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
Type
Transaction
Processing
DSS
Usual
Option
Purchase
Reason
Build
Need frequent changes
and custom displays
Companies want custom
access
Requires special expertise
and security
Web
Build
Interface
Infrastructure Purchase
Requires extensive audit
and error checking
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
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
Feature
Ease of use
...
Weight
10%
Rating
4
Score (=W*R)
.4
Features Matrix
Estimated Value
Feature
Ease of use
...
Value
$20,000
% Present
50%
Score (=W*R)
$10,000
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
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
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
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