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Robust ERP and Business Systems Procurement: Part 1 -- Introduction

Introduction to a comprehensive and highly effective approach to business information systems procurement that ensures high value outcomes and discourages low quality bidders from tendering

Robust Business Systems Procurement: Introduction Part 1

Links to previous articles at the end of this article

In my recent article on "The Real Issues in Business Systems ", I mentioned the recent bad experiences of Bridgestone and BMW with business systems implementations.  These situations highlight the fact that even the most successful businesses experience difficulties with regard to system implementation.

The parallel "Real Issues" series of articles will discuss the factors that give rise to the problems experienced and specific measures to prevent the problems.  The series commencing with this article will address the question of how to go about procuring systems and initiating the implementation of new systems in a way that takes account of the Real Issues principles.

This article is directed at informing executives and senior managers with regard to methods that are really important in order to be able to manage the procurement and implementation of new systems effectively.  These same methods have application in the procurement of general business improvement services as well, and some of them can be applied to contract renewal with regard to ongoing support contracts.

In this series of articles I will set out to explain a robust business systems procurement approach, which is directed at achieving robust and enforceable contracted outcomes for a truly fixed price.  This approach is based on the manner in which large construction projects are contracted, something that I term "the engineering approach".  Inherent in this approach is a requirement that the entire procurement, configuration, customization, testing and commissioning process is undertaken to standards that permit effective litigation by the client in the event of non-performance.

Fundamental to the engineering approach is the reality that engineering construction takes place within the framework of tried and tested procurement methods with tough, enforceable contracts.  There is also a clear understanding by all parties that litigation will follow negligence, non-compliance or default.  Because litigation is entirely practical in such situations litigation is virtually never required.

The approach to business systems procurement outlined in this article is directed at achieving this same level of robust contracting such that successful litigation is entirely possible and therefore not required.  This will be discussed in more detail in subsequent articles.

Fundamental to this engineering approach to business systems procurement is an emphasis on requiring the implementation contractor to accept responsibility as the expert in the implementation of their software.  This is done in such a way as to transfer all appropriate risk to the contractor while clearly delineating the responsibilities of the client organization.  This is achieved through a robust procurement process with clearly defined governance and results in a tough and robust contract, leading to an effective implementation (configure, customize, test, deploy, commission) which delivers the agreed realistic business outcome.

The approach comprises the following major components, which will be discussed in more detail in subsequent articles.  The discussion focuses on major projects but can be down-scaled to even the most basic business systems or even business services procurement:

1. Strategic Facilitation and Executive Governance

For large projects which operate across operational divisions in the organization, the Executive Sponsor of the project must be the Chief Executive.  The Chief Executive is the custodian of the integrated view and function of the business and is therefore the only person with the perspective and authority to perform this role.

In order to ensure that the Chief Executive can perform this role effectively and with limited time commitment there are a number of other roles that are critical:

a. Strategic Advisor to the CEO and Strategic Project Facilitator

An expert in the field of business systems procurement and implementation, with the ability to serve as an advisor to the sponsoring executive and guide the project.  NO alliances or allegiance to any product or contractor organization.  This person must be able to operate at the executive level.

Analogous to the senior architect on a prestige building construction project.  This person must interpret the requirements of the business, express these with a far-reaching long term view of where the business is going and ensure that the new business solution is geared to this future" view.  This person should not have any line responsibility in the business.  They should monitor the "Factors Causing Failure" and "The Critical Factors for Success" that are discussed in the separate series of articles on "The Real Issues in Business Systems".

This will generally be an independent specialist advisor.  It is sometimes challenging to plan their time since they are largely dependent on the rest of the people working on the project for day to day workload.  It is therefore generally best on larger projects to appoint them on a full time basis for a fixed monthly fee for the duration of the project.

It is generally not practical for the CIO to play this role, they are too caught up in the day to day pressures of the business.

b. Business Team Leader

A member of the executive team who is responsible for ensuring that the right people in the business are consulted at the right time.  Also ensures that the right people are in the room for workshops, testing sessions, etc.  This person carries the ultimate responsibility for ensuring that the business is fully consulted and engaged in all stages of the project.

c. Contract Manager

Also an executive or at least a senior manager one level down from the executive suite.  Responsible for all the logistical and contractual arrangements with regard to the procurement, assisted by the procurement department as necessary.  Also responsible for all contractual matters during the implementation.

