Software Application Acquisition – Not a Simple Task! Eddie Whitfield CPIM, CIRM, CSCP, P.E.

Topics Functional and Technical Selection Criteria for Vendor Selection Software License Agreements (SLAs) Software Lifecycles and Dependencies Application Vendor Requests Negotiating Terms and Conditions Procurement Costs Software Installation and Configuration Upgrading and Maintaining Applications Other Fun Stuff

Functional and Technical Selection What should the software applications perform? – Determined before software selection – Established with all software applications Minimize overlaps Adhere to company standards Aligns with all constituents – users, IT, corporate direction What software applications qualify? – Functionally – yes or no – Cost – Support – Qualify in our IT environment

Examples Logical SystemApplication NameVendorVersion Hazardous Waste Reporting Federal and State Reporting ABCVersion 7.0 Hazardous Waste Reporting Government Reporting ZZZVersion 9.4 Emissions Historical Data Management Compliance Monitoring DDDVersion 6.3 Mass & Energy Balance - Plants Balance CalculatorHome GrownNo Version Production Data Calculator Material Balance Plus DevelopmentVersion 0.1

Criteria for Vendor Selection First – Meet the needs for the technical requirements – yes or no Vendor aligned with company objectives – Application development – Implementation / installation – Training – Production support Total Cost of Ownership (TCO) Software lifecycles

Software License Agreements Software License Agreements (SLAs) aligned with company objectives – yes or no – Shrink-wrap or strategic – Single source, sole source or multiple vendors – If SLA separate from purchase order (PO), then SLA stands Costs are separate from SLA

Software License Agreements Shrink-wrap – Microsoft Dongle – Still works, boutique vendors Server – Oracle, SAP License server – Client/Server Subscription - SAAS

Software License / Maintenance Agreements Can third parties work on the software Are development licenses free Are development licenses free after go-live Is support available if off-site access to the system is prohibited How long will the product be supported

Software Lifecycles and Dependencies Software length before upgrades are required – Standard – Extended – End of Life Software Dependencies – Microsoft Server Office MS SQL Other – Oracle Relational Database Applications – Other software – Interfaces Service oriented architecture (SOA) Hard coded File transfer ApplicationVersionQ1Q2Q3Q4Q5 A8 A8.1 A8.2 B4 B4.1 B4.2 C2 C2.1 DNone D

Application Vendor Requests RFI – Technical information without pricing RFQ – Information including pricing RFP – May be similar to a RFQ, but many times includes services

Negotiating Terms and Conditions License key or dongle Proprietary information Copying – Reverse engineering Term Delivery Termination License Fees Taxes Right of assignment Limitations of liability Indemnity Governing law Warranty

Negotiating Terms and Conditions Support – 24 by 7, only 8 hours, other “We” (the vendor) have a process On site, phone or choice Perpetual, term or subscription based User based, server based, both Upgrade policy

Procurement Costs Total Cost of Ownership (TCO) – Purchase order cost – Software licenses – Implementation – Subject matter experts (SMEs) – IT support – Vendor support and maintenance – Hardware (hosting fee) – Shipping of software and hardware – Tariffs – Import / Export – Holding cost - financing – Inventory cost – shelfware – Damage – Theft – Insurance

Software Installation and Configuration Configuration competency Core modifications Development testing Factory acceptance testing (FAT) Site acceptance testing (SAT) Commissioning and startup

Upgrading and Maintaining Applications When to upgrade – Need new functionality – Dependent software Operating system Dependent software Other applications Maintaining Applications – Who – IT, SMEs, vendor – Control – software audits for usage – Payments – “Not in my budget” – Vendor support – how long and the extent

These are just some highlights and issues to consider.

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