11

Some Management IssuesSome Management Issues

22

ScopeScope

ProcurementProcurement ContractsContracts LegalLegal

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Procurement stagesProcurement stages

Feasibility studyFeasibility study Prepare Prepare ITT (Invitation to tender)ITT (Invitation to tender) Select pSelect potential supplieotential suppliers and send ITTrs and send ITT Evaluate bids and produce sEvaluate bids and produce short listhort list Short listed bidders give presentationsShort listed bidders give presentations Final evaluation of bidsFinal evaluation of bids Request for ‘best and final offers’Request for ‘best and final offers’ Final selectionFinal selection

Note that, for procurements over Note that, for procurements over €200,000,€200,000, for public for public bodies in the EU, the procedure is laid down by a directive.bodies in the EU, the procedure is laid down by a directive.

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Feasibility StudyFeasibility Study

Start from the problem.Start from the problem. Identify the constraints.Identify the constraints. Try to identify several ways of solving it (or Try to identify several ways of solving it (or

alleviating it or avoiding it).alleviating it or avoiding it). Then for each possible solution:Then for each possible solution:

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Feasibility Study (cont)Feasibility Study (cont)

What exactly do we want?What exactly do we want? Is it technically feasible?Is it technically feasible? Are there packages available?Are there packages available? How much will it cost?How much will it cost? How long will it take?How long will it take? How much will it save us?How much will it save us?

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Build or buy?Build or buy?

The software industry has been repeatedly The software industry has been repeatedly criticised for re-inventing the wheel. criticised for re-inventing the wheel.

Building you own is very expensive.Building you own is very expensive. Buying a package leaves you at the mercy Buying a package leaves you at the mercy

of the supplier.of the supplier.

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PPackage software advantagesackage software advantages

kknown, tried and proven (reduced risk) nown, tried and proven (reduced risk)  oother usersther users manymany software bugs eliminated software bugs eliminated mmaintainedaintained and and up-to-date up-to-date costs known more preciselycosts known more precisely pprobable enhancementsrobable enhancements ddocumentation already availableocumentation already available..

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Custom built advantagesCustom built advantages

Because it only has to meet your needs, it may be Because it only has to meet your needs, it may be a lot simpler (easier to use and less likely to have a lot simpler (easier to use and less likely to have bugs) than a general purpose package.bugs) than a general purpose package.

ddeveloped according to eveloped according to youryour specification specification should fit should fit in with user environmentin with user environment can be can be modified to modified to suit changing user suit changing user

requirementsrequirements users can be involvedusers can be involved from from the the outsetoutset..

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Procurement stagesProcurement stages

Feasibility studyFeasibility study Prepare Prepare ITT (Invitation to tender)ITT (Invitation to tender) Select pSelect potential supplieotential suppliers and send ITTrs and send ITT Evaluate bids and produce sEvaluate bids and produce short listhort list Short listed bidders give presentationsShort listed bidders give presentations Final evaluation of bidsFinal evaluation of bids Request for ‘best and final offers’Request for ‘best and final offers’ Final selectionFinal selection

1010

Invitation to Tender (ITT)Invitation to Tender (ITT)

Otherwise known as a request for quotations Otherwise known as a request for quotations (RFQ)(RFQ)

Results of feasibility studyResults of feasibility study Summary of functional and non-functional Summary of functional and non-functional

requirements (mandatory, highly desirable and requirements (mandatory, highly desirable and desirable)desirable)

Terms and conditions Terms and conditions  Timetable and budgetTimetable and budget Information required Information required

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Selecting list of tenderersSelecting list of tenderers

Particularly important in public procurement, Particularly important in public procurement, where rules may say that lowest tender where rules may say that lowest tender wins.wins.

Important that they have Important that they have relevantrelevant experience and have financial resources experience and have financial resources commensurate with the job.commensurate with the job.

Purchasing departments tend to lump all Purchasing departments tend to lump all software supply together.software supply together.

