5 Questions you need to ask before doing any Technology Upgrade
So you are looking at a technology upgrade. This can be an exciting time, but also an anxious time. In our work with many companies, here are some key questions that can assist in getting approval, corporate buy-in, and ultimately the promised benefit from the project.
Do you have a Corporate Technology Strategy?
A corporate technology strategy is a process for evaluating technology needs through the lens of corporate vision and strategy. Effective corporate technology strategy is cross-functional, bringing together leaders from departments to review technology opportunities, assessing the benefits, and putting projects on a roadmap. The team will need to balance infrastructure projects (which typically do not have a high ROI by themselves) versus revenue generating or efficiency projects, which can often demonstrate a strong return.
Without a corporate technology strategy and a process for regular evaluation, projects are often approved without consideration for the organization’s capability to absorb the technology given what other projects are going on. Without a strong approval process, companies can fall into the trap of departments trying to do technology without IT. At best this limits the benefits of the project to that department, but often what starts in a department will eventually require the IT department’s help, and that can increase the timing, costs, and sometimes even the success of the project.

If your company is newly developing a corporate strategy, it starts with an evaluation of all the technology projects in process and planned at the department level, and then a listing of the key initiatives with details on cost, expected benefit (we like hard cost savings, hard revenue expectations, and soft cost savings as categories), and a roadmap. For most organizations, this strategic plan should be led by the IT department, with input from departments. We suggest the creation of a steering committee to keep the process relevant to the organization. An outside consultant is often helpful in the establishment of a strategic plan and planning process.

Have you mapped the current state and expected future state, including a risk assessment?
There is often a temptation to skip the current state and just map the future state. The temptation makes sense, we already know what we do, let’s just make it better. The danger is that organizations often don’t really know how they do things and failing to properly map the current state will lead to future solutions with process holes that can lead to rework or failure for improvement initiatives. Taking the time to interview key stakeholders, map out processes, and validate the process will pay dividends in your future state development and ultimate implementation.

In a technology upgrade, the future state is a combination of the new process flow with the new technology. Future state could include a process flow, organization chart, and expected process improvements. A future state should be widely shared with process owners for feedback and buy-in.

In doing the current and future state, you should be conscious of risks the change creates, and formerly documenting the risks and steps taken to mitigate these risks should be incorporated into the future state design. The risks assessment can also be used in the business case.

Have you Developed a Business Case for the technology change?

A business case is a justification for a proposed project or undertaking based on its expected commercial benefit. A good business case has an executive summary, finance section, project definition section, and project organization.
Executive Summary
Executive Summary provides a short summary for the entire business case. It is the first impression, and needs to be succinct and impactful.
Finance section
Finance section includes costs for the project, internal resource requirements, the expected benefits, and a risk analysis. The more concrete the benefits the better. While costs for the project are often easier to get, don’t forget the costs of internal resources.

Benefits should be as specific as possible. Create expected cost savings based on estimated labor savings, create a budgeted revenue or margin improvement in a goal that can be measured. If there are “soft cost” savings, these should be listed as separate from ‘hard cost” savings.

A risk analysis should include the risk of not doing the project as well as sensitivity analysis to market changes, and how these risks are going to be managed.
Project Definition
Project Definition answers most of the why, how and what questions. It includes you goal, connects the project to the overall strategy of the company, and defines the benefits. It should define the scope and any interdependencies.

The project definition should have a project outline, including what is required, how will it be done, who is responsible for the tasks, and a timeline.

This section may also include a market assessment and finally the purchasing strategy.

Project Organization
The Project Organization section defines project governance. This includes roles and responsibilities, review points, and the decision making process. It should also define how the project progress will be reported back to the board and interested stakeholders.

Do you have a detailed scope of work and sufficient resources for the project?
In some instances the technology vendor will have a predefined scope of work, and often times using their scope of work template can be helpful as you develop your scope. However, the vendor scope of work will most likely focus exclusively on their portion of the project, and may not include process change work necessary for you to achieve your organizational goals. Also, many technology projects involve multiple software integrations that will require you to have a master scope of work and project plan across many vendors and integrators. Finally, a software vendors scope may not include things you want them to do that are outside their normal practice, and you’ll want to make sure that your goals are achieved in the Scope of Work.
Generally you would want to define the scope of work before selecting the technology vendor, so that you are clear on what you want and can run an RFP process. Do your research – rarely will you be the expert on the technology you are buying. Learning best practices or finding an expert at this stage can save time and money down the road, and help reduce the risk of buying what the vendor was selling rather than what your organization really needs.

Resource planning for a project is critical before you begin. You’ll need to be clear what capabilities you have internally, and what the availability is for those resources. Outsourcing is expensive, but it can be more expensive to hold a project up or shortchange an effort by trying to keep it inside. Make sure your budget provides resources to outsource if you need to, and identify areas where outsourcing is an option.
What is the vendor selection process you need to follow?

The RFP process is helpful in assessing solutions. It provides leverage to get competitive pricing and understand differences in the marketplace.

Using the Scope of Work you’ve developed provides a level playing field for vendors to compete on.

When drafting an RFP, the questions you ask are critical to developing an RFP that allows you to truly evaluate vendors strengths and weaknesses. Finding an expert is helpful as you go through this process. Do the research to know what is the latest technology and how it would impact your organization, so that your RFP allows bidders to respond in a way that demonstrates the value of their offering.

The negotiated savings for software can be significant. One CIO we work with estimates that he gets an average of 40% off the ‘list price’ in negotiation. Software firms are often driven by quarterly sales targets. In addition to annual software costs, it is sometimes possible to negotiate the implementation costs. Keeping the implementation team booked is important for a software company. Being flexible on timing may provide additional pricing leverage.
Executive Partners is a business improvement consulting firm with over 30 years of experience implementing business improvement results. They have worked with organizations from mid sized to fortune 100, developing efficiency strategies, business case analysis, and assisting in technology upgrades.

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