A Consumer’s Guide to Acquiring Information Technology for your Business

Computer technology has revolutionized the way most businesses function and will continue to do so in the future. As we all know, acquiring computer systems is not without risk. In this paper, we identify common problem areas and give some broad, general advice on what you can do to minimize the risks involved.

Hidden Costs

One of the biggest problems associated with acquiring computer technology is that vendors offering to supply the technology are not always up front about all the costs involved. Due to the complexity of computer systems, consumers are often unaware of all that may be involved in using or developing the technology. Because of this, they may miss important costs involved with the system or services they are looking to acquire. Many of these costs are not obvious at all, and may only become apparent when systems are upgraded, extended, changed, etc., or are integrated with existing systems.

Here are some important questions to ask in regards to costs:

1. If software is being purchased, what is the licensing arrangement? How many users can use the software? What are the limits of the software in terms of users? Will we need to add more hardware if we add users? How much does maintenance cost and who will perform regular maintenance and at what cost? How much will upgrades cost? Will the software work with our existing hardware and operating systems? Will our staff require training to use the software? Do we get the source code?

2. For hardware purchases, is the hardware industry standard, or proprietary? Examples of proprietary hardware are IBM midrange and mainframe computers, while an example of industry standard hardware would be windows based P.C.’s made by Dell or Hewlet Packard. Will the hardware being offered meet our needs? Can we do a “pilot” system test, or does the vendor have examples of other companies successfully using the proposed hardware for a comparable system?

3. Network Costs:What are the costs associated with the network?

Sometimes costs are poorly estimated because proper analysis is never done to outline the requirements of the system. Proper systems analysis and software engineering early on in the development cycle is required to give a “blueprint” of the proposed system so that costs can be more accurately estimated.

Proprietary Hardware

Be careful about getting locked into proprietary hardware. If the hardware is proprietary, remember that the vendor will have a monopoly for supplying upgrades, parts, etc., so make sure you find out these costs before you decide to buy. There will be a temptation for the vendor to overcharge for things like upgrades or maintenance since you would be forced to buy from them only. In addition, some features you may want in the future may be unavailable if the vendor decides not to offer them. Keep in mind that in some cases, the proprietary hardware may consist of only custom cards that run in a normal P.C. configuration.

On the up side, companies like IBM can maintain stringent quality control standards over all aspects of their hardware, and if there is a problem, they cannot blame someone else to try to avoid taking responsibility.

Software Acquisition

There are a number of ways to acquire the software your organization needs. Many large computer companies like IBM, SAP and Siebel offer off-the-shelf products, frameworks, consulting services and custom software. Another option is to hire programming staff to write the software in house.

When you purchase software, some software vendors may offer to supply the source code. This is highly variable and is dependent on the nature and scope of the software. If the vendor offers to supply the source code, make sure that the application was developed using industry standard computer languages, otherwise it may be useless. Some vendors may offer to give you the source code, but will then withhold some key code segments or libraries to make compilation impossible. Again, this renders the source code useless and leaves you at the mercy of the vendor. If you decide to create the software in house, you will then own it outright. Many companies do exactly that, especially for web-based software, so that they can maintain a high level of control over their computer systems.

As a general rule of thumb, go for the simplest approach that will meet your needs. Don’t get wowed by bells and whistles if they are unnecessary. If you can use an off the shelf product like MS Excel, do it.

With the importance of the Internet, many companies choose to hire a web developer (or a web development company) to create a website with the functionality they need. Internet and Intranet based information systems are becoming extremely popular because they are relatively easy to program and customize, and the same software can be used by both internal users (employees) and external users (clients or offsite employees). Again, make sure the developer uses industry standard languages and components so that you can fix or modify the software when you need to, and it is almost guaranteed that you will need to. A very important point that I can’t stress enough is that if you have a falling out with your web developer or with the company that you hired to do your software development, you will be in an infinitely better position if you own and control your information systems in a format that can be freely modified, extended, etc., so that you can hire whoever you want to take over the development and maintenance of your systems.

Conflict of Interest.

The last area we would like to address is conflict of interest. Advice that appears to be objective and unbiased can actually be the opposite. This happens when the advice giver has a financial interest related to the advice being given. Here are a few example scenarios that we have seen:

– A company your organization is thinking of using to outsource your information technology management offers to supply, free of charge, a consultant to work with you to do a feasibility study.

– A salesperson suggests the best way to solve a computer related problem. The solution involves the purchase of products from the salesperson’s company.

– A consultant recommends a particular software company to do custom programming for a project. The consultant has a financial stake in the software company.

While these points may seem obvious, it is amazing how often I have seen these conflicts of interest happen with often disastrous results. Find someone you can trust to give you honest and impartial advice.