Bringing value to the ITT process
By Ron Wedderburn
October 2004
This invariably starts by identifying well known suppliers and sending them through a very stressful black box exercise to find the correct solution. Often, the selection process is flawed, resulting in the purchase of a sub-optimal solution.
Our experience of managing the ITT process for many companies has identified several principles in achieving maximum value from this process as illustrated in Figure 1.
Figure 1
Governance
The ITT must be treated as a project in its own right with recourse to adequate resources in the form of decision makers, sponsors and expert users.
The company's strategic aims and user requirements must be managed. This presents a dichotomy as one end of the spectrum is at a high level while the other is at a very granular level. Nevertheless, user acceptance is crucial to the success of the project.
Supplier Selection
Specialist knowledge is required to choose participating suppliers. A myriad of suppliers offer solutions which vary from those with good brand names but ageing technology, those providing framework solutions, others providing package solutions to others providing componentised solutions.
Evaluation
Care must be taken to ensure that user requirements are consistent, valid, prioritised, and are grouped into themes that will deliver the necessary economic benefits. A company must understand both its hygiene requirements and those that are necessary to differentiate itself from the market.
Pay cognisance to the wording of the requirements and how the answer from the supplier will be scored and evaluated. Wording should be such that the supplier provides a full and descriptive answer.
The selection process should encompass a combination of a written response, to act as an audit trail, and practical exposure to the solution, to identify fact from fiction.
Effectively, the ITT must evaluate business functionality, IT solutions, implementation methodologies and pricing.
Suppliers' efforts must be respected. At all stages throughout the process, one has to empathise with the challenges and concerns they face. This is particularly important when communicating with the supplier and ensuring that they are subject to a fair and independent process.
Reference Visits
Suppliers will not provide access to dissatisfied customers. It is also difficult to get detailed information from a potential competitor.
However, some of the challenges surrounding the competitive nature of companies can be overcome by using external specialists to do an analysis of the implementation and provide an overview without revealing competitive information.
Due Diligence
Due diligence requires thorough investigation of:
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business functionality
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IT architectures
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implementation methodology
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risk management
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governance
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relationship management
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ongoing support and maintenance strategies
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strategic approach to addressing change.
Most importantly, the due diligence must include an analysis of the supplier's financial strength, as it is uneconomic to invest in a long-term relationship with any supplier that cannot demonstrate financial viability.
Contract Negotiations
Contractual negotiations are inherently complex, time consuming, and require legal expertise. Despite this, financial services companies must insist that the contracts are structured to their benefit and are not the standard supplier's contract.
In summary, the ITT process is extremely complex and difficult, with many companies not having the necessary skills to ensure they get the best results possible. This is no reflection on calibre of staff, rather an indication that the core competencies of the in-house staff lie elsewhere.
For the process to be successful, the financial services company would receive a far greater return on their investment if they used the specialised skills and expertise of a company such as Winchester White to manage the process and be responsible for its successful conclusion.