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Preplanning For The Procurement

Posted By Robert Shumate, Thursday, May 7, 2015

This is the third of an eight-part series on procurement practices in information technology. This series is authored by Bob Shumate, a Member Emeritus of the IJIS Institute and the chair of the IJIS Institute’s Procurement Innovation Task Force. The material in these articles covers the findings of the Procurement Innovation Task Force and offers some insight into the problems and solutions in procurement evident in today’s information technology markets.

The first step in the procurement process involves deciding what it is the entity would like to achieve. In a very large number of cases, the procuring entity has only limited knowledge of the technologies that it seeks to acquire as a means of improving its performance. The first step toward a successful procurement is to establish a governance structure to both manage the process throughout the procurement itself and to maintain oversight of the project implementation. In almost all technology procurements, the governance structure should include:

  • Key enterprise stakeholders that will be affected by the newly acquired technology.
  • Technical specialists who have an understanding of the technology being sought.
  • Procurement professionals who manage the details of the procurement.
  • Legal representatives who understand the legal requirements inherent in the procurement.

Establish procedures for the governance group that will allow it to be nimble and responsive, recognizing that technology is ever changing and decisions need to be made promptly when required. While key players need to be involved, keep the total membership as small as the procurement requirements allow. Make sure that someone is in charge with the authority to call meetings, require decisions to be made as necessary and to ensure that the procurement remains on schedule.

An often neglected but critical aspect of pre planning is the need to create a road map that shows how the new technology will interact with other entities. Who will be the likely suppliers of information to the system entity and who will be the likely consumers of information generated by and available within the system? How will the acquired system(s) fit within the architecture at a higher level such as the county, state, or even national scope?

Enterprise architecture is vital for ensuring that information sharing for both the immediate needs and requirements that may occur in the future. Make the effort to determine what Enterprise Architectures may be in place that will affect your procurement and make the effort to develop an architecture that describes how your system will fit within the enterprise at all levels. Understand how you will share information in a way that minimizes the dependencies of each system on the implementation of other systems. One of the most important benefits of an Enterprise Architecture is identifying consumer systems from provider systems and identifying the type of services required to tie them together. This is the defining characteristic of a service-oriented architecture (SOA) and is the key to ensuring that your system will be able to deal with dependencies between systems both presently and in the future.

The Architecture should encourage the sharing of information and functionality between systems using open industry standards. We are living in a period where changes in technology are taking place monthly. The approaches that have become mainstream in the past five years include such concepts as Software as a Service (SaaS), Infrastructure as a Service (IaaS), Platform as a Service (PaaS), automatic provisioning, and cloud computing services – either private or public. All of these options come with advantages as well as challenges and there is no better time than the pre-planning period to become familiar with the advantages and shortcomings of these alternative approaches.

Use the pre-RFP period to gather information. Invite several companies to engage in informal discussions with the Governance Group to listen to the problem, which needs to be solved and to present their ideas of what a solution would look like. This is a great time to conduct informal presentations since the procurement process has not yet entered the formal stage and ideas can be freely discussed. Use this forum as a way to become educated in the solutions available and to get some idea of the costs associated with solutions that may be applicable to your problem. Depending upon the legal and administrative restrictions that are in effect in your jurisdiction, you may have to be creative to manage this portion of the effort. You may have to issue a formal RFI and then select a sub group to present their solutions to the governance group. While this may take a little more time, it will also work to give you insights into approaches to your problem that you had not previously considered.

The pre-planning period is the time to focus on what the changes you would like to achieve are going to cost. Because this is a period outside the normal RFP process, you can often use informal visits to get at least broad estimates as to the cost of different approaches. This is the time to reconcile what your budget is with the estimates you have received for different solutions. Unrealistic expectations that exceed the available budget almost always lead to disappointing results. This is the time for the governance group either to lower expectations or to seek additional funds for the anticipated project. Whatever you do, do not try to force a five million dollar project into a two million dollar budget.

Wherever able, be as transparent as possible regarding your budget for the technology you are procuring. Suppliers need to be able to present solutions that fit your budget and a lack of transparency regarding your budget often results in solutions well beyond what you can afford. Reputable suppliers will not try to offer a ten million dollar solution if they are aware that you only have a five million dollar budget and often may be able to propose solutions that fit within your budget. In the event that no supplier is able to offer a satisfactory solution within your budget, you can consider either revising your plans and seeking a solution that fits within your budget or postponing the procurement until budget conditions meet your needs. Both options are preferable to trying to implement a solution for which you have insufficient funding.

Use common sense when evaluating solutions and costs. If three suppliers price similar solutions in the ten million dollar range and a fourth offers the same solution for four million dollars be very skeptical and submit the proposed solution to additional scrutiny. Many times companies will propose solutions at unrealistic prices in the expectation that somehow they can fashion a solution within the available budget or use the change order procedure to make up the difference. Rarely does this result in a successful conclusion. Depending upon your size and the availability of internal resources with the ability to manage the preplanning process you may want to consider contracting with an outside firm to assist you in managing the procurement process. There are a number of companies that specialize in providing assistance to agencies in advising on how the process should be handled. If you do employ outside assistance undertake the same careful process you would use in selecting the final contactor to find a company that has the capability of providing the type of assistance that you need.

Comments welcome on this topic!

Next:Defining and Articulating the Procurement Problem

Future Posts:

  • Preparing and Disseminating the Formal RFP
  • Evaluating Responses to the RFP and Selecting a Supplier
  • Negotiating a Contractual Agreement with the Selected Supplier
  • Contract Oversight and Management

For further reading: https://ijis.site-ym.com/?page=Procurement_Resource

Tags:  budgeting  Enterprise Architecture  Governance Structure  planning  Pre Planning  pre-RFP  procurement  RFI  RFP  SOA 

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