by Al Polanec, Blue Archer Principal

As seen in Pittsburgh Business Times

With economic conditions as they are, it may seem like a good time to put off expenditures on technology projects. Projects both to upgrade your existing systems and to build new systems may seem chief candidates for cost-cutting measures. But the questions to ask are:

One, what will the Return on Investment be for the project, and two, how long will it take you to realize this return. If you have a potential project that could pay for itself in the short term AND could better your competitive position in the marketplace, then you have an opportunity to prepare your company for the inevitable upturn in market conditions as well as better your position in the down market. The companies that learn to be IT champions in the current market climate have a marked advantage in becoming the leaders of tomorrow's bull market.

Finding good project opportunities may seem a daunting task, but let's review some very basic project types that lead to increased profitability, and competitive advantages in the marketplace at large.

1. Data Warehousing may sound like a very boring, unglamorous affair. But if there is anyone in your organization who has difficulties getting accurate financial, project, inventory or other information, then this is an excellent place to begin your search. The lack of proper data can lead to uninformed management decisions, undue amount of employee effort in securing information, and an inability to service the customer properly. For example, in a contract-based manufacturer, a lack of meaningful and properly disseminated project cost reporting can lead to projects that have cost overruns, inability to properly communicate project information to clients, and the expenditure of an excessive number of man hours in trying to obtain the proper information. A focused data warehouse application could prevent such ongoing waste of resources that could best be directed to customer service. Also, proper metrics allow for more accurate bidding on future projects.

2. Business to Business solutions are on the rise. Since the breakdown of the various "Business to Consumer" business models (the demise of the flashy dot.coms), B2B solutions are becoming more widespread and effective. If you are able to offer a streamlined data entry point to your legacy systems, and allow your customers to input their own orders, you reduce your workload, reduce human error, and reduce your turnaround time to complete orders. This in turn improves cash-flow and allows a significant competitive advantage in the marketplace by being able to offer "direct ordering". Some companies opt to pass along internal cost savings in the form of lower product costs for goods and services sold through internet-based B2B portals.

Ok, so you have selected a type of project that can greatly increase the bottom line of your company. Now what? There are a myriad of vendors and service providers in the marketplace, selecting one of these is beyond the scope of this article. So let's assume you have done a search of local companies that service your market, and have narrowed the field to several companies. Here are my Top 6 things to look for when you contract with an information technology company:

1. Do they write specifications for their projects? Ask to see a specification or part of a spec they have done for another project. Consultants who work without specifications either do not plan their work, or else intend to treat your project as a purely "Time and Materials" project.

2. Do they commit to fixed bids? Or better yet, "Not to Exceed" bids. There's nothing a consultant likes more than "T&M" engagements. Don't be fooled, what T&M means is they can go about their work in a sloppy, disorganized manner. Fixed Bids mean that your consultant has the experience and confidence to know what the job will take. This is very important to the success of the project. Not to Exceed bids are the best type of contracts from a customer perspective, they allow for cost under-runs, but not cost overruns.

3. Can they share client lists and references with you? Don't just talk to one former client, talk to several. There is no substitute for satisfied customers. Ask the customers if their projects were done on time, on budget, and with a good degree of quality and professionalism. Also, ask how responsive the company is to their changes and other needs.

4. Can they show you a similar project or work effort? If you can see something similar to your project, it will allow you not only to select your vendor and feel confident in them, but will also allow you to better decide on your needs. Ask if they can reuse any existing code from other projects to save costs on your project.

5. Get several estimates on your work. Be sure to give each vendor the same scope document to work from. It is your responsibility to be honest and fair, and not plan to increase the scope in the course of the project. Don't be surprised when some vendors respond with bids as high as ten times the bids of other vendors! Information Technology companies have widely varying business models. Do not evaluate solely on the lowest price, but realize paying more is no guarantee of receiving more. Refer to points 1-4 to qualify low bidders.

6. Who owns the source code? When your project is complete, be sure you know, and have defined in contract, who will own the source code of your project. If you intend to remarket or otherwise use the software someone develops for you, be sure to negotiate this up front. Standard contracts can revert full ownership of code back to the developer, or if no ownership clauses are implicitly stated, then code ownership most often reverts to the client under normal "work for hire" guidelines. But be safe, and define your contract that you at least have full access to all the source code developed for you. This is especially important if you have any programming elements that are considered "compiled" code components.

A final money saving tip that 90% of customers don't leverage:

Once you begin your project, it may seem like your work as the internal project manager is just to read status reports from your vendor, and pay the bills. But this course of action is one that more often than not dooms your project to cost overruns.

Make sure you work as hard as you can, as early in the project as you can, to define the functional specification for the project. Even though it may be difficult to know exactly what you need before you begin to see the project/application take shape, it is important to define as much as you can prior to starting the actual programming of your internet-based application. Remember, changes to your project can be very costly, especially once programming has begun. Always ask that the programmers present you with a complete functional specification for your project/application PRIOR to beginning programming, and then make sure you take time to read this specification. You can save yourself many thousands of dollars by taking several hours to read a specification.

I hope this article has been helpful. My many years of experience in consulting has taught me that a well-educated customer is the best kind to have. After all, we should all be looking for long-term relationships with the companies we do business with, and being informed makes this very possible. Best of luck with your next endeavor. To receive more information about this article, please email me at apolanec@bluearcher.com

Regards,

Al Polanec
Principal
Blue Archer Consulting

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