Purchasing a Solution Chapter 9

Reasons to Buy Focus on core competencies Lower costs Higher reliability Built in audit and security Improved performance Avoid political conflict

Reasons to Build Gain competitive advantage Unique environment Easier to build than buy Unsure of requirements Want to gain expertise and experience

Project Examples: Build or Buy

Steps to Success Understand your needs Do your homework Find a reliable, flexible, relationship-oriented vendor Negotiate a contract Put appropriate metrics and methods in place Debra O’Donnel, Software Magazine, July 1998, p46

Requirements Mandatory: must be present for the product to be acceptable. Often yes/no. Desirable: features that would be useful but not critical. Often evaluated for different levels of quality. Irrelevant: features that may be interesting but have no real value to the organization.

Typical Features Functionality Modularity Compatibility Maintainability Reliability Security Vendor Support

Sources of Information In-house expertise Internet Vendors Consultants Literature Similar installations Review services

Features Matrix Weighting and Rating

Features Matrix Estimated Value

Acquisition Strategies Rent: Short term, complete vendor support, high cost Lease: Intermediate term, local support, user specified equipment Purchase: Cheaper, total user responsibility Contract: Full vendor responsibility, contract sensitive

Licenses By machine: product can be installed on a single computer only. Concurrent usage: product can be installed on a network as long as no more users can be running it than licensed. Site license: organization can install up to the negotiated number of copies anywhere. By individual: product can be installed on machines used by a single individual (e.g. home and office)

Request for Proposal A formal process for getting vendors to supply a product and a portion of the design work in exchange for a chance to get the contract.

Request for Proposal OPEN, FAIR COMPETITION WITH UNDERSTOOD CRITERIA All qualified vendors given an opportunity to bid.

Need to publish: Written requirements (RFP document) Process for selecting finalists Formal presentation Don't let vendors run the selection Evaluation standards Legal requirements and company policies

Concerns Retain Core Competencies You get what you negotiate services people Understand your needs Include basis of cancellation for cause for convenience Vendor expects to make a profit

RFP Contents Introduction Instructions System Requirements Objectives Contacts Timetable System Requirements Mandatory Requirements Desirable Features Evaluation Method

RFP Process First Pass: Eliminate unacceptable alternatives; reduce the choices to 2-4 alternatives. Second Pass: Select the final product.

Evaluation Criteria Features Table Delivery Date Hard Dollar Evaluations Soft Dollar Evaluations Delivery Date Acceptance Criteria & Penalties Mandatory Features Desirable features

Verifying Capabilities Acceptance testing Performance testing Work sample Generated test data Benchmarking Modeling and simulation