This can be the CIO.

Note that there is nobody on the client side who carries the title "Project Manager" or "Project Leader" -- there should be one Project Leader and they should be supplied by the successful contractor as part of the package of services.

2. Robust Request for Proposal (RFP)

The Request for Proposal document is the heart of the procurement process.  It should be a well proven document that contains all necessary clauses to manage both the procurement process and lay the foundation for the project.

It should set out the stages of the procurement process and the specific contractual requirements for the configuration, customization, testing, deployment and commissioning of the system.  The RFP should form the basis of the final contract.

Note that it is pre-requisite that the Client will define the contract with amendments to accommodate the contractor, using the contractor's preferred contract is not an option.

One of the objectives of the RFP is to scare off fly-by-night operators.  Another is to allow as many different bidders as possible in the first stage of the tender process in order to ensure that the best possible combination of software and Implementer is selected.

By way of example, the RFP document that I typically use runs to over 60 pages. This is available as a template to purchase together with templates and instructions for the full set of documents referred to in this article.  Email me for information .

A key objective of the RFP is to make it clear that the client is purchasing services from the successful bidder on the basis that they are experts in implementing their software and will be held fully accountable for the project outcome.

3. Strategic Essence based Business Requirement Specification

Refer the separate thread on "Strategic Essence: The Missing Link in Business Information Systems " for more information on this point.

The Business Requirement Specification should be drawn up by the Strategic Advisor to the CEO (Strategic Project Facilitator) in close consultation with the executive team and operational management.

This strategically focused requirements document focusses on documenting the essence of the business, the "right things done well" that have caused the organization to prosper.  This should be done within the context of clearly stating a twenty year view of what is required from the system in terms of business outcome.

Components of the requirement should be prioritized on a percentage weight basis over not more than about nine primary categories.

This is not a technology document, it is a strategic business outcome orientated document -- based on what is required from the investment in order for the organization to prosper.  This document is the heart and the art of the final outcome.

It must be worded in such a way that the onus for the outcome rests with the contractor (Implementer), subject to close cooperation by the business.

In this regard it is vital to understand that operational business personnel lack the long term perspective to define a long term solution.  They must be consulted but they must not dictate the solution.

To Follow

4. Detailed Bill of Services

5. Precision Configuration

6. Business Simulation Laboratory

7. Formal "Go-Live" Certification

8. Prescribed Certificates

9. Client Compact

10. Executive Engagement

11. Facilitation of Change

12. Bid Compliance Checklist

13. Bid Adjudication Schedule

14. Prescribed Bid Table of Contents

15. Comprehensive Pack of Reference Documents

16. Data Warehouse and Business Intelligence

17. Three Stage Procurement Process

a. Stage 1: Narrowing the Field

b. Stage 2: Select Preferred Bidder

c. Stage 3: Detailed Discovery, Finalization of Project Plan and Contracting

d. Configuration, Customization, Testing and Commissioning

Conclusion

I have used this approach successfully to conduct fixed price fixed business outcome projects, and hope that you will find it of value.

If you are embarking on any form of business systems procurement, large or small, this approach can be adapted appropriately.  It also has application to procurement of other soft business improvement services.  Some of these principles can also be applied when entering into negotiations to renew contracts with existing suppliers.

I offer advisory services with regard to the application of these principles and would be delighted to discuss how I might be of assistance.

I also offer sets of electronic template documents for the above, one set suitable for small to medium size projects and another suited to larger projects, these are available for purchase, email me for details .

Yours faithfully


Dr James Robertson PrEng

James A Robertson and Associates Limited
Assisting clients to thrive through effective and efficient application of Business Information Systems

Mobile: +44 (0) 776-862-2875
Landline: +44 (0) 207-059-0007

Previous articles:

Strategic Essence -- The Missing Link in Business Information Systems
Summary
Part 1: Strategy Defined
Part 2: Differentiation
Determining Strategic Essence

The Real Issues in Business Systems
Introduction

Strategically Enriching your Business Systems
Introduction


Random Selection of Articles by Dr James Robertson

Dr James A Robertson PrEng

Business Systems NOT delivering?

