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Based on his experience at Foster Wheeler Energy, Richard Field explains how to cut through the complexity involved in buying computer hardware and software
It wasn't just the new information technology that made a break with the past when Foster Wheeler Energy Ltd (FWEL) needed a wholesale replacement of its IT systems. The traditional role of the IT department, as the driving force in the buying process, changed as it began to work with purchasing and other sections.
FWEL designs and carries out engineering projects around the world, mainly in the process industry. The head office, based in Reading, buys and deploys most of the wide variety of systems used by around 2,500 of the company's staff.
A hefty slice of FWEL's IT spend over the past two years has gone on the replacement of existing departmental systems. The typical brief for suppliers was to supply their proprietary application software, put the system in and then provide maintenance and support. The purchasing for these projects, compared with hardware or shrink-wrap software, tends to involve a wider range of issues and is where the major challenges for purchasers lie.
In FWEL's case, the new systems were generally similar to their predecessors, but were more up to date, interconnectable and, of course, Y2K-compliant. They included an IT helpdesk, a facilities management package, telecoms and human resources systems and several financial systems. Prices ranged from about L100,000 to L500,000.
One important aspect of this work is how it goes beyond mere procurement issues, and could be better described as project or contract management.
Procedures obviously vary from company to company but, at FWEL, the starting point was to adapt the processes used for its project purchases. These reflect the usual procedures in the petrochemicals industry, where one of the key objectives is to produce a transparent selection process for contracts that are worth very substantial amounts of money.
These procedures are optimised for capital equipment in cases where:
* the scope and costs can be fairly well defined;
* once installed, the equipment usually operates unchanged for years;
* possible alternative products may offer similar functionality and performance.
IT systems don't fit these assumptions very...