In 1948, Claude Shannon, the father of Information Theory, introduced a concept that changed the world: Entropy. In simple terms, entropy is the measure of uncertainty or “noise” in a message. The more noise there is, the harder it is for the receiver to understand the signal.
In the world of large-scale Digital Transformation, we are currently seeing a spike in Requirement Entropy. Organizations, often guided by traditional consultancies, are issuing RFPs containing upwards of 1,500 “business-outcome focused” user stories. While the intent is to be thorough, this sheer volume of low-fidelity information often has a counter-intuitive effect: It drives the best vendors away.
In a recent engagement for a major housing provider, a procurement for a critical Finance system saw a 75% vendor refusal rate. This wasn’t because the project lacked budget; it was because the “Signal-to-Noise” ratio was too low for quality vendors to manage.
1. The “Signal-to-Noise” Problem
When an RFP consists of 1,000+ stories that focus only on “Outcomes” without defining “Mechanisms,” it creates high entropy. For example, a requirement stating the system should “facilitate the triaging of damp and mould” contains almost zero actionable data for an estimator.
Elite vendors—those who understand the physics of software—look for the “Signal.” They look for Logical Data Models (LDMs) and Sequence Diagrams. They want to see how data moves from A to B. When they encounter 1,000 “wish-list” stories without technical guardrails, they recognize that the cost of “decoding” the requirements is a massive upfront risk. Rather than gambling their reputation and capital, they simply decline to bid.
2. Adverse Selection and the “Risk Premium”
In economics, the “Market for Lemons” describes what happens when a buyer cannot distinguish between a high-quality product and a low-quality one. The high-quality sellers eventually leave the market, leaving only the “lemons.”
A high-entropy RFP inadvertently triggers this “Adverse Selection”:
- The Transparent Vendor: These are the partners you want. They want to give you a fair, fixed price. But because they can’t see the “Hard Logic” (the NFRs, the Idempotency keys, the State Transitions), they cannot estimate accurately. They withdraw to protect their integrity.
- The Opportunistic Vendor: These vendors are comfortable with ambiguity. They know that a vague 1,000-story backlog is a “Change Request” goldmine. They bid low to get through the door, knowing they can capture the true cost of the project later through endless scope re-negotiations.
3. Requirement Archaeology: The Hidden Cost of “Sentiment”
If we dig into a 1,000-story backlog, we often find it isn’t a roadmap—it’s an archaeological record of organizational pain. It contains legacy “wants” mixed with high-level buzzwords like “seamless facilitation.”
While gathering this sentiment is a vital part of the discovery phase, it must be distilled before it hits the market. Software is not a list of wishes; it is a System of Logic. By treating requirements as “stories” rather than “logic,” we ignore the technical dependencies—the Directed Acyclic Graph (DAG)—that actually dictates whether the software will work.
4. Reducing the “Cognitive Load” Tax
Estimating a multi-million-pound project is a massive cognitive task. When an estimator is forced to navigate 1,500 fragmented stories, they hit “Cognitive Overload.” To protect themselves, they apply a “Complexity Tax.” They don’t bid on the work; they bid on the uncertainty. You end up paying more not because your project is uniquely difficult, but because the lack of technical clarity has forced the vendor to “buffer” their quote against the unknown.
5. The Recursive Solution: Technical Stewardship
To attract elite vendors and secure a fair price, we must move from “High-Volume Documentation” to “High-Density Architecture.” Recursive Software helps organizations bridge this gap through Technical Stewardship. We don’t just “gather requirements”; we architect certainty.
- Backlog Consolidation: We condense 1,000+ stories into 10-15 High-Density Work Packages.
- Technical Blueprints: We provide the Logical Data Models and Sequence Diagrams before the tender. We specify the NFRs (Non-Functional Requirements) like Dead Letter Queues and Idempotency so the vendor doesn’t have to guess.
- Signal Restoration: We turn the “Noise” back into a “Signal,” allowing the best vendors in the market to bid with confidence.
Conclusion: Accuracy is the Highest Form of Advocacy
The most “people-focused” thing a transformation leader can do is provide clarity. By restoring technical rigor to the procurement process, we protect the organization’s budget, reduce the stress on the internal team, and ensure that the “Cargo” actually lands.
Recursive Software: We solve the complexity, so you can deliver the outcome.
