Methods of Acquisition

System
Requirements

In small groups of 2 or 3 students, discuss :-

Factors comparing off the shelf procurement VS in-
house/ tailored solutions development
Write the ideas of the group in the form of a diagram or
table.
Invitation To Tender (ITT)
Criteria for assessment
Pre-ITT Activities
Pre-Tender Activities
Establish a framework for evaluation
(including criteria, marking scheme)
Set up an evaluation team
Identify and set up appropriate administrative
support
Preview the market/potential suppliers
Visit other installations/sites
Visit potential suppliers
Potential suppliers visit you
Evaluation Framework
Requirement for a focused evaluation
Objectivity
Fairness of treatment
Objective is to select the most appropriate
solution
Fit for purpose
Value for money
What criteria will you utilize?
Remember:
Mandatory
Useful
Nice to have
Evaluation Framework
Use an arithmetic marking scheme
Beware views (subjective?) already
developed during the process
Have you already developed trust in the
potential supplier?
Evaluation Team
Same as specification team?
Equal weight to views of user and
computer department?
Any input from computer department
why?
What role for bit players?
Finance staff
Audit
Legal
Senior management
Politicians
Evaluation Team
Procedure for decision-making.
A final two!?
Procedure for reporting the decision.
How?
Who to?
Invitation to Tender - ITT
Getting the Right Deal and
Supplier
We will cover:
Invitation to Tender

Administrative Support
Market and Suppliers
Structure
Sequence
Procedures
Administrative Support
This process does NOT involve a single flow of
information (ITT) to the supplier
NOR
A single flow of information (tender) to the
purchaser
Rather this process will generate considerable
communication
Administrative Support
You need to keep a careful record of all activities
in the process
Including decisions taken and on what basis
WHY?
Do not assume administration support is just a
by-product of the tendering process
Review Market/Potential Suppliers

This could/should help inform the specification

process
But beware of subjective specification
Who do you send the tender to?
How many?
How do you find out who they are?
Review Market/Potential Suppliers

Preferred supplier
Knowledge of competitors
Request for information
Invite expressions of interest
Advertise:
- Trade magazines
- Official Journal of the European
Community
Visits
For reference
Vendor assessment
Product demonstrations
Get to know potential suppliers
(a future partner)
See the solution in real life
Visits
Objectively test supplier claims
Seek independent views
Arrange trial use!!
Any role as a beta-test site?
Enjoy a good lunch!!
Invitation to Tender
CONTENTS
What is the objective of the procurement
process?
Provision of a cost-effective solution to a set of pre-
determined business needs
Therefore, contents [and format] of an ITT should be
aimed at achieving that objective
N.B. The ITT will eventually be part of a legal document.
Invitation to Tender
An ITT should include:
Background, context
Description of the tender process
Key terms definition
How supplier should respond
Presentation of price information
Description of other services potentially
required
Inclusion of key dates, a schedule
And of course, functional and non-functional
specifications
Invitation to Tender
Background,Context

Description (brief) of the current system

Summary of existing working practices in
the relevant area
Business model of areas affected by new
system
Conceptual data model
Invitation to Tender
Descriptionofthetenderprocess
How to respond
What to respond
Consistency of responder between potential
suppliers Why?
When to respond
Procedures for supplier queries
Maintain a level playing field Why?
Any rule for a vendor conference?
Invitation to Tender
Do you want a supplier to know who the
competition is!?
Clarification of communication channels
How are costs to be communicated?
Standard format spreadsheet?
Cost head for all other costs
Ensure you can evaluate like for like
Invitation to Tender
What other services might you require?
Training
Project management
Implementation management
Documentation
Hardware? New server?
Technical software Database licence?
Local tailoring
Extra functionality
Interfaces
System integration
Invitation to Tender
What is an integrated solution?

Be aware of the Black Hole scenario

Remember this is an invitation. You

want them to respond.
ITT Format
Key Points:
This will be a legal document
It will probably be handled by several
people
Give them as much appropriate
information as possible
You must provide clear guidance on how to
respond
Should a potential supplier pay to receive
the I.T.T ?
ITT Structure
Paper and/or electronic?
Appropriate front page
Solid structure if paper
Needs to look professional
Needs to be readable and inviting
ITT Sequence
Title page What should it contain?
Contents page(s)
Sufficient Detail
Provision of a good access index
Overall context Why a requirement for a new
solution?
Company background
Description for potential suppliers
Questionnaires?
Market position
Long-term strategy for product
Role of User-Support Group
ITT Sequence
Any special requirements e.g. use PRINCE as
project management methodology
Purchase role and resources
Functional specification
Non-functional specification
A description of all other potential services
Provision of cost information consider use of
your format
What legal arrangements their standard
contract or yours?
Glossary of terms
Appendices detailed information
Procedures
For Potential Suppliers
Query Processing rules to follow
How to respond e.g.
Fully available
Partially available (+comment)
Available Q3/2005
Not available
Timetable for the process
Response deadline
Decision day
Notification of winner and losers
Description of the evaluation process
Implementation Issues
Putting it All Together
This Covers:

Implementation Issues
Analysis and Studies
Replacing existing system
Testing
Reporting
Working practices
Education and training
Conversion
Legal Issues
Analysis & Studies
The implementation process starts with analyses of the
business and its working processes.
This work is a continuation of the requirement
specification made in the procurement phase, but now
in even more detail and now with only one specific system
in focus getting this system in full operation meeting
these requirements
Analysis & Studies
Need to describe the current process and the specific
working routines that affects or could be affected by the
new system.
Reporting requirements, administrative requirements,
straight-through-processing aspects, and other IT and
functional aspects of the set-up of the system will be
analysed.
The results of the analysis will form the system
implementation plan and address relevant issues to the
managers and other decision makers.
Replacing existing system

