© CGI Group Inc.

how to reduce the inherent uncertainty of contracts … André van der Wiel Contracting Director

Nesma Autumn Conference 2017

“IT Contracts are inherent uncertain and we are constantly in search of means to reduce this uncertainty during the contract lifecycle.

In this session we will explore where we should use metrics or where to avoid them in order to build

a sustainable and successful contract…”

Yardstick /’ja:dstik/ Noun, a measuring rod a yard long, typically divided in inches, standard used for comparison

Agenda Goals and pitfalls of metrics in contracting… •  IT contracts

•  Functional division •  Construction •  Confounders •  Come together…

3

IT contracts…

System Integration Design, build and integrate Application Services

Maintain IT software

“DBOF” Design, Build, Operate & Finance

IT Outsourcing Activities, Assets & people & delivering services

System Integration Functional design | Use case | “lift and shift” estimates: SBS/WBS & estimate based on metrics

waterfall | Agile

Fixed Price, fixed Date | T/M | (Metrics?)

“Repeat factory with mature client and stable environment” (trust)

Percentage of Completion | # sprints | quality of work

5

largely at supplier, Fixed Price & date, (non functionals) over & under estimation

Scope

Execution

Type/ obligation

Metrics

Progress

Risk

Application Services based on client data & due diligence results Metrics based or historical data, SBS/WBS

functional (ITIL) to Devops/Agile

fixed price | Pay per use | Metrics (FP) | KPI Bonus/malus

after calibration (SLO), full metrics, e.g. quality of code, efficiency gain, maintainability

Catalog / SLA / KPI | backlog

6

Due diligence and SLO/SLA calibration, bonus/malus

Scope

Execution

Type/ obligation

Metrics

Progress

Risk

“Design, Build, Operate, Finance” business case… High level of design Metrics (“Factory driven”)

Build : waterfall | Agile run : functional to DevOps | SLA / KPI

Fixed Price fixed Date | pay per use | bonus/malus

Full metrics, e.g. quality of code, efficiency gain, maintainability

Build : PoC | # sprints, backlog | metrics run : busines case > Catalog/SLA /KPI

7

Business case driven and high integration with customer, pay per use

Scope

Execution

Type/ obligation

Metrics

Progress

Risk

IT Outsourcing based on client (historical) data & due diligence results Metrics based (parameter driven), SBS/WBS

functional (ITIL) to Devops/Agile

fixed price | Metrics o.a. FP | Pay per use Bonus/malus

Full Metrics, e.g. quality of code, efficiency gain, maintainability …

Catalog / SLA / KPI | Metrics

8

organisation, transition, transformation, efficiency gain, Due diligence, SLO calibration, bonus/malus

Scope

Execution

Type/ obligation

Metrics

Progress

Risk

… and its “confounders”

Agile DevOps Velocity

Roles and responsibilities

Technologies Quality of output Maturity of client

Number of incidents

Application Portfolio Management Flexibility

Guarantees

ITAM

Reporting Mixed teams

Business Value

Automation On/Off/Nearshoring

Charging model

Delivery model

Commercial Legal

… and its “confounders”

T&M capacity

Project; Agile

Project: Waterfall

Service; Price per FP

Service; Price per sprint

DevOps Capacity

Service; DevOps team(s)

Agile capacity

Complexity / maturity

Out

put b

ased

/ ad

ded

valu

e hi

gh

low

high low

Automatically calculated FPs

Estimation

Repeating activities automation

Pro Action Application Mgmt

Customer maturity

Function Point implementation

Agile Architecture (RCDA)

Product Owner maturity

Quality of code

Heterogeneous high maturity models drive complexity (price/value) in contracting. Metrics should be part of the solution

Service; Price per SLA

Disputes occur in many IT projects and Services, most agreements anticipate with escalation and arbitration … Often disputed topics: •  Scope : increase of complexity, partial termination •  Quality of work : such as quality of code, security, maintainability etc. •  Due Diligence : clearing assumptions during tender process.

Contractual disputes And solving them amicably

System Integration Design, build and integrate Maintain IT Systems

Maintain IT software and hardware

“DBOF” Design, Build, Operate & Finance

IT Outsourcing Activities, Assets & people & delivering services

metrics application… •  Initial build metric estimation in

SI is riskfull. (heterogeneous environments & system)

•  Metrics and calibration adds value to IT contracts

Come together… Metrics & Contracting

•  Open standards verifiable by independent third parties •  New models for contracting DevOps and heterogeneous solutions •  Absolute measures versus relative •  Standardize “historic data” … controlled shared database? •  Help the business owners where & how

to apply Metrics in contracting