Procurement

Conclusion: Of growing interest to senior IT executives is the effective practice of vendor management. Because this is where many client/vendor relationships commence, IT procurement lies at the very heart of vendor management. This is the second in a series of two articles that highlights the critical nature of IT procurement and some of the steps that can be taken in order to gain effective and timely outcomes.

Conclusion: Business units and end users are calling for, if not demanding, IT managers to deploy Microsoft SharePoint. SharePoint is this years ‘must have’ product1 - however few understand what SharePoint is, what it does well and what alternatives exist. SharePoint initiatives will backfire without significant effort to ensure that an organisation is properly educated, specific applications and business needs are identified, and realistic expectations are set.

Conclusion: As a result of dissatisfaction with their initial outsourcing arrangement, some organisations have decided to move their IT services back in-house or to adopt a selective sourcing approach. Others have rethought their approach to outsourcing and have moved to an outsourcing model that is more flexible and more closely aligned to business goals and strategies. This has necessitated a different approach to the outsourcing relationship, an even greater emphasis on governance, and a more open approach to the relationship between the client organisation and the service provider.

Conclusion: Most major IT procurement activity is oriented around acquiring software or services, the impacts of which are likely to have profound, organisation-wide consequences. As such, the cost of making mistakes, or indeed making poor choices, can be extremely high. Some of the consequences may include one or more of the following: 

  • Business benefits not being realised;

  • Budgets being exceeded;

  • Project execution times being extended; and

  • Organisational reputation being damaged.

Conclusion: The often expressed dissatisfaction with outsourcing has lead many organisations to consider backsourcing their outsourced IT services. This is often done without due consideration being given to another option i.e. selectively sourcing IT services. When this option is considered many organisations have found it to be a more attractive option than backsourcing, with significant benefits and less of the complications associated with bringing IT back in-house.

Conclusion: With climate change a hot social issue, organisations with a “Social Responsibility” strategic objective are looking at ways to reduce their environmental impact and the IT organisation, like other areas of business, is expected to find ways to reduce their carbon foot print.

The data centre is a prime target for a few “quick wins” because in most organisations it houses a significant proportion of IT resources, and it is the area over which IT has the greatest control. IT organisations should start with short-term initiatives that are self-funding (i.e., payback period < 12 months) and which can be accomplished with little or no capital investment. With server 3-years power and cooling costs now comparable to server acquisition costs, Infrastructure Managers must look at optimising data centre energy efficiency.

In the last 18 months, many hardware vendors have jumped on the Green IT bandwagon to try and differentiate their offerings in a rapidly commodifying market. IT organisations must carefully evaluate vendors’ claims to separate the marketing hype from the reality. Purchase agreements or tender requests for ICT goods and services should explicitly require vendors to demonstrate how and where their products meet the buyer’s environmental requirements1.

Conclusion: The increased focus on the environmental impact of ICT activities makes it essential that organisations making ICT purchasing decisions focus on the virtuous triple bottom line of economic viability, social responsibility, and environmental impact. Purchase agreements or tender requests for ICT goods and services should explicitly require vendors to demonstrate how and where their products meet the buyer's environmental requirements.

Conclusion: Unless CIOs are able to provide business with a balanced and accurate picture of IT performance, it is likely that IT will be treated as ‘just another supplier’ in the minds of senior business executives. Moving IT up the value chain to become trusted and strategic business partners requires more than concerted efforts in delivering projects and keeping the IT lights on. It requires effective marketing and good communication. One of the ways of improving IT credibility is to develop an effective IT scorecard that highlights precisely how IT’s performance supports and indeed, adds value to the business. Further, providing scorecarding data to IT management and staff is likely to provide an incentive for them to lift IT performance levels.

Conclusion: One of the main requirements for achieving a successful outcome to any outsourcing agreement is an effective governance arrangement between the client organisation and the service provider. This can be one of the more difficult aspects of any outsourcing agreement as it needs to be set up to ensure that it addresses the priority areas in a manner that will also allow for an effective on-going relationship between the two parties. In addition, there must be continuing management involvement in the process over the life of the agreement so that it remains an important part of the outsourcing initiative. 

Conclusion: Organisations are moving to minimise their IT staffing problems by contracting much of their planned IT recruitment process to specialised HR outsourcing agencies. This trend, Resource (or Recruitment) Processing Outsourcing (RPO), brings significant benefits including having the right people available at the right time, reducing placement costs, and saving hiring managers time and stress. This RPO approach is even more potent when coupled with Panel Supply contracts. Its value is not limited to ICT recruitment and can be applied across as much of the organisation as will benefit.

