Identifying Acquisition Needs


Identifying Acquisition Needs











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Identifying Acquisition Needs

by Faulkner Staff

Copyright 2022, Faulkner Information Services. All
Rights Reserved.

Docid: 00018558

Publication Date: 2204

Report Type: TUTORIAL

Preview

As the first step of any procurement, the identification of acquisition needs has the potential to affect the success of the entire RFP and contract process. A common mistake in technology procurement
is purchasing technology because it is new rather than because it
serves an essential need of the business. To avoid this
pitfall, it is important to focus on business needs as well as technological
features when identifying potential acquisitions. It is essential to rely on a cross-disciplinary
team of business and technical experts to determine whether a particular
technology could serve a high-priority business need efficiently and
cost-effectively. For assistance with the needs determination process,
organizations can also enlist the help of consultants and use software tools such as business
workflow checklists that help diagnose problem areas, as well as electronic user
requirements surveys that integrate with RFP production.

Report Contents:

Executive
Summary

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Best Practices for Preparing
a Request for Proposal Tutorial

Evaluating RFP
Responses Tutorial

Negotiating
and Writing Contracts Tutorial

Ensuring
Contract Performance Tutorial

Effective contract management comprises a
series of steps. The first is to determine the business needs
that the technology procurement will address. Next, a company must prepare and
distribute a request for proposal (RFP) that articulates those needs. After
evaluating the proposals it receives and choosing a supplier, the
company is ready to negotiate and write a contract with the supplier. The
company must then be prepared to ensure contract performance and to
renegotiate the contract when circumstances change. Each step builds on the preceding ones. Contract management is most successful when a company
approaches each step with the entire process in mind.

As the first step of any procurement, the
identification of acquisition needs has the potential to affect the success of
the entire RFP and contract process. Ultimately, an RFP and contract cannot be
considered successful if the goals they achieve are not meaningful to the
company. Therefore, when determining acquisition needs, it is important to
focus on business needs and not make the mistake of acquiring unneeded technology
just because it is available. On the other hand, a company should make an
effort to learn about new technology as it becomes available
in order to make informed decisions about whether that technology fills a
business need for the company.

To avoid a too-narrow focus, it is important
that acquisition needs be determined by a cross-disciplinary team that
represents the key stakeholders throughout the company who will be affected by
the change and whose cooperation will be needed in order for the project to
succeed. In most cases, this includes both business and technical experts. User surveys, analyses
of the current system, benchmarking, vendor demos, professional seminars, and
trade journal articles can all help a company determine the business needs to
be addressed in its RFP and contract process.

Several companies offer tools and consulting
services to help reduce the timeframe and improve the results of the needs
determination process. These include electronic user surveys that integrate
with RFP production, as well as business workflow checklists that help companies
diagnose problem areas. Another resource that provides
numerous tools for collecting needs assessment information and making decisions is A Guide to Assessing Needs, a
full-length book available at no charge from the World Bank (see http://www.needsassessment.org/).

Description

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Prior to writing an RFP, a company must
carefully determine the business needs that the RFP should address. The core
method of determining acquisition needs is usually a user survey aimed at
locating inefficiencies and bottlenecks in the company’s workflow. This
information can help the company identify potential savings that could be realized
by automating or enhancing a task or a step in their business procedures. To be most
useful, the list of needs produced by the user survey should be categorized by
business process, and the needs should be prioritized to ensure that the most
important requirements are given proper weight when a proposed system is being
evaluated. A potential drawback of assessing needs via a user survey is the
risk of disappointing users who may infer that they will receive what they ask for
in the survey.

The user survey process can be streamlined
through the use of survey tools that provide pre-loaded, customizable user
requirements surveys that can be distributed, responded to, and processed
electronically. This type of user requirements survey can be organized and written so
that its responses are automatically incorporated into an RFP. The RFP
questions thus produced should be designed to allow quantitative, consistent
comparisons across vendors to aid in evaluating RFP responses and suppliers.
The RFP questions should also be designed to elicit detailed, specific supplier
responses that can form the basis of an explicit, enforceable contract.

