Key Issues, Trends and Risks in IT Procurement
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Transcript of Key Issues, Trends and Risks in IT Procurement
Presented ByPresented By
Beverley SinclairBeverley Sinclair
Key Issues, Key Issues, TrendsTrends
and Risksand Risksin IT in IT
ProcurementProcurement
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22KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
OverviewOverview
The current IT environment
IT project key issues, trends and risks
Strategies/key messages that demonstrate to potential customers that your company and team are the
lowest risk in a high-risk environment
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33KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Changing TimesChanging Times
Period of rapid change Government and industry are radically
reforming business practices through several initiatives including Business Process Reengineering (BPR), Total Quality Management, learning organization culture adoption
DoD has cancelled Military Standards that for many decades governed how the military-industrial complex worked.
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44KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
This is not a temporary aberration caused This is not a temporary aberration caused by a radical fringe.by a radical fringe.
The changes are mainstream, The changes are mainstream, sweeping, real, and here to stay.sweeping, real, and here to stay.
Changing Times Changing Times (cont’d)(cont’d)
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55KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Change is the New ParadigmChange is the New Paradigm
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66KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Why the Changes?Why the Changes?
These changes result from and introduce a new world order
We are entering a period of experimentation, uncertainty and confusion as we try to invent, understand, and cope with new ways of doing business.
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77KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Everything is being Everything is being challenged. Nothing is challenged. Nothing is remaining the same.remaining the same.
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US DoD InitiativesUS DoD Initiatives
Current reforms are a continuation of a long struggle to find better ways to do business
Admiral Perry has issued direction statements which move the requirements for industry from compliance to military quality standards towards certification against the international quality standards (ISO 9000 series)
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99KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Merging Military and Commercial Merging Military and Commercial AcquisitionsAcquisitions
In the USA, there is a drive towards a single process national industrial base to achieve: unimpeded access to the best emerging
technologies; single process facilities; rapid process and product improvements; high quality through international commercial
standards; and economies of scale.
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1010KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
The Canadian Department of National Defence is showing signs of following in the same direction.
Merging Military and Commercial Merging Military and Commercial Acquisitions Acquisitions (cont’d)(cont’d)
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1111KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
So What is Replacing Military So What is Replacing Military Standards?Standards?
How will DoD be certain that a company will do a good job?
By looking much more closely at By looking much more closely at each company’s track record.each company’s track record.
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1212KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Increasing Importance of Past Increasing Importance of Past PerformancePerformance
In the past, proposal were evaluated on the basis of its merits without considering previous performance.
Today, past performance is worth 50%50% in USAF Acquisition Reform projects!
Proposal MeritProposal Merit
Proposal RiskProposal Risk
Past PerformancePast Performance(technical, cost, (technical, cost, schedule)schedule)
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1313KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Cost as an Independent Variable Cost as an Independent Variable (CAIV)(CAIV)
In the past, cost was a dependent variable Performance at whatever cost Unit price and schedule adjusted to achieve
performance
COST
PERFORMANCE
Acceptable
Affordable
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1414KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What Does This Mean to What Does This Mean to Contractors?Contractors?
Government and Military can no longer afford to pay for the last few % of performance
Cost, schedule and performance are all subject to trade-offs
Affordability is a key requirement in future acquisitions
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1515KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What Does This Mean to What Does This Mean to Contractors?Contractors?
Wastage and rework is no longer acceptable or affordable
Wastage and rework are major elements of RISK that must be tracked, measured and managed for elimination
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1616KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
IT Industry TrendsIT Industry Trends
Government-Industry partnering (cooperation, not control, and shared risk)
Integrated, co-located team includes all functional disciplines
Project Managers have the authority to get the job done
Concurrent Engineering—electronic capture of team design effort
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1717KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
IT Industry Trends IT Industry Trends (cont’d)(cont’d)
Users are part of the team—involvement in design trade-offs
Common management toolset across government-industry team
Performance measurement—cost/schedule and technical
Reward good performance with incentives
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1818KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Govenment and Military will Govenment and Military will involve industry earlier in the involve industry earlier in the
acquisition cycle. acquisition cycle. Performing market analysis to learn what is
possible before picking an acquisition strategy Conducting pre-solicitation conferences to obtain
input from industry Issuing a draft copy of the SOR or RFP and ask for
comments Conducting common-sense trade-offs to balance
performance, cost and schedule
In other words, Government and Military are In other words, Government and Military are paying more attention to getting their needs paying more attention to getting their needs
understood.understood.