Conclusion: Evaluation and measurement are creative activities in the technology business. In terms of evaluating the productivity benefit of broadband, the creativity needed is quite high. Finding a standard ROI assessment approach is not easy and designing better methods to locate broadband productivity is another challenge.

In terms of measuring broadband, the methodology applied, is critical for understanding how broadband contributes to productivity. As the broadband debate rages over both sides of the Tasman, the need for a better designed research project that determines the extent to which broadband contributes or not to productivity of knowledge workers should be a priority for organisations in the IT industry.

Conclusion: Backsourcing IT-related services is not a simple exercise. To ensure that there is minimal risk to the business while the IT functions are being brought back in-house, significant management attention will need to be devoted to this activity.

Conclusion: Speed, quality, and cost with which IT solutions are built and with which IT services are delivered depends on a large number of variables. Understanding and managing these variables can lead to order of magnitude improvements – neglecting them can lead to serious inefficiencies.

Conclusion: With storage capacities typically growing at 35%+, most organisations are finding they must routinely add more capacity. To avoid creating silos of storage capacity that can not be shared and optimised, or building a storage infrastructure that becomes increasing complex and costly to manage, IT organisations must properly plan and execute storage acquisition.

It would not be unusual for an IT Manager to feel as though they are ‘caught in the headlights’ when an unsolicited proposal from a supplier with an attractive price and favourable terms and conditions lands on the desk. For the record, advertising literature sent to a prospect is not unsolicited proposal.

Conclusion: Managers often go into a formal market scan (or test) for goods and services with an incomplete problem statement, limited grasp of their requirements and their priorities and expect to emerge knowing which suppliers can meet their needs and their likely price. This approach is unrealistic and naïve.

Market scans need much preparation and should be complemented by a team of informed and experienced business professionals.

Conclusion: Conflicts will arise during the process of purchasing IT assets and services unless there is a clear definition of roles. Put simply, IT management’s role is to identify what is required and implement it, while Purchasing’s is to ensure what is required is supplied at the best value for money and the transaction meets probity requirements.

One of the more difficult IT related decisions that an organisation may have to face, is whether to bring outsourced IT functions back in-house. There are a wide variety of reasons why such a course of action might be contemplated.

Conclusion: IT/MIS within an organisation can be thought of as a business and, like any business, should have an active marketing plan in place. Such a plan helps the CIO and key members of the MIS group actively promote to all parts of the organisation the value of the services delivered by the MIS Department. The plan should be couched in business terms understood by each user community and not in “IT-speak”.

Conclusion: One of the more difficult aspects of the management of projects is the decision making process associated with shutting down troubled projects. There are a range of factors that can influence decision makers and prevent them from making a rational decision to close down a troubled project. These include project related influences, psychological and social factors as well as organisational pressures.

Conclusion: Estimating the cost of software development projects is notoriously difficult. The simple “thumb suck” technique still enjoys significant popularity, and although attempts to introduce a more rigorous estimation process usually lend a scientific touch to the process, any numbers that are not based on historic metrics tend to collapse like a house of cards. Obtaining useful metrics is the hard part. The only way it can be achieved in a realistically short time frame, is by adopting an iterative, incremental approach based on timeboxed iterations of constant duration.

Conclusion: Successful outsourcing initiatives usually have a number of common characteristics. Using these as a check list in new, or even existing, outsourcing deals can have a positive impact on the success of your outsourcing initiative.

Conclusion: Often one of the unsung heroes in a successful IT management team is the Business Support manager, whose job it is to manage the organisations business management relationship with diverse stakeholders such as suppliers, clients, project teams and finance.

Conclusion: Discussions with IBRS clients have found that a large proportion of outsourcing contracts are re-negotiated or terminated early. The circumstances in which the exit occurs can affect the willingness of both parties to co-operate and for them to agree on the timing and cost to exit. If termination issues have not been negotiated as part of the original contract, then they will need to be finalised prior to the exit. In this situation an organisation is placed at a significant disadvantage, and there is a risk that lawyers will need to be called in. This is unlikely to lead to a smooth and non-disruptive exit.