Benchmarking against similar companies is
another way to identify inefficiencies and areas that could be improved. In
addition, an asset management system can be used to analyze the total cost of
ownership (TCO) of current IT assets and identify the assets that should be
replaced because they cause a disproportionate share of trouble tickets and
service requests. A change management system can be used to analyze the impact,
risk, and resource requirements of a proposed change.

Current
View

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Manually assessing acquisition needs can be time-consuming and can yield
incomplete or inconsistent results. Several companies offer tools and consulting
services to help reduce the timeframe and improve the results of the needs
determination process. These include Infotivity,
Strategy CIO, and Technology Evaluation Centers (TEC).

Business Workflow Checklist. A business workflow checklist arranges discrete tasks
or functions for a particular business procedure in workflow order in order to help
companies diagnose information bottlenecks caused by lost documents, missing
data, or lack of automation. Infotivity offers
specialized business workflow checklists that help companies analyze the flow
of information for a variety of procedures including general ledger, accounts
payable, accounts receivable, payroll, computerized maintenance management,
manufacturing/MRP, order processing/inventory, and web site development.

Customizable User Requirements Survey. It can be
tempting to implement a generic user requirements survey or to reuse a survey
that was developed for a past procurement or for another company. However, the
results will be far more reliable if the survey questions are
tailored to the present needs, priorities, and business environment of the
organization. Some companies offer survey tools that
reduce the timeframe and work involved in determining contract needs while still
creating customized results. These packages include pre-loaded surveys that a
company can fit to a particular procurement situation by adding, deleting, or
modifying survey questions. For example, Infotivity offers user requirements
checklists for numerous industries and applications including accounting,
customer relationship management, enterprise resource planning, human resources,
and financial systems. These surveys offer pre-loaded questions that are
specific for a certain application or industry, and they let managers change,
add, or delete questions. When filling out the survey, users can also add items
to address needs that were not included. Both end users and managers can assign
priorities to features or needs in the survey.

To ensure the assessment addresses business needs, survey questions
should focus on results and performance, rather than asking what new
technology participants desire. Also, as with any survey, it is important to
remember that the results are subjective, reflecting the perceptions of the survey
participants rather than objective performance measurements. Before administering
the survey to the entire target audience, it is a good idea to pilot test the
survey with a representative sample and analyze its results, then modify or
remove any questions that do not provide useful information.

Dual-response Survey. A dual-response survey collects
information on both current and desired performance for each item. The US Government Accountability Office (GAO) recommends that needs assessment
surveys use the dual-response format
because such surveys can help a business quantify and compare the acuteness
of the needs it identifies, as well as identify opportunities for cost-cutting
in areas where current performance already exceeds desired performance. Table 1
below illustrates the format of a dual-response survey. Respondents rank each item
in the survey on a scale of one to five for current performance as well as desired
performance. The numerical scale for
each survey item can represent agreement (from strongly disagree to strongly agree),
satisfaction (from very dissatisfied to very satisfied), or some other scale
appropriate to the question. For each question, subtracting the current performance from the desired performance
yields a value that represents the discrepancy between current and desired performance.
Positive values for this gap represent needs: the larger the gap, the more acute the need.
Negative values for this gap represent opportunities for cost savings, as they identify areas where the
current allocation of resources exceeds perceived needs.

Table 1.
Dual-Response Survey
Current Performance Survey Question Desired Performance

– 1 – 2 – 3 – 4 – 5 –

1.

– 1 – 2 – 3 – 4 – 5 –


– 1 – 2 – 3 – 4 – 5 –

2.

– 1 – 2 – 3 – 4 – 5 –

– 1 – 2 – 3 – 4 – 5 –

3.

– 1 – 2 – 3 – 4 – 5 –

– 1 – 2 – 3 – 4 – 5 –

4.

– 1 – 2 – 3 – 4 – 5 –

Open-ended Response Items. Although multiple-choice survey
responses can be easy to tabulate, they necessarily limit both the topics participants
can provide information about and the responses they can choose about those topics.
It can be worth the trouble to include some open-ended response items in the survey, on which participants will not be
biased by predefined survey choices. Open-ended responses can provide information about needed changes in areas that
a company may not have known to ask about. Below are some useful open-ended response items.

