www.rudeandersen.com   •   lars@rudeandersen.com   •   +45 5070 0070

 

 

 

Lars R. Andersen

 

Freelance CIO/CTO  •  Management consultant  •  Project manager  •  IT architect

 

  • Flexible, hands-on, experienced and cost-effictive support.
  • Specific competences within IT management and mobile networks
  • Selected experience available in free white papers

 

Note that the information here contains my person viewpoints and not those of any present or previous employer and is not updated with latest employment history

 

 

IT procurement and contracts

 

Securing an adequate IT contract can come a long way from following a few principles:

 

  1. Be explicit in the effort expended on the process vs. the value of the contract in order to avoid to loose contracts for critical agreements and excessive contracts for small agreements.
  2. Use the commercial leverage. With few exceptions, vendors will stretch themselves in the face of a potential order.
  3. Understand the dynamics following signature: once a system or contract has been implemented, the shifting costs will be such that the vendor will have a huge advantage in negotiations.
  4. Be vary when basing the agreement on vendor standard contracts; vendor contracts are often very unbalanced.
  5. In all situations, in particular if using vendor contracts, ensure that key terms are agreed early in the process when the commercial balance is still strongly in your favour.
  6. For large or critical agreements, consider expending the effort in setting up own contracts to secure that discussions start in your favour and make comparison of terms between vendors a lot simpler.

 

The following illustrates how the sourcing process may be set up in general.

 

 

The steps are as follows.

 

Strategy/direction. As a first step, the overall direction of what needs to be procured must be in place. This will be driving the decision for a replacement of system, sourcing of operation or what the specific sourcing project is about. In addition, the expected effort, approach, timeline, staffing etc. must be in place.

 

Vendor options. Also as part of the part of the first phase, there must be a gross list of vendors that are expected to fulfil the functional, technical and commercial requirements.

 

 

These first two steps, particularly the direction (strategy) are significant undertakings in their own right.

 

The next steps consist of preparing the material that is to be sent to potential vendors and submitting it to the vendors.

 

 

Prepare requirements lists the functional and technical requirements. The details of this depend on what the object of procurement is and how much one desires to specify.

 

Prepare RFQ material, i.e. the more formal documents. Some of this is generic and some dependent upon the specific object of procurement.

 

Submit tender and short-list consists of sending the material to selected vendors and, based on the answers, select the most suitable for further discussions.

 

 

Following getting the responses from the vendor, a phase of comparing and normalizing responses follows. This can be quite formal with minimal dialogue in case one chooses to stick strictly to the requirements. However, as much more value can be gained by leveraging the strengths of the vendor rather than insisting on one’s own requirements, a dialogue is generally better than very formal interaction.

 

For each vendor, understanding the strengths of the solution proposed, and going into detail to understand how the vendor may support your requirements.

 

After the iterations with the vendors, a selection based on as normalized comparison as possible must be made. This can be either a final contract or a memorandum of understanding, depending on the level of finalization. In order to ensure consistency towards the vendors, the selection should be final.

 

Following the selection, there is an implementation process. The process will be designed as part of the sourcing process, but is obviously very depending upon what is being procured.

 

Experience and offerings

Activity

Contribution

Process supportProvide assistance on methodology, templates for specifications, templates and process for RFI/RFQ, contract templates, staffing, duration etc.
Project managementEnsure progress of transformation project.
PresentationManagement level presentation of findings, progress, issues, challenges and choices.