P u rchasing Key Inform Systems - The Bord Gais Eireann (BGE) Case
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CAS, EXPÉRIENCE ET PÉDAGOGIE
Purchasing Key Information
Systems – The Bord Gais Eireann
(BGE) Case
Frederic ADAM1 & Denis TWOMEY 2
Maître de conférence, Department Accounting,
1
Finance and Information Systems, University College Cork, Ireland
2
Transportation Services Manager, Bord Gais Eireann, Cork, Ireland
RÉSUMÉ
Les dirigeants d’entreprises sont de plus en plus conscients de l’importance extrême du
déploiement équilibré de leurs moyens informatiques. La sélection des systèmes clefs de
l’entreprise ne peut être un succès que si elle se fonde sur une bonne compréhension de ses
mécanismes internes et de son environnement, et des technologies disponibles. Trop d’en -
treprises ne tirent pas profit de leur informatique parce qu’elles n’ont pas su intégrer les di -
mensions managériales et technologiques de leurs projets. Les systèmes ainsi développés ne
correspondent pas aux besoins parce que leur analyse et leur sélection n’ont pas intégré les
critères de tous les acteurs organisationnels impliqués.
Dans cet article, nous présentons une étude de cas de Bord Gais Eireann (BGE) qui s’est
concentrée sur le processus de sélection d’un système clef. L’article met en valeur les spéci -
ficités des projets informatiques de ce type et leurs implications pour la conduite de ces pro -
jets. En conclusion, un modèle pour le processus de sélection et l’achat de logiciels clefs est
présenté qui insiste sur la nécessité d’intégrer les dimensions managériales et technolo -
giques des projets informatiques.
Mots-clés : Achat de systèmes informatiques clefs, Conduite des projets, Modèle du pro-
cessus de sélection.
N° 3 – Vol. 6 – 2001 75SYSTÈMES D’INFORMATION ET MANAGEMENT
ABSTRACT
Senior managers have become aware that the management of the information system
portfolio of their organisation can ultimately lead to success or failure. The successful se -
lection of mission-critical information systems begins with an understanding of the exter -
nal and internal business environment and of the technological environment. Many or -
ganisations have failed to reap the benefits of their IT investments because they never
achieved the required level of integration and cohesiveness between business and IT. The
resultant information systems fail to meet the business requirements of the organisation
because system requirements are either ill-scoped or the selection process they followed is
not business driven.
In this paper, the case of Bord Gais Eireann is used to examine the process of selection
of a mission-critical system. The paper outlines the specificities of such IS projects and their
implications for project management. As a conclusion, the paper puts forward a process
model outlining how the integration of business and IT can be achieved to ensure the suc -
cessful completion of selection stage of IS projects involving the purchase of mission-criti -
cal off-the-shelf packages.
Key-words: Purchasing mission-critical systems, Project management, Process model.
76PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
1. INTRODUCTION BGE in a process model that could be
followed for the software selection
The importance of information sys- phase of IS projects involving the pur-
tems is well understood within the bu- chase of key information systems.
siness world and much research has
been carried out on the difficulties in-
herent in developing information sys- 2. THE OBJECTIVES
tems to support the key areas of a bu-
OF THE STUDY
siness or even for competitive
advantage. There is a new trend in the
In order to learn about the process
software market to propose off-the-
of buying complex information sys-
shelf applications of increasing com-
tems in the market place, a longitudi-
plexity. The Enterprise Resource Plan-
nal case study of an organisation in the
ning (ERP) area is one area where this
process of acquiring a mission-critical
is particularly evident and much resear-
application was carried out. Bord Gais
ch is being devoted to it (Rowe, 1999).
Eireann (BGE) is the semi-state body
This is a major difficulty for organisa-
in charge of distributing natural gas in
tions, because, at this point in time, the
Ireland both to industrial customers
process and issues associated with the
and to private customers (about
selection and purchase of critical infor-
300,000 households use gas central
mation systems are still not clear (Adam
heating in Ireland). Data about the
and Cahen, 1998; Marciniak and Rowe,
process followed up to the signature of
1998). Indeed, the literature does not
the contract was collected extensively
adequately deal with the steps organi-
through a series of interviews with key
sations should follow when buying key
actors over