IT management

IT acquisitions

Our changing world around us

We now live in interesting times. People are now jumping both head and feet into the world of unrelenting change.

Any individual or organisation wanting to survive and even make some serious profit in these difficult times will have to find ways to adapt to this climate (or else develop a new social and economic system of the future).

One possible solution is to acquire IT resources.

Why acquire IT resources?

IT resources have the opportunity to help us:

  1. Adapt to change;
  2. Save time;
  3. Save money; and
  4. Create more money.

How does the acquisition of IT resources help people?

If we look more closely at how IT resources can help people to adapt, save time and money, and possible even make money, we discover that people want:

  1. To organise and find information faster than any manual method such as the filing cabinet;
  2. To automate common tasks so we can free up our time to do something else more creative and interesting (e.g. decision-making);
  3. To speed up the common tasks over a given time period for increased productivity;
  4. To create, manipulate and store new ideas quickly and easily; and
  5. To present results to others in a realistic way, often without affecting the environment.

The aim of this web page

But how does an organisation formally acquire its IT resources? And will the acquisition of an IT resource (i.e. a system) assist the organisation's goals?

These questions will form the basis for our paper as we look at the procedure behind the acquisition of IT resources.

The importance of following a procedure for major IT acquisitions

Acquiring IT resources is not a particularly hard task to perform. All it takes is for you to walk into a computer shop and then walk out with a handful of items (preferably after paying for it), and then bring them into the organisation.

This is acceptable if the cost for purchasing the items is relatively minor. However, for a very large purchase, it is important for you to follow a tried-and-tested procedure when acquiring IT resources.

Why? Because:

  1. There is not an unlimited amount of money available to spend on IT (i.e. a budget will usually be set by the finance section and/or upper management division);
  2. It may help you to more easily obtain the finance you need to purchase the right IT resource by showing that you have followed a certain procedure;
  3. It can help to reduce the time and complexity of finding and choosing the right IT resource;
  4. It can help people affected by the technology acquisition to be prepared and more accepting of the change;
  5. People affected by the change may have their own important requirement to consider;
  6. It makes the installation and application of the technology a smooth and steady one for all concerned;
  7. There are many competitors selling similar IT products and you will need to know which one to go for;
  8. It may be a legislative requirement to follow a procedure (e.g. in the public sector); and
  9. It makes everyone think you know what you are doing.

The IT acquisition procedure

There are eight important steps to follow if reliable and cost effective IT products are to be acquired and people are properly able to the use the products:

  1. Prepare people for change and defining the needs
    Talk to the clients who will use the new IT resource and work out their requirements. If necessary, bring in a consultant.

  2. Gather information on suitable IT products
    This is a preliminary search for suitable IT products available from vendors.

  3. Write a technical specifications paper
    Put together all the client requirements and an estimate of the costs (1) to purchase the IT resource into a coherent report.

  4. Get funding approval
    Deliver the report to the finance department or higher management for funding approval.

  5. Write a Request for Proposal (RFP) document
    Prepare the RFP document in preparation for sending to various vendors.

  6. Send RFP document to vendors
    Deliver the RFP document to vendors to help get a precise price.

  7. Evaluate proposals presented by vendors
    The vendors will send their responses by way of a proposal. As soon as the proposals come in, start evaluating them.

  8. Negotiate the price
    Negotiate on price with your preferred vendor based on the responses you've received, site demonstrations etc.

  9. Purchase the IT resource
    Choose your vendor and purchase the IT resource.

  10. Install the IT resource
    The IT resource is installed within the organisation.

  11. Evaluate and refine the IT resource
    To ensure the IT resource performs exactly to the specifications of your clients, get feedback from the clients and make any refinements deemed necessary.

There are variations on this theme. At Lange Consulting a slightly more detailed procedure was published on their web site at http://www.users.bigpond.com/clange/steps.html as follows:

  1. Identify the requirement.
  2. Prepare a requirement specification.
  3. Identify and rank your selection criteria.
  4. Identify risk factors and prepare costing matrices.
  5. Identify value-for-money factors applicable to the Tender.
  6. Prepare supplier questions related to the selection criteria.
  7. Draft the Tender.
  8. Include advice in the Tender on how suppliers should respond, the selection criteria, and how responses will be evaluated.
  9. Seek sign-off of your Tender by specialist contracts officers.
  10. Prepare and issue invitations to suppliers to respond to the Tender (e.g. by issuing an advertisement).
  11. Ensure the Tender is circulated so that all potential suppliers can discover the opportunity.
  12. Ensure stakeholders are aware of key milestone dates.
  13. Prepare and document your evaluation plan.
  14. Prepare and implement a probity plan.
  15. Prepare APET data base and parameters.
  16. Monitor the progress of the evaluation, ensure sufficient resources are available to conduct the evaluation in a timely manner.
  17. Provide early advice to shortlisted suppliers of presentations or demonstrations.
  18. Provide early advice to reference sites about clarification required on aspects of a supplier's bid.
  19. Recommendation report.
  20. Debrief unsuccessful suppliers.

