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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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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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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Change is the New ParadigmChange is the New Paradigm

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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Emphasis on complete solutions, faster delivery

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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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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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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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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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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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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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Fact:Fact:

Research shows that only 9%9% of large software projects come in on-time and on-budget

WHY????

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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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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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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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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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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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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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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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Why is there so much Failure ?Why is there so much Failure ?

Complexity Continuity Change

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Project ComplexityProject Complexity

Project Contracting Teaming arrangement Requirements Constraints Proposed solution

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Project ContinuityProject Continuity

Project direction Project team Project personnel

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Needless to Say, CustomersNeedless to Say, Customersare Nervous! are Nervous!

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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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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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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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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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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

key issues, trends and risks in it procurement

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