In today's world, the vast majority of companies use external suppliers at least in some of their IT systems. In the previous part we have described the common problems like:
- BUZZWORD
- LOW ENTRY PRICE - WATERFALL
- PAY FOR OUR PROBLEMS – AGILE
- THE RIGHT PERSON MAKES DECISIONS
- PROMISES
- “I DO NOT KNOW AND DO NOT WANT TO KNOW”
- THE CUSTOMER DOES NOT INVOLVE
- THE CUSTOMER HAS NO VISION OF ITS SYSTEMS
- SAVINGS MAXIMIZATION
- TOO MANY SYSTEMS WITH ONE SUPPLIER
and here we will propose some tips which can be used to avoid them.
"What should you do then?"
Surprisingly there are just a few rules that you must follow, at least in part, to avoid problems in the future. (Of course, the list of rules can be extended)
Sometimes compliance is not easy in some business environments, however, the more attention we pay to them, the less chance we have for future problems.
The selection of a supplier should take place with the participation of at least several equivalent bidders.
This requirement seems obvious. However, often the supplier "enters" the client's company in a way that suggests that it is the only entity on the market offering a given service, and the buyer withdraws from the planned tender procedure. Therefore, we should keep in mind that the IT world is full of great companies ready to meet clients needs.
Too many systems with one supplier. It may happen that a client satisfied with the previous implementation entrusts the implementation of subsequent key systems in the company to the same supplier. While this is desirable on a small scale, the customer must be careful not to entrust one supplier with too many important systems. The supplier, knowing that he has a dominant position, may begin to dictate the terms of the client, manifesting in overstatement of subsequent changes or long implementation times. It can also offer the client old technologies that will allow savings on the supplier's side, as well as higher operating costs on the client's side. This phenomenon is called "Vendor locking".
People who have an idea about technology should participate in discussions with suppliers from the very beginning.
Technical people can look at the service offered pragmatically and recommend the best solution in terms of technology and support, and thus the subsequent costs of "operating" the system. Although their voice does not have to be the most important, it avoids many wrong decisions appearing at the beginning of the process.
The client should have a vision of IT systems and environments development.
It seems crucial to understand that the development of IT systems is also part of business, even though it often affects revenues only indirectly. Therefore, the client should allocate some resources for coordinating IT development because their costs usually turn out to be lower than the savings resulting from planned architecture development.
The customer should be involved in specifying the requirements.
In the case of Agile, this means delegating a person to assume the function of a Product Owner (PO) for the entire duration of the project. In the case of the waterfall methodology, a strong commitment to defining requirements, followed by final tests and product acceptance. Without such involvement, the project may fail despite the best intentions and the commitment of the supplier.
The customer should supervise the supplier's activities.
The requirement seems unnecessary at first glance. However, it often turns out that the project can get stuck in a trivial place or drift in the direction that the client didn't want to go.
If we run projects in the Agile methodology, even more significant commitment and constant contact with the supplier is required because the work result is delivered in intervals and the client must continuously monitor progress, backlog, and set task priorities.
Estimation of costs and profits in the long run.
When implementing a new system, you need to think carefully about its use strategies in the long run and calculate the TCO - Total costs of ownership, e.g., for five years, taking into account additional changes introduced in this period, infrastructure, licenses, etc. Often, after such an analysis, it turns out that that incurring slightly higher expenses for initial implementation saves a lot more money at a later date.
Analysis of manufacturing processes on the supplier's side.
Under challenging projects, it also happens to analyze software development processes on the supplier's side, to assess at the stage of its selection how the subsequent cooperation will take place. It is not a frequent phenomenon and requires excellent competence on the client's side, but it allows you to avoid many costly mistakes, especially in sensitive or expensive projects.
Of course, there are many more elements to pay attention to, such as negotiation and monitoring of SLA, impression in a traditional way or DevOps, selection of the optimal environment (server room or cloud), costs of system changes, supplier's experience in new technologies, supplier technology partnerships with large market players determining the technologies used. The selection and proper management of the supplier are therefore crucial for matching the supplier to the customer and translates into subsequent costs of system development and support.
"How much it cost ?"
Does it mean that I have to have large IT team to cover it all? NO!
You don't need a large team to provide the minimum support. However, it should be clearly said that the level of competence of people on the client's side delegated to IT projects will have a significant impact on the result of ongoing projects. Sustainable expenditure in this area can quickly pay back and save significant amounts at a later date.
In many companies, doubts arise when we compare costs vs profits directly at spreadsheet. A hard digit representing the cost of implementation often wins in a collision with difficult to estimate costs that will appear at a later date. As a result of focusing only on the lowest implementation cost, we often get a higher total cost of the system spread over years of operation, less flexibility and the associated smaller system capabilities. Thus, the length of the time horizon considered for an IT system can have a significant impact on costs.
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