Home Articles Et tu, Brute? When technology procurement ends in tragedy

Et tu, Brute? When technology procurement ends in tragedy

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It’s no surprise that the epilogue of so many technology procurements is one of hardship and misfortune. Transitioning to a new or upgraded IT system is a major undertaking for most businesses.

The challenges are compounded for large national and multinational organisations that need to integrate their systems across multiple offices or change the manner in which customers interface with those systems.

This article takes inspiration from Shakespeare to impart five top tips for avoiding a tragic technology procurement.

Knowledge (transfer) is power: ‘Our remedies oft in ourselves do lie’ (All’s Well That Ends Well, Act I, Scene I)

Without appropriate skill and knowledge transfer, businesses risk becoming dependent on their technology suppliers to manage and operate their systems and processes.

This is particularly problematic where suppliers support business-critical operations (and more so where those operations have been moved into the cloud).

While businesses are entitled to rely on the expertise of their technology suppliers, it is prudent to maintain sufficient internal capability to monitor and manage supplier performance.

Moreover, outsourced arrangements should:

  • ensure that suppliers train in-house personnel in the operation of new and updated systems, and
  • require the regular review and central storage of project documentation (including training materials, contract manuals and technical specifications).

Cooperation is key: ‘Help me, Cassius, or I sink!’ (Julius Caesar, Act I, Scene II)

Successful procurements hinge on good customer/supplier relationships, which are in turn fostered by good governance and fair business terms. Project agreements that are more akin to master-and-slave arrangements with high risk and low reward for the supplier are unlikely to encourage good supplier performance.

For this reason, there is a growing trend towards negotiating project agreements that are relationship and outcome focused, rather than driven by risk. These agreements employ mechanisms such as:

  • sophisticated governance regimes that bring the right people together at the right times and facilitate open communication
  • ‘bonus’ arrangements that reward good supplier performance, and
  • dispute escalation and decision-making forums that afford meaningful supplier representation.

What’s your Plan B? ‘Modest doubt is call’d the beacon of the wise’ (Trolius and Cressida, Act II, Scene II)

Contingency planning is particularly important in the technology industry.

The time and effort required to develop and implement new systems is frequently underestimated, leading to project delays. And even if those systems are subject to extensive testing, it is often difficult to predict how they will perform in a production environment.

It, therefore, makes sense to have a viable ‘Plan B’ (and even a ‘Plan C’ and ‘Plan D’) in place before embarking on any major upgrade or replacement of core IT infrastructure. Different contingency plans may also be required during different phases of the project.

For example, Plan B during the design-and-build phase may involve exercising an option to extend the contract with the incumbent or rolling out a less functional off-the-shelf product as an interim solution. During the support phase, Plan B may entail maintaining hot sites or engaging an alternative provider to step in at the supplier’s cost during prolonged system failures.

Ensure strong leadership and executive level buy-in: ‘The king’s name is a tower of strength’ (King Richard III, Act V, Scene III)

It is an unhappy reality that many boards do not oversee technology projects with the same level of scrutiny as other projects that directly affect their core operations.

Technology procurements that run over budget and over time, disrupt business continuity, and ultimately add little value to the business are often linked to a lack of executive level oversight. To some extent this has improved in recent years with greater regulatory focus on corporate governance.

However, there are a number of initiatives that can be taken to ensure that the board is kept informed and able to ask the ‘tough’ questions when needed. These include:

  • establishing appropriate contractual processes for measuring and reporting project performance to the board for critical review
  • scheduling periodic presentations to the board to ensure that the project continues to align with the business’ strategic objectives, and
  • ensuring the board has sufficient expertise (for example, by appointing the CIO or an appropriate non-executive director to the board).

And don’t ‘let Rome in Tiber melt’ while you focus on Egypt! (Antony And Cleopatra, Act I, Scene I)

Although major technology procurements can be all-consuming, it’s important not to neglect other technology projects that are underway.

Top CIOs differentiate themselves by their ability to manage major technology projects having regard to their organisation’s existing systems and strategic initiatives.

For example, they may provide a greater financial incentive to suppliers who implement critical infrastructure swiftly and with minimal impact to the business’ other suppliers. Or they may delay the commencement of a new project to avoid distracting the in-house technology team from an existing project that has entered a critical stage.

And when major technology procurements start to divert key resources from existing projects, CIOs are adept at persuading their fellow executives to engage more resources to support the day-to-day operation of core systems and infrastructure.

Julia Murray is a Lawyer in the Technology, Media & Telecommunications group at Minter Ellison.

Image by Jeremy Burgin

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