Users wield the tender axe

The Australian IT tender process is a formidable part of the aggressive IT landscape, but the industry still struggles to get it right.

For IT business, the private or government tender is where the rubber hits the road.

Careers, balance sheets and over-hyped product claims come under the microscope as users exercise their self-determined right to appoint a winner.

Situations such as the fallout from Sydney Airport's network infrastructure tender (Computerworld February 12, page 1) highlight the power a select group of users have over the bidding process.

The experience of competitive vendors in this case has left them questioning the value of the bidding process.

Grant Morrison, general manager of Fore Systems, believes tenders must be "fair and impartial", but doubts this is always the case.

He believes customers use complex tender documents to "lock certain people out".

An additional concern is the huge cost of chasing tenders in vein, when the likely winner is already decided in the mind of the user.

"In reality, it's like a false way of doing things," Morrison said.

Frank Liebeskind, group manager IT at MMI, agrees and believes users can help vendors save millions in pre-sales costs. His solution is to send 10 carefully worded questions to vendors to determine the first cut of 10 candidates.

Liebeskind said questions about vendors' reference sites can often reduce the field to a shortlist of two or three candidates.

This method then allows the select few to spend their pre-sales dollars on the "proof of concept".

Liebeskind's advice is to advise vendors exactly what process you will follow.

"What you've got to do is tell the vendors what you are doing," he said.

Ross Cartlidge, data network manager at Sydney University is experienced at running open industry tenders, with at least two "big" deals under his belt and another currently under negotiation.

Cartlidge's golden rule is work out exactly what is needed by the organisation before inviting companies to tender.

"I think it's inappropriate to say 'let the tenderers design your network for you'," he said.

Cartlidge believes it's is up to the user to be "nice & concise" when it comes to outlining exact requirements for the task.

Communicating precisely what you need in the official tender document can be difficult, he concedes. He said he often conducts private meetings with tender-hopefuls before the submission deadline to iron out any misunderstandings.

In addition, Cartlidge agreed with industry suggestions vendors do not often understand the business issues driving IT projects.

"It can certainly be a problem", he said, but commented it is not part of his experience to date.

But according to Donna Eiby, director of industry consultants Tender Support Services, vendors often fail to address users' critical project management and business issues.

"Ignoring management issues altogether is perilous," she said.

Quoting research from Yankelovic Partner in September 1998, Eiby said 72 per cent of Australia's top decision-makers prefer business process outsourcing (BPO) instead of in-house IT projects.

The figure compares to 63 per cent of global decision makers who prefer BPOs.

Despite our enthusiasm for the practice, she said: "In Australia, there isn't really a good example of an IT outsourced contract working well. They've been a disaster."

Eiby's advice is for industry players to prepare for the possibility of losing critical tenders.

"People get overwhelmed by it," he said.

"People seem to think if it's a tender, it's different to other purchasing processes; it's not."

Ian Yates, an IT consultant with RiverCorp and veteran Computerworld columnist, is more succinct in his opinions of tender processes.

After years of experience in the field, he believes too many customers use the tender process to blame vendors for implementation difficulties.

An additional problem with the formal tender process is formal documents do not allow vendors to negotiate pricing with the user, he said.

But despite this difficulty, he said tenders still remain popular with both private and government users: "It covers your arse."

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More about Fore SystemsMMIRivercorpSydney Airport CorporationTender Support ServicesYATES

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