Call the Business Systems Specialist

Dr. James Robinson

Dr James A Robertson -- has been involved in the effective application of Business Information Systems, including but NOT limited to ERP, since 1987 and in the profitable and effective use of computers in Business since 1981.

Drawing on a diversity of experience, including formal military training in Quick Attack techniques at the Regimental Commander level, Dr Robertson has developed highly effective methods of investigating any sub-optimal Business Information Systems situation -- be it an established system or a stalled project or any other source of Executive frustration -- quickly and concisely diagnosing the root cause of the problem and prescribing concise practical actions that Business Executives can effectively act on see the Pulse Measurement page and also the Sample Reports page for redacted real reports.

He has also developed highly effective methods of strategically enriching systems to unlock the full potential of existing investments, see the Precision Configuration page and couples this to architecting small pieces of clever software that harness the full potential of your investment, see the Software page.

If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist
James@James-A-Robertson-and-Associates.com

Business System Failure is RIFE -- we offer insight into why this happens AND WHAT is required to prevent it.

Failure is at epidemic levels with massive damage done to client companies -- if you are NOT aware of the extent of the problem please visit the About Failure page for a catalog of major failures running to billions of Pounds and Dollars.

All evidence indicates that the established players do NOT know how to deliver stable, reliable high value solutions that WORK.

There HAS to be a better way!

This website provides information relating to that way with a large collection of white papers, presentations, standards documents, etc that you can use to start bringing the situation under control

We also offer high level advisory services with regard to the application of the principles advocated on this website

We offer an ENGINEERING APPROACH to addressing these issues

Click here to read more about the Engineering Approach

By Engineering I mean the formal, structured, highly disciplined, highly systematic, highly practical approach that consistently delivers results in ALL areas of human endeavor where formally trained and certified engineers are the ONLY practitioners permitted to operate -- think large buildings, factories, motor vehicles, aircraft -- highly complex systems that work at a level that we take it for granted that they WILL work and where failure is all but unthinkable and, when it happens, attracts immediate public attention and rigorous investigation directed at ensuring that such failures are prevented in the future -- in fact, everything that the management consulting industry that implements complex software systems is NOT

This approach is discussed further on the Engineering Approach page.

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Book -- The Critical Factors for Information Technology Investment Success

In 2003 I undertook an in-depth analysis of all the information and experience that I had gathered with regard to the factors giving rise to Business Information System failure including ERP and general IT and classified this information into a number of categories including "The Factors Causing Failure" and "The Critical Factors for Success" based on this I developed a two day Course "The Critical Factors for Information Technology Investment Success" which is still offered today.

Based on this I wrote the book of the same name, which is available in electronic form here for download:


Random Selection of Articles by Dr James Robertson

SNw 058 The Critical Human Foundation

Everything we do with business information systems and is dependent on people.  This articles addresses in some detail a diversity of factors that influence the success or failure of business information system projects
SNw 047 Strategically Enriching your BIS: Part 2 -- Principles of Data Engineering

A discussion of the fundamental principles of data engineering which are vital to unlocking the full potential of your business information systems investment

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Articles by James A Robertson and Associates

There is a large body of white papers, articles and other content produced by Dr James Robertson available on this website

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Table of Contents

Home

About Dr James A Robertson PrEng -- The Business Systems Doctor -- and Other Topics

Catalogue of Major Business Information System Failures

About the Engineering Approach

James Robertson's Value Add

Attributes of a HIGH VALUE solution

Recognizing Business System Failure

The Critical Human Foundation

Old Software IS Viable

From South Africa

Competencies of Dr James A Robertson PrEng

About Professor Malcolm McDonald

Table of Contents

About my relationship with the Almighty Creator, Yah the Eternally Self-Existing

Comments relating to the Business Systems Industry and other topics

Testimonials and other positive material regarding James Robertson

Reference Articles

List of Articles

Article Catalogue

Achieving High Value Business Information System outcomes

Executive Custody -- What is it and HOW do you get it?

The REAL Issues in Integrated Business Information System Success

Part 1: Introduction

Part 2 -- Mythology and Lack of Executive Custody

Part 3 – Strategic Alignment and Precision Configuration

Why your ERP is NOT delivering and HOW to FIX it

IT Project Management

Pulse Measurement

CEO Anthony Lee Comments on his experience of the Pulse Measurement

No Charge Guarantee on the Pulse Measurement Service

Examples of Pulse Measurement Outcomes

Critical questions regarding the Pulse Measurement™

The Pulse Measurement Workflow

The Critical Factors for Business System (ERP+) Investment Success in the Pulse Measurement

Indicative Pulse Measurement Durations

What is a JAR&A Pulse Measurement?

