Using this (highly) simplified phased approach for acquisition, you could increase the business value of a software (or any other technology) purchase while reducing costs:

• Do you establish a very clear business value to every software purchase?

• Do you set very clear and measurable functionality requirements for all acquisitions?

• Do you select at least two viable alternative products as BATNAs for every purchase?

• Do you actually have the ability to fall back on that BATNA? (Don’t know what a BATNA is? There is another entry on this site that covers the topic.

• Do you conduct effective bench testing of product before the purchase?

• Does your bench testing match your requirements to actual product functionality?

• Do you establish a clear and strategic value you are willing to place on technical support and/or ongoing maintenance?

• Do you have two clear sets of contractual terms and conditions relating to this type of purchase? Establish one set of "must have" clauses and one set of "will not accept" clauses. Again, another article on the BTCN site covers this critical topic.

• Do you follow a formal strategic negotiations plan for this acquisition?

• Do you check the product that you receive to ensure it is what you ordered and in the quantity or quality that you ordered?

• Do you review all paperwork that accompanies (or doesn’t accompany) the product?

• Do you bench test the product you actually receive to ensure that it still matches the functionality that governed the purchase? (Don’t be surprised if this value has changed. It does happen.)

• Do you ensure that the product has been effectively implemented according to the agreed parameters?

• Do you follow up on the product within the warranty period to determine if it is fully functioning according to requirements?

• Do you follow up on the actual technical support and/or maintenance services delivered by the provider?

• Do you go back to the re-seller or provider with solid evidence of failure should failure occur? (Or do you just eat your losses and move on?)

• Do you clearly document this entire process?

Unfortunately, even the basic steps we just listed are either not considered or they are fragmented across the enterprise to the extent that very little control is exerted on the purchase and maximum control is exerted on distributed silo ownership. In terms of the average technology purchase, if you do not have a centralized and very solid acquisition process in place, you will consistently lose money due to functionality, over-purchasing, ineffective implementation, pricing, and duplication of services.

So? Based on this information, the average company has a couple of major problems that prevent any realistic reduction in IT financial waste. First, there is essentially no meaningful, centralized, or knowledgeable control over the life cycle of technology assets. And second, executive management has literally no idea that their company is leaking IT dollars through a money sieve with hundreds of tiny but highly significant holes. So far, we’re only discussing the workflow of a relatively simple acquisition process.

Want more? Agree? Disagree? Don’t care? Let us know & we’ll follow up.