Bi-modal delivery of value-generating services

Di Sergii Dovgalenko

Articolo estratto da Tecnologie e nuove competenze – The Procurement Magazine, Anno 6 N°1

 Sergii Dovgalenko

Sergii Dovgalenko,
Chief Procurement Officer in JSC “Ukrainian Railways”


Megatrend – powerful macro-economic and geopolitical forces of the likes of emerging technologies, globalization, and changing demographics – initiated the tectonic shift to Industry 4.0 enabled by always-connected data-hungry computer systems.

Likewise, our fellow IT departments transformed their operating model, so they are becoming T&I – Technology and Innovation. This abbreviation represents the new paradigm of Bimodal IT – well-planned reliable quality core systems and processes and agile empirical business-centric innovations.

IT procurement, as we know it, ceased to exist – it became “technology” or “digital” procurement, which no longer sources commodities for IT departments – it delivers value-generating services for the business. Our requestors are omnipresent – marketing department needs the campaign efficiency metering, HR people want online timesheets, CEO office require the virtual Board of Directors portal. All of them will sponsor and operate these cloud apps or web portals, which need to be delivered to them seamlessly “as-a-service”. T&I (still remember what is that?) need both Platinum support and maintenance for the ERP platform and “no clue” app development hackathon – this means that procurement must be equally bimodal and exercise agile or boiler plate approach depending on the nature of a requirement.

ITIL Service Lifecycle fits the technology procurement perfectly, as it represents the path of evolution of a business requirement into a service strategy, then design, implementation (transition), and operation. Procurement need to operate the similar logic and map the strategic sourcing process to the ITIL Service Lifecycle. The result of procurement efforts is not a contract – it is the value delivered to the business and consumers. The longer it takes the value to reach its recipients, the less effective is the procurement work. This leads us to the notion of agility – the sustainable shortest lead time between the business requirement formulation and benefits realization.

Indeed, we need to be capable of supporting both agile and waterfall processes. However, our mentality should always be agile – streamlined, flexible, less obsessed with governance and do- cumentation, and more – with value, performance, and collaboration. It must reside on trust to suppliers and support of end users. In this respect, agile is rather an adjective explaining the new procurement mindset.

There are multiple factors of resistance to agility – top-down long-term business planning, “big bucket” budgeting, wa- terfall PMO, rigid corporate governance, hierarchical siloed operational model. Even the way we apply the strategic sourcing is sometimes reactive, sequential, with excessive controls, and overwhelming documentation. Nevertheless, our existing processes already contain means to agility, and you do not need to wait for the corporate big-bang change management program to run your first sprints. Try to apply agile methodology to the very process of becoming agile – create a vision, specify a roadmap, identify an MVP – the best level of agility you can reach without dramatic changes to corporate frameworks – and start reaching there increment-by-increment.

For example, our strategic planning could be the incremental one based on a backlog of strategic initiatives/milestones with frequent periodic process checks and refinement of the vision with the implementation of each new initiative. Our project budgets could be allocated as seed funding (per couple of sprints until a prototype or an MVP and then the next tranche). Agile governance need to be exercised by delivery teams, who should decide on the empirical performance metrics they will use and self-monitor. The standardized management reporting (if required) becomes the part of the delivery of each sprint. Scope of Work should be replaced with the Statement of Objectives with the product vision. The supplier selection process should be streamlined and favoring competitive prototyping. The 4th industrial revolution requires technology procurement 4.0 that is agile, supportive, customer-centric, and value-driven. The entire paradigm is shifting from the governance and cost cutting to the value generation, speed of execution, and partnership with the business and suppliers. Therefore, procurement integrates with the business to share common values and achieve joint results.

Currently, procurement is in the crossroads of possible evolutionary directions, and if we do not choose the right path, our profession may become extinct. The business is unforgiving to rudimentary functions and equipped with diverse tools to divest of those – outsourcing, automation, and decentralization will take their toll from those who stuck in the past. Therefore, being bimodal, flexible, and valuable is not a nice-to-have option – it is a survival kit.