Conclusion: Determining how to exploit emerging technology, while managing technology for legacy systems, is increasing the span of control of the IT Infrastructure manager. Because the application systems often cross technology eras, as set out in the diagram below, the role of IT Infrastructure has become more complex, intellectually challenging and successful performance business critical. One of the down sides is managers typically have little time to participate in strategic conversations, limiting their career development opportunities.

Conclusion: Due to their scale of operation and the massive databases they need to manage, Australia’s major banks often act as a bellwether for other IT users. This is certainly the case at present as a number of banks commit to Master Data Management (MDM) in an effort to bring their management reporting into order.

Why do many IT projects that are obviously in serious trouble go well past the point where they should have been shutdown? We can all give examples of where money and resources have continued to be invested in such projects, but do we understand the factors that can impact on decision makers and unduly influence what would appear to be the rational decision to close down a troubled project?

Conclusion: The potentially negative impact of vendor lock-in is unavoidable, but it can be minimised by making intelligent choices with respect to the use of technology products when building application software. In the interest of keeping the cost of lock-in at bay, IT organisations should rate the maturity of the various technologies that are being employed, consider the results in the design of their enterprise architecture, and pay appropriate attention to the degree of modularisation within the architecture.

Conclusion: The technology adoption cycle and its cousin, the hype cycle, are familiar concepts. While the theory is instructive, there are acknowledged gaps in its explanatory power, and consequently in practical application, although many organisations and vendors implicitly subscribe to the general thrust of the concept.

The steady stream of new technology – including innovations and upgrades - means potential buyers are evaluating products almost continuously; whether as consumers or for businesses. From both sides of the equation, can buyers and sellers make a better bargain with the idea of the adoption cycle? Could buyers be better informed and rational or is there a portion of emotion involved in buying technology? And how does a business adapt the technology adoption cycle to be successful?

Conclusion: One of the dilemmas facing senior managers is whether to allocate IT expenses to a service type or absorb them as a corporate overhead. The problem is compounded when a direct expense, attributable to Cost of Sales for a service or product, is involved. If it is absorbed as a corporate overhead unit costs needed to determine pricing will be hard to identify.

When issues, such as the one above arise, managers have to wrestle with options for chargeback systems for IT services and whether the effort is justified. There is no right or wrong answer, only the preferred option.

Conclusion: Inexperienced organisations often see benchmarking as the process of measuring best performance and fail to achieve the real value of benchmarking which is the discovery and adoption of best practices that drive best performance. Done appropriately benchmarking can yield unexpected and significant benefits, but done inappropriately it wastes considerable time and money1.

Users are demanding, and gaining, more IT flexibility in order to attain greater business flexibility. It''s not yet clear in many industries how and where users will require such flexibility, but buying behaviour is usually an indicator of emerging business strategy. However, it is clear that flexibility is the strategy du jour. In this environment, users are adapting their business and IT investment behaviours to enable flexibility, and to pay for it. The move to tactically strategic IT and business change is a direct response to the desire for flexibility, and its inherently higher investment costs to achieve.

Conclusion: Stories of late and failed projects are legion within information technology. Whilst there are may be many reasons for project failure, a key root cause, largely overlooked in the literature, is failure to correctly enunciate user requirements. A less than satisfactory outcome at the requirements definition stage can only become magnified as the project proceeds.

Though the costs of acquiring storage hardware will continue to decline during the next five years, any savings for users will be exceeded by the additional costs that will be incurred in the ongoing management of increasingly large disk farms. Storage will require significant investment in tools, development of processes and retraining and recruitment of specialist staff. New models for procurement of storage capacity and storage management will become a viable alternative to in-house management of storage.

Conclusion: By the end of this decade, blade servers will have become the standard form factor within most datacentres. Driven by convenience, manageability and price/performance, most IT organisations will choose blades over rack-optimised to build out a low cost, highly flexible computing infrastructure. Over 90% of these systems will be based on industry standard servers (i.e. x32/64 based systems) running Windows or Linux.

As the existing IT infrastructure begins to reach the end of its economic life IT organisations should re-examine their architectural standards and evaluate the benefits of bladed based computing. They should start by first understanding the new trends in server infrastructure (see, “Refreshing IT Infrastructure? First Break All the Rules!” Feb-2006) and then comparing the value proposition of blades compared to traditional rack-optimised servers.

Conclusion: After 5 years of tight IT budgets many IT infrastructure components are reaching the end of their economic life and recent surveys suggest IT organisations intend to begin refreshing key systems this year. The path of least resistance is to replace these components with new items, staying with the “status quo”. However this may not be the best strategy!

