Purchasing computer software or services is not easy! There are a lot of details to be sorted out, and purchasing the wrong product or service can have long-term consequences. You have to have a good idea of what you stand to benefit from buying any product or service, in particular when there are high dollar investments at stake. It is also not unusual that the initial purchase is just a first step to set you up for on-going expenditures like consulting support unless you are in a position to support the newly acquired product (or plan to develop that competency). Project Managers may sometimes shun this responsibility because it is much more difficult to be in control of a process that is mostly based on activities that are largely performed by third parties. Let's consider what is involved.

Typically the process starts with a concept of what is required. There is some process that should be run more efficiently, and you anticipate some kind of improvement that will yield a significant benefit for the company. If you think of benefits first, it is a lot easier to think of what you will need to make these benefits materialize. This is a logical starting point for thinking of alternative solutions. Having a handle on this is not just a luxury, it is critical unless you are not really serious about having to justify the purchase. Unlike in-house development, once you decide to go ahead it may be difficult (or costly) to stop in mid-stream, so you need to be sure of the reasons for getting involved in a potential purchasing situation. A major mistake is to go light on determining the true needs of the buying organization and to be goaded into making decisions based on brochures and vendor claims of what the product will be able to accomplish for you.

As a first step prior to hammering out the details you may want to contact vendors with a general enquiry about the kinds of functionality you had in mind and what they may have for sale (or on the drawing board). This does not require much effort on the part of the vendors who may indicate their level of interest in doing business. Not all vendors want to go ahead if they do not think they can easily meet the requirements, and some vendors will bid on anything in the hope that they can kind of bend the requirements to suit their product line. You want to be reasonably sure that the vendor responses are genuine before you spend too much money. You also have to consider the type of vendor (or size, or financial strength, etc.) that you want to work with. Bigger is not always better, but sometimes companies have strict requirements about whom they will do business with.

If it looks like you will be able to purchase a product or service that meets your needs you must be prepared to fully detail what it is that you want. Sometimes people get what they did not ask for, especially if they get carried away with vendor literature on all the wonderful things products can do so that they forget to confirm that it does what they were originally looking for. One of the major reasons for using the PM4HIRE.COM Purchase Methodology is to make sure that all procurement projects steer clear of the "glossy" trap (other than to perhaps short-list all the vendors that may be potentially able to deliver the desired functionality). You do not want to do this for all procurements, of course, but it is a necessary protection for when you consider major purchases.

Preparing the RFP/RFQ Document...

The key to success is to know exactly WHAT you are looking for. The RFP (Request For Proposal) usually indicates that a custom solution is expected, while the RFQ (Request For Quotation) usually invites vendors to quote the costs for a COTS (Commercial Off The Shelf) solution. Of course you can keep your options open and thus specify that you will accept either alternative.

PM4HIRE.COM has experience with all major aspects of software development, in particular with the requirements elicitation process. This is the key to defining proper procurements specifications, either for a COTS product or for a custom developed solution. In addition to itemizing everything the customer wants from the product you also need to specify how important a specific feature is and what value such a feature contributes to the bottom line. You need to establish a fair evaluation and scoring process, or you can use our proprietary methodology and develop the RFP/RFQ based on the value analysis methodology that we recommend and use on any procurement project that we get engaged in. Although a detailed requirements document takes some effort to product it can make bidding on the project a lot easier, and it makes vendor selections a lot easier too.

The purpose of a detailed RFP/RFQ document is to itemize everything that you want to have included in the final product. In practice, not all products offer all functionality to the same degree. You need to be prepared to define what is minimum functionality and what is desired functionality, and how you are going to classify the responses as part of your overall Value Analysis. You have to explain not only how the scoring takes place, but how the vendor can be assured of making the best possible initial impression. To keep it short and to the point, if a vendor cannot be bothered describing the potential purchase in terms of how it can be compared to other vendor proposals then it will most likely be a waste of time to do business with that vendor, no matter what size they are. Sometimes in dealing with a smaller vendor you will be a much better positioned to get what you want, while the larger vendor may take things for granded and then makes your life difficult by remaining unresponsive. This can put you on the spot, because you likely do not want to eliminate choices up front.

The structure of the RFP/RFQ should set the tone for the proposals or quotations so that you can make an objective assessment of how well the vendor meets the requirements. For example, you can request that all proposals respond to individual requirements, so that you can determine if the product satisfies a requirement in full or only in part. You can then reflect that in the individual requirement item's score, which is relative to the priority settings (or weight) you have assigned to different requirements. You may have to educate the vendors with respect to the benefit of having each functional requirement itemized in a table format so that they can enter a short assessment of how their proposal addresses each item, especially if the relative weight of the items is clearly spelled out. The vendors should know their product better than you do, and therefore they should be better able to tell you how, and how much, the product meets each of the specific requirements.

The evaluation of vendor responses is a time-consuming effort, that can be streamlined somewhat by using the proprietary PM4HIRE.COM approach based on a detailed Value Analysis and scoring process. You can simply insist on the response format and disqualify vendors that try to go around the proper process. With our tools you can often rate a response in less than 2 hours, and have it compared to the other proposals we had received earlier. There is always a wide margin of errors when you have to rely solely on the vendor responses, if only because the original requirements may be misinterpreted, but usually there is more than enough accuracy to rank the proposals and to let you focus on the top 3 or 4 alternatives. Clearly this depends on the vendors going along with the scoring process that is making it easier for us to compare many alternatives in a single procurement analysis session.

