How to de-risk your investment in advanced business software
So you’ve decided to invest in a new advanced business software system but you are nervous about:
- A budget blow out
- Missed timelines & deadlines
- Project outcomes that aren’t close to justifying the investment
- Projects that have a negative impact on existing business operations
- Being part of a failed implementation and abandonment of the new system
By paying attention to the following matters you can not only de-risk your project but you stand to obtain far greater value from your investment.
- Appoint a client project manager with authority over project team members and with experience in project management of advanced business system projects.
Your project manager plays a critical role in working with the supplier’s project manager to deliver the project. They will co-ordinate resources, manage delivery of client work effort on time, and will manage treatment of variations. They will also play an important role communicating with interested parties during the life of the project.
- Carefully consider the project scope, and critically analyse the proposed solution, as mid-project changes (project variations) can be expensive.
Don’t short circuit the planning phase. Detailing your specific requirements and matching each of these against the supplier’s solution removes later doubt over the suitability and practicality of the proposed solution, the value of the work effort and the expected outcomes. Mitigate risk by documenting expectations and assumptions pre-contract and refine further during the initial project planning phase.
Be wary of the “it includes everything” statement and be realistic regarding a fixed fee ensuring allowances and exclusions are reasonable. A fixed fee may appeal however if it excludes or diminishes the outcomes you need to justify the investment then it may represent a false economy.
- Be prepared to make an allowance (A contingency) as unexpected occurrences can and do arise from time to time regardless of the quality of the planning and budgeting effort.
Predicting exactly how much time and effort is required to deliver all the business benefits the buyer expects the system to deliver is no science. With experience suppliers can predict fairly accurately however there are so many factors outside of the suppliers control and unknown facts that providing a precise figure, even after detailed analysis, is fanciful.
Some suppliers look to provide buyers with competitive pricing by optimistically representing the work effort and by basing pricing on a perfect project roll out. The perfect project roll out rarely happens.
- Contract with experts with project, product and business acumen.
It’s a rare combination and often only achieved by contracting companies who deliver projects with a team of consultants with complimentary skill sets. Introducing a new advanced business system isn’t the time to skimp on the investment by giving amateurs or jack of all trades consultants a go. That approach equates to seeking out the cheapest heart surgeon to save a dollar. Experience counts for everything in the advanced business software industry as getting the investment wrong can sink a business, getting it right can lead to industry leadership.
- Critically analyse daily rates and estimated project days
Whilst a lower daily rate may seem attractive, if the consultant takes longer to complete tasks than a more experienced consultant then the effective rate and value to your business may lay with the consultant with the higher daily rate.
If the estimated project days differ dramatically for the same product critically analyse the solution, the team members and the scope of work each party has proposed to determine if one has over estimated or one has under estimated your job.
Once you are comfortable working with a vendor consider an initial engagement to properly plan your project so without a full financial commitment you can critically evaluate the project plan, the solution and the timeline to deliver the proposed project. It can give you the purchaser greater confidence over what you will get from your investment.
- Allow adequate time for your staff to complete project tasks as well as their day to day responsibilities.
Unrealistic timelines that do not permit your staff to complete their project tasks will typically lead to a greater spend with the consulting firm and or greater stress at go live.
- Avoid short cuts.
The quality, depth and longevity of your system investment will be impacted by decisions you make during the project. Project expediency may cost your company much more in the long run.
- Place a value on quality services.
The lowest price is often accompanied by higher risk. Inexperienced consultants will take longer to complete tasks and often waste time investigating, correcting previous errors or producing inferior outcomes. Their hourly or daily rate becomes expensive.
No one wants to be ripped off by paying too much but likewise no one wants to pay money where they do not receive a benefit or expected benefits from their investment that in turn justifies the investment.
- Limit the scope if funds availability dictates a scaling back
If a quality outcome requires a scaling back on your project scope, seriously consider doing so, implementing the excluded functionality when sufficient funds permit. More often than not companies need time to absorb all the changes a new advanced business system brings so a staged implementation plan may be worthwhile considering.
- Avoid the fixed fee for ‘everything’ where everything is not defined. This is a recipe for disaster.
A fixed fee from some suppliers is nothing more than a commitment to supply the buyer with an agreed amount of time that when that time is exhausted they demand more money.
Remember consulting firms are looking to maximize their effective daily rate and staff utilization rates. A fixed fee has to be tied to service delivery or project outcomes or both otherwise it will cause issues for all concerned.
A fixed fee for the project elements that can be fixed is best negotiated once the details of what is to be delivered and the outcomes that are to be included in the project are documented and agreed to. For example the fee to create forms and reports once defined can be fixed. Other services such as training however are more subjective. Based on experience, consulting firms can estimate, generally quite accurately, the amount of training required to ensure system users can competently use the system however such a service for budgeting purposes is better managed by assignment of an expected from and to time allowance and then inclusion of strategies to maximize the value of training including train the trainer, the use of visual processes specific to the company’s business processes, authorities and conditions, test systems and system simplification.