Well, let us not make things too intractably complicated. We shall focus on the basic "eight-step" procedure and explain in a little more detail what the steps mean.

Prepare people for the change

Suppose you are the manager of a fledgling or well-established business or organisation. What is the first thing you should do when acquiring IT resources?

Do you:

  1. start purchasing any type of IT resource and then hope everyone else will know what to do with it?
  2. want to look like a professional organisation so you go out and buy any fancy looking IT resource to give you that look?
  3. talk to your staff and listen to their concerns before purchasing the IT resources?

Before you can successfully install any new IT resource in an organisation, the first thing you must do is talk to the people who will use the technology.

The aim here is to listen to the concerns of those affected by the change or who will use the technology. If the acquisition of an IT resource is still the only option, then make sure the needs of people are fully understood before purchasing the resource.

Do I need help in acquiring IT resources?

Unless you are a highly experienced IT manager with knowledge of every IT product "under-the-sun", or you are not that terribly hard pressed for time to do some research work on your own, you would be wise to get some assistance from a consultant specialising in IT acquisitions, or talk to your internal IT staff.

A consultant is there to listen to your needs and the needs of your staff and will explain to you all the IT resources available and which one is best suited for you and your staff.

About the consultant

When choosing a consultant, make sure he/she is independent. In other words, the consultant should not be paid by a computer or software company. In that way, you are more likely to receive impartial advice on a whole range of IT-related information.

And if you do hire a consultant, develop your own written contract for the engagement. Otherwise, the contract will be developed by the consultant - and this could be to his/her advantage, not yours.

If a consultant supplies a standard contract, remember that all aspects are negotiable. Strike out sections you don't like and add things you need the consultant to do. And most importantly, make sure there are legal clauses to protect you as well as the consultant during and after the contract period.

NOTE: Never rely on a verbal representation as this cannot be presented in a court of law as evidence in case a disagreement takes place.

Gathering information on suitable IT product(s)

There are two ways you can do this. Firstly, you could do the research work yourself by reading widely and looking at a number of brochures and magazines, and then write down on a rough piece of paper the details of the vendor's name and address followed by the price and features of all suitable IT products.

Or secondly, you could develop a formal document called a technical specifications paper followed by a Request for Proposal (RFP) document in which you carefully write down all the needs that must be met. Then you submit a copy of the original RFP to each qualified vendor. Later, the vendors will come back with their best recommended "solution" (or proposal) for your needs.

This latter approach is the recommended way of gathering information about IT products. It has the benefit of putting vendors in a directly competitive position, which means they will provide you with their most cost-effective "solution". It also has the added benefit of allowing vendors time to provide you with a more custom-designed "solution" to meet your needs especially if you intend to buy in bulk.

The main disadvantage in using RFP is the difficulty in writing all the key requirements and making sure the needs are clearly stated in the document. That is why some organisations prefer to employ a consultant to develop the RFP.

A model structure for developing a RFP document can be found on the Internet, or visit a good library about IT acquisitions for an example.

Know what you need from your IT product(s)

Before choosing your preferred IT product(s), make sure you know exactly what it is you want from the product(s). The last thing you want is to purchase something that looks like it will satisfy your needs now, but discover 6 months later that you should have purchased an inadequate system.

Write down a list of things the IT product(s) (or system) must do within your organisation. And for how long? If it has to last a long time, reliability and quality after-sales support will be a high priority when purchasing the right IT resource.

When writing your list, try to include not just what you need right now, but also any possible future applications for the IT resources. Called this your "Needs and Wish" list.

Who makes the purchases?

You should remember that the money for purchasing IT resources usually does not rest with you, or even the IT department. This is understandable as not all IT purchases go straight to the IT department. There are likely to be people working throughout the organisation who may need certain IT resources.

Final approval for getting the funding to purchase IT resources usually rests with the people in the finance department and/or higher management.

Managing the multivendor environment

Each organisation will have different IT needs resulting in potentially many different printers, computers and software requirements under the one roof. If that is the case, it is likely the organisation must manage different vendors.

This multivendor environment is usually inevitable in a modern business organisation. Hence managing such an environment can bring headaches for the IT manager of the organisation.

To minimise the problems, managers should:

  • select more standardised hardware and software; and
  • minimise the number of vendors with which an organisation must manage.

Choosing the right IT product - the multi-attribute utility model

Now suppose we have responses from a number of vendors on what they consider to be the right solution for your needs. How do we compare apples with apples, oranges with oranges, and so on?

You develop what is known as a "Multi-attribute Utility Model". You do this before implementing any new system into an organisation because we have to know what is the right system to use for our clients.

What this model does for us is help us to compare a range of products selected by vendors and see which features meet the needs of the clients, and then use the model to justify our decision to purchase what we consider the best solution.