Performing due diligence analyses...

The idea of due diligence is to make sure that your understanding of what you asked for is generally in line with what the vendor decided to propose. Sometimes you have to dig around a bit to confirm that what you asked for is actually what you get! Assuming that you start with a detailed RFP/RFQ document you can validate that each aspect of the requirements is satisfied by the delivered product. This is the most stressful part of the effort, as vendors will be eager to close the sale.

PM4HIRE.COM are actively involved in all aspects of Quality Assurance, including verification of software against predefined requirements. This is just what you need for a COTS system. The vendor usually will warranty that the software works for the intended purposes, but it would not be the first time to see a schism in how different parties understand the same facts. It is much easier for a third party to step in to explain the gap between what was expected and what was proposed, since (usually) there is no conflict of interest. The buyer and seller have too much at stake to be detached and objective about it. A buyer is more likely to reject a vendor product as no good, while a facilitative approach would explain how specifically a product might not quite live up to expectations. More than once have we experienced a vendor committing to incorporating specific needs into a future release of the product, and to provide written guarantees with meaningful financial consequences for failing to deliver. Of course we all want the purchase to succeed if there is sufficient common ground to make the product worthwhile.

Due diligence with respect to a custom development proposal is a lot more difficult. The product is not ready to be tested by a long shot, and yet some recommendations must be made on whether to proceed or not. Here is where it pays to have a QA Governance background to ascertain the quality of the vendor methodology and how well these best practices are adhered to. A lot more reference checking goes into the purchase of any custom software, while the emphasis for COTS software is on testing the product for yourself. There is also a question of how closely you can monitor custom development contracts. You may think that you are getting a local company to develop custom software for you, while in reality development may again be sub-contracted out to the lowest oversees bidder. Whether this spells trouble or not depends on the nature of local product support as opposed to having to get your expertise from foreign locations.

It is a hotly debated topic of what is expected from offshore development, and how reliable these vendors are. They usually boast stellar track records as top-notch methodology centric development shops, but that can be difficult to ascertain. This kind of procurement may have to rely heavily on a local Quality Assurance effort (in house or by an independent contractor) to confirm that you get what you pay for. Typically if you incorporate the proper checks and balances in the purchase deal you can scare away vendors that do not completely believe in what they have to sell. While some progress payments may be inevitable, the bulk of the payments should not take place until the functionality has been verified. Understandably the vendor will insist on an objective method of verification. PM4HIRE.COM can be a major contributor to provide an objective implementation plan that incorporates sufficient controls to make sure that the purchaser is protected, but also to make sure that the vendor is given every opportunity to succeed.

Confidentiality and security are tough issues that must be resolved before offshore development is considered, because you do not have much control over the vendor if they decide to take your strategic specifications to write a commercial product that is sold to your competitors. While there are many foreign development houses that would never consider such a thing, there are also far fewer remedies open to the customer if they do abscond with a proprietary product design. These are only some examples of the many things that need to be considered as part of the procurement process.

Negotiating the procurement contract...

Unlike shopping in your local supermarket the purchase must be concluded by carefully reviewing the terms of the sales agreement. The time to resolve your differences with the vendor is before the purchase is final. You do not want to gamble on getting things resolved in the future.

PM4HIRE.COM has the experience to go the final mile on your behalf, and to leave nothing for granted. The process should not be an adversarial one: you want to establish and maintain good vendor relations. The idea is that you do not want to find yourself arguing about what you expect of after-sales service versus what the vendor is prepared to offer. This may not be such a big deal for a COTS purchase, but what if a custom development fails to live up to your expectations? Usually a package vendor will warrantee that if the product fails to deliver what was promised a full refund will be offered, assuming that you have specified exactly what was expected of that product. In that case the mistake was made by the vendor in proposing the wrong solution. It tends to be less black and white when it comes to custom development, which is far more subjective and where the implementation takes a lot longer. Usually progress payments are made before you may conclude that things are not what they seem to be, and that can make even the most congenial vendor a tad reluctant to make too many concessions!

It is often beneficial to have an independent party, such as PM4HIRE.COM, involved in the process as a facilitator. Our approach keeps you fully engaged, while we can either act as backroom advisers or we can step into the ring to act as much as possible on your behalf. If the product does not quite meet requirements, there may be room to negotiate an upgrade and/or a discount. If there are concerns about a development we may be able to obtain specific warranties of fitness to meet your requirements, and we have the technical know-how to confirm that specific claims can be verified. We can also take steps to accommodate the vendor and to make sure they have everything they need to be able to deliver on their promises. As facilitators we can reduce any issue to its basic facts, to what was requested, to what was proposed, and to what was delivered. There may be many ways to resolve differences, some preferred by the purchaser, others by the vendor, until there is a mutual acceptance rather than to let differences build up to a complete breakdown in communication.

We do not provide legal advice, but we can work with counsel to provide the technical assessment of the kinds of protection that you may required, as well as what is fair (and common practice) in dealing with the vendor. We have seen many instances of "almost smoking" dialog where we stepped in and calmly explained the opposing positions to both parties, in order to step away from confrontation and to move towards reconciliation of the needs and wants of the parties involved. Procurement can often turn out to be a very stressful effort, so it helps to have someone on your side to put the process into the proper perspective of establishing common ground at the onset of a working relationship.