Structuring your Organization for a High Percentage of Contractors

Todays technology organizations are under increasing pressure to delivery data, functionality and innovations to support corporate objectives. These objectives are increasingly demanding due to competitive market conditions, as well as a growing maturity and awareness across business teams of how and where technology can enable corporate objectives.

IT organizations will often look outside to third parties to add skills, capacity or existing technology to accelerate roadmaps or de-risk project delivery. This capacity will often take the form of individuals with highly specialized skills, or massive teams that can swarm to tackle a problem overnight, much faster than the organization could effectively scale their own team.

Leveraging external capabilities to augment internal IT teams can bring a variety of positive impacts:

• Capitalization?- Many organizations look to external firms to provide turn-key solutions, engineered for the specific needs of a business allowing for simplified capitalization of the work. While other methods can allow for capitalization, this is an effective method to separate new development from maintenance activities for accounting.
• Flexibility?- To obtain flexibility from unpredictable budgets, organizations will look to external teams to augment delivery and focus on specific point projects that can be completed in pre-determined periods of time. This flexibility extends a perceived ability to swarm on focus areas or restructure teams as priorities change.
• Specialty Skills?- Some organizational initiatives require highly specialized skills, the types that do not make financial-sense to hire long term, but rather bring in to affect change rapidly on a specific problem domain or corporate initiative.

While external resources provide flexibility, when not managed and structured properly, risk can be brought though:

• Churn?- The risk of loosing key team members increases if they are contracted through third parties. People can leave for different opportunities, benefits or leadership. All of which are outside of your primary control because they are employed by a third-party, managed by leaders outside your organization.
• Loss of expertise?- Many organizations have over-relied on third-party resources for extended periods of time, creating situations where consultants have more experience than their employee counterparts. The threat of organizational brain-drain is amplified when these individuals leave or move on to other projects.
• Delegated decision making?- Many third-party and consulting agreements spell out the work to be delivered, but not the process to make decisions. This introduces risk that prioritization, architectural, operational or integration decisions will be made with the short term needs of the project in mind, and not the long term organizational direction.
• Trusting others’ hiring decisions?- While the purpose of hiring third parties is to grow the team, many consulting led organizations will hire very rapidly with a different hiring standard than you might with your own team. This introduces risks of organizational chaos or low quality work to a project and should be managed through diligent standards for team structure, work management and outcome measurement.
• Mercenaries, not missionaries?- While project-based teams can delivery large quantities of work in short periods of time, they will be hired for that project and not as ambassadors of your product and organization. Decisions will be short term, decisions will be rushed and communication will be project focused, not mission-enabling.

Successful use of third-party resources is about proper planning, work structure, accountability and measurement of outcomes. Execution is a joint effort with the consulting firms, but the structure of them is the responsibility of the executive that brought the team into the organization and is accountable for their work products. This structure must be in place before executing on work with third parties to ensure that accountability is defined and measures understood before beginning work that can be difficult to change at later stages of execution.

• Oversight?- Clear structures must be defined before executing on work involving third parties for how outcomes will be measured, reviewed, accepted and updated to address feedback. This strong project hygiene is key to ensuring regular visibility by stakeholders and interested parties that are dependent on the quality of their produced capabilities and adherence to schedule commitments.
• Systems & Technical Design?- Before embarking on third-party developed applications, projects or solutions your organization should ensure strong design patterns are established for how systems communicate, how systems are operated, what technologies are available for consumption and how components should be decomposed for later integration or replacement. This ensures that third parties have clear guidance for how they can consume existing services, where they must build new and how those integrations are expected to operate. The goal should be to avoid Conway’s Law?from being realized.
• Planning & Prioritization?- Leveraging third-party teams for projects is not as simple as “are we going to be waterfall or agile”. The answer will lie in the middle - We must ensure a long term goal is not lost and that the team is aligning key decisions and prioritization around that goal. But we must regularly be checking in on progress, adjusting work to address emerging risks and eliminating roadblocks as soon as they are identified to ensure the team can execute at full velocity. Key project elements including roadmaps, risk maps, project financials and feature prioritization should be reviewed and kept up to date.
• Decisions?- As part of kicking off any third-party work, a set of standards should be set for how decisions are discussed, decided by named individuals, documented, and disseminated. This becomes the running record of the project including the key players and decisions to ensure the entire team is aware and executing uniformly. This facilitates later staffing changes as well as project transitions if necessary.
• Documentation?- In addition to decisions, other key documentation should be produced along the journey of the project and shared with key employees that will take on accountability when the third-party is complete and has moved on. These key employees should be provided time to define what elements the documentation contains, review it for completeness and allow for discussion with the third-party engineering teams to provide clarity where needed.
• Delegation?- Delegation of authority is common in large organizations, when third-parties are involved it becomes especially critical to ensure delegation of authority is deliberate and communicated broadly. This ensures that accountability for key decisions and awareness is well understood, and team members can move quickly on work within their swim-lane and area of responsibility. The third-party teams must have a clear single point of contact, that is available at a moments notice to address challenges without delaying the project or leaving team members idle.

Some key take aways from personal experience and the above list to ensure success:

• As a leader, if you are leveraging third-party teams for executing on engineering or other technical work, focus your employee hires on those that provide the most leverage and oversight. These are commonly Project Managers, SREs, and Architects to ensure the above framework for decisions, architectural patterns and project governance are managed by experienced employees, specifically missionaries for your organization.
• Be deliberate about off-shore teams and the impact the timezone offset will have. Work can be done effectively off-shore, but it must be work that is highly decomposable and clear in definition. Generally speaking, the more direct collaboration is needed between your employees and the third-party, the less likely an off-shore team will be effective.
• Manage the number of third-parties you use for development, integration, operations and other technology and product development. One is often not the right answer as a single vendor will lack diversity in capability, and more then five becomes very difficult from a vendor management perspective and risks overlapping third parties working on adjacent work without the right employee buffer. The right answer varies by an organizations capacity to manage parallel work tracks.
• Focusing on outcomes and leveraging third-parties that see success in the same way lower risk and ensures alignment of goals and methods should projects go off the rails. A vendor that takes on some risk with fixed-price, fixed-scope projects means they put some skin in the game, but also means a higher level of clarity is required from your team on objectives and feature definition.
• More communication is better. Start with lots of touch points between the third-party, your team of leaders and the necessary subject matter experts. This ensures the vendor has access to all the folks that will be needed for a successful project. While folks will be reluctant due to their own workloads, it is always easier to back off the touch-points once a cadence has been established than recovering from slips and project delays.

In most organizations, a magical acceleration of work is rare just because the team size is increased, especially when the growth in capacity comes from third parties or contractors. With proper organizational structure the risk of adding third parties can be managed and their work structured in a way to maximize the ability for success. Deliberate structures for decision making, architectural patterns and planning is key to ensuring third parties can help scale your organization and your ability to deliver value for business partners.