  • How does technology get in the way of you doing your job?
  • What technology change would help you the most with your job?
  • Describe how this change would help you do your job better or more efficiently.
  • Is there anything else you would like to tell us about your technology needs?

Electronic Distribution and Processing. The
most impressive time savings provided by the survey tools come from electronic
distribution and processing. Interactive, electronic user requirements surveys
allow users to respond over a LAN, a WAN, an Intranet, e-mail, or the Web. User
responses can then be automatically merged, tabulated, and reported without
the time and errors that would be involved with manual data entry. The
information thus obtained can also be automatically
incorporated into an organized, detailed, prioritized RFP.

Consulting Services. Another option is to
hire an outside consultant with detailed business process knowledge to help
identify and prioritize a company’s contract needs and ensure that all
pertinent issues are addressed. Info-Tech Research Group provides advice,
tools, workshops, and templates to help an organization make and justify IT
purchasing decisions. Strategy CIO provides an IT assessment to help match
technology needs with business goals. Technology Evaluation Centers (TEC)
offers the services of software selection expert consultants in addition to
online evaluation tools, research, and RFP templates customized for particular
software types, industries, and business areas.

US Government Accountability Office (GAO). Another resource concerning best practices in acquisition management is the
GAO. From the GAO’s perspective, successful acquisition management depends on a foundation of acquisition-focused organizational alignment and leadership, policies and processes, investment in human capital, and knowledge and information management. Their recommendations are summarized below:

Organizational Alignment and Leadership

  • A chief acquisition officer with primary responsibility for managing acquisitions.
  • Well-defined roles and responsibilities for all participants.
  • Goals and metrics for evaluating the efficiency, effectiveness, and strategic relevance of acquisitions, communicated throughout the company.
  • Acquisition function reflecting changes in mission, budget, workforce, and technology.

Policies and Processes

  • Acquisition process executed by cross-functional teams of key stakeholders.
  • Suppliers provided with feedback on performance.
  • Participation of small business suppliers encouraged.
  • Company’s needs strategically assessed and aligned with planned acquisitions.
  • Policies and processes continuously improved in response to stakeholders’ needs and concerns.

Human Capital

  • Human capital strategic planning that includes acquisition officials.
  • Acquisition staff recruited, retained, and developed.
  • Appropriate performance metrics, workload, skills, and training for acquisition workforce.
  • Establishment of performance expectations and metrics for all management
    levels.

Knowledge and Information Management

  • Database of key suppliers.
  • Decision-making informed by data on categories of spending.
  • Concessions from key suppliers gained by leveraging data on spending patterns.

Recommendations

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Step 1. Assemble a
Cross-Disciplinary Team

The first step in contract management is to
assemble the team that will determine acquisition needs and then prepare and
evaluate RFPs. Because IT infrastructure can touch
every department and function in a company, this should be a cross-disciplinary
team that represents the key stakeholders who will be
affected by the change and whose cooperation will be needed in order for the
project to succeed.

Both business and technical experts need to be included on the
cross-disciplinary team. By including people who
understand the business context in which the IT system will be used, the
planning team can better assess and manage what parts of the business and the
IT infrastructure will be affected by the change, in particular how workers’
roles and customers may be affected. A diverse team that represents all the
stakeholders within the company will also be better able to establish a
reasonable scope for the project, changing only what is necessary and
integrating the new components with existing systems that are still functional.

Many organizations find it cost-effective to
hire a dedicated Technology Research and Planning Specialist to lead the cross-disciplinary
team. Responsibilities for this position would include analyzing technology
needs and investments, staying current with technology trends, maintaining
relationships with high-tech research firms and suppliers, and ensuring
technology assets and expenditures align with business requirements and plans.

Step 2. Keep the Entire
Contract Management Process in Mind

The contract management process begins with
determining the business needs that the RFP and contract will address. The user
requirements survey should be organized and written so that its responses can
form the basis of an RFP that in turn will elicit detailed, specific proposals
that can be easily compared across vendors and can then form the basis of an
explicit, enforceable contract. Choosing an integrated, electronic user survey
allows a company to convert the survey responses automatically into an RFP and
ultimately into a contract, reducing data entry time and errors.

