Good Technology:
Acquisition Issues
What are the issues in
acquiring and managing IT
CIO, July 15, 1998
Critical Questions
for IT
How does IT influence the customer
experience?
Does IT enable or retard growth?
Does IT favorably affect
productivity?
Does IT advance organizational
innovation and learning?
How well is IS run?
IT Goals
Early
Mid
Recent
Current
Cost Savings and
Control
Alignment with
Organization Goals
Integration Into the
Business
Competitive Advantage
Three Rules to
Remember
Don't commit to any technology until
after it has crossed the chasm.
Use normal rules of engagement when
dealing with enabling technology kings
and princes and application companies
of any size.
Wherever there is an enablingtechnology gorilla, get on that
bandwagon and no other.
Business Objectives
Increase Revenue
Reduce Cost
Identify those business functions that will
use the infrastructure and how IT will
promote their business objectives. In
business terms. Technical excellence is
not enough!
Business Expectations
Suggested measures
At the highest level, an IT organization
should be tracking a number of key ratios
and indicators.
[These should be reported on in terms of
current value, trends, and rate of change]
Service Level Objectives
Typically service levels are negotiated with users
or management and carefully tracked.
Network availability
99.8%
Mean time to hardware failure
1 mo
Mean time to software failure
1 month
Mean time to respond
10 min
Performance
95% < 2 sec
Mean throughput
64 Kbps
Total Cost of Ownership
TCO
A standardized environment costs less to
install and maintain than a heterogeneous one.
Electronic software distribution ensures
consistent software installation and eliminates
the need to physically install software on each
computer.
Use remote systems management tools to
move software and data to and from laptops,as
well as to store backup images of users' hard
disks.
Use automated technical support tools to
reduce support personnel staff.
TCO
Consider replacing personal computers with
"thin clients" such as network computers.
Client/server technology offers another take
on TCO, without the need to invest in network
computers.
Use automated network management and
monitoring systems to reduce the infrastructure
costs of WANs.
Network Architecture:
Universal Goals
Interoperability: work with other users
Scalability: ability to expand
Flexibility: ability to add or move users
Security: keep outsiders out
Central Control: manage from one place
System Acquisition and
Installation
Acquisition Strategy
Make or buy
Installation
Direct, phased, pilot, parallel
Training and Evaluation
Centralized or distributed
Mandatory or voluntary
Strategic Partnerships
Outsourcing, etc.
Installation
Acquisition
RFP and RFQ
benchmarks and penalties
Maintenance
Service
Preventive and restorative maintenance
Outsourcing
Outsourcing of IT
Functions
Traditional Outsourcing: removing IT
from a function for a long term (10 years)
Transitional Outsourcing: using outside
services to move to a new environment
over a short term (1-3 years)
Product Acquisition: purchasing
functionality rather than building it
Outsourcing Difficulties
Contracts are structured for long periods
(10 years is normal)
 Early benefits are clear for the customer; late
benefits to the outsource supplier
(When the benefits start building for the outsourcer, the
customer starts wanting change)
 Few outsourcers large enough for big projects
(EDS, CSC, IBM, AT&T)
 Technology evolution changes strategic IT
relevance
Outsourcing Features
More than half of all firms are considering
some sort of outsourcing activity
Acceptance of strategic alliances
Win-win alliances in many business areas
IT’s changing environment
Focus on networking and integration places
extraordinary pressures on legacy and state
of the art systems management
Outsourcing Drivers
Management concern for cost and
quality
Breakdown in IT performance
Supplier pressures
Simplified Company management
agenda
Financial Factors
Corporate culture
What Happens
Vendor specialists
Current IT organization
Basic services
Request for Proposals
OBJECTIVE: OPEN, FAIR
COMPETITION WITH UNDERSTOOD
CRITERIA
Qualified vendors should be offered an
opportunity to bid.
Intelligence
In-house
Vendors
Consultants
Literature
Similar installations
Review services (Auerbach, DataPro)
RFP Process
First Pass:
Eliminate unacceptable alternatives;
reduce the choices to 2-4 alternatives.
Second Pass:
Select the final product.
Need to publish:
Written requirements
Formal presentation
Don't let vendors run the selection
Evaluation standards
RFP Contents
Introduction
Instructions
Objectives
Contacts
Timetable
System Requirements
Mandatory Requirements
Desirable Features
Evaluation Method
Evaluation Criteria
Features Table
Hard Dollar Evaluations
Soft Dollar Evaluations
Delivery Date
Acceptance Criteria & Penalties
Mandatory Features
Desirable features
Desirable Features
Modularity
Compatibility
Reliability
Maintainability
Vendor Support
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
Validation
Test the proposed system to assure that it
does what you want:
Modeling
Simulation
Benchmarking
Work sample analysis
Copyright 1999 Doug Adams
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