Before we begin our new podcast series on managing supplier relationships, Amit Kapoor explores what a client-side team is and what makes them so important to any complex transformation programme.
We also look at how you go about building one, as well as what commercial models can be used for engaging client-side teams.
What is The Commercial Matters Podcast?
Commercial Matters is a podcast for leaders of major transformation programmes looking to confidently tackle niggling supplier relationship issues in their IT programmes.
The podcast is hosted by Amit Kapoor who is a commercial consultant on major transformation programmes across a range of sectors in the UK.
Join us every Monday for a new episode of the Commercial Matters Podcast.
Useful Resources and Links
Pricing Models Blog (in which we discuss fixed pricing and T&M in more detail)
What To Do Next
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If you have any questions about this episode or you want us to cover something new, then contact us on firstname.lastname@example.org.
Check out the final episode of our series on IT disputes IT Disputes – Different IT Dispute Specialists where Amit Kapoor looks at the 3 types of dispute professionals you are likely to come across.
Here is the full transcript from the podcast episode.
What is a client-side team?
The easiest way to think about a client-side team is to imagine a complex transformation programme. Let’s say a programme that is being set up to implement a cloud ERP system. In such a programme you would typically have Oracle being engaged in the capacity of the software product provider. Moreover, you would also appoint a systems integrator (someone like Fujitsu or IBM) who is responsible for configuring the software product towards the needs of the end-client organisation.
What you would typically find is if you just put the software product provider and systems integrator together, you still do not complete all of the activities you need for the completion of the programme. Although these vendors will take certain actions and complete them, for the success of the programme – and for you as the client to derive business benefits from the programme – you need to take further action which is more aligned with realising and implementing business change across your business.
It’s those kinds of activities that sit with the client-side team. In the scenario I just mentioned, I spoke about a minimalistic client-side team where everything else is being done by the systems integrator and you are happy to trust the systems integrator to complete the programme.
However, there are also varying models where there is a much stronger and broader client-side team that’s built up. This includes people like functional consultants, technical consultants and technical/solution architects. Essentially you are making sure the supplier isn’t marking their own homework and everything they deliver to you is checked by some people who are working on your side in the programme before it’s treated as the final deliverable that you’ll be going live with.
What is the size of a client-side team?
The number of people in a client-side team can vary significantly. We’ve seen programmes that were probably worth over £50 million in costs having 50-strong client-side teams. Alternatively, we’ve also seen programmes that value having a much leaner client-side team, with a lot more delegation to system integrators and software product providers involved in the programme.
What makes a client-side team important?
There are 3 reasons why client-side teams are so important to complex digital transformation programmes.
1) Keep your suppliers honest
It is important to understand the suppliers that you are engaging when you launch into significant complex programmes. For example, tech giants such as Accenture, IBM and Oracle have objectives of their own that from time to time may or may not align with your objectives as an end-client. Your objectives on a complex transformation programme might be about achieving business benefits. However, the objective of the tech giants might be to do as much or as little as possible that allows them to get paid for the scope that they signed up to.
Consequently, when things get heated compromises have to be made. Sure, you can counter bad supplier behaviour with good commercial management, but commercial management is not a panacea. A client-side team keeps your side of the bargain fulfilled at all times. This means if you are a client that has signed up to do X things in order for the supplier to then do Y things, a client-side team ensures X things are done by the promised dates so that the supplier can get on with their ensuing actions.
2) Keeping on top of assumptions and dependencies
Secondly, because these large system integrators are typically very profit-oriented, any proposal that they make for you will always be caveated with a list of what they call assumptions and dependencies. These are things that they sign up not to do and would expect you as the client to do. Someone has to do that with a lot of rigour and keeping to the programme’s timescales, and that is the sort of thing that fits in the scope of your client-side team.
3) Fulfil activities that are required in any complex transformation programme
Lastly, very often any complex transformation programme will require a very high level of stakeholder alignment in your organisation as well as a very high level of business change. Even if you get a SI who decides to keep their assumptions and dependencies section of the contract very lean, in that they take up a lot of the responsibilities, it is highly unlikely that they will be taking up your willingness or ability to take up the new system.
There will always be some level of aptitude and willingness that will be required of you as the client to make the programme a success. That is again something that fits into the scope of activities that a client-side team would do because they act as the eyes and ears of the business.
They consult with the business end-users at every stage of the programme, make sure their voices are heard and reflected in the development of the system and then also make sure that the end-users are again involved in the testing of the solution. Therefore, without a client-side team, you can’t fulfil those activities which are inevitably required in any complex transformation programme.
