Advising On Flexible, Collaborative and Innovative Contracts and Ways of Working To Get The Best From Digital Ecosystem

Wednesday 08 May, 2019

The client, a global utility company, were looking to position themselves within the market as a digital leader. To do so, they needed to differentiate themselves within a highly competitive sector by providing unique customer experiences.

The client's main challenge was that their ‘as is’ digital capabilities were struggling to deliver their vision in a sustainable manner. Although the client's digital delivery model included some internal digital capability, they were heavily reliant on their relationship with single Tier 1 supplier under an ageing contract shaped and executed such that: 

• almost all digital projects were delivered using a time and materials commercial model;

• fragmented demand management impaired the ability to accurately forecast costs;

• lack of effective competition meant the incumbent was not routinely challenged on price;

• performance was, at best opaque and not adequately addressed by SLAs;

• as a result, it was a challenge to deliver products to the market competitively; and

• meanwhile, the risk profile was severely skewed in favour of the Supplier

• a network of supplier relationships and ‘comfort’ with the status quo created inertia in the business when change was mooted.

Addressing these challenges and creating enhancements beyond were essential to set the client on the right path to realise their digital ambition.


Approach

Coeus conducted a digital maturity assessment to gauge gaps in the client’s digital and Agile capabilities as well as their operating model. Working with the client’s digital and procurement teams, we defined the client’s short-term and long-term digital vision and needs.

We developed a set of digital requirements to engage and assess potential suppliers using a highly collaborative and iterative sourcing process. The sourcing approach took advantage of rapid negotiation techniques resulting in the agreement in principle of suppliers within a highly accelerated timeframe.

In parallel, Coeus set out the foundations of a collaborative and sustainable digital operating model, which was then further developed once the suppliers had been selected to identify and adopt best practice.

During each stage of the sourcing process, the suppliers’ solutions and commercials were tested against the agreed target state and validated with senior stake holders. Throughout the process, Coeus continuously evolved the target state, based on ongoing inputs from business and innovation brought by suppliers in the process.

Subsequently Coeus has worked with the client and suppliers to further refine the digital operating model ensuring it fulfills the client’s ideation to delivery philosophy. This approach built in lean principles and applied flexible Agile delivery methods throughout.

Results

The digital operating model Coeus developed is a ground-breaking approach appropriate for medium to large scale organisations grappling with the challenge of how to get and demonstrate best value from their Agile/DevOps initiatives. It establishes a flexible contract and ways of working to get high levels of collaboration and innovation from the supplier eco-system.

The benefits delivered include:

• A pioneering digital framework agreement developed with Agile principles in mind;
• A range of commercial models from time and materials through to outcome based;
• A collaborative environment where innovation is rewarded;
• A modular agreement with common core terms and plug and play elements appropriate to each assignment enabling rapid contracting and mobilisation;
• The introduction of two new very capable digital partners;
• A set of Agile focused performance measures;
• A lean, Agile process for engaging the digital partners, including a rapid micro -tender process;
• 25% reduction in cost and time to deliver;
• Knowledge transfer to enhance the client’s internal Agile digital capability;
• A clear agreement maturity path; and
• A company-wide process for capturing and channelling new demand appropriate for the digital operating model through the process.

Coeus involvement has laid a firm foundation upon which the client’s digital ambition can be realised. We continue to support them in this ground-breaking initiative.

Read more about our Sourcing Capabilities here.