Sizing Up Software Suppliers for Successful Project Integration

By Gary C. Latham

When government agencies rely on one vendor for information technology (IT) pilot testing and another vendor for large-scale rollouts, the wrong people may be performing the right job.

Frequent changes and advancements in core information technologies are a way of life in the government sector. Many times, enterprise organizations don’t bother with discrete software purchases, opting instead to buy licenses for entire suites of software at once. Solutions to leverage that software are expected to follow. Once solutions are formulated, the pace is often fast and furious, as public agencies and their vendors learn the benefits and limitations of software implementation.

This pace of change, combined with the complexity of enterprise software solutions, demands that organizations follow an adoption path that begins with a small pilot project or proof of concept, before leading to a large-scale production rollout.

Typically involving a subset of the user community, pilot projects are enacted to prove or disprove a theory around the concepts of operations, usefulness, feasibility, and technical soundness surrounding a solution. Pilot procedures also assess the impact of a solution on the organization and determine factors involved in a full implementation.

Launching Pilot Programs

Where do government entities turn to design, develop, and deploy pilot-sized solutions? In the IT world, public agencies frequently call on small- to medium-sized businesses (SMBs). Generally speaking, SMBs are businesses focused either on a specific technology or on the customer, while knowing one or both factors inside and out. That knowledge pays off in an SMB’s ability to look across the enterprise environment and the pilot community to quickly determine necessary steps for the design and deployment of a successful solution.

Often, pilot efforts are awarded under existing contracts, as small-business set-asides or as sole-source procurements, based on the specific technology and/or size of the project. A common practice involves awarding an IT pilot contract priced slightly below the sole-source limits or under the umbrella of a very limited procurement.
In awarding a pilot contract, the government agency is generally challenged to find a large integrator with the appropriate resources, rate structures, and motivation to pursue business at this small scale. Therefore, the small businesses eagerly accept the project, while large systems integrators (SIs) wait and watch to see if the pilot efforts generate the kind of interest and funding necessary to fit their business model.

When small businesses dive in to the project, their strong points are speed and knowledge. At this scale, the service provider needs to work intelligently and swiftly to remain profitable, which means supplying a highly skilled staff (at relatively low rates) with direct expertise in the technology or solution. During the pilot phase, these individuals explore all facets of the solution, recognizing its potential or impending impact on the organization, as well as thoroughly understanding relevant user requirements.

The small business then exits the pilot phase as a true expert regarding the client’s specific environment and the solution within the context of that environment.

Trapped in the Procurement Cycle

When the pilot stage is completed, the procurement cycle begins, with large SIs typically targeted to deliver the large-scale rollout. Domains of the large SIs focus on scale and vehicle, two common factors that drive the selection of an IT vendor.

During the selection process, government entities sometimes overlook the benefits of asking the small business that performed the pilot to play a key role in the larger effort.

Without question, the large SIs rely on the small business to become a part of their project team and gain an advantage in bidding, as well as to impart an understanding of the solution and environment.

Unfortunately, the small business is typically forced to choose a partner at this stage, as large SIs are appropriately jealous partners and demand exclusivity.

If the small business selects an SI that does not win the final bid for the project, the public agency stands to lose 100 percent of the intellectual capital associated with its initial pilot investment.

Even if the small business makes a wise decision and partners with
the winning SI, the pilot firm is often relegated to a minor role on the implementation team. In any case, once the SI enters the procurement phase, the business needs and model of the large SI tend to dictate the project. Rates that were drastically reduced in order to compete, for example, can lead to the selection of staff who may not be equipped to perform the work well or efficiently.

Certainly, lessons learned by the small business and its potential contribution to the program are devalued and de-emphasized at this point of the procurement cycle.

To add insult to injury, the current procurement methodology, based on pilot projects followed by new procurements, delays an organization’s ability to reap the benefits of the now proven technology or solution. During this delay, the small business is typically forced to reassign its staff who performed the initial pilot.

Because SMBs simply cannot afford to reserve valuable staff during a lengthy procurement, the government entity may lose the invaluable knowledge base developed during the pilot phase.

Across the board, the government agency loses. The organization’s investment in the pilot becomes a forgotten cost, rather than leading to a more efficient and effective rollout. In addition, the cycle repeats itself as small businesses fight for new pilots, while the large SIs wait for the big projects to surface.

Breaking the Cycle to Reap Benefits

Alternatives exist to help public entities break the fragmented procurement cycle and maximize pilot investments:

• First, pilot procurements should include necessary options for allowing the small business to deliver the large-scale rollouts, predicated on the success of the pilot.
• Secondly, when the government agency insists on turning to the larger SIs for the IT rollout, the agency should map out a role for the small business that performed the pilot. The small business should be at the core of all bids that build on the pilot, as opposed to forcing the small business to pick a prime SI and hoping for a favorable outcome.
• Finally, if competition becomes necessary following the pilot, construct the procurement in a manner that encourages small businesses to become prime players in the effort. To offset any perceived risk of relying on the small business, encourage large SIs to become part of the project team as subcontractors, while establishing metrics that provide incentives for efficient delivery and penalties for poor performance.

Following the above measures will allow the government entity to benefit from highly skilled, motivated workers who specialize in the key technology and solution, not only during the pilot project, but throughout the entire rollout.

If the small business stays involved with the project, the government entity will not lose the collective knowledge garnered during the pilot phase.

In turn, when the small business and SI work together to implement the IT rollout, the main objective should focus on how to effectively leverage the new solution for the business benefit of the end users, not the bottom line of the large SI.

Editor’s Note: Gary C. Latham is Senior Vice President for Operations in the Public Sector Division of Internosis. The company provides business-driven information technology (IT) services that integrate Microsoft technologies in the enterprise environment. Through a network of consultants and engineers, Internosis helps public- and private-sector clients develop strategies and applications to improve information sharing, manage technology changes, in-crease productivity, and minimize risk. The company is headquartered in Greenbelt, MD, with regional offices in Boston, Colorado Springs, New York City, and at international locations.
For additional information, visit http://www.govinfo.bz/4589-101.