Welcome to the fourth edition of BUSINESSBOOST — the latest in a series of business briefings from Blue Stone Business Solutions, a specialist and independent information technology consultancy business.

In the last issue we looked at controlling costs; this was obviously outside our normal IS cycle (see diagram below) but was in response to feedback from clients who were concerned about cash management during these difficult business times. This month, we have returned to our standard sequence and the topic covered in this issue is therefore system acquisition.

Major system replacement projects often fail to deliver the benefits expected. They often run over budget and implementation timescales fail to be met. This is not altogether surprising since most companies run this type of exercise infrequently and the process of buying and implementing new systems is often lengthy and expensive. Basically, you need to have a thorough understanding of the IT marketplace in order to get it right, ie. to be in a strong buying position, to reduce timescales and to minimise your risk.

So let’s look at why system acquisition is so important to get right.

This diagram shows where we see system acquisition in the overall scheme of information systems. It can be regarded as the most crucial phase in the process of being ‘a good buyer’:

Having clearly understood the business processes that need to be supported for your future business strategy, we can now start to define at a detailed level the functional requirements of the new business system. To go into great detail across the whole of your business would be expensive, time-consuming and indeed irrelevant. What we need to do is to concentrate on the key areas that differentiate your business from the competition. These ‘must-have’ areas of functionality need to be described in sufficient detail for potential suppliers to have a clear understanding of what you are trying to achieve and how the system is to operate. You will often hear the expression “the devil is in the detail”. This is because if you do not make your requirements clear, the answer to any question posed to a supplier will always be ‘yes’. This leads to false levels of expectation being set, which then leads to users not getting what they need, being dissatisfied and with the supplier trying to chase a moving target, both budgets and timescales are missed. What we therefore have to do in your business critical areas is to remove any ambiguity so that potential suppliers know exactly what is required of them.

Blue Stone has the experience and skill necessary to be able, by discussion with key members of your staff, to describe in business terminology exactly what you require from your new business system in order to achieve your overall business objectives. This document is often referred to as the statement of key requirements and should be in ‘business-speak’ so directors and senior managers can understand, agree and sign-off what is needed. This document then has to be translated into ‘IT-speak’. Here it helps to be ‘fluent’ in both ‘languages’; a lack of fluency in IT-speak on the part of businesspeople when confronted with IT suppliers often means there is a danger that ‘If you don’t understand the question, you cannot possibly understand the answer’. Potential suppliers need a clear understanding of exactly what they are being asked to supply, with no areas of confusion. The document that provides this is invariably referred to as the invitation to tender.

The next dilemma is figuring who should receive your ITT. We are able to offer valuable assistance in this area as we are in regular contact with the key vendors in the market sectors that we deal with. In deciding who to approach, we also have to consider issues such as geographical coverage, range of functionality, sophistication of the application, cost, people and style. We will assist you in developing an agreed shortlist of potential suppliers that are well-placed to supply what is needed for your business. Typically, these short-listed suppliers are then asked to prepare scripted demonstrations of their proposed solution. By your selection team using a weighted scoring system, the relative strengths and weaknesses of the suppliers becomes evident. Ususally, in order to further de-risk the process, we then enter into contractual negotiations and pilot exercises with the chosen supplier.

This might all sound complicated and time-consuming but, in reality, the process saves time and reduces risk. Where companies do not follow a formalised process, they can often face a confusing picture; for example, it’s common for clients to contact us, having received a number of different bids from potential suppliers where costs and timescales vary wildly. The reason for this is that requirements were not defined tightly enough at the outset and the suppliers thought they understood and interpreted the information provided in very different ways. This can lead to at best a massive waste of time, or at worst a contract with a supplier who is not actually capable of meeting your business objectives. The process of systems acquisition sounds easy but is in fact complex and fraught with problems. Blue Stone is ideally placed to help you through this minefield because we are totally independent — that is to say we do not sell products or have allegiances with companies that do. Because of this independence suppliers are very willing to cooperate fully with us. This enables us to get the very best for you from the supply marketplace. Incidentally, the majority of our project rescue work comes about from companies that have failed to run their system acquisition process effectively (but that’s a story for another day!).

Blue Stone can leverage its knowledge of the systems marketplace and of business to help you through this difficult process. The case study below describes in more detail how we achieved this for one such organisation.

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When we look back on the numerous system acquisition projects we have conducted over recent years, we have invariably been able — in a relatively short period of time (often as little as one working week) — to have identified significant scope for improvement in our clients’ processes. Once these have been redesigned and new systems subsequently introduced, there have either been marked efficiency improvements and/or reductions in cost.

Because we are confident of our ability to review the position and come up with practical, cost-effective solutions, we are willing to undertake an initial exercise for you at 50% of our normal rates†. However, in case you’re wondering if this is just some hit-and-run marketing strategy, then you should know that we tend to work with all of our clients over the long term, often working alongside them over many years. Businesses tend not to do this unless there are sustained improvements, and this is precisely what we aim to deliver. But don’t take our word for it, talk to one of our many satisfied clients, a number of whom will be able to tell you about their dramatic improvements in systems capability or significantly reduced IT costs as a result of our involvement. Immediately below we have described one client’s views of the benefits they gained from such an exercise.

†This offer is limited to the first 10 days of services provided and is only available for the initial project with a new client.

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Bridging the gap in information systems worldwide

Our client is a global business operating in the construction sector. When we came alongside, the company had different systems in each of its worldwide locations which was severely limiting the company’s ability to operate cohesively as a global enterprise. For example, one country had a PC-based system written and supported in-house, while another made extensive use of spreadsheets. The main location had a bespoke system which was over 20 years old, the original designers and programmers of which were no longer around, written in a programming language that had long since fallen off the radar. All of this represented a high-risk scenario.

We were asked to set out an approach to identifying a new unified system capable of being deployed globally. Clearly this system had to cope with the variations in accounting standards, currencies and languages, as well as addressing the client’s rather niche business requirements, making this one of our more challenging projects.

Initially we reviewed the broad options, and evaluated the pros and cons of Tier 1, bespoke, best-of-breed and packaged solutions. Naturally each route had a quite different profile in terms of cost, risk, future-proofing and functionality, but using our structured approach the options were clearly characterised and as a result the company chose to adopt the packaged software approach.

We then undertook a structured specification and selection exercise. Suppliers were pre-qualified and tenders issued and evaluated. Following extensive demonstrations, due-diligence enquiries and contract negotiations a supplier and solution was selected which offered an acceptable balance of risk, cost and capability.

We finalised the contracts and commercial negotiations saving our client significant amounts whilst securing favourable terms, including a fixed-price implementation. The system has now been rolled out to all locations and is providing a common platform for commercial processing around the world. So our client now has:

• a modern, supportable solution
• one system for all locations offering commonality of approach but able to cater for local differences where appropriate
• a strategy which will cope with business changes for years to come
• a low-risk IT platform upon which to base their business

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The next issue of the newsletter deals with contract negotiation: or, how to engage suppliers in meaningful contract and licencing negotiations. Primarily it will show how best to agree a balanced contract between the parties for the supply, support and maintenance of systems solutions; one which clearly records the supplier’s responsibilities and obligations, as well providing the clarity and detail necessary to minimise any risk to the project during the implementation phase and beyond. Most importantly, we show how an effective contract can help you avoid problems in the first place, not just protect you if things go wrong.

However, if in the meantime you feel you could benefit from an initial discussion with Blue Stone now, then please let me know, either by phone, e-mail or by clicking here. I look forward to hearing from you.

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Copyright © November 2008 Blue Stone Business Solutions. All rights reserved.