James F. Dowling
- November 28, 2003
The breadth and seriousness of issues that must be managed by the Information Systems Departments of mid-size companies are the same as those of larger corporations with more people and funding resources to apply to them. IT Managers of smaller enterprises must therefore do the same or more than their larger counterparts with less by necessity. Experience, working with dozens of companies of all sizes indicates that larger corporations are trying very hard to behave like their smaller, more nimble, counterparts. At the same time, small, fast moving companies are trying to establish stable IT infrastructure like that of the larger ones.
Information technology product selection is one issue that does not scale up or down with the size of the enterprise. The number of suppliers is the same, the number of products is the same and the amount of work necessary to understand products and suppliers sufficiently to make an informed decision is constant as well. Whether the product being selected is software, hardware, services or information, the challenge is to maximize business value and minimize infrastructure complexity. The former goal produces short to mid-term return on investment and the latter produces lower mid to long term cost of ownership.
The deck is stacked against the IT Manager. Internal clients rarely provide a clear picture of how the products will be used to increase business value in the short term and even less frequently for the long term. Suppliers make it difficult to compare features and functions by using ambiguous or misleading language. More often than not, time pressure is high and resources are short. There is hope. If IT managers focus on the capabilities that the products provide to the business, they can engage the right business managers more readily and they can provide essential data to help suppliers present their products.
Note: This note first appeared in a column by James F. Dowling in Mid-Range Computing. Look for other previously published Mid-Range Computing columns by Mr. Dowling at this site or visit Midrange Showcase at http://www.midrangecomputing.com.
E-Procurement Is A Starting Point
E-Procurement is a hot topic these days. There are many suppliers and even more companies pretending to be suppliers of e-Procurement solutions. There is a relatively short list of capabilities that e-Procurement systems will give to a company. Some are:
- Reduce cycle time from requisition to goods delivery and supplier payment,
- Enable more aggressive negotiation of pricing for commodity goods,
- Increase ability to propagate data to diverse systems from a single point of capture.
If this were the complete list of capabilities that are valuable, they represent all of the opportunities for increased business value and therefore provide the basis for computing the Return side of the Return on Investment Calculation. By documenting the way that these capabilities reduce cost or increase competitive advantage, business managers can readily establish the upper limit of investment that can be supported. This process alone will winnow down the list of potential IT investments.
Explore What Is Available
The next culling step is to ask potential suppliers to explain how their products can effect the desired capabilities and to estimate the cost of doing so. This step should be done without consideration for current systems and infrastructure. By doing so, the concept is being tested without significant IT resource commitment. If suppliers can provide the capabilities at an affordable cost, specific product selection can proceed. Otherwise, the program may be put on the shelf for another try later.
If a near-current view of IT infrastructure and application systems is available, they can be provided to candidate suppliers for another round of validation. Software system suppliers know what it takes to integrate their products into diverse environments. At worst, they will guess at the complexity and risk from experience with similar situations. At best, they will make accurate estimates and identify minimal risk. In either case, a round of "Hows" is in order. Meet with the suppliers one by one and ask how systems will be integrated. By exploring the tools and techniques that a supplier will use to implement their solution, IT managers can make a good assessment of project risk. Unsure approaches, unfamiliar tools and complex interfaces generally indicate higher risk. On the other hand, strong conviction to employ familiar tools is a sign of lower risk.
Now Consider An RFP
Only after all parties understand business value, process implications and technology challenges is a request for proposal in order. As simple as this sounds, it is often forgotten especially in larger companies. This approach employs several principles of IT management learned from small, highly effective organizations.
- Let business lead the discovery process,
- Add people to the program as needed and remove them when their contribution is made,
- Involve suppliers in the discovery process judiciously - respect their time.
Readers who work in government may have cringed through the paragraphs above thinking about how many procurement policies were violated. It is recognized that talking to potential suppliers one on one and some of the other concepts are disallowed. However, similar results can be obtained by attending supplier seminars and trade events, or by networking with people who have first-hand experience with the products that are being considered. Use the concepts if not the method to make each IT investment and supplier selection a series of informed decisions.
This column will continue to explore the change / size paradox. Big companies desiring speed and growing companies desiring stability. The author would appreciate feedback on material presented as well as suggestions for future study and reporting. The general theme is IT management and the goal is to make it easier to get clients what they want and what they need to succeed.
About The Author
Jim Dowling is VP of the Alignment Consulting Practice at TechnologyEvaluation.Com, Inc. located in Woburn, Massachusetts. TEC researches IT products and suppliers as well as the ways companies obtain business value from IT. TEC's consulting services remove time, risk and ultimately cost from IT related decisions.