The systematic decision-making approach to choosing a suitable product is as follows:

  1. PRODUCTS TO COMPARE
    What are the products you are comparing? Write down the names of the products and vendor name with contact details.
  2. LIST ALL CRITERIA
    List all the criteria associated with each and every product. For example, if you are buying a computer, you will need to mention things like memory, hard disk capacity, PC/Mac or both, price and so on.
  3. SET YOUR LIMITS
    What are your own and/or the organisation's constraints? In all likelihood you will not have buckets of money to throw at vendors just to buy your dream product. So set limits. Ask yourself exactly what you need now. Later consider the future requirements if the budget can stretch to it.
  4. CHOOSE YOUR CRITICAL CRITERIA
    Identify the criteria you are really looking for based on user requirements for the product (e.g. low running costs, etc).
  5. RANK YOUR CRITICAL CRITERIA
    Now specify the relative importance of the criteria. For example, is low cost the highest priority criteria for you? If so, rank this as number 1. Do the same with all your other critical criteria.
  6. REDUCE THE CRITERIA TO A COMMON BASE
    This essentially means creating a numerical range to use when comparing products. This is usually between 0 and 10, or 1 and 100 inclusive. Sometimes you may need to break the criteria into several attributes to help make the comparison easier for you. For example, a four-seater may be more valuable than a two-seater. So set the four-seater to 75 and a two-seater to 25.
  7. APPLY THE MODEL
    This involves choosing a suitable number in your head (out of 100 or 10 depending on the scale chosen). How high the number should be will be determined by how good the product is compared to other products and how useful it is to your requirements.
  8. CHOOSE THE BEST PRODUCT
    Add up all the numbers for each critical criteria for one product. Do the same for all other products. Then choose the highest score from all the products. The product with the highest score is the best product.
  9. BE AWARE OF CONSEQUENCES
    Look at the consequences of the best product you have chosen. Can you get the funding for it? If you can't, always keep in mind the next one or two products in case the consequences are not that promising with the best product you have.

All this work is best done on a spreadsheet.

What criteria should I look into when comparing IT product(s)?

It will depend on the type of product you are purchasing, but bear in mind the following points:

  1. FUNCTIONS
    Look at the functions included in the package. Are these functions standard or extras? Will it need lots of modifications to make it work the way you want it? Will the package support future expansion?
  2. FLEXIBILITY
    Look at the flexibility of the package. Can you modify the package? Any customisation features?
  3. USER-FRIENDLINESS
    Can a non-technical person use it? How much training is required to understand this system? Does the system come with clear and simple to read instructions. Is the system intuitive to use?
  4. HARDWARE AND SOFTWARE
    Look at the type of hardware and software resources. Do you need specialised hardware or to upgrade your current system to run or use the product? What operating system is required? How much room does the product take up in an office, on a computer and so on?
  5. INSTALLATION EFFORT
    Is it easy to install? How difficult would it be to convert current data and processes to the new system?
  6. MAINTENANCE
    Do you need staff of your own to maintain the system, or will the vendor do the maintenance for you? Will there be updates or enhancements done on the system by the vendor? Is it easy to make the changes to the system?
  7. DOCUMENTATION
    Are you given adequate information to help you install, run and maintain the system? Or will this be done by the vendor? What happens if the vendor goes out-of-business? Will you have the documentation to continue using the system?
  8. VENDOR QUALITY
    Is the vendor experienced in this system? Is the financial record and sales strong with the vendor? Does the vendor give support for their products? Is the vendor quick to respond to calls from their clients, especially in regard to suggestions and improvements?
  9. COST
    How much does it cost? Are you purchasing outright, or on a lease arrangement? Are there yearly maintenance fees and contracts? What are the annual operating costs of the system? How much is the total "whole-of-life" costs (and not just the upfront or initial costs of purchasing something)? How much would it cost to modify the system for future expansion?

Why do we need to do this?

This may seem like a lot of bother for what may be a handful of responses from vendors, but it is important. In the real world, most organisations will have to take into account hundreds of requirements. And you may be faced with the task of deciding which of the vendors' products is the best and most suitable for your needs based on these requirements.

Now you could rely on your memory to record all the requirements and make a very good decision on a product. But then you will need to show to other people your justification if you ever intend to get the funding to purchase the product.

That is why we develop this Multi-attribute Utility Model. And the best way to do it is on a spreadsheet.

Can this IT acquisition procedure be expensive to apply?

Well, yes and no. If the RFP and tendering process is not done right and the system is not chosen correctly, it can potentially be an expensive exercise indeed for both the people using the system (i.e. the clients) and the potential supplier of the system.

The problems leading to a high expense during the RFP and tendering process include:

  • Not consulting all clients who will use the system for their needs.
  • Hiring expensive consultants as a method of acquiring the information from clients about their needs.
  • Relying on just one or two suppliers for the supply of systems when a greater number of suppliers could provide a lower cost and higher quality system solution.
  • Poorly written contracts that can lead to legal misunderstandings.
  • The extra staff training costs when choosing complicated systems over simpler ones.
  • The needs of the clients keep changing and the preferred vendor has to constantly modify the system.
  • Time spent preparing the RFP document and evaluating the responses.