Survival of the fittest – why it makes sense to measure the pulse of your business

Examples of Pulse Measurement Outcomes over 24 years

Sample Pulse Measurement Reports

Strategy

Strategic Essence: The Missing Link in Business Information Systems

Strategic Essence: Overview

Strategic Essence: Part 1 -- Strategy Defined

Strategic Essence: Part 2 -- Differentiation

Strategic Essence: Part 3 -- The Essence IS Different

Strategic Essence: Part 4 -- The Essence should be the Point of Departure

Strategic Essence: Part 5 -- Discovering Strategic Essence

Strategy -- the Essence of the Business: What is it and how do you develop actionable strategic plans?

Simple Steps to Increase the Strategic Value of your ERP Investment

Free Strategic Snapshot Toolset and Manual

A strategy focused planning system beyond traditional budgeting

Tough IT and ERP Procurement and Contracting that Works

Robust Business Systems Procurement

Part 1 -- Introduction

Part 2 -- Bill of Services, Laboratory, Go-live Certificate, etc

Part 3 -- Executive Engagement, Bid Compliance, Adjudication and other matters

Procurement Documents

Guidance and Advisory Services

The Art of Project Leadership

Why Regular Communication with the CEO is Vital

The Business Simulation Laboratory

Precision Configuration and Strategic Business Information Architecture

Precision Configuration based on Strategic Engineered Precision Taxonomies

The JAR&A Cubic Business Model

Highly Structured Strategic Chart of Accounts -- a Vital Element of your Corporate Information Arsenal

The Product Catalogue -- an Essential Element of any Precision Configuration

Attributes -- answers to the questions you have NOT yet thought to ask

Case Studies of Notably Successful Projects with high value Precision Configuration

092 Doing things differently and better -- ASCO Case Study 2-- BPM Summit 2013

088 Strategic ERP Invesment -- ASCO Case Study -- Service Management Conference and Exhibition Africa

026 Information Architecture and Design of FIS for Rennies Group -- Financial Information Systems Conf

018 CRM Risk Control: Designing and Implementing an Integrated Risk Mgmt Sys -- Integrated Risk Mgmt Conf

011 V3 Consulting Eng: Benefits of MIS to Professional Practice -- SAICE 15th Ann Conf on Computers in Civil Eng

Strategically Enriching your Business Information Systems

Part 1 -- Introduction

Part 2 -- Principles of Data Engineering

Part 3 -- Steps in applying these recommendations

Simple Steps to increase the strategic information value yield from your Business Systems Investment

The Full JAR&A Taxonomy Manual

Part 1: Introduction, Problem Statement, Definitions and Examples

Part 2: Why Use JAR&A, Required Knowledge and Experience, Cubic Business Model and Chart of Accounts and Taxonomy Software

Part 3: How to do it, Case Studies and White Papers and other References

Example General Ledger Manual

Business Process -- Irrelevant, Distracting and Dangerous

The RIGHT Approach

Custom Strategic Software Design and Oversight of Construction

Standards for Custom Software Specification

What IS Software?

IT Effectiveness

Organizing Outlook

Critical Factors for I.T. Success

A Moral and Ethical Dilemma -- Systems that Fail

Case Studies examining Business Information System failures

The BBC Digital Media Initiative Debacle

The Bridgestone -- IBM Conflict

Speaking and Training

Showcase of Conference Presentations

Most Viewed Presentations

Briefings and Seminars

Why your ERP/BIS is NOT delivering and HOW to FIX it

ERP and IT Procurement that Delivers Results

The Critical Factors for IT and ERP Investment Success

Other Seminars

Conferences and Public Presentations

Conferences 80 to 99 -- 2009 to Present

Conferences 60 to 79 -- 2005 to 2009

Conferences 40 to 59 -- 1996 to 2005

Conferences 20 to 39 -- 1994 to 1996

Conferences 01 to 19 -- 1989 to 1994

On-Line Seminars (Webinars)

Webinar on Preparing and Presenting Webinars

Contacting James A Robertson and Associates Limited