Information Technology Information Technology Project ManagementProject Management

Buying Packaged Software: RFPs and Vendor Selection

Why create software when Why create software when you can buy it? you can buy it?

Many times, the best solution is to buy packaged software

Often begins with the development of a Request for Proposal (RFP)

Detailed list of questions submitted to vendors

RFP

What Should an RFP What Should an RFP Contain?Contain?

Key dates in the proposal process– RFP release, proposal due date, proposal

evaluation, and so forthContact information

– Who the vendor may contact and how communication should be done

Information about your business and your requirements

Criteria for Evaluating Vendor Criteria for Evaluating Vendor Software PackagesSoftware Packages

Financial viability of vendorOther vendor characteristicsContract terms and conditionsOpinions of other users of the packagePackage characteristics

Financial Viability of the Financial Viability of the VendorVendor

Does the vendor have sufficient capital/surplus to meet its on-going obligations and to absorb any unexpected financial losses?

Does the vendor have any contingent liabilities (e.g., lawsuits) that could adversely affect its financial condition?

Has the vendor achieved profitability from its operations?

Is there a concentration of revenue in one or relatively few customers?

Other Vendor CharacteristicsOther Vendor Characteristics Does vendor provide timely on-site and/or

telephone support? Does vendor track user questions/problems? Does vendor adequately test new products and

releases? Does vendor have sufficient knowledgeable staff? Does vendor provide quality training and

documentation?

Contract Terms and Contract Terms and ConditionsConditions

If source code is not a deliverable, will it be maintained at a third party location (e.g., bank vault), and be made available in the event the vendor goes out of business?

Is the timeframe within which the vendor is required to respond to problems/questions clearly defined?

Is the extent of vendor support, training, and documentation clearly defined?

Contract Terms and Contract Terms and Conditions cont’dConditions cont’d

Is the timetable for all deliverables and payments clearly defined?

Has a favorable relationship between deliverables and payables been negotiated?

Are all costs clearly defined? Are there penalties if contractual agreements are not

met by the vendor? Does the contract allow for in-house use of the package

for acceptance testing purposes prior to purchase?

Opinions of Other Users of Opinions of Other Users of the Packagethe Package

How satisfied are they? Would they purchase it again?

How responsive is the vendor to problems?Is the system easy to use?What kind of conversion/implementation

problems were encountered?How difficult is it to interface the package with

existing systems?What other products were considered and why

did they select this one?

Package CharacteristicsPackage CharacteristicsDoes it provide the needed functionality?Is it easy to use?Is its design flexible enough to allow changes?Does it have good documentation and help

screens?Does it use current but proven technology for

which support is available?Does it include appropriate control features?

Pros and Cons of Packaged Pros and Cons of Packaged SoftwareSoftware

Pros Cons

Remember: Customizing Remember: Customizing Packaged Software Drives Up Packaged Software Drives Up

Total CostsTotal Costs

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Project Management Project Management Challenges RemainChallenges Remain

Just because you buy software or enter into an outsourcing arrangement doesn’t mean that you can count on the vendor to manage the project

Requirements still have to be determined and system still have to be implemented along with accompanying organizational changes . . . And these are the two key areas where project often go awry

The same project management principles apply