How do you build a client-side team?
There are two approaches you can take to build a client-side team.
Approach 1 – Trial and error
The first approach is the most common way clients go about building a client-side team. Firstly, the programme sponsor usually appoints a programme director and a programme manager. The inception team then check for redeployment pools or to check for people who get along well with the initiating team, and then that team gradually starts building up with in-house resources.
However, it is then discovered that a number of roles can’t be filled internally, so an attempt is made to go out to the external market. More often than not, the decision to externally hire a resource is made after a failed attempt to hire that role internally. Subsequently, this means you are getting people in roles much later than you would like because you are having to experience failure and then go out to the market to get someone for the role.
Approach 2 – Managed Service Provider
The alternative is to look at a managed service provider very early on in the programme, who is responsible for sourcing any external hires that you need through the course of the programme. The reason we recommend using a managed service provider is that programmes are really mini-organisations and when you are in a programme you are signing up to very fast-paced obligations that your programme needs doing.
In reality, you don’t really have the option of having two rounds of hiring. Failing to hire internally and then having to hire externally, inevitably means that you will delay the programme. You really want a fast-paced talent highway where you can get the people you need as and when you want them – with little lead time. That is exactly what a managed service provider option will offer you.
Furthermore, one of the advantages of MSPs that can quite easily be overlooked is the fact that when you have a resource partner work with you very closely then it allows you to test out scenarios of resource planning for any search requirements. Using an MSP does make a lot more operational sense than trying to rely on your organisation’s internal processes for contingent labour hiring.
Head over to our blog article Which Route to Market Should You Take? | Marketplaces vs DOS to find out more about the advantages of using a managed service provider.
How can you engage a client-side team?
If you were going through your own internal contingent labour model you are very likely to be entering into specific contractor contracts with individual workers and they would be paid daily. However, when you have a managed service provider appointed you have the option of doing a fixed-price contract, or a contract that is Statement of Work oriented, for example, where the supplier is paid on milestones.
Does that model make commercial sense?
One thing I’ve learned being a procurement and commercial manager for over 12 years is that most people in my peer group would prefer to be making fixed-price contracts with their suppliers as it considered the gold standard of contracting. This is because when you agree on a fixed price it means you have some certainty of scope and some predictability of cost, so it feels like you’ve done a good job; and you haven’t just opened a chequebook for the supplier.
Nevertheless, in my experience, client-side teams are best managed on a T&M (time and materials) basis, wherein you don’t have specific fixed milestones against activities. Even if you do then you have enough flex built into that model with some level of acceptance that there might be a need to increase the budget of that fixed price.
You can find out more about fixed price and T&M in our blog, 3 Pricing Models You Can Use to Pay Your Contactor (And When to Use Them).
What is the reason for that?
One of the problems of fixed-price is once you sign up to a fixed-price you do get an illusion of price certainty. However, from a supplier’s perspective they’re always monitoring the scope and price, so keeping that integrity between scope and price is extremely important to them.
It’s not that commercially sensible for them to be agreeing to extend the scope without an increase in price because what if they then had to incur a delay as they experienced unknowns and at that time you wouldn’t be kind enough to give them the benefit of further commercial cover.
Much of the friction that happens between suppliers and buyers on any programme is after a delay is incurred where a supplier wants to be recompensed for the time or profits that they lost, versus the buyer who tries to assert the contract and say that the price was agreed, so we’re not waiving it.
Now, you can do that with some suppliers in a programme, but you can’t do it with all. This is because you do need some kind of a team that acts as a catch-all. For example, if you had a systems integrator who was refusing to do a certain number of reports because they believed they weren’t in scope, but you believed they are in scope, what do you do then, when things aren’t moving? Aside from the fact that you could litigate against a supplier and invoke a dispute resolution process, operationally you have very limited options.
What is the solution?
However, if you have a client-side team that could act as building up those reports then you have a viable alternative on the ground in that supplier acting in that intransigent manner. To be able to commission that sort of work to your client-side team you do need the client-side team to be working on a more flexible contract than a fixed price contract. Therefore, you do need to have some people in your programme working on a T&M basis so that you flex any scope overruns, cost overruns, or scope disputes with the suppliers.
Download our Programme Staffing Playbook for evidence and strategies to get the rest of your organisation to buy in to your concept of having a managed service provider for a programme.
Next week we will start our new podcast series which will focus on how you manage supplier relationships across an IT programmes lifecycle.