Bay Area Consulting Group - Finding that New Application System

Bay Area Consulting Group - Finding that New Application System

Finding that New Application System

Ten Keys to Effective System Selection



As companies grow and evolve, they often find that the processes that have served them well in the past are no longer as effective as desired, and do not provide a sound foundation for working toward the company’s strategic vision. In today’s world, when business processes are no longer effective, it almost certainly means that the time has also come to replace the systems supporting those processes.

As the commercial, off-the-shelf software market has grown and matured, it has become increasingly unusual for a company to decide that its needs are so unique that it must embark on the custom development of a new system. In virtually all cases, it makes more sense to look for packaged software systems that can be acquired and implemented. One good rule of thumb is that if a commercial system can meet at least 85% of the requirements – and all of the most essential ones – then a packaged solution is probably the more effective approach.

Selecting new application software is a critically important part of improving process effectiveness, and an effective effort will have a major positive impact on the performance of your organization for years to come. Some of the key elements of effective software selection are described below.

* Clearly defined project objectives – At the outset, it is critically important to clearly define the project’s goals and objectives. By defining project “success,” they will provide guidance and direction for the project team throughout the effort to select and install a new system. Most importantly, the project objectives must have the clear endorsement of the sponsoring executives.

* Executive sponsorship and a representative project team – Executive sponsorship is a key part of the foundation that will support a successful project. The executive sponsor must ensure that required business decisions are made on a timely basis and that the project has the resources it needs to be successful. The last part of the foundation is the project team itself. It should include both business and technical participants, who should bring to the project an awareness of both the strategic importance of the system as well as an understanding of the business practices being addressed.

* Thoroughly understood and documented requirements – With a sound foundation for the project established, the most critical step in the selection process is the development of the business requirements that the new system must meet. This specification of requirements will provide the criteria for assessing whether or not candidate systems meet the business needs of the organization – the most critical test they must pass. They should also form the basis for the acceptance testing of the new system near the end of the project, prior to implementation, to confirm that the needs of the user community have been met. These business requirements are central to the entire project.

Individual requirements should be assigned a priority. Typically, these are
o Essential – those requirements that a new system must meet in order to be a potential candidate.
o Imprtant – those requirements that will make a difference in how well tImportanthe system performs
o “Nice to have” – Those requirements that will enhance the usefulness or convenience of the system, but will not have a significant effect on achieving its fundamental objectives.

Normally, your emphasis in defining requirements should correspond to these priorities, but you should also include those requirements that you suspect may enable you to differentiate between competing systems.

* List of viable vendors – A successful selection project requires that you identify the vendors whose products are the most competitive and responsive products to your needs. This can be a bit of a challenge. Some effective techniques include:
o Survey your employees to learn if they have experience with candidate systems at other jobs or from their contacts in other organizations
o Query peer organizations, i.e., those that need the same kind of software products that you do
o Review the literature and trade publications
o Internet research. Often, you can get some good ideas directly from “googling” the appropriate key phrases. In fact, you may even find papers and literature that compare the software you are interested in.
Finally, as you begin to identify candidate vendors, you may be able to determine what systems they most often compete with, as you probe for strengths and weaknesses and their qualifications to meet your needs. You should seek to identify 4-6 vendors to receive the RFP.

* Thorough RFP – One of your objectives should be to enable the potential vendors to compete on an equal basis, so that your decision is ultimately based on comparable information. A comprehensive Request for Proposal (RFP) promotes this. The RFP must of course communicate the requirements that the new system has to meet, but it should also include other important information:
o Background about your organization, its business, and your systems and technical environment.
o Information about your IT organization and the resources available to support the new application system. In particular, describe other systems that the new system will have to integrate with.
o Description of the functional process that the new system will serve, including such information as the number of employees, their organization, activity/volume statistics and the like.
o The overall system selection process, including major activities such as receiving the proposal, system demos, vendor reference checking, and final decision making; it is helpful to lay out the timeframes you expect these activities to require.
o Evaluation and decision criteria – it is also helpful to communicate to the vendors exactly how you will make the decision and who the decision makers will be. You should determine the weighting you will give to key project components, such as 1) meeting requirements, 2) vendor stability, 3) implementation approach, 4) on-going system support and upgrades, and 5) costs (software, hardware, implementation and on-going maintenance).
When the RFP is issued to prospective vendors, you should know how the rest of the selection process will play out, who the participants will be and the expected timeframes.

* Organized approach to proposal evaluation; selection of finalists – The key first step in the evaluation process is to effectively perform a preliminary evaluation of the proposals, with the objective of winnowing the number of vendors down to 2-3, from whom you will receive live presentations and system demonstrations. It is recommended that you prepare structured evaluation packages that enable each reviewer to grade and comment on each aspect of the proposal, in accordance with the evaluation criteria that have been developed. The evaluation should include both subjective comments and a quantitative score. Suggested scoring might be on a scale of 1 – 10, with reference phrases provided; e.g., 10) Meets all requirements; 7) Meets “essential” and “important” requirements; 4) Meets “essential” requirements; 0) does not meet requirements. The quantitative component of the evaluation should not be permitted to overshadow the subjective, but it does introduce a measure of objectivity that is helpful in assessing the overall results.

* Scripted system demonstrations – As with the proposals themselves, the objective with system presentations and demonstrations is to enable you make an effective comparison of the competing systems. The best way to do this is to prepare a script that each vendor must follow in presenting the demonstration. This prevents the vendor from focusing on the “neat” features that his system may have, unless they are central to your meeting your business objectives. The script should incorporate the key processes that are required to meet your functional requirements, and enable you to not only see what the system can do, but how it does it. The user interaction with a system is of major importance in modern systems; you only learn how the system works by seeing the demo.

Your process for evaluating the demos should be organized in the same manner as the proposal evaluation, with structured evaluation forms that follow the demo script, including both quantitative and subjective comments. It is also helpful, after each demo, to gather from the evaluators the key strengths and weaknesses they observed. These can later be reviewed and compared when trying to make a final determination. At the conclusion of the demos, you should be able to narrow down your choices to a single winner or two finalists.

* Structured reference checks – Reference checks provide you the opportunity to talk with other users of the systems regarding their experience with the systems themselves, and, as importantly, with the vendor, both during implementation and later with respect to system support and system upgrades. Once again, it is desirable to prepare a structured questionnaire, so that you develop comparable information from each reference. You should place particular emphasis on those considerations of importance to your organization, and any questions that lingered following the demos.

* Selection workshop – The critical decision step is where you will finalize your selection of the successful vendor and system. A good technique is to assemble your evaluation team, in order to review all the information you have developed, including the proposals, demonstrations and vendor references. You can use the quantified proposal and demo results to provide a baseline, but then you should also review the subjective comments and conclusions of strengths and weaknesses. Costs should also be considered, remembering that software acquisition costs are frequently only a relatively small portion of the life-cycle cost of purchasing, implementing, operating, and maintaining a new application system.

* Vendor contract negotiation and project planning – The final step in the selection project is the transition to actually implementing the new system. You need to develop a contract with the vendor to acquire a license to use the software and any related hardware. The contract should also cover any services that the vendor will provide during the implementation, which means you will need at least a high-level project plan as a basis for the contractual agreement, before the detailed project plan is developed as the first task in the implementation process. Finally, you must contract for ongoing system support and software maintenance and upgrades, following systems implementation.

The selection of a new application system is a major event for most organizations. You should expect to be using the new system for a minimum of five years, and often much longer. During that period, the new system will have a fundamental impact on the way your organization functions. Ensure that you give each system selection project the leadership, emphasis and resources that it therefore warrants.






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