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1919KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What We’ll Be Seeing More Of...What We’ll Be Seeing More Of...
Most Products will be Commercial and Non-Developmental Products. Design and development will be solicited only
when it is unavoidable
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2020KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What We’ll Be Seeing More Of... What We’ll Be Seeing More Of... (cont’d)(cont’d)
Standards will be Selected and Tailored Premature application of military standards and
specifications will be avoided Overspecification will also be avoided. References
will be tailored Incrementally-scaled requirements-specification-
solution cycle in an iterative approach (Spiral Model), using Rapid Prototypying, Rapid Application Development with ‘requirements to solution’ traceability and measurable, expected results management
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2121KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What We’ll Be Seeing More Of... What We’ll Be Seeing More Of... (cont’d)(cont’d)
Emphasis on complete solutions, faster delivery
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2222KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What We’ll Be Seeing More Of... What We’ll Be Seeing More Of... (cont’d)(cont’d)
Evaluation of Bids Clear information will be provided explaining
the source selection criteria so that these may be used in bidders’ trade-off decisions
Rules for serious consideration of alternative proposals will be provided
Proprietary data will be protected, maintaining competitive advantage
Winners will be selected on the basis of best value, not the lowest price
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2323KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What We’ll Be Seeing More Of... What We’ll Be Seeing More Of... (cont’d)(cont’d)
Pre-Contract Negotiations Government and DoD will work with
contractor to determine how tasks can be simplified; the number of deliverable documents can be reduced, the specifications relaxed, and the management approach streamlined.
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2424KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Business Process Changes (1995)Business Process Changes (1995)
Involves Industry Early
Performance-oriented Requirements
Few Military Standards & Specifications
Prepares Statement of Objectives
Prepares Preliminary WBS
Eliminates Non-value Added CDRLs
Eliminates Massive Paper Flow
Bid Selection – Value For Money
Helps With Program Definition
Prepares System Specification
Works to Commercial Standards
Prepares Statement of Work
Uses Integration Master Plan
Shares Commercial Format Data
Establishes Electronic Process
Attractive Best and Final Offer
GOVERNMENT ...GOVERNMENT ... INDUSTRY ...INDUSTRY ...
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2525KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Reformed Acquistion – Shorter, Reformed Acquistion – Shorter, Simpler, FasterSimpler, Faster
Time Req’t Stated to Contract Let
RFP Size
Military Standards & Specifications
Proposal Size
Data Items
Government Program Office Size
Time Contract Let to Initial Fielding
3 Years
1,000 Pages
Many
5,000 Pages
265 Items
80 People
7 Years
MeasureMeasure TraditionalTraditional ReformedReformed
1 Years
100 Pages
Few
250 Pages
20 Items
40 People
5 Years
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2626KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Trends in IT ProjectsTrends in IT Projects
Integrated product teams Rapid movement towards ISO 9000
Certification Adoption of ‘best practices’ Recognition of usefulness and adoption of
standards for Software Quality – utilization of metrics models
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2727KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Trends in IT Projects Trends in IT Projects (cont’d)(cont’d)
Movement toward individual professionalism in terms of membership in professional organizations and associated practice Certifications, particularly with respect to Software
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2828KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Fact:Fact:
Research shows that only 9%9% of large software projects come in on-time and on-budget
WHY????
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2929KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Study* FindingsStudy* Findings
Projects were classified into three resolution types: Type 1, Project Success Type 2, Project Challenged Type 3, Project Impaired
* The Standish Group “Charting the Seas of IT”, 1994* The Standish Group “Charting the Seas of IT”, 1994
Type 1: Project SuccessType 1: Project Success
16.2%16.2%
Type 3: Project ImpairedType 3: Project Impaired
31.1%31.1%
Type 2: Project ChallengedType 2: Project Challenged
52.7%52.7%
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3030KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Failure StatisticsFailure Statistics
Only 9% of projects in large companies were successful
16.2% of medium and 28% of small companies were successful
61.5% of all large company projects were challenged compared to 46.7% for medium and 28% for small companies
Most projects, 37.1%, were impaired and subsequently cancelled in medium companies compared to 29.5% in large companies and 24.6% in small companies
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3131KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
The Reasons?The Reasons?
