A new transaction processing system
For Scope, an established UK-based charity that provides information and support to disabled people and their families, it is imperative that front-line services and back-office processes run efficiently and cost-effectively so that the greatest possible resources can be devoted to where it counts: those in need. Recognising that technology is a key efficiency enabler, Scope undertook an ambitious programme to upgrade its management information systems (MIS) and infrastructure, beginning with finance applications like staff expenses, purchase to pay and sales invoicing. Says Geetha Rabindrakumar, Director of Finance: “Our principle business driver was to improve frontline services and reporting procedures for staff and budget holders, and to increase the efficiency of finance processes including the speed of payments to suppliers and cash collection from debtors.”
According to the Matthew Austin, project manager: “Our main objective was to provide an automated, web-based facility for collecting, processing and reporting financial information. This was to be used by all 800 of our staff for their expenses, by 400 users for purchasing and requisitions and by the150 employees responsible for processing sales invoices. The data captured by this ERP-style system was then to be used for management planning and budget forecasting.” For the new expenses system Scope used an external service provider, but the core finance/ transaction processing system was to be implementing in-house as a solution suite supplied by a major software provider.
Given the size of the project investment (£320,000 over a five-year period), the complexity of requirements and Scope’s limited IT procurement expertise, the charity decided to bring engage expert assistance. Says Rabindrakumar:” We aren’t experienced in contract negotiations on projects of this size and we knew that if problems arose our position would only be as strong as the contract we had in place with our strategic provider. So it had to be airtight. We needed the expert eye of someone with both IT and contractual knowledge. As it’s turned out, BPG has proved its value throughout the project, from providing advice on how to handle our supplier relationship, and in holding them to the provisions of the contract.”
One of the first things Scope learned from BPG was how to identify and set out its business objectives so the vendor knew exactly what outcomes they were expected to achieve. The charity’s team had mapped out 20 scoping scenarios and drawn up specification documents. However to ensure nothing was overlooked Scope asked BPG to formally package the tendering documents and the contract. “The way BPG stipulated the contract guarantees that our partner is responsible for any scope creep with no added costs to us,” Rabindrakumar explains. To avoid any downstream surprises BPG negotiated a fixed price contract upfront. In addition, payments were amortised over the five year implementation lifecycle. This meant that Scope would not be required to commit all of the capital required up-front – an arrangement that strengthened its bargaining position. Moreover, because payments were to be made in stages the strategic partner had a long-term motivation to maintain a quality performance.
This provision turned out to be hugely important as the project progressed. The contract saved Scope an estimated £80,000 in additional technical consultancy costs that were required to fix a variety of problems that arose during implementation. It also cleared the impasse that developed when the project encountered issues in late 2009 because of key objectives missed by the provider. This occurred because the vendor had neglected to conduct timely quality reviews and routine testing procedures during the development stage, leading to a breakdown in communications between the provider’s implementers and the Scope project managers. Because of these omissions in quality assurance, the charity only discovered the software gaps on delivery and just before the scheduled pilot rollout. Says Austin: “The solution we received turned out to be nowhere near meeting our key scenarios which made forward progress extremely problematic.”
Managing the partner relationship
One of the key advisories BPG gave Scope was to keep project expertise firmly in the vendor’s court so they would remain responsible for any necessary fixes downstream. “This is not as easy as it may sound,” points out Austin, “especially with stakeholder pressure to get the job done. The more you lose confidence in your supposedly ‘expert’ supplier, the more there is the tendency to become proactive and take over. Our in-house team was very willing to take on those tasks, like quality reviews and testing, which should have been done by the supplier. Moreover, it’s difficult to keep the lines of responsibility rigid when you and your partner are working together on a daily basis. There are so many grey areas in a project of this complexity that it’s not always clear-cut who has responsibility for what – a lot depends on goodwill.” That said, Austin agreed it was crucial to resist the temptation to seize control because once the vendor cedes responsibility it can be extremely difficult to hold them to the terms of the contract.
Bringing in the heavy guns
Despite these implementation problems, it was difficult for Scope to single-handedly call their partner to account. This was largely because the project managers on both sides had forged a friendly – and hopefully long term – working relationship and Austin was reluctant to get litigious. “The situation called for some hefty contract negotiation and thankfully we had an ‘ace up our sleeve’ in BPG. They took on the role of applying ‘motivation’ to the vendor, leaving me to be the mediator.” BPG did this by offering an objective assessment of the situation, comparing the actual results against contracted agreements and then realigned expectations on both sides. A mutually agreed Change Control Notice was put forward that required the supplier to do another scoping (at their own cost) based not on the system’s specifications, but on the charity’s actual requirements. BPG’s review then called for extensive software quality improvements and gap closures, together with an aggressive schedule of milestones and firm completion deadlines. Faced with this professional analysis, Scope’s partner had no option but to immediately agree to the demands, while an apology for the inconvenience caused to date. To ensure these obligations were met, a BPG technology expert was on call to review the testing processes and to provide rapid reaction should problems arise.
With the project back on track, Phase One of the new financial system – including sales, invoicing and purchasing applications – went live in August 2010. “There are still a few implementation gaps but it’s what you’d expect during the early stages of a rollout,” explains Austin. “Because of BPG’s astute handling of both the procurement and mid-implementation arbitration, we’ve saved £80,000 in project costs and months of additional delay. The best part is that we remain on good terms with our strategic partner which is promising for the future.”
Concludes Rabindrakumar: “BPG gave us the confidence we needed to work within a partnership on a very complex implementation, with the backup we needed to successfully negotiate change control. The whole project has been an eye-opener from the standpoint of what can go wrong and how to protect our interests. Shortly we plan to go out to tender on Phase Two of the system which will include budgeting, forecasting and performance management. And yes, we will most certainly ask BPG to continue providing advice at each stage of the procurement and contract negotiations and to continue their role as a valued mentor.”