Part 3 (of 3) of a white paper I wrote 10 years ago for a customer that had just recently started selling professional services, but had sold product for over 20 years. This deliverable was one of several I created over the years to train sales and delivery staff in the ways of professional services and intangibles in general. Part 2 is here, and Part 1 is here.
LEGACY refers to the existing, outdated process of selling.
Confidential refers to the company itself.
What Decides Whether a Project Should Be Approved?
You may well be pushing your project through channels that are not as familiar with the solution from a technical perspective as they are from a business perspective. While LEGACY as a whole is geared toward technical management, you need to be familiar with, and conversant in, the business categories your client is used to.
Your goal is not to educate the client in LEGACY and change the way they perceive their business. You goal is to show that you think like your client does, and understand the way their business works. In most cases you are not being asked to redesign everything, just address a specific issue. If your approach is too far from the mark, and you lose effective commonality with your client, you will lose the contract. At that point it doesnÃ¢â‚¬â„¢t matter how wrong they were, what matters is that you failed to close a deal because you were too busy telling the client how wrong they were.
It cannot be stressed enough that templates and guidelines available to you through the intranet should be treated as exactly that-starting points. You must use these tools to make sure that whatever your end result for a proposal or presentation, it suits the customerÃ¢â‚¬â„¢s communication style and information exchange pace. The farther you stray from reading and reacting correctly to the customerÃ¢â‚¬â„¢s language, pace and views, the less their heads will shake up/down and the more they will shake left/right.
Be prepared to discuss the solutions proposed with regard to how it will affect the following factors:
The Business factors include:
-Return on Investment (ROI)
-Strategic Match (SM)
-Competitive Advantage (CA)
-Management Information Support (MI)
-Legislative Implementation (LI)
-Organizational Risk (OR)
The Technology factors include:
-Strategic IT Architecture Alignment (SA)
-Definitional Uncertainty Risk (DU)
-Technical Uncertainty Risk (TU)
-Information System Infrastructure Risk (IR)
LetÃ¢â‚¬â„¢s take a closer look at each of these factors:
Enhanced Return on Investment (ROI)
Assesses the cost-benefit analysis plus the benefits created by the IT investment on other parts of the organization. For example, electronic or web-based form processing provides a data entry clerk with the capability to process claims, a higher value function.
Strategic Match (SM)
Assesses the degree to which the proposed project corresponds to established company or departmental strategic goals. This factor emphasizes the close relationship between IT planning and corporate planning and measures the degree to which a potential project contributes to the strategy.
Projects that are an integral and essential part of the corporate strategy have a higher probability of approval than those that are not. Strategic Match assesses the extent to which an IT investment enables movement towards long-term directives and initiatives.
Think of this as the match between the network functional model and the business operational model. Be conscious of how these strategies affect those engaged in your presentations and reading your proposals.
Competitive Advantage (CA)
Assesses the degree to which projects create new business opportunities, facilitate business transformation (e.g., inter-organization collaboration through electronic commerce), increase the customerÃ¢â‚¬â„¢s competitiveness or improve the customerÃ¢â‚¬â„¢s reputation or image.
Competitive Advantage requires placing a value on a project’ s contribution toward achieving one or more of these objectives. This can be hard with regard to intangibles, so be sure to stress the Confidential strategic approach, and not focus too closely on any tactical steps to get there. Discuss methodologies common in similar businesses.
Management Information (MI)
Assesses a project’ s contribution to management’ s need for information about core activities that involve the direct realization of the mission, versus support activities. Measuring a project’ s contribution to the core activities of the business implies that the company or agency has identified its critical (business) success factors.
CBSFs are buttons you should push often to promote your project. You should always bring any proposal back into the framework of how well it will assist the customerÃ¢â‚¬â„¢s LOB (Line of Business).
This measurement is obviously subjective because improved management information is intangible, but the benefit measurement can be improved if the customer first defines those core activities critical to its success, then selects a general strategy to address these issues.
