Software Application Acquisition –

Not a Simple Task!

Eddie WhitfieldCPIM, CIRM, CSCP, P.E.

Topics• Functional and Technical Selection• Criteria for Vendor Selection• Software License Agreements (SLAs)• Software Lifecycles and Dependencies• Application Vendor Requests• Negotiating Terms and Conditions• Procurement Costs• Software Installation and Configuration• Upgrading and Maintaining Applications• Other Fun Stuff

Functional and Technical Selection

• What should the software applications perform?– Determined before software selection– Established with all software applications

• Minimize overlaps• Adhere to company standards• Aligns with all constituents – users, IT, corporate direction

• What software applications qualify?– Functionally – yes or no– Cost – Support– Qualify in our IT environment

ExamplesLogical System Application Name Vendor Version

Hazardous Waste Reporting

Federal and State Reporting

ABC Version 7.0

Hazardous Waste Reporting

Government Reporting

ZZZ Version 9.4

Emissions Historical Data Management

Compliance Monitoring

DDD Version 6.3

Mass & Energy Balance - Plants

Balance Calculator Home Grown No Version

Production Data Calculator

Material Balance Plus

Development Version 0.1

Criteria for Vendor Selection

• First – Meet the needs for the technical requirements – yes or no

• Vendor aligned with company objectives– Application development– Implementation / installation– Training– Production support

• Total Cost of Ownership (TCO) • Software lifecycles

Software License Agreements

• Software License Agreements (SLAs) aligned with company objectives – yes or no– Shrink-wrap or strategic– Single source, sole source or multiple vendors– If SLA separate from purchase order (PO), then• SLA stands• Costs are separate from SLA

Software License Agreements

• Shrink-wrap – Microsoft • Dongle – Still works, boutique vendors• Server – Oracle, SAP• License server – Client/Server• Subscription - SAAS

Software License / Maintenance Agreements

• Can third parties work on the software • Are development licenses free• Are development licenses free after go-live• Is support available if off-site access to the

system is prohibited• How long will the product be supported

Software Lifecycles and Dependencies

• Software length before upgrades are required– Standard– Extended– End of Life

• Software Dependencies– Microsoft

• Server• Office• MS SQL• Other

– Oracle• Relational Database• Applications

– Other software– Interfaces

• Service oriented architecture (SOA)• Hard coded• File transfer

Application Version Q1 Q2 Q3 Q4 Q5

A 8

A 8.1

A 8.2

B 4

B 4.1

B 4.2

C 2

C 2.1

D None

D None

Application Vendor Requests

• RFI – Technical information without pricing• RFQ – Information including pricing• RFP – May be similar to a RFQ, but many times

includes services

Negotiating Terms and Conditions• License key or dongle• Proprietary information• Copying – Reverse engineering• Term• Delivery• Termination• License Fees• Taxes• Right of assignment• Limitations of liability• Indemnity• Governing law• Warranty

Negotiating Terms and Conditions

• Support – 24 by 7, only 8 hours, other• “We” (the vendor) have a process• On site, phone or choice• Perpetual, term or subscription based• User based, server based, both• Upgrade policy

Procurement Costs• Total Cost of Ownership (TCO)

– Purchase order cost– Software licenses– Implementation– Subject matter experts (SMEs)– IT support– Vendor support and maintenance– Hardware (hosting fee)– Shipping of software and hardware– Tariffs – Import / Export– Holding cost - financing– Inventory cost – shelfware– Damage– Theft– Insurance

Software Installation and Configuration

• Configuration competency• Core modifications• Development testing• Factory acceptance testing (FAT)• Site acceptance testing (SAT)• Commissioning and startup

Upgrading and Maintaining Applications

• When to upgrade– Need new functionality– Dependent software

• Operating system• Dependent software• Other applications

• Maintaining Applications– Who – IT, SMEs, vendor– Control – software audits for usage– Payments – “Not in my budget”– Vendor support – how long and the extent

These are just some highlights and issues to consider.

Questions and Comments