Steps to successful technology acquisition

13 May 2020 • 3 mins read

Amidst the oftentimes sombre news about the Covid-19 pandemic are encouraging reports on how companies are using technology to overcome the unprecedented disruptions they face.

Cloud computing, data analytics and voice-over-IP technologies are enabling companies to continue operations despite office closures - conducting virtual business meetings, matching orders to delivery slots in real-time, serving customers via interactive digital platforms and keeping office workers in productive employment through telecommuting.

They clearly demonstrate the economic and human benefits of digitalisation, and are spurring others to accelerate the use of technology across their organisations.

Nevertheless, companies should resist the temptation to rush headlong into acquiring the latest and shiniest pieces of technology. Hasty unplanned technology acquisitions can turn into an unnecessary drain on a company’s limited finances and management time. To avoid such costly quagmires, careful staging of the technology procurement process is essential.

As a first step, it is important for the company to consider what solution it truly needs for its own business requirements and to select the most appropriate technology supplier accordingly.

Can the identified requirements be met by commercially available off-the-shelf (COTS) products? COTS products offer hardware and software solutions which are pre-packaged for relatively fast deployment to meet the standard requirements of most enterprises. If not, does the company require a blue-sky solution which integrates COTS products with customised coding and bespoke system architectures? These considerations help to filter the field of suitable technology suppliers which the company can approach with an invitation to tender (ITT) or invitation to quote (ITQ).

The task of preparing the company’s ITT or ITQ is foundational to the technology procurement process. This should be done by a multi-stakeholder team comprising procurement personnel as well as managers with in-depth knowledge of the underlying business and operational needs. In crafting the desired solution specifications, the team must be mindful not to over-specify requirements as they could result in significant cost and delivery overruns.

For example, is it really necessary to require state-of-the-art machine learning algorithms for a chatbot intended to answer a finite range of customer queries? Or can such a chatbot be more efficiently built and operated with open source scripts like Python or JavaScript? And is the chatbot so mission critical that it must be hosted on a battery of dedicated servers with not less than 99.95% uptime?

A disciplined methodical approach in scrutinizing technical requirements against actual business needs is paramount if project costs and delays are to be contained.

In addition to right-sizing its technical requirements, the company should aim to furnish as much information as feasible to potential suppliers. The ITT or ITQ should contain details on its business objectives, conditions of contract, implementation timeframe as well as procedure for suppliers to seek clarifications. It is frequently helpful to conduct briefing sessions to share the company’s expectations and to clarify any assumptions or issues which potential suppliers may have. For example, does the company operate any existing hardware or software which it intends to retain? If so, does the new technology solution need to interface with such legacy systems?

These systems may be running on software written in old programming languages like COBOL which will require suppliers to source for project personnel skilled in these arcane computer languages. Such clarifications and information sharing will enable potential suppliers to better craft their offers to meet the company’s requirements. This should also limit the risk of mismatched expectations and reduce the likelihood of potential disputes between the parties.

Following the issuance of its ITT or ITQ, the company can expect to receive responses from interested suppliers. Their offers would contain details of various proposed solutions, associated pricing structures, projected delivery timelines and information on the suppliers’ personnel responsible for implementing the solutions.

Aside from evaluating the financial costs and technical capabilities of these proposed solutions, other areas which the company should review include the licensing terms, change control and resourcing mechanisms.

The following are some lines of enquiry which the company may consider pursuing. Does the software licence limit the number of concurrent users within the company? Would different licensing conditions and metrics apply if the software is installed in a virtualised operating environment? What is the change control process to effect possible project changes? How are the cost and timeline implications for such change requests assessed? Has the supplier resourced its proposal with an adequate number of skilled personnel? If these personnel are subsequently redeployed, what is the mechanism for ensuring their replacements have similar experience and skills?

A proper evaluation of the financial, legal, technical and project management aspects of the offers, will enable the company to make a well-informed decision on the most suitable solution and supplier for its requirements.

The company’s selection of the right technology solution and supplier is a critical success factor. As the technology project moves into the build and delivery stages, significant levels of cooperation will be expected from both parties. Where agile software development methodologies are employed, the supplier will need regular feedback from the company’s business users throughout its cycle of design, coding and testing activities.

In turn, the company will expect the supplier to fix any coding bugs or user-experience issues in a timely fashion. These are fair expectations as the company and the supplier need to work together to achieve the desired results. Having clear project objectives and cultivating a strong relationship with effective team engagement will provide a cooperative environment where the procured solution can be implemented quickly and effectively.

A successful technology procurement will buttress the company’s ability to ride out the storm and ensure its business is well-positioned to stay ahead digitally when the crisis is over.

Contributed by Vincent Kor, who is the General Counsel of the Government Technology Agency where he advises and works on various technology law matters.

This article was first published by the Government Technology Agency of Singapore on May 6, 2020. The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of Bank of Singapore Limited or its affiliates.


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