If you’re on the hunt for a new system, you know the process and the choices can be daunting. You have to remember that the vendors’ job is to sell; yours is to match up your application requirements with the best application strategic approach. The following five factors will help you do this.
RETURN ON INVESTMENT
How will the system improve my bottom line or increase sales? While there are always many intangibles, management should strive to get the user community involved to determine the system’s feasibility based on savings.
Typically, this may cover the current year to the first year under the new system, or the current year operation to several years out to reflect growth. Companies are now striving for short-term paybacks—less than three years, and often as little as 12-18 months.
TOTAL COST OF OWNERSHIP
A frequent mistake that companies make is to look only at the purchase price and what the vendor has in the proposal. You also need to consider the vendor costs for modification, systems integration, adequate training and on-site services, conversion, etc. It’s important to look at this on a multiyear basis: What are the incremental licensing costs as your business grows?
BUILD VS. BUY
If you’re developing your application inhouse, should this be the strategy
longer term? Consider your growth and complexity—and the rapidly changing technologies of servers and the Internet.
MATCHING APPLICATION NEEDS TO VENDOR FUNCTIONS
There are several steps involved in any reliable process for system selection and implementation:
• Establish a project team, including the project manager
• Develop detailed user requirements across the enterprise, including business statistics and transaction volumes (peak and average)
• Conduct general vendor research and explore IT models: license, SaaS, etc.
• Develop your request for proposal (RFP) and send to a short list of vendors
• Conduct a gap analysis comparison matrix between your requirements and vendors’ responses
• Evaluate vendor proposals and third party software and hardware if necessary
• Invite vendors from your short list to do scripted demos. This will verify vendors’ responses and show most of the critical applications
• Identify potential modifications and get detailed specifications with estimates for inclusion in the agreement
• Determine the amount of hardware redundancy you’ll need for failover and for testing and version upgrade environments
• Identify integrations to other internal and external applications and service bureaus
• Create the detailed implementation plan, milestones, training and conversions required
• Review ROI
• Do vendor due diligence by conducting scripted reference calls and site visits
• Select and negotiate final partner.
• Interview the vendor’s implementation team and evaluate their experience
• Review expected time frames and major milestones with the vendor
• Develop internal training and conference room pilot programs
• Work up a detailed plan with responsibilities and completion dates
• Determine conversion plan; what and how much, and what tables/files are going to be built manually
And finally, as part of the implementation plan you have to develop necessary contingency plans, since you never know what could happen.
Joseph “Tocky” Lawrence, vice president of F. Curtis Barry & Co., will cover “Selecting & Implementing the Right System,” on April 9, at NCOF.