Before closing a deal with a new technology provider, one assesses aspects related to the agreement, such as project's cost, deadline, partner's delivery quality, and their market knowledge. However, another item must be considered: contract type. Which one is more advantageous? Open or closed scope? Find out the answer on this article.
Published on 08/19/2021. Translated by Reinaldo Zaruvni.
Before choosing a technology provider, one will probably consider at least four aspects related to the deal: project's cost, deadline, partner's delivery quality, and their market knowledge. However, there is a fifth item which cannot be forgotten: the contract model.
A closed scope contract model defines and describes project's cost, requirements, roles, and other characteristics from the beginning of the development of a digital product. Then, following actions will be managed in a controlled manner so everything goes according to plan.
On the other hand, an open scope contract model still defines and describes project's cost, requirements, roles, and other characteristics from the beginning of the development of a digital product. Nevertheless, those responsible for the following actions will be ready to nimbly take different paths, which will ensure results' achievements in the short, medium and long terms according to what the main goal is.
In other words, while an enterprise builds a solution to address what it needs to with an open scope contract model, a company develops what it thinks to be ideal with a closed scope contract model - and, in the second case, may be deceiving itself. I will tell you why.
Nowadays, we live in a BANI world, a brittle, anxious, non-linear, and incomprehensible environment. This acronym was created by Jamais Cascio, who was an anthropologist and a futurologist, and it translates very well what has been happening to our planet since the beginning of the Covid-19 pandemic.
In a few months, different individuals' and companies' areas were affected by the disease, having varied impact on each field. Relationships, habits, and behaviors completely changed. Many solid structures, as they were known until then, showed themselves as tight and weak ones, leading society to develop new role models.
Therefore, does a closed scope contract model provide dynamism, and flexibility to a company that desires to keep up with the changes in the market and in user behavior?
Let me explain what a scope contract model is, its types, and how each one of them works when we talk about software development. I hope I can help you choose the best technology provider and the best business partner for your situation.
By definition, a scope concerns what a company aims to achieve at the end of a process. Whether related to software development or not, it is common to find two subdivisions of it:
Project scope: more goal-oriented description of a job to which parties dedicate themselves, including specific objectives, deliveries, deadlines, costs, and the like.
Product scope: oriented to functional requirements, it is a set of essential needs of a project's result, such as login screen, and forms, for example.
In short, project scope is "how", and product scope is "what", so starting a project demands these two tools. Now we can go into the details of open, and closed scope contract models.
One must pay attention to at least two main points when thinking about scope contract model:
Level of product' scope description, and of its definition.
Allowed flexibility, and adaptability during project's processes considering both pre-defined, and unforeseen requirements.
It is important to keep in mind that both open, and closed scope contract models do not exist without requirements' definitions and without their descriptions, after all, such a lack of statement results in high risk of ineffective short-term and long-term outcomes. However, this document differs for each one of them.
Together, company, and the technology provider must decide what will be the project's level of definition, which may vary. They also must always look at business' specific demands.
In a closed scope contract model, the level of detail is very high. Requirements are completely described, and they are defined like this as well. Therefore, one gets into each feature's micro aspects, as this action guarantees that any change through the development will be controlled and effective. It takes an investment of long time before a project begins
On the other hand, there is a macro level of detail in an open scope project model. Requirements' descriptions, and their definitions work both as guides to those who are responsible for developing a project and as expectation aligners, leading to successful results. Besides, open scope provides a flexible control of changes, by which one may identify really needed adaptations and apply them. Lastly, as enterprise, and technology provider get a deeper understanding of the market or test a current product, it is possible to modify its development's course.
Companies can count on agility to start projects with such a model, even if it demands constant follow-up - an important tool which enables alignment between interest parties so, at the end, all of them receive what was established by contract with its proper adaptations.
Open scope contract model's essence is reflected by flexibility and the understanding that something may lose its priority when a not foreseen feature takes its place.
None of those two options is the best or the worst one, and choosing open or closed scope contract model is not related to a right or a wrong decision. Both may guarantee benefits to a project according to its needs.
For example, a closed scope contract model can be a perfect alternative to an enterprise which must deal with less complex projects, those which require reduced development time, like a system integration. Such projects usually are well defined, bring few surprises, do not change a lot and face not so many new needs through their processes.
In a way, closed scope decreases chances of going over budget. However, problems, and solutions must be clear in a scope like this. After all, there is no space in it for changes, mistakes, or unforeseen tests - and a company will receive exactly what it hired and defined in a project, no more, no less. Therefore, choose it only when you are absolutely sure of what problem you must solve and of what you need to do.
In its turn, perhaps choosing open scope contract model may make more sense when it comes to more complex projects, those which require long time investment, like a new software development, as it ensures a digital product aligned to market scenario, current user behavior and the like.
That is, it is important to evaluate in detail your demand to make the best decision for your case. Besides, remember that the world renews itself at an insane rate nowadays and that what is a success today may not be great tomorrow. Everything changes, and it should be that way. Thus, software development processes must be flexible for you to reach the best results.
It is possible to achieve a very well-defined goal, in which all parties are aligned, with an open scope contract model. At ateliware, by developing our own software and those to our partners, we have learned that complex projects may benefit more from it. It leads to successful digital products, products in constant evolution, ready to meet the world's needs and its expectations.
Closed scope contract model turns processes too rigid, therefore it does not comply with nowadays tech market's versatility and flexibility, characteristics that guide our actions. We prefer open scope to guarantee delivery quality whether in the short, medium, or long term.
At first, we do understand that working with forecasts may be frightful, but such scope, combined with a proper methodology, will result in successful development.
For example, with it, deliveries come in cycles, as it happens with Agile Methods. Besides, results are measured by development metrics, like CFD, Lead Time, Throughput, and Monte Carlo, which evaluate teams' performances, work rhythm and so on.
Finally, an open scope contract model allows a company to keep up with all software development steps, to add new features to a product, and to change what must not stay the same. Closed scope embraces just what has been conceived at the beginning of a deal.
Those who have no experience with software and digital products development, or those enterprises that are more conservative, may assume that an open scope contract model is riskier. After all, how can they be sure that a certain result will be achieved? Even a supposed "lack of predictability" could be a point of concern. However, when they understand how variables are organized in it, they realize that its advantages are interesting in a short and a long term.
In short, by choosing it, one guarantees flexibility to follow up his or her own business changes, market moves, and user behavior; thus, building a solution which will make sense at any time. Processes will not be kept at a rigid, straight line. They will be adapted through their development journey, because there is an enhanced freedom to change ideas.
With an open scope contract model, it gets easier to build an ideal digital product, which many times will not be exactly as imagined at first, but will still be a unique one, derived from careful tests and broad studies.
Now, if you're still thinking about moving forward with a closed scope contract model, I want to ask you a question: what if the idea you have today evolves over time? Is it worthwhile to freeze your team's work and create another project?
The future is flexible. The universe of innovation and technology is changeable by nature. Choosing not to react to their changes may not be the best option. Am I right?