Should You Be Doing Better Due Diligence?

How Thorough Preparation Can Save Costs and Ensure Smooth Transitions in Your Technology Implementations

One of my favorite quotes is: “An ounce of prevention is worth a pound of cure”. Benjamin Franklin's famous expression is so true in so many aspects of our lives; wiping the stove after each use instead of waiting until the end of the week, thinking about how we want to use folders to organize our email or files, or planning out a building project before starting. Well, think about what you would get with a pound of prevention.

So often, in the Information Technology space, we are so concentrated on how a product will work technically either; within our environment, with our applications, or with our users that we often forget to balance and document the commercial and business side of the procurement process.

In this post, I'm going to be exploring a phrase that gets thrown around a lot and what it means to me. IT Project Due Diligence. I'll cover four components that I think are critical to proper due diligence including: Requirements Definition, Score-carding, Financial Project Planning, and Financial Summary. 

Let’s start with requirements definition, as this is usually the first place you should start when you’re undertaking a new IT Project. At a high level, the Requirements Definition should be based on a requirements gathering exercise to determine (a) how the current technology is being used or not used, (b) what the business feels it needs most in the technology or a replacement, (c) which features, or functionality are most important vs nice-to-have, (d) any budget constraints, (e) any time constraints for completing the project, and (f) other success criteria.  Interviews with stakeholders and users are important and ensure that vested interests are considered during the process.  An expert consultant who understands your current technology and the competitors in the marketplace can help you work through the steps in the process to maximize the data available to understand the problems and evaluate solutions.

Next up is Score-carding. What is Score-carding you may ask? Well, we all remember the report cards that used to come at the end of the semester giving us grades for the different subjects in school. We apply this concept to the technology being evaluated and the various providers/vendors. The process begins with Requirements Definition. Next, we take the list of requirements and work with the IT Leader to document the importance to the business for each requirement. We use that list of requirements and priorities to evaluate the replacement options throughout our meetings, provider demonstrations, and pricing conversations. Then we stack rank the providers based on their capabilities to meet the requirements. Then we use business logic to determine a ranking by requirement and total for all requirements by provider. Score-carding is crucial because it gives us a subjective measure of the provider’s capabilities vs a gut feeling and/or the ‘experience’ that many IT consultants rely on for these evaluations. Score-carding is also a “CYA” so IT is not the only business unit that is seen as having an impact on the technology selection process.

Now, let’s move to the financial side of the project evaluation process - the most important aspect of a project and the reason Socium Consulting was founded. I’m going to take a two-pronged approach starting with the project and vendors themselves, then move on to how the project impacts your budget. 

A lot of IT Partners and IT Consultants can help you with requirements and score-carding. They may take a mathematical approach, but many don’t provide any guidance when it comes to financial summarization. Why does this matter? You have a defined list of requirements, so to ensure the business knows the impact of the new technology procurement, they need to understand how it compares to current costs. Taking an apples-to-apples approach is necessary for the business to understand what the direct comparison of these products is. Then, we have to articulate the technological benefit of a procurement effort, preferably with a quantitative measure (like FTE replacement, ticket/time savings, etc.) or with a qualitative measure (user experience improvement, increased ease of management, etc.). This financial comparison should itemize the products and services you're consuming today along with their direct replacement on the new technology side. Finally, they should measure a total cost of ownership (TCO) along with any professional services and promotional incentives. 

Finally, let's talk about budget impact. Again, one of the core tenants of Socium Consulting and the reason that we can have a big impact on your ability to quickly procure technology is the impact of technology on your budget. As you move through the procurement process, your Sales Account Manager is probably telling you: “my solution can save you X amount of money per year”. BUT, how do they arrive at that number? When can you expect to see those savings? Can you do a Big Bang migration or do things need to be phased out? The answers to these questions impact the annual budget you submitted to the business at the beginning of the year. Even if you’ve budgeted for a project, you want to make sure it's going to align with the allotment you’ve been given. This is where methodical planning for expense management comes in. At Socium Consulting, we help you identify by site, by business unit, or by company, a rollout plan and then help you understand how those costs will ramp up and how some costs will fall off. 

Wrapping things up. Obviously, all projects are different but, if I was an IT director, VP of IT, or CIO, I would want to follow this formula to FULLY document my actions to ensure that I'm on the same page as my executive team, to ensure the business has a vested interest in the IT solutions my company is using and finally that I have a paper trail that mathematically captures the product evaluation, selection, and rollout plan. Taking all this into account, I'm reminded of another Benjamin Franklin quote: “Those who fail to plan, plan to fail.” So, the summary of this article would be: Those who fail to take an ounce of prevention will fail, even with a pound of cure.