10 Keys to Successful Technology Acquisitions
A very large number of information technology projects fail every year. Some studies have shown that only one-fourth of all IT projects undertaken by Fortune 500 companies are completed successfully. Others give IT projects only a 50% chance of being completed within time and cost budgets.
Would you invest millions of dollars in a project with a 25% chance of success? IT managers are increasingly answering no to this question. So, what is their alternative? Their alternative is to shift this risk to a third party. The risk can be reduced by acquiring technology from outside companies that specialize in building technology, instead of attempting to build it internally.
A new problem arises after you decide to buy instead of build your technology. Most project managers are inexperienced in acquiring technology. How can you ensure that you will buy the right technology from the right vendor, and at the right price for your business? Here are ten keys to successful technology acquisitions:
Leverage. A thorough research and evaluation of each vendor will provide you with leverage. The more time and money each vendor invests in winning your business, the hungrier they will be to win the deal. You will also be more successful in negotiations if you can create a competitive environment for the vendors.
Information. Without information, you risk selecting the wrong vendor for your situation. This is even more important when acquiring technology that you know nothing about. A thorough research and evaluation process will educate your team, allowing you to make a better decision and negotiate a more effective deal for your company.
Objectivity. Almost all technology acquisition decisions are subjective. Therefore, the goal is to objectify the decision as much as possible. This can be accomplished by breaking down the big decision into many small decisions. Applying tools, such as a scoring matrix, will help you objectify the decision as much as possible.
Priorities. It is difficult to select the best technology and vendor for your situation if you don't have a good understanding of what is important to your organization. Establish your priorities before evaluating any vendors to ensure that the vendors can't persuade you to change your priorities in their favor.
Fairness. Any time you have vendors investing money in winning your business, you are at risk that they will take legal action in case they feel they didn't receive a fair chance to win your business. Additionally, you may not select the right vendor if you don't give all vendors the same opportunity to respond to your requests for information.
Mutual Benefit. Although you want to get the best deal possible, you don't want to put the vendor out of business by dealing with your company. A good partner is one that is financially strong and can fund future development to your benefit. There are exceptions to this, of course, but in general, you want the partnership to benefit both companies.
Consensus. In order to have the support of the stakeholder organizations, you will need to build consensus on the vendor of choice. This requires you to involve them and update them periodically throughout the process. Additionally, you may want to include a business subject matter expert on your team to represent their organization.
Project Management. It is critical that you have a project manager who understands the technology-acquisition process, and who can manage the team to a fair and objective decision on which vendor and technology is best for your situation. By reading my new book, Technology Acquisition, project managers learn about the process and people involved in successful technology acquisitions.
Leadership. Just as you need good project management, you also need a strong leader. Many projects are cancelled or fail to secure the funding they need because they didn't ensure the ownership of a top-level executive who could champion the project to the rest of the organization.
Thoroughness. Small things can snowball into big things very quickly. Make sure that you uncover all the potential costs, risks, assumptions, issues, and terms involved in the deal before you sign it. This is the time that you have the most leverage, so make sure that you resolve the issues prior to contract approval.
By focusing on these 10 keys to success, you will increase your chances of acquiring the right technology from the right vendor, and at the right price for your business.