Due to significant changes in technologies over the last 7 years we recommend IT organisations challenge their existing infrastructure assumptions (formal or informal) and create new rules to guide construction for the next 7 years. The greatest obstacle is not changing technologies but overcoming people’s resistance to changes in their environment.

Conclusion: Without a support strategy for legacy systems and technology, organisations run the risk of getting caught short when a vendor withdraws support or staff maintaining the systems, the problem is compounded when few, if any, staff have the support skills required, which is often the case for legacy application systems.

Conclusion: Multisourcing can provide a number of significant benefits to client organisations however the full potential will only be achieved if the issues of governance and system management tools and processes are satisfactorily resolved prior to multisourcing.

Conclusion: Since the beginning of the dot.com boom of the late ‘90s, there has been considerable debate over which web server should be used. By 2004 the web server wars were over with two clear victors emerging, IIS from Microsoft and Apache from the Apache Software Foundation. IT Organisations (ITOs) should move beyond debating the technical merits of various product and select an organisation wide technology standard based on existing investment, skills or alignment with strategic platforms. As part of an ongoing strategy to reduce infrastructure complexity (see “Infrastructure Consolidation: Avoiding the vendor squeeze”), ITOs should create a pragmatic plan to migrate to the new standard.

Conclusion: IT Outsourcing in the SME (Small to Medium Size Enterprise) sector can be an initiative which can bring real benefits to many SME’s. There are, however, a number of considerations that need to be taken into account to ensure that the exercise achieves its objectives and provides a positive outcome for the IT staff.

Conclusion: The Service Level Agreement (SLA) is a key part of any outsourcing contract. Done well it can play an important role in improving service performance and can also provide the foundation to a successful partnership between the client and the service provider. Done poorly it can sour the relationship and lead to a bureaucratic exercise of SLA monitoring and review.

Conclusion: The need for systems integration skills in organisations that keep their IT processing in-house and those that use external service providers will continue to grow and increasingly be a differentiator in services offered to clients. Managers who do little to enhance the skills of professionals engaged in systems integration activities will be doing themselves a disservice and run the risk of losing their highly marketable staff.

Just recently, there have been a number of announcements from the heavyweights of the software industry. These events have the potential to make a big impact on the industry and on user plans. Whenever a vendor acquires another company, reorganises or announces a new strategy the effects are sure to be manifested in changed product roadmaps, reduced support or R & D for products, account management changes and many other aspects that could change user plans. By understanding the impact of announcements such as those discussed below, users can avoid costly mistakes when choosing products and services in a constantly evolving market.

Conclusion: Manyfirst-generation outsourcing arrangements have reached or are approaching their end dates. Users are taking fresh approaches to outsourcing with past lessons learnt being encapsulated into new deals.

What are the major lessons learnt? How will next generation outsourcing deals be constructed? What should be done differently this time around? Where to start?

Conclusion: An often heard complaint from organisations, is that despite issuing an RFP, the process selecting an Outsourcing Service Provider took considerably more time than they had expected and consumed considerably more resources than were planned.

Large vendors repeatedly make announcements of their intention to provide products and services to the large market that small and medium sized enterprises (SME) provide. Rarely however, do these marketing announcements translate into usable solutions for SMEs or marketing success for the vendor. Without identifiable returns, vendor SME initiatives are short-lived. To show a commitment to SMEs, IT vendors must identify their market and create products and services appropriate to the needs of SMEs. Vendors must not assume that their strengths and competencies in the consumer or large business market will automatically guarantee success among SMEs. CIO’s should closely examine any ''SME'' branded offering from a vendor for relevance to their business.

Conclusion: While the introduction of Serial Attached SCSI (SAS) will have a significant impact on the storage environment though 2006/7, over the next 12 months clients should be wary of the hype vendors will use to promote it. By year end 2005, technical staff should gain a basic understanding of the key features/benefits of SAS. Though 2006/7, IT organisations should begin using SAS, in conjunction with SATA, in DAS, SAN and NAS configurations when it provides a lower cost storage alternative [i.e. than Fibre Channel (FC)] while still meeting application and data service level requirements.

Conclusion:There is conflicting evidence on the role of IT in delivering higher productivity. Some studies attribute productivity gains almost entirely to IT, yet two recent surveys have found that astute management may have played a vital role.

