The standard, large project tendering procedure based on detailed specification has been used for years throughout industry, but whether it is a good way to select business software is questionable. Today’s market is mostly package-based, offering complete or almost-complete solutions straight out of the box. Using these packages, there is no need to specify standard functions in detail, and full specification is beneficial only where there is unique functionality or competitive advantage to be gained.
The millennium problem and European monetary union have forced firms to look critically at the way they buy software. Getting quickly to the point where a firm’s specialised requirements can be considered is the key to a more effective method of package selection now finding favour with suppliers and consultancies.
The Business and Accounting Software Developers Association (BASDA) is a group of software developers, consultancies, suppliers and users which has produced a request for information (RFI) selection process that combines experience from across the software industry with common sense. Analysing the differences between using the RFI process and traditional invitation to tender (ITT) on some typical projects, BASDA estimated that elapsed time could be reduced by 45% and effort by 33%.
‘Companies used to spend a huge amount of time and money when selecting systems,’ says Brian Barr, a manufacturing and operations management consultant for accountant Robson Rhodes. ‘Now we write the RFI with them and ask suppliers to respond. Responses are structured to match the RFI, so we can quickly identify the best suppliers, then shortlist two or three. Finally we run workshops with the client and each supplier in turn, after which a buying decision can be made.
‘We aim to help companies quickly find the package which delivers a 70% or 80% fit without alteration, so we can then concentrate on the rest, to understand divergences. Resolving these can mean changing the way a business operates or bespoke software, but I’ve yet to come across a company that can’t adapt.
‘The best companies have looked five years down the line, and understand what they want their systems to do. There are still some, though, that are not flexible enough to follow the lead of a new system that already implements common processes in a standard way. If you are going to use a package you’ll have to compromise somewhere.’
RFI-style selection relies on a range of packages being available to satisfy a client’s computing needs, choosing the closest fit to business requirements, and using the standard functionality as much as possible. The aim is to reduce the amount of customisation to a minimum, keeping down costs and reducing project risk.
‘People now tend to accept 80% of system functionality off the shelf,’ agrees Gary James, operations manager at Team 121, an SAP solution provider to the engineering sector.
‘The other 20% is where benefits and competitive advantage are added, often using interfaces to legacy systems. However, to use a package, you have to be able to compromise, but you outsource development and maintenance, which is a major benefit.’
The reasons people buy systems have changed too. Apart from millennium and EMU motivations, they aren’t buying technology, they’re buying solutions, but only if they need to change for a particular reason, or to gain competitive advantage.
Andrew Bailey, Oracle’s UK product marketing manager, observes: ‘The general trend for small and medium companies is for highly-configurable off-the-shelf packages. Some recent internal focus groups we held established that whereas IT purchasing used to originate in the IT department, it is now almost exclusively driven by business requirements, and originates from internal business users.’
The RFI approach also encourages a change of emphasis in software procurement from supply to implementation. Traditional tendering puts a lot of effort into getting a contract and a price, sometimes losing sight of the fact that the software then has to be implemented and staff trained.
‘Most people in the past have negotiated on software price, but forgotten about the price of implementation,’ says John Wolfenden, managing director of Fourth Shift Europe, an enterprise resource planning supplier. ‘All the risk is in implementation, so people need to accept that software is going to be off the shelf, but there will be contracts for support and implementation. Of course if you have to write bespoke code, implementation timescales become hard to control. It’s much better to look at what the standard workflows have to offer.’
Where bespoke coding or customisation is unavoidable, there is no alternative to producing a full specification, but by using RFI selection this is only required in exceptional circumstances, for example for electronic data interchange interfaces or integration with legacy systems. The enormous advantage of closely fitting package solutions is that most if not all the business processes are already catered for, because the commercial demands on all businesses are generally the same.
Efficient package selection based on business need is the way forward, and whether an RFI or some other method is used, bear in mind that the IT market is not static. A lot of people do not look beyond 1 January 2000. Whatever happens on that date business will continue, although the IT market may be different.
‘The pressure in the marketplace at the moment is for fast decision-making, because of the millennium problem and European monetary union,’ says Wolfenden. ‘It’s going to be interesting to see what happens afterwards, as systems get back to competing on things like price and performance.’
A quicker way of getting down to details
‘There is a huge demand for replacement systems at the moment, which is outstripping supply,’ says Mark Slaven, partner in charge of information systems and technology at Robson Rhodes.
‘The BASDA RFI is a sensible way of quickly getting to a reasonable level of detail with a few shortlisted suppliers. A lot of common functionality can be taken for granted, but obviously, when software is not established, you must have a detailed specification.
‘The client has to be prepared to work like this, and for most small organisations that’s OK. There are still a lot of mid-market companies nervous of not going through the formal specification exercise though.
‘We’re moving away from using documents and standard demonstrations, to having shortlisted suppliers work with clients on a detailed evaluation of their product against business critical requirements. This is much more constructive for both sides than a demonstration.
‘All the same, decisions are often not challenged hard enough and people should be asking if there are better ways of doing things, or whether they should even be doing what they currently do.
‘The things to remember are: approach this with an open mind; focus on what’s important to your business; don’t be scared to shortlist quickly if you’re not happy with your choices, you can always go back and change the list; invest time in preparing and running workshops.’
Growing business breaks with tradition
AM Paper Converters in Skelmersdale, Lancashire, mills soft paper for domestic use and processes the bulk material into the products sold from supermarket shelves. Its systems are already millennium compliant, but the business is growing and changing.
Business systems manager Don Brynne says: ‘We believed the traditional invitation to tender method of selection was risky and limited. It’s fine for IT people, because the approach is logical and formal. I wanted to approach the problem from a business perspective, and explore what options there might be.’
Working with consultants from Team 121, Brynne and his team quickly arrived at a shortlist of systems. This was rapidly reduced to one contender. Assisted by Team 121, supplier and customer worked together to finalise the solution. ‘To be able to state what you want requires knowledge of the product,’ he says.