Restarts Cost Overruns Time Overruns Content Deficiencies But these items are just the effects, not the
root causes. The real reasons include poorly or incompletely defined requirements poor or inflexible design deficiencies in communication
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3232KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What Makes an IT Project Fail?What Makes an IT Project Fail?
Project Challenged Project Challenged FactorsFactors
% of Responses% of Responses
Lack of User Input
Incomplete Req’ts and Specs
Changing Req’ts and Specs
Lack of Executive Support
Technology Incompetence
Lack of Resources
Unrealistic Expectations
Unclear Objectives
Unrealistic Time Frames
New Technology
Other
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
12.8%
12.3%
11.8%
7.5%
7.0%
6.4%
5.9%
5.3%
4.3%
3.7%
23.0%
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3333KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What Makes an IT Project Fail? What Makes an IT Project Fail? (cont’d)(cont’d)
Project Impaired Project Impaired FactorsFactors
% of Responses% of Responses
Incomplete Requirements
Lack of User Involvement
Lack of Resources
Unrealistic Expectations
Lack of Executive Support
Changing Req’ts and Specs
Lack of Planning
Didn’t Need it Any Longer
Lack of IT Management
Technology Illiteracy
Other
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
13.1%
12.4%
10.6%
9.9%
9.3%
8.7%
8.1%
7.5%
6.2%
4.3%
9.9%
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3434KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
What Does It Take for an IT Project What Does It Take for an IT Project to Succeed?to Succeed?
Project Success FactorsProject Success Factors % of Responses% of Responses
User Involvement
Executive Management Support
Clear Statement of Requirements
Proper Planning
Realistic Expectations
Smaller Project Milestones
Competent Staff
Ownership
Clear Vision and Objectives
Hard-working, Focused Staff
Other
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
15.9%
13.9%
13.0%
9.6%
8.2%
7.7%
7.2%
5.3%
2.9%
2.4%
13.9%
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3535KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
And If That’s Not Bad Enough...And If That’s Not Bad Enough...
A high percentage of executive managers believe that there are more project failures now than five years ago and ten years ago. This despite the fact that technology has had time to mature!
Significantly More Failures
Somewhat More Failures
No Change
Somewhat Fewer Failures
Significantly Fewer Failures
27%
21%
11%
19%
22%
17%
29%
23%
23%
8%
Than 5Than 5Years AgoYears Ago
Than 10Than 10Years AgoYears Ago
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3636KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Why is there so much Failure ?Why is there so much Failure ?
Complexity Continuity Change
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3737KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Project ComplexityProject Complexity
Project Contracting Teaming arrangement Requirements Constraints Proposed solution
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3838KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Project ContinuityProject Continuity
Project direction Project team Project personnel
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3939KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Needless to Say, CustomersNeedless to Say, Customersare Nervous! are Nervous!
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4040KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
You Don’t Want to Just Win the You Don’t Want to Just Win the BusinessBusiness
You Want to Keep and GrowYou Want to Keep and Growthe Businessthe Business
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4141KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
Critical Success FactorsCritical Success Factors
To win business, you need to demonstrate to the customer how you will minimize degree and measure of wastage minimize degree and measure of rework manage requirements and expectations standardize to common business practices
and views
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4242KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
You Need to Demonstrate Your You Need to Demonstrate Your Awareness of the Risks Associated Awareness of the Risks Associated
with IT Projects, as well as your with IT Projects, as well as your Ingenuity, Experience and Quality Ingenuity, Experience and Quality
PracticesPractices
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4343KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
To Produce a Winning Proposal To Produce a Winning Proposal that Delivers...that Delivers...
Demonstrate to your client that you have the lowest risk, highest value solution/team
Adaptability is the strategy for optimizing a business to change
the technique or methodology to meet this strategy is the adoption of a Learning Organization culture
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4444KEY ISSUES, TRENDS AND RISKS IN IT PROCUREMENTSinclair & Associates © 2000-2011
To Produce a Winning Proposal that To Produce a Winning Proposal that Delivers... Delivers... (cont’d)(cont’d)
The theme then for winning proposals (i.e. winning the business - making the business a win), not just getting a signed contract, is demonstrable maturity and capability of the
team/company
individual professionalism and independently recognized credentials of the team/company members