Legislative Implementation (LI)
Assesses the degree to which the project implements legislation, Executive Orders and regulatory requirements. For example, Federal law requires the INS (Immigration and Naturalization Services) to process passengers arriving at airports from international flights within 45 minutes.
A project is more likely to be approved if it directly implements legislation, and only slightly less likely if it indirectly implements legislation. This is where doing your homework pays off immeasurably.
Organizational Risk (OR)
Assesses the degree to which an information systems project depends on new or untested corporate skill, management capabilities and experience. Although a project may look attractive on other dimensions and the technical skills may be available, unacceptable risks can exist if other required skills are missing. This does not include the technical organization, which will be measured on another dimension.
You should be prepared to augment and staff those areas where the customer is not prepared for the solution. The project should not involve the addition of any other problems for the customer. Include training staff if necessary.
Organizational risk also focuses on the extent to which the organization is capable of carrying out the changes required by the project, that is, the user and business requirements. For example, a poor project match would be one that reflects that the business organization has no plan for implementing the proposed system; management is uncertain about responsibility; and processes and procedures have not been documented.
Strategic IS Architecture (SA)
Assesses the degree to which the proposed project fits into the overall information systems direction/directives and conforms to open-system standards. It assumes the existence of a long-term information systems plan or strategy-an architecture or blueprint that provides the top-down structure into which future data and systems must fit.
Strategically matching our offerings with the customer will not only help Confidential get their business directly, but also position us to manage and direct other contractors from this higher, more strategic position.
Definitional Uncertainty (DU)
A negatively-weighted factor that assesses the degree of specificity of the user’ s objectives as communicated to the information systems project personnel. Large and complex projects that entail extensive software development or require many years to deliver have higher risks compared to those projects segmented into modules or phases with near-term objectives.
You may well have to assist the customer in defining those areas where you can help. This should be done without condescension, as the client may well be discussing things not in their LOB, but in yours.
Be sure not to present a large project as being a one-step process. Breaking it down into manageable components not only makes it easier to explain and justify, but also demonstrates that no one function of the project can attribute to the failure of the effort as a whole.
You need to be confident that your solution is not just the best, but also the most thoroughly researched and defined. If you really understand the customerÃ¢â‚¬â„¢s business, you will convey and demonstrate as little uncertainty as possible.
Technical Uncertainty (TU)
Assesses a project’ s dependence on new or untried technologies. It may involve one or a combination of several new technical skill sets, hardware or software tools. The introduction of an untried technology makes a project inherently risky.
This component is not limited to technology. You may well be introducing changes that require internal restructuring and a shifting of duties. Care should be taken to ensure the client is prepared for this transition. Discuss change management strategies at length as required to ensure the customerÃ¢â‚¬â„¢s trust in our abilities.
IS Infrastructure Risk (IR)
Assesses the degree to which the entire IS organization is both required to support the project, and prepared to do so. It assesses the environment, involving such factors as data administration, communications and distributed systems.
A project that requires the support of many functional areas is inherently more complex and difficult to supervise; success may depend on factors outside the direct control of the project manager.
Reasons for Outsourcing
Private industry and the Federal government have numerous reasons for outsourcing. Consider the following reasons, in descending order of importance, for outsourcing information systems projects by Operational Managers:
-Focus in-house resources on core functions
-Personnel cost savings
-Improved quality of information systems services
-Increased access to new technology
-Provide alternatives to in-house costs
-Stabilize information systems costs
-Technology cost savings
-Reduce technological obsolescence risk.
Information Technology managers have similar reasons for outsourcing. These reasons can be combined and categorized as follows:
-Access to Skilled Personnel
-Improved IT Responsiveness
-Help with Legacy Systems
-Improved Business and Customer Service
-Implement New Architecture.
Lets take a look at each:
Budget Realities/Cost Reduction
Budget realities and reducing costs are clearly a significant concern for both the Federal government and private industry. Budget restrictions are the controlling factors in the business environment and have a key impact on deciding which functions to perform in-house versus which to outsource.
