Software vendors call for fast-track procurement

The accountancy software industry cannot cope with the deluge of sales enquiries prompted by the year 2000 and European monetary union. At its annual meeting in London this week, the trade association BASDA issued a proposal to streamline IT procurement, writes John Stokdyk

BASDA, the Business and Accountancy Software Developers Association, represents 187 of the UK’s business software developers. Many of them had expressed frustration at the detailed invitations to tender (ITTs), often running to 50 or more pages, that prospective customers ask them to complete as part of their procurement processes.

BASDA’s fast-track tendering system is based around a shorter document, a ‘request for information’ that the association has drafted in co-operation with KPMG, Coopers & Lybrand and other specialist IT consultancies. The RFI requires suppliers to respond within two weeks to a simple summary of requirements, covering basic hardware and software, timescales, transaction levels, number of users and budgeted price range.

Suppliers are also asked to submit a profile of their software and company background. These responses should give potential customers enough information to shortlist about three suppliers for more detailed examination. The BASDA proposal suggests a half-day at least to assess different packages, leading to the selection of a ‘preferred supplier’ who should be asked to carry out extensive on-site software testing before signing a contract to supply.

BASDA director Dennis Keeling unveiled the RFI-based procurement proposal at the association’s annual general meeting at the Institute of Directors in London last Tuesday. To encourage more users to adopt the streamlined RFI approach, BASDA will publish a guide for software buyers later this month with sponsorship from KPMG.

‘The traditional method of selecting a business and accounting system is to prepare a detailed requirements specification alongside other operational requirements in a huge document, known as an ITT,’ explained Keeling.

‘This is often seen as the first step in the selection process and may be sent to 20 or 30 suppliers.’

ITTs can take several man-months to complete, he explained, and can sometimes cost suppliers more than #50,000 each. Keeling cited the experience of the National Trust, which ended up with a shortlist of only two suppliers for a 350-user system. Neither vendor was particularly suitable, but all of the others declined to respond to the charity’s ITT.

‘It is not surprising that many software developers are not prepared to respond,’ said Keeling. ‘Market leaders can afford to cherry-pick their customers, and smaller companies, who may have excellent products, simply cannot afford to tender for all the potential business.’

Keeling – who has probably done more than anyone to promote functional checklists as a software-purchasing aid – explained that the RFI is designed to zero in more quickly on the most appropriate software developers. The detailed requirements specifications should be satisfied by the preferred supplier at the testing phase. ‘The crux of this approach is that the customer gets a system that will work,’ he said.

Jack Shonfield, director of management consultancy Genesys, said that ITTs did not always meet the needs of his clients. ‘ITTs tend to focus on minimising risks for the customer rather than on the most appropriate hardware and software,’ he said. ‘The general functionality of accounting packages is such that ITTs are no longer relevant. The advantage of this new RFI approach is that it looks at how the software meets business requirements so that when it comes to implement the systems, customers can hit the ground running.’

Although BASDA’s suggested approach appeared to be to the advantage of both parties, Shonfield, said he would cast a critical eye over it in case it might be ‘intentionally, or not, slanted to supplier’s benefit, rather than the buyer’s.’

In response to the suggestion that major consultancies would resist buying procedures that reduced their involvement, Keeling said that Big Six firms such as Coopers & Lybrand and KPMG helped shape the proposal and already use the streamlined RFI-style procurement approach.

‘For a small company, it can save 30% on the elapsed time of selecting and installing a new system. Our figures suggest they can cut the time down from 135 man days to 93,’ said Keeling. Larger companies can expect to cut the time from an average of 230 to 148 man days.

‘With 64% of the companies we have surveyed looking to acquire new accounting software within the next two years, the industry is on the verge of a massive boom,’ he said. ‘But if customers use the old-style ITT process, they will be unlikely to have new systems in place by 2000.’

BASDA SOFTWARE SELECTION PROCESS

– Prepare requirements specification

– Send 3-4 page request for information (RFI) to ten appropriate vendors

– Shortlist 3-4 packages

– Initial evaluations and reference checks

– Select preferred supplier

– Detailed demonstrations

– On-site testing against requirements specification

– Project planning

– Final quotation on realistic requirements

– Contract negotiation.