1212

Draw up short listDraw up short list

Examination of proposalsExamination of proposals and e and elimination of potential limination of potential suppliers because:suppliers because:

They don’t meet (or don’t understand) the requirements.They don’t meet (or don’t understand) the requirements. They don’t meet other constraints (e.g. we said we They don’t meet other constraints (e.g. we said we

wanted delivery in September 2007 and they’re offering wanted delivery in September 2007 and they’re offering delivery in April 2009).delivery in April 2009).

Their proposal does not contain the information asked Their proposal does not contain the information asked for (e.g. they don’t give a fixed price, although we asked for (e.g. they don’t give a fixed price, although we asked for one).for one).

We don’t believe their proposed solution will work.We don’t believe their proposed solution will work. We are unhappy with company (e.g. we don’t think they We are unhappy with company (e.g. we don’t think they

have the resources).have the resources).

1313

PresentationsPresentations

Opportunity to clarify things not clear or not Opportunity to clarify things not clear or not stated explicitly in the proposal.stated explicitly in the proposal.

Opportunity to ask awkward questions.Opportunity to ask awkward questions. Opportunity to ask for changes.Opportunity to ask for changes. Can we work with these people?Can we work with these people?

1414

Evaluating bidsEvaluating bids

Common procedure:Common procedure: Produce a list of criteria and weights.Produce a list of criteria and weights. Get a group of people to score each Get a group of people to score each

proposal between 1 and 5 on the basis of proposal between 1 and 5 on the basis of how well it meets each of the criteria.how well it meets each of the criteria.

Add up the total of scores Add up the total of scores × weights for × weights for each proposal.each proposal.

1515

Criteria for evaluating proposals for Criteria for evaluating proposals for bespoke softwarebespoke software

Are the price and timescale realistic?Are the price and timescale realistic? Does the company have sufficient rDoes the company have sufficient resources of esources of the the

right level right level actually actually available?available? Quality of references.Quality of references. Stability and financial soundness.Stability and financial soundness. Project management expertise.Project management expertise. QQuality management culture.uality management culture. Fit with requirements.Fit with requirements.

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Criteria for evaluating packagesCriteria for evaluating packages

Is the functionality adequate?Is the functionality adequate? Does it meet the non-functional Does it meet the non-functional

requirements?requirements? How many customers are currently using How many customers are currently using

the package?the package? Can you talk to some of them?Can you talk to some of them? What do you get?What do you get?

1717

Evaluation of packages (cont)Evaluation of packages (cont)

Will you need assistance to implement it?Will you need assistance to implement it? How much does it (really) cost (including How much does it (really) cost (including

training, consultancy, optional modules, training, consultancy, optional modules, maintenance)?maintenance)?

How well established is the producer (and How well established is the producer (and the supplier if they are different)?the supplier if they are different)?

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Evaluating bids (example)Evaluating bids (example)

1.1. How well does the proposed system meet the How well does the proposed system meet the functional requirements? [15]functional requirements? [15]

2.2. Is the supplier sufficiently well established Is the supplier sufficiently well established financially? [10]financially? [10]

3.3. How easy will it be to expand the system to meet How easy will it be to expand the system to meet future requirements? [5]future requirements? [5]

4.4. Does the supplier have sufficient experience in Does the supplier have sufficient experience in the application area? [5] the application area? [5]

1919

Final selectionFinal selection

Request for “best and final offers” often results in Request for “best and final offers” often results in better offer being made.better offer being made.

Some public procurement rules don’t allow this.Some public procurement rules don’t allow this. Remember to look at lifetime costs.Remember to look at lifetime costs. In public procurements in the end you probably In public procurements in the end you probably

have to take the cheapest.have to take the cheapest. In other cases you look for the best value for In other cases you look for the best value for

money.money.

2020

UWA’s accounting package UWA’s accounting package requirementsrequirements

Functional requirements easily met.Functional requirements easily met. Procurement dominated by non-functional Procurement dominated by non-functional

requirements:requirements:– Client server architecture, with server running Client server architecture, with server running

UNIX and Oracle and PCs running Windows as UNIX and Oracle and PCs running Windows as clients.clients.

– Up to 100 simultaneous users.Up to 100 simultaneous users.– Network, server and PCs already in place.Network, server and PCs already in place.