For technology managers it’s important to understand how technology affects productivity because the argument that productivity gains can be realised often underpins business cases and investment decisions. Technology alone may not produce higher productivity but simply make the input component of the productivity equation more efficient. Under these types of conditions, therefore, the role of management becomes a key variable in realising productivity growth.

To understand how productive they are, managers should examine their organisation’s business processes and management practices over a number of dimensions. These dimensions would include business processes in conjunction with personnel quality and management; the aim of which is to know how an organisation functions as a whole and therefore to know how and where improvements to productivity may be applied.

Despite the "On-Demand" type services, many organisations will continue to own and manage their server platforms. With cost-cutting directives still an issue for all our clients, understanding future events in the server markets and their impact on buying decisions is essential.

Conclusion:In the last three years company mergers in the IT industry worldwide have shrunk the number of technology related brands. New brands arising from the acquisition of companies, such as HP and Compaq, need to be reinforced by a renewed marketing effort to convey what the new brand means i.e. its service offer, value proposition, product range, style and so on.

The new merged brands are not the sum of their two parts. In some cases these brands have to reorganise their products and redefine how to sell them to achieve what they expected as a consequence of the merger or takeover. The effort on branding, that is on the style and presentation of a brand is not always persuasive on its own. A focus on product and service is essential, yet can be overlooked, even though consumers are now more able to assess the value of brands than in the past.

For buyers of technology products, whether for home use or business, the value of a brand is an essential element in the decision to buy. But as Chris Morris discussed in “What to do when your Vendor gets Acquired” (IBRS July 2003) a company’s product is a real thing, with services and functional components and management has discretion on whether to change it or let it stay, based on the design of the new business model after a merger or takeover.

Conclusion: Last month I wrote advising IT practitioners to learn the language of risk management, particularly in the context of ANZ/NZS 4360:2004. The article also contained advice to ensure that IT has a place at the decision-making table when considering the implementation of corporate risk management software.

An assumption was made in the article that in your organisation some corporate risk management initiatives were already under consideration. However, suppose this is not the case. How can the IT practitioner pitch a case for an Enterprise Risk Management (ERM) project as a strategic system? This article provides a guide for doing so, allowing the IT practitioner to assert leadership in a burgeoning area of corporate practice.

Conclusion: The CIO Perspective, December 2004 entitled, 'IT Issues in Company Acquisitions' highlighted the CIO's involvement in two due diligence processes and having to provide an opinion on the state of the business solutions included in the assets being offered for sale.

In the article, two examples were quoted of small but profitable organisations which were being offered for sale and had immature IT service delivery systems and governance processes. In both cases the organisations used IT to provide business support or delivery systems. He was of the opinion the systems and process immaturity did not adversely impact the business performance of both organisations.

Conclusion: Too often project managers embark on programs of work without sufficient analysis on whether the organisation has the capability or capacity to implement the initiatives. When initiatives inevitably run late most internal observers cite poor project management as the cause of the problem.

Some programs cannot be implemented on time no matter how well they are project managed. These programs go wrong at the planning stage when people fail to identify the work that needs to be done before the proposed project can actually begin.

To avoid inevitable project management failures strategic planners must firstly determine what can actually be achieved in year 1, year 2 and year 3 of the ICT strategic plan. When implementation constraints are known planners can develop a base program of work that is achievable. Once this is done planners should then fine tune the priority of each initiative based on its contribution to business value.

Conclusion: For many years organisations and agencies engaged a single IT provider when they lacked the wherewithal to integrate the services and used the engagement to manage the organisation’s risks. As organisations acquired the skills to integrate systems services and manage the risks, many opted to selectively source expecting to reduce their costs and get the right solution. A new management debate ensued.

In some ways the debate parallels that situation which occurs in organisations with operationally critical equipment and where management is unsure whether to enter into a maintenance agreement with one supplier or opt for a per call service arrangement with multiple suppliers.

While the maintenance versus per call service debate focuses on risk versus cost, the analogy unfortunately trivialises the efforts needed to integrate complex business solutions or implement multiple systems components of an end to end IT operation service with ambitious performance objectives.

Implementing complex solutions typically involves integrating offerings from multiple software and hardware vendors, directing the activities of specialist technical staff and coordinating multiple project management activities. The aim usually is to meet a scheduled completion date or deliver a system response time consistent with the project’s objectives.

