, on the other hand, needed a fast sourcing or procurement process, seeing it as necessary pain. Something was structurally wrong and it was high time we changed our ways. This is where I had decided to embrace Lean Agile Procurement.
What is Lean Agile Procurement?
"I took a speed-reading course and read War and Peace in twenty minutes. It involves Russia.” - Woody Allen.
As Woody says it, Lean Agile Procurement is difficult to put in a nutshell.
It is an Agile procurement or sourcing framework that allows businesses to find solutions for complex and/or strategic IT projects; complex as in "we don't know what our customers want exactly and there isn't an off-the-shelf piece of software for that".
What it takes is a clear vision and part of the required features. More importantly, Lean Agile Procurement vows to reduce the time it takes to search, find and select the most appropriate vendor for a project. It claims to do so in days or weeks instead of months. And that's bold!
Lean Agile Procurement basically merges the RFI (request for information), RFP and contracting processes in a couple of daily workshops with the vendors. It invites people on either side of the negotiation table to fully cooperate by being transparent, focused and bringing the right people around. Last, the canvas is Lean Agile Procurement's keystone.
The framework is heralded by the folks at Flowdays. Mirko Kleiner tirelessly preaches all over the world. Interestingly Mirko doesn't have a buyer profile at all.
Complex projects have the following features: Those who sponsor them take strong commitments vis-a-vis the top management who, in turn, take commitments with the market and customers. Additionally innovation is the bottom line. So there is a huge constraint and expectation in marketing the right output the sooner the better. If either the deadline is missed or the deliverable is of poor quality, your competitor will move ahead and the organization will be left behind dealing with project cost overrunning, litigation with vendors and more stress on extended project team members to fix things.
Lean Agile Procurement promises to satisfactorily address the issue. Yet, to paraphrase the definition of Scrum: Lean Agile Procurement is simple to understand and difficult to master.
What Lean Agile Procurement is not or can't do
Lean Agile Procurement is not a miraculous therapy for dandruff, stinky armpits and smelly feet.
It isn't advisable if the product or service you are looking for is neither complex nor strategic. On the contrary, using it for everything will be counter-productive for your organization.
It can't be the last resort to hastily shortcut procurement processes for ill-thought projects.
It takes a huge toll on your workload; meaning that all other topics will have to be postponed until the process is done. Believe me when it is, all other topics will pop up again and hit you hard.
If Agile values and principles are neither fully understood nor shared nor trusted, don't go for it. You will end up perverting the system and cutting corners.
So now, how did we do for our first project?
Finding candidate projects
Once I have received my Lean Agile Procurement certificate, I was full of hope and eager to implement the method as soon as possible. I quickly identified a first project in the same month. Of course, the project team was in a hurry and they asked me to advise on the best sourcing approach. I gave them the choice between the classical RFP and the experimental Lean Agile Procurement. They shrugged off the latter and eventually opted to stick to the standard process. Eventually, 8 months later, the RFP was dropped. What a disappointment.
Later in October 2018, a colleague asked to brief him about the standard procurement process and lead times for a strategic project. I told him to start filling the Request for Information (RFI) template documents with his requirements. I also warned him that it may take up to 6 months to have a contract ready for signature. He shared my warnings to the project team members. One of them called me back asking me if there was a way to make it in 2 months because they had to select a vendor by end of December.
So I took a poker face and told her quietly that I had a solution. The only trade-off I requested was everybody's full availability and dedication during those 2 months. And it worked.
From my initial procurement plan…
Initially my plan was:
Send out a concise RFI with our vision, a description of our project, what we are looking for with a handful of requirements and leave the vendors 2 weeks to reply.
Analyze the answers and shortlist vendors for the workshops.
Invite the shortlisted vendors to come and attend a 1st workshop and share their questions with us and their competitors.
Prepare the Lean Agile Procurement canvas in order to share it with the vendors during the 2nd and 3rd workshops.
Invite all shortlisted vendors to come and attend a 2nd workshop and start collaborating using the canvas as the guidelines for the negotiations. The draft of contract would also be filled in. At the end of the day, we would share our feedbacks with the vendors and shortlist a few (i.e. 1 or 2) for the 3rd workshop.
Invite the shortlisted vendors to come and attend a 3rd and last iteration of the workshops. Again feedbacks to the vendors right at the end of the sessions.
Submit our vendor recommendation to the steering committee and confirm the award to the selected vendor.
Sign the contract and kick the project off.
… to our final procurement plan.
This is what we eventually did:
We wrote a 6-page RFI. The project team felt more comfortable with annexing a spreadsheets that contains requirements such as a fair list of features, a high level project, technical, operations, legal, commercial, ethics and vendor due diligence (i.e. financial risk assessment).