2121

UWA’s accounting package – UWA’s accounting package – procurementprocurement

(In 1996) only three suppliers able to bid.(In 1996) only three suppliers able to bid. One dropped out because it appeared they couldn’t meet our One dropped out because it appeared they couldn’t meet our

requirements.requirements. Left with two. Both had ISO 9001 certification. One was twice the Left with two. Both had ISO 9001 certification. One was twice the

price of the other with no obvious advantages. Both had been in price of the other with no obvious advantages. Both had been in business for about 10 years and had plenty (around 100) customers for business for about 10 years and had plenty (around 100) customers for their earlier product.their earlier product.

Both suppliers warned us that their software was incomplete and had Both suppliers warned us that their software was incomplete and had many bugs.many bugs.

Existing customers of cheaper company said the it was good at Existing customers of cheaper company said the it was good at mending bugs and at doing what it promised.mending bugs and at doing what it promised.

We chose QL, developed and supplied by Distinction, a Swansea-We chose QL, developed and supplied by Distinction, a Swansea-based company, previously known as MicroCompass.based company, previously known as MicroCompass.

2222

UWA’s accounting package – UWA’s accounting package – costs (1)costs (1)

Basic cost £50,000.Basic cost £50,000. Required to take 10 days project Required to take 10 days project

management from supplier at £800 per day, management from supplier at £800 per day, plus expenses.plus expenses.

Needed another 10 days consultancy at Needed another 10 days consultancy at £1,000 per day.£1,000 per day.

Maintenance charge 20% = £10,000 per Maintenance charge 20% = £10,000 per annum.annum.

2323

UWA’s accounting package – UWA’s accounting package – costs (2)costs (2)

Training – six people on one week courses at Training – six people on one week courses at £3,000 per course, plus travel and subsistence £3,000 per course, plus travel and subsistence expenses, £20,000.expenses, £20,000.

Required to provide and pay for an ISDN line for Required to provide and pay for an ISDN line for maintenance purposes.maintenance purposes.

Had to replace 20 PCs in Finance Office by new Had to replace 20 PCs in Finance Office by new ones that could run Windows 3.1 – cost £25,000.ones that could run Windows 3.1 – cost £25,000.

16 extra Oracle licences required for server, cost 16 extra Oracle licences required for server, cost £12,800.£12,800.

2424

QL: First five years’ costsQL: First five years’ costs

Year 1Year 1 £126,000£126,000

Years 2 to 5Years 2 to 5 £13,500 p.a.£13,500 p.a.

2525

UWA’s accounting package – UWA’s accounting package – costs (3)costs (3)

New and much enhanced version released New and much enhanced version released in 2000.in 2000.

Had to take it because support for previous Had to take it because support for previous version would be withdrawn.version would be withdrawn.

Cost £10,000 but had also to upgrade PCs Cost £10,000 but had also to upgrade PCs to Windows 2000, upgrade Oracle, and to Windows 2000, upgrade Oracle, and upgrade server (necessary for other upgrade server (necessary for other reasons).reasons).

2626

UWA’s accounting package – UWA’s accounting package – costs (4)costs (4)

Web-based version now introduced – cost c. Web-based version now introduced – cost c. £40,000.£40,000.

Big advantages (maintenance much easier, Big advantages (maintenance much easier, fewer demands on client PCs, easier for fewer demands on client PCs, easier for non-Finance Office staff to use.non-Finance Office staff to use.

2727

UWA’s accounting package – UWA’s accounting package – overall experienceoverall experience

Initially quite a lot of problems, many of them arising from bad software Initially quite a lot of problems, many of them arising from bad software engineering.engineering.

Difficult to see that they were complying with ISO 9001.Difficult to see that they were complying with ISO 9001. Project manager not very competent; consultants very competent.Project manager not very competent; consultants very competent. Company generally very helpful and problems now fixed.Company generally very helpful and problems now fixed. Ten years after buying it, we are still extending our use of it and getting Ten years after buying it, we are still extending our use of it and getting

new benefits.new benefits. Given when we wanted to buy, we couldn’t have done better.Given when we wanted to buy, we couldn’t have done better. We were lucky. The package we selected proved successful and the We were lucky. The package we selected proved successful and the

supplier well managed and honest.supplier well managed and honest.