To Buy or Not to Buy: Points to Consider

FRAMINGHAM (03/06/2000) - Evaluating an IT purchase is a type of due diligence referred to as risk management. The big accounting firms and IT consultancies such as Compass America Inc. in Reston, Va., and Quantitative Software Management Inc. in McLean, Va., tackle technology risk management.

When determining if a software system or new technology fits business goals and the supporting IT shop, Compass America senior consultant Syd Hutchinson recommends considering the following:

-- Early adopter risks. Is your company going to be the first to use the technology in great volume? It may perform well in restricted scenarios, but are there customers using it at the capacity your company would?

-- Life-cycle costs. When buying or acquiring a technology, the purchase price is only one part of the equation. Consider the maintenance and upgrade costs of running the technology for the next 10 years, not just the costs of getting it in the door.

-- Skill sets. Does your IT shop possess the in-house skills to support the technology, or will adopting it require retraining the whole staff or signing an outsourcing contract to get proper coverage?

Douglas Putnam, vice president of services at Quantitative Software Management, is wary of "egregious buy-ins" and "super conservative bids" on time and materials in proposals because often "the customer gets stuck picking up the costs." He suggests writing warranties into the contract to ensure that conditions are met and specifying quantitative measures because "reliability can be a nebulous concept."

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