Step 3. Survey Users

An essential component of determining
acquisition needs is surveying users to locate inefficiencies and information
bottlenecks. A user requirements survey can help identify business and
procedural problems faced by users. A workflow checklist is used to ask users
what would make their jobs easier, when they must spend time searching for or
correcting data that is needed for a task, how much time they spend hunting or
waiting for data, and how much time is wasted due to lack of needed
information. The survey and checklist results can help a company identify
potential savings that could be realized by automating or enhancing a task or a
step of the business procedure (and help justify the cost of the change).

It is important to ask users what they like
about the current system as well as what they do not like. A common mistake in
stating the requirements for a new system is to focus only on fixing what is
lacking in the current system, without ensuring that the new system preserves
what is already working in the current system. Some recommend using a
dual-response survey format, asking users to rank both current and desired
performance for each survey item in order to identify the areas of greatest
need.

Some companies offer survey tools that
include pre-loaded surveys that can be modified to fit a particular procurement
situation by adding, deleting, or modifying survey questions. Electronic
distribution and processing let users respond over a LAN, a WAN, an Intranet,
e-mail, or the Web. User responses are merged automatically and the results can
be converted into an RFP without manual data entry.

Step 4. Organize and
Prioritize Needs

To ensure that the most important
requirements are given proper weight when evaluating a proposed system, needs
should be prioritized and ranked by importance. To reduce the burden of
this process and to ensure that the priorities reflect the needs of the people
who are using the system, the user requirements survey can ask users to assign
a priority to each need. Mandatory "must have" features can then
carry more weight in the decision than desirable "nice to have"
features. The mandatory list will include system constraints (such as the need
to use an existing database or to interface with a legacy system) as well as
key features. 

Step 5. Focus on Business
Needs

Throughout the process of determining
contract needs, it is important to ensure that proposed IT procurements meet
actual business needs rather than perceived needs driven only by the release of
new technology. A company should guard against the temptation to buy new
technology simply because its existing but still functional IT infrastructure
has become "out of date" and newer technology is available. When assessing
its needs for new hardware or software, a company should focus on:

  • Simplifying or improving business procedures.
  • Accomplishing tasks faster and more efficiently.
  • Saving money or generating more revenue.
  • Addressing both immediate and long-term needs.

Step 6. Learn What Is
Available

Sometimes it can be
difficult to think outside the box of "the way it has always been
done." Many companies fail to improve their business processes and IT
infrastructure simply because they are not aware that there is a better way to
do it. When determining contract needs, it is a good idea to learn what new
features and functions are available through vendor demos, professional
seminars, trade journal articles, and conversations with colleagues at other
organizations. The company can then make an informed evaluation of whether the
new technology would answer a business need.

Another way to better understand the
products and services offered by a multitude of potential suppliers is to
distribute a request for information (RFI). RFIs are
concise, high-level documents that emphasize the objectives of the enterprise,
rather than specific business processes. Distributed to a wide group of
vendors, an RFI helps a company quickly gather relevant information about new
technology that could help improve its business processes, as well as obtaining an
overview of potential suppliers.

Step 7. Benchmark against
Similar Companies

By comparing its performance against other
companies that have similar IT sizes and functions (benchmarking), a company
can identify inefficiencies and other problem areas that could be improved. The
benchmarking process can also provide information about what technology other
companies are using and how it is helping them to accomplish their tasks.

Step 8. Analyze the TCO of
the Current System

An asset management system can help
determine IT acquisition needs by analyzing the total cost of ownership (TCO)
of current IT assets. By
tracking the original and current value, accumulated repair and upgrade costs,
and support costs based on trouble ticket history for each asset, an asset
management system can help identify which IT assets cause a disproportionate
share of trouble tickets and service requests. These assets, which are a drain
on the company’s resources, may need to be replaced. The information in an
asset management system can also help a company choose whether the new system
should integrate with its legacy system or replace it.

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