We elaborated an RFI balanced score card for the requirements we have listed. The format I have suggested has been discarded in favour of an old one everyone else was comfortable with.
We invited all vendors to attend the 1st workshop. However we didn't anticipate that vendors wouldn't speak their minds as they were surprised to find each other in the same meeting room!
Broadcasting the Lean Agile Procurement canvas received a lukewarm welcome among the team. In other words, nobody wanted to leave it in the clear. So we used the RFI score card structure as the guideline for our negotiations.
We held one workshop per vendor. The project team thought it was disrespectful to vendors to have them all in the same session and do a beauty contest. This was obviously more exhausting: Instead of one day with all vendors, it was a full week of 4-hour workshop with each. Also our legal team didn't wish to participate leaving the contracting as the last step of the process. As I expected it, this added another two intense weeks after the December deadline.
The last workshop worked well but was equally demanding.
There were a few requests from the steering committee that led to an extra-negotiation over the phone and via e-mails with the selected vendor. I expected this so no specific issue there.
The contract negotiations added some delay but it was great to see that those who participated to the workshops earlier on either side were perfectly aligned. So two weeks to close a contract in a fair constructive way wasn't bad at all.
The check list for success
Here are my recommendations for a successful Lean Agile Procurement:
Ensure people are available and focused during the workshops. This is a strong prerequisite. This entails everybody to be in the same place and participate (no multitasking).
Prepare sufficient training and communication for the people who will be involved.
An reciprocal non-disclosure agreement (NDA) is compulsory as usual. Your organization must have a template available. Note that a vendor that is too picky at NDA stage must be discarded. It is usually a bad sign.
Keep your RFI content concise. 5 pages are recommended. Sentences must be clear and short. Avoid unnecessary (procurement and legal) jargon.
The canvas is a must. It is difficult to draft if your mind is unclear. If you can't fill then you are neither ready to share your vision and objective nor ready to engage in a transparent and constructive conversation with the vendors. All your organization project documents must serve as annexes to the canvas.
People (including all vendors) must be in the same room. Forget concerns about a vendor stealing new features from their competitors and releasing it fully-tested by the time the RFP is awarded. It is very unlikely to happen.
The sponsors must participate to the workshops. They can't just be the "second negotiation table behind the scene" acting like the hidden puppet masters of the negotiations.
Brief your project team members that they have to be very demanding with the vendors. Similarly, prepare them to be equally put on the grill by the vendors. Gone are the days where the mighty client knows it all and the vendor just executes.
Still, it is acceptable not to have all vendors attending the same workshops. Keep in mind that this is more exhausting and vendors will attempt to regain control over the process by playing the game they know (i.e. the sales rep running the show and the other guys remaining silent for 4 hours).
A 4-hour long demo is the best basis for the workshop interactions. So request your vendor to come ready. The canvas will be filled in by the buyer and the sales person.
The inputs of the workshops must immediately fill the annexes of the future contract. So again, have the contractual structure ready and shared. Leave the main body of the contract to the lawyers though.
Lessons learnt and achievements
Lesson #1: Don't assume that those who blame lengthy procurement processes are ready to change them and adhere to Lean Agile Procurement.
Lesson #2: Use the project's time constraint as an advantage to market the Lean Agile Procurement method internally.
Lesson #3: Keep in mind that anything in Agile can adapt and improve. So procurement dogma don't always apply here.
Lesson #4: Vendors are wary of their competitors. You have to factor that in when explaining the process and the project. Keep reminding them what the process is good for.
In just one attempt, we managed to reduce to procurement lead time from 6+ months to 4 months. 1 cumulated month was sufficient for all workshops and contract negotiations. Also, Lean Agile Procurement has demonstrated that the Procurement department is a trusted partner for ambitious projects. To my surprise, we received very positive feedbacks from both sponsors and… vendors. And the word is spreading around faster than expected.
Conclusion
I reckon I did find what I was looking for when I attended the Lean Agile Procurement training on a snowy day in Switzerland. So I will keep pushing. You might try it too.
For more information about Lean Agile Procurement, get in touch with Flowdays (https://flowdays.net/en/home) (https://www.lean-agile-procurement.com/#home/comparison).
From more information about Scrum (an Agile framework), read the Scrum guide (https://www.scrumguides.org/docs/scrumguide/v2017/2017-Scrum-Guide-US.pdf)
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Original source of the blog post:
https://www.linkedin.com/pulse/rolling-out-lean-agile-procurement-retrospective-randriamananjara/