Conclusion: Reference checks are rarely a key differentiating factor in an evaluation, but they can prevent unpleasant surprises. Use reference checks when evaluating new or unfamiliar technology. A good reference check can be helpful in substantiating claims of viability, validating specific functions or capabilities, and reducing risks of unknown or unforeseen problems related to a technology or architectural design. Poorly executed reference checks fail protect the organisation from sub-standard service and support, poor quality control, and chronic understaffing.

In recent years, microprocessor vendors have begun designing chips with more than one processing unit, or "core," on the chip in an effort to boost performance for certain types of applications. As far as the software running on the systems is concerned, dual-core chips appear to be two separate processors, raising the question of whether or not they should require two software licences.

Conclusion: To maintain a sound business relationship, regularly assess every IT Operations and Development service provider's performance and take corrective action immediately unexpected deviations occur.  Providers that act quickly and fix problems position themselves to get more profitable work from the client.   

IT organisations that build systems and software piecemeal fashion, using the so-called "Best of breed" components on the market from different vendors, should be aware that "Best of breed" is a dying breed. The increased complexity and cost of these systems rarely can demonstrate the incremental benefits over "Good Enough" solutions to justify the time, effort and expense

Conclusion: Better vendors tend to be selective about their clients.  Over the years, I have been in many bid-no-bid meetings where it was decided we would not bid for work with a client because the costs and risks of doing business with them was too high.

Good vendors treat good clients like gold.  Difficult clients on the other hand often attract two types of vendors - vendors who are not good enough to win business from good clients or vendors who charge difficult clients a hidden premium.  Difficult clients can expect low quality service from both types of vendors.  Even the better vendors will put their weaker performers on the accounts of difficult clients.  After all, why would anyone put good people on a painful and generally low profit account?

A critical factor in the successful management of PC leasing contracts is the availability of accurate and consistent data that will facilitate the tracking and management of the assets. This factor is frequently overlooked in a Lease vs. Buy decision that is typically focused on TCO and NPV. In most cases, asset information can only be obtained from multiple sources.

26 May 2004: Telstra is sending 450 software jobs to India as part of its outsourcing agreement with IBM Global Services.

Last month we introduced the concept of a vendor management program. We noted that most mid-size organisations do not consider the full life cycle of product selection; instead, they tend to focus on purchase price alone. IT acquisitions are usually made by the IT department in isolation, without the proper insight of the business requirements and with the primary focus being on "speeds and feeds," price and the ability of a vendor to deliver a solution quickly. This month we provide a framework for the process.

Related Articles:

"The Case for a Vendor Management Process Part 1: The Case" IBRS, 2004-04-28 00:00:00

Conclusion: For years many organisations have ignored best practice advice in evaluation and selection.  Inevitably, the choice is to move forward after a couple of vendor demonstrations, or to fast track, do an abbreviated version of a hierarchical methodology. This, unfortunately, can introduce subjectivity, or at least an assertion of personal bias.

 

Conclusion: IBRS strongly believes that Australian Mid Sized organisations must begin to actively manage their dealings with their business partners, suppliers and customers. At the same time, they must deal with staffing and budgets that are not keeping pace with the ever-growing requirements of their IT infrastructures. A top priority must be to find ways to decrease the total cost of ownership of IT infrastructures and to minimise staffing requirements. Being able to consistently select the right vendors and products will be essential to achieving this goal.

Many of our clients report that they are not satisfied with the relationships that they have with the IT vendors and consultants they have selected. Poor post-purchase relationship management seems to be as much to blame as actual selection and negotiation process.

Related Articles:

"The Case for a Vendor Management Process Part 2: The Process" IBRS, 2004-05-28 00:00:00

Small and midsize companies have, so far, mostly postponed investment in CRM solutions because of their complexity, their cost and dubious return on investment. Now, with Microsoft in the fray alongside Salesforce.com and others like them with their online deployment models, SME''s have a better range from which to choose and should be planning how they can take advantage of more affordable solutions

Changing business processes and systems to comply with legislative requirements is a major hidden cost in the public and private sector. Ironically, it is also one of the least referenced in the research literature.

Conclusion: When IT industry futurists speculate on the next wave of technology, they often ignore two important elements in the equation, ie ‘what problem will the solution address' and ‘will the buyers' pay for it'? Until the futurist has answered these questions, their predictions lack integrity.