The focus here is on the initial release(s) of the

system and supporting tools for one or more
pilot projects within the organization.
Testing the system via pilot projects serves two
purposes:
1. To introduce the new process and tools incrementally
2. To get early feedback on whether the benefits defined
in the project's business goals and objectives is
actually occurring
Testing
Regular tests are performed from during the entire
implementation.
During the conversion phase data structure tests are made
first in the test environment (pilot)
Thereafter tests are carried out in the production
environment.
When the data structure is ready and tested in the
production environment the test conversion starts.
This will be going on parallel to the other activities until its
time for final conversion, when all data is ready to put into
the production environment.
Testing
The different tests can be divided into:
1. Functional tests, for example verifying that
product is correctly priced or verifying that it is
possible to generate customer invoice
2. Flow tests, verifying that the way of working in
the system accords to the existing working
routines and
3. Acceptation tests, the client/tender tests and
approves the system before production start. The
project leading in connection with the flow- and
acceptation tests is called Test leading.
Reporting
The work with reports runs parallel to the other
activities during the entire implementation.
Working within the new system structure and
needs of the user, investigate how present
reports and processes shall be customised.
Require report development at the client and in
consultation with the client. Need facility to
develop reports, for example in Excel or any
other appropriate report development tool.
Working routines
The work with reviewing all routines starts, like
the reports, parallel to the other activities
Require practical help with customising the
system from the present working routines and if
needed prepare new working routines
Quality assurance
Documentation of working routines
Education / Training
Ensure availability of appropriate training and
guidance for all staff involved in implementation
of system
Undertake procurement skills gap analysis to
identify areas and individuals requiring training
Develop training programme (potential for
buying-in expertise as required)
Prepare Mini Guide covering principles and
processes
Prepare detailed best practice toolkit with
standardised documentation
Conversion

Before the final conversion, analyses of present

data in existing systems must be made.
For example, look at what data is handled
mechanically or respectively manually.
Once the data is checked it is transported to the
new system. The data that is transported is for
example customer data, supplier information
and transactions.
Standardised tools are available on the market to
do automatic tunings in relation to a conversion,
which makes it very effective
Other Important Issues
Note that implementation can take
several months to complete
Does that square with your business
requirements
Outsource project management of
implementation phase to specialists
Contractual Relationship
The duty of the contractual relationship between a vendor
and the customer:
Is based on an explicit or implicit contract (vendor's moral
obligations are firmly grounded in this contract).
In the absence of an explicit, written contract, there is still
a certain tacit understanding between the buyer and seller
which constitutes an implicit contract.
Thus the customer pays a prescribed sum of money and in
return receives a product or service with certain features
and functions (via this transaction both parties enter into
this contractual relationship. This contract is a 'free
agreement' that imposes on both parties the duty to
comply with its terms)
Contractual relationship
In addition to the explicit terms of the contract there are
implicit ones, which impose secondary moral constraints.
It follows that if a contract is really a free agreement,
neither party can be coerced.
Moreover, a valid contract implies that the customer has
full knowledge of what they are receiving, implying that
there cannot be any misrepresentation about the product
features, the warranty, service commitments, etc.
Hence, there is an obligation upon the vendor to honour
the explicit terms of the contract along with the secondary
constraints, which include avoiding concealment or
misrepresentation and avoiding any undue influence or
coercion.
Product Support
Most IT systems require considerable post-sales support
and on-going product maintenance (especially true for
software products).
Customers normally pay an annual maintenance or
licensing fee for this important service(usually includes
access to a help desk facility as well as new releases or
product updates).
A withdrawal of such services can have serious
repercussions on a client's operation.
However, it is impossible for vendors to guarantee an on-
going service, since they do not always have control over
their own destiny, i.e. a vendor can be taken over by a
competitor, encounter financial difficulties, go bankrupt,
etc.
Product Support
Vendors can, however, take certain steps to minimise the
likelihood that the product will lose its usefulness,
including:
1. In the case of bankruptcy or other grave problems, make source
code available to their customers. How?
2. Vendors must be candid about their future prospects;
customers have a right to know about the essentials of the
firm's financial status
3. Vendors must make ongoing product support a major issue if
they are negotiating as a victim in a take-over or as a partner to
a merger.
4. If necessary to discontinue maintenance support, IT vendors
should provide customers with adequate notice of their
intention.
Vapourware
A common problem of promoting and selling
products before they are really ready for the
marketplace (such 'mythical products' referred to as
vapourware)
What are the risks?
Product Reliability
Reliability is defined as: The capacity of a product or
system to perform its intended function under normal
operating conditions.
Errors and malfunctions can prove to be costly or
disruptive.
A contract requires that the buyer should not be coerced
and should receive full disclosure regarding the features of
the product.
Hence, the vendor must not misrepresent a product in any
way or knowingly sell a defective product.
Must supply a simple warning notice (warn its customers
about potential problems because they have a right to be
informed).
Any kind of misrepresentation is a violation of the basic
contract between seller and buyer.
LOCAL TAILORING

How does a general package relate to a

specific company?
Over-Procurement of Functionality
Under-Procurement of Functionality
WHAT HAPPENS IF...
Software does not fit with your IT Strategy?
E.g. Database Technology
Additional Functionality Provided by
Supplier which is costly
You may consider an Executive
Information System
How can Organisations Respond?

Prevent IS/IT Strategy Mis-Match

React to IS/IT Strategy Mis-Match
Enhance current strategy to more closely
align to IS/IT Strategy
How do these categories apply to:
In-House Developed Software?
Packaged Software?
Not Covered on this module but Important!

Contract Law
Service Level Agreements
Training
On-Going Data Integrity
Integration
On-Going Strategy and Development
Database Administration
Performance Management
Business Process Review