Federal and private sources have determined that outsourcing is an excellent method to produce savings. The Congressional Budget Office estimated in 1995 (3 years before this report was written) that between 20 to 40 percent cost savings could be achieved through outsourcing. The potential savings make it feasible to consider outsourcing as a means of providing IT services.
Access to Skilled Personnel
Companies need to consider access to skilled personnel. IT supported organizations are experiencing a shortage of highly skilled and experienced personnel brought about by continued buyouts and early retirements. In addition, hiring freezes, the loss of FTE slots, loss of funding, and/or buy-out and early retirement authorizations have prevented re-staffing.
(for a detailed analysis as to why the market is short of IT personnel, and thus rich in opportunities for Confidential, see my May 1999 paper Ã¢â‚¬Å“The Business Case for a Software Engineering Service Offering from ConfidentialÃ¢â‚¬Â -by Pat Trainor)
Remaining employees may not always have the specialized skills or training to keep pace with the rapidly evolving technology. Additionally, technicians and programmers skilled in the most current technology and languages are often hired by commercial firms at salaries significantly higher than smaller companies or the government can offer.
Improved IT Responsiveness/Business and Customer Service
Outsourcing is a means of improving IT responsiveness and business/customer service. As agencies implement a re-focusing on their LOB, they are taking a closer look at their core competencies and how these services can be provided to the customer in a more efficient and effective manner. Companies are focusing their resources on the core functions which they do best. Outsourcing some functions provides companies with the flexibility to strategically redirect those resources to mission critical activities.
Outsourcing also enables a company to potentially improve the quality of information systems services by obtaining those services from an organization whose primary mission is IT. An example is the current industry move to obtain certification using Carnegie Mellon UniversityÃ¢â‚¬â„¢s Software Engineering Institute (SEI) Capability Maturity Model (CMM). The SEI CMM rating validates that an agency or company has put repeatable software development and program management processes in place in its projects/programs and in various levels of its organization.
Few Federal or small business activities have the resources or funds to obtain the knowledge and skills required, implement the repeatable processes, and go through the certification process. However, these capabilities can be obtained from vendors whose core competency is to provide high quality software/process development.
Agencies are finding that outsourcing gives them access to CMM Levels 3, 4, and 5 capabilities which they otherwise could not afford to develop in-house.
Help with Legacy Systems
Companies and agencies are currently looking to outsource functions related to legacy systems. Many Federal agencies have large systems written in earlier computer languages such as COBOL. These programs are full of “spaghetti code”-the result of years of modifications to the code, some without adequate documentation.
The programming challenges resulting from these undocumented programs are intensified by a lack of programmers skilled in the earlier languages. Although the number of legacy system programmers is limited, private industry has better access to people with these skills.
(Remember, this was written in 1998 -pat)
The Year 2000 (Y2K) is an excellent example of companies and agencies having to make major modifications to legacy systems. Contractors have developed tools and management processes to handle much of this re-programming and re-engineering effort. With the Year 2K coming to the forefront, programmers with skills in the older languages are in high demand.
Accordingly, the programmers are demanding and getting higher compensation than the government and smaller companies can provide. Outsourcing Y2K projects provides Federal agencies access to the specialized tools, management processes, and personnel private industry has available.
Implement New Architectures
Agencies and private industry are also looking to outsourcing as a solution and source to keep up with the increasing changes in technology. Contractor and consulting organizations are seen to have more leverage to acquire and maintain new computing/telecommunications resources at a significantly reduced cost than can the Federal agency can have directly. Contractors are also seen to be able to implement the new technology better and more quickly because of their focus on continuous technology refreshment.
Most large contractor organizations already have the vendor agreements in place, and the revenue volume necessary to take advantage of them, to provide continuously updated technology. Confidential can spread the cost of this technology over several customers so that one customer does not bear the brunt of the entire technology upgrade.
Portions of this document include material from a wide variety of sources. Some of those include:
–eStrategy eGov Strategies