Conclusion: There is no time like the present to get Executive buy-in to invest in a Records and Document Management (RDM) framework and technical solution. Pending legislation in USA (Sarbanes-Oxley and Bio-Terrorism) and CLERP9 in Australia, a synopsis of which appears in Note 1 below, is likely to put RDM on the radar screen of many CIOs and IT managers.

Software licence compliance is something that many will have to achieve during 2004. The risk of a licence audit by any of your software vendors has increased greatly during the last 6 months; many audits have been done and a high proportion of those auditees have found themselves to be in violation of their agreements. It’s time to consider your position and plan a course of action.

In The Economist’s most recent IT quarterly (September 2003) survey there is a scathing piece about the implementation of CRM in banking, and financial institutions generally. Australia is not mentioned in the analysis, but the point is clear – that as many as 80% of CRM projects fail – which is not news to anyone with experience of CRM projects. There is a gulf between the promise and delivery of CRM.

Since the IT industry continues to consolidate, with acquisitions of both large and small companies a weekly event, users must keep several questions and action items in mind to respond effectively if and when one of their main suppliers is suddenly acquired. It is important to remember that all acquisitions are takeovers – there is no such thing as a friendly merger – and if you are a customer of the acquiree you have to be extra diligent.

Conclusion: Consultants can be a potent weapon provided you are using the right consultant for the right reason; you manage the assignment appropriately; and you insist on a deliverable that is implementable in your organisation.

CIOs should review their selection and management processes for consultants. Consultants should win assignments based on value for money outcomes - not on daily rates - and assignments should be managed end to end from the pre-proposal stage to implementation.

 

Conclusion: “Offshore outsourcing” or the practice of outsourcing IT or business functions to other geographic regions is growing, with similar trends forecast for the future. While offshore outsourcing offers cost-cutting opportunities, it does possess risks unique to offshore projects, which have resulted in mixed success when adopting this strategy. Detailed risk assessment, strategic planning and ongoing management must be conducted by any organisation considering an offshore project, or commercial benefits will be lost, ultimately negating proposed cost savings.

Conclusion: If you know your organisation’s records and document management processes are out of control and do not propose a viable solution, you are putting your job, and the CEO’s, at risk.

Why Records and Document Management?

One of the hidden and unavoidable costs of running an organisation is that of manually filing, retrieving and disposing of records and documents. This cost often runs concurrent with the hidden risk from not being able to find key documents when required for evidentiary purposes or completing an asset sale. How can the costs be avoided and the business risks minimised?

To answer the question, let’s look at what has been happening in many firms of all sizes in the last couple of years.

 Conclusion: While certain types of IT sourcing deals (such as large “mega deals”) have been criticised by commentators, it may not be beneficial for all organisations to alter their current IT sourcing strategy. All potential cost and management problems must be carefully considered prior to altering any sourcing strategy.

Procurement of PCs, software, servers or services can seem overwhelming due to the complexity inherent in the process, market and business volatility, and uncertainty in the vendor community. Buyers should use a formal process - including the establishment of documented best practices and standard document templates - tailored to that organisation’s culture and structure to bring discipline to the process. Ultimately such an approach will reduce TCO. A successful negotiation requires a complete understanding of the product or service, how it will be used, user profiles, and identification of vendor negotiating levers.

Conclusion: Server consolidation has become widespread as budget pressure is maintained and corporate mergers and reorganisations continue. Although the overwhelming majority of consolidation projects are viewed as successful (at least in terms of the reduction in number of servers) when failures occur it is usually because of poor planning. Vendor endorsed programs often appear very attractive, but unless the full implications of your particular environment are taken into account the only goal that will be met is the vendor’s revenue target.

Conclusion: In today’s business climate in which discretionary capital is scarce, CIOs, or equivalent, need to be confident and able to convince the Executive they can deliver the benefits expected in proposals to invest in IT Infrastructure1. To meet the needs of stakeholders when real time services are at stake, the arguments must be compelling and presented in a way that leaves the Executive no alternative but to approve the proposal.

Conclusion

Traditionally, vendor lock-in was associated with deliberate vendor-driven outcomes, where software and hardware forced the client to align their business processes to those offered by a specific software or ICT platform. Vendor lock-in often limited the flexibility of organisations to meet business needs as well as increasing costs. As a result, information and communication technology (ICT) was often seen as a limiting factor for business success when agility was needed. Historically, vendor lock-in was therefore seen as a negative. Poor timing, bad decisions and clumsy procurement practices may still see organisations fall into unwanted vendor lock-in situations. But is vendor lock-in always a negative?