10-point checklist to avoid IT procurement pitfalls 

17 August 2023 09:41 AM By CIO Studio

New Zealand has had its fair share of large IT projects fail due to problems that stemmed from flawed procurement processes. It happens across the board, but troubled projects in the public sector get more attention.

We don't always hear about troubled tech problems in the private sector, but those in the public sector get more attention thanks to the Official Information Act, and the Local Government Official Information and Meetings Act.

These pieces of legislation often allow journalists and members of the public to piece together the decision making behind procurement of technology services, software and hardware that had a less than optimal outcome.

IT procurement meeting

The latest project in the spotlight was revealed in reporting by RNZ, and involved plans by the Government to partner with Microsoft to roll-out use of artificial intelligence in schools.

This proposed project didn’t stem from a clear strategy to develop use of AI in the education space, but seemingly a desire on the part of the Government to generate projects for Microsoft, which is investing in building data centres in Auckland to support its new Azure cloud computing region.

In 2020, RNZ reported, “the government chief digital officer (GCDO) asked about a dozen departmental chief executives to come up with ideas to work on with Microsoft,” which the Government had previously signed a non-binding memorandum of understanding with.

Avoiding vendor lock-in

Several “lighthouse” projects were identified, including using education ministry datasets to personalise learning for neuro-diverse students, and to use AI to augment decision-making processes.

A lot of work went into the project during 2020, but by late 2021, in the midst of the pandemic, it fizzled out, or as the project leader put it, the AI plans "fell into a black hole". It is probably just as well. The use of AI posed concerns about “ethics, data sovereignty, data privacy, amongst others" at the Ministry of Education. 

It’s staggering that a procurement process for a major new initiative underpinned by technology was kicked off in this way with the desire to collaborate with an existing vendor seemingly the driver. But by March 2021, according to RNZ a steering group overseeing the project was intent on "avoiding vendor lock-in by only working with Microsoft".

Unfortunately, without a clearly defined plan to use AI in the education sector communicated to key stakeholders, including the public, the project was shaky from the start. It appears as though the Government short circuited its procurement process by working so extensively, and exclusively, with Microsoft in developing the use cases for AI.

While the AI project was quietly shelved, a lot of people in government agencies and at Microsoft spent a lot of wasted effort on it, which is a poor outcome for the taxpayer in itself. 

This sort of thing is all too common in the private sector too. An hastily conceived idea too quickly moves to discussions with an existing vendor, which prematurely kicks off a procurement process. It can waste everyone’s time and money. 

Businesses and government agencies alike can do better by sticking to some key principles that should be considered when approaching any IT procurement project, big or small. Here are ten of the most important ones:

1. Define clear objectives

Clearly define the goals and objectives of the IT procurement project. Identify the specific needs, requirements, and outcomes you aim to achieve. This will help guide the entire procurement process and ensure that you select the most suitable IT solution.

2. Thorough planning

Invest time in detailed planning before initiating the procurement process. This includes developing a comprehensive project plan, identifying stakeholders, defining roles and responsibilities, establishing a realistic timeline, and setting a well-defined budget.

Man searching for research

3. Conduct market research

Perform thorough market research to understand the available IT solutions, technologies, and vendors. Evaluate their capabilities, track record, reputation, and customer reviews. This research will help you make informed decisions and select reliable vendors.

4. Develop clear procurement criteria

Clearly define the criteria against which you will evaluate potential vendors and IT solutions. These criteria should align with your objectives and requirements. Consider factors such as functionality, scalability, compatibility, support, pricing, and vendor stability.

5. Foster effective communication

Establish open and effective communication channels with potential vendors. Clearly communicate your requirements, expectations, and evaluation criteria. Encourage vendors to ask questions and provide detailed proposals. Effective communication ensures alignment and minimises misunderstandings.

6. Rigorous vendor evaluation

Evaluate potential vendors using a structured and objective approach. Assess their capabilities, experience, technical expertise, financial stability, and customer references. Consider conducting interviews, requesting demos, or evaluating prototypes to gauge the vendor's suitability.

7. Contract negotiation

Pay careful attention to contract negotiation. Ensure that all contractual terms and conditions are clearly defined and agreed upon, including pricing, licensing, support, maintenance, and service-level agreements (SLAs). Seek legal advice if needed to protect your interests.

8. Risk management

Identify and manage potential risks throughout the procurement process. Perform a comprehensive risk assessment and develop mitigation strategies. Consider factors such as vendor reliability, security, data protection, project delays, and unexpected costs.

Boss training his people

9. Change management

Recognize that IT procurement projects often involve organisational changes. Plan for effective change management, including user training, stakeholder engagement, and transition strategies. This will facilitate smooth adoption of the new IT solution.

10. Post-implementation evaluation

Evaluate the success of the IT procurement project after implementation. Assess whether the solution meets the defined objectives and if the vendor delivered as promised. Identify lessons learned and areas for improvement to enhance future procurement projects.

By adhering to these key principles, you can increase the likelihood of a successful IT procurement project that aligns with your organisation's needs and delivers the desired outcomes.

At CIO Studio, we’ve advised on many IT procurement projects. Get in touch with our team for advice on how to run a smooth procurement process from the outset.

Peter Griffin
Tech Correspondent, CIO Studio