When it’s time to replace your company’s aging order management system, you’re faced with a classic dilemma: build, buy or go with a hybrid solution. On one hand, you know that building a system takes significant time, expertise and investment capital.
On the other, you’re not sure if commercially available systems, or a hybrid application, can meet the company’s functional and cost requirements.
What’s the best way to figure it out? Take a ground-up, open-minded and objective approach based on objective, meticulous assessments of all requirements, capital and staff resources, and upfront and ongoing costs.
Strong management skills: the make or break
Inadequate project management and planning and not enough detailed research are by far the biggest culprits behind failed system solutions. Most of the other failure factors listed in the sidebar below are results or symptoms of these two root problems.
From the outset, the project leader must secure and leverage management’s full support to ensure buy-in and cooperation across the organization. It must be established that this is a corporate project, not just “IT’s project.”
Creating this plan — and then revising and expanding on the detail as decisions are made and the next stage approaches — is crucial. Projects founder because assignments and estimate components are not planned at the level of detail necessary to manage and control the process.
Strong management skills and detail focus also come into play in vendor oversight — being on top of the specifics and tracking vendors’ adherence to timetables is mandatory — and in controlling change as a project proceeds.
For example, meticulous cost estimates and budgets can be derailed by “scope creep,” or when the desired capabilities for the system keep expanding. Some of this may be unavoidable, as needed operational changes or even acquisitions may occur during the course of a lengthy system project.
In these circumstances, the project leader must be able to manage up and manage down, in order to revise the plan and budget as efficiently as possible. The leader also needs the management skills to head off unnecessary, costly scope changes by management and others.
Let’s take a closer look at the core user requirements and cost estimates components of project management:
User requirements and project stages
It’s essential to have an accurate, thorough understanding of current user requirements and how these are likely to evolve. The project leader needs to research how well the current application solution meets the company’s current needs from a detailed business application functions perspective.
This knowledge base is then used to research and determine how well each prospective application will meet the current and longer-term projected needs of the various specific users and management.
The user requirements evaluation should include determining the scalability needed for sales volume goals and the basic hardware and software platform direction. It should also cover all capabilities and functions needs relating to ecommerce, marketing and merchandising, the call center, the warehouse and the supply chain.
Once you’ve drafted the user requirements, the project can proceed down separate project paths to determine how the desired requirements will be satisfied by various options.
With internally developed systems, analyze whether the existing system can serve as a foundation for the future system. If it can’t, redesigning, reprogramming and implementation will require more work, time and expense. A realistic estimate of internal development costs entails several stages. You have to start by projecting detailed user requirements. You can then produce a high-level, functional overall design, followed by subsystems designs. Next, develop estimates for the application’s technology and programming development, and for testing at the program, subsystem and total-system levels.
Research and document the number of people and skillsets required in each area and level. Remember: Order management systems alone often have thousands of programs and hundreds of tables or files.
For commercial systems, once user requirements have been detailed, you have to develop an RFP; research vendor/system core capabilities to narrow your prospect list for the RFP; evaluate the responses both on paper and by thorough demos, site visits and reference checks; and finalize your proposal for submission to management.
Assessing total costs, realities
Pinning down all internal development costs, skills and time factors is complex and laborious. While determining commercial systems costs and schedules is a bit easier, you will never have 100% of the information needed to make perfect comparisons.
At some point, you have to use the most detailed information available to finalize your cost and timetable estimates, apply your judgment, and decide on the best direction.
From a cost and budget standpoint, keep in mind that a common and serious mistake is failing to take into account the total costs of ownership for each option over a three- to- four-year horizon.
Internal option evaluation should include all costs for hardware and software; IT design, programming and implementation; outside professional services required; database administrators and other support professionals; and all aspects of annual maintenance and support.
Commercial systems evaluations should include all deposits and payments for licenses, as well as costs for the core vendor’s software and professional services, third-party software and services, conversion, training and annual support (both vendor and associated IT support costs).
Anticipate and try to build in some budget leeway for the operational changes/scope creep factor. Well-prepared budget estimates often turn out to have been underestimates because changes requiring plan revisions increased the project’s costs. You have to assess your company’s ability or readiness to implement various options not only on a cost basis, but on the human resources and corporate culture levels.
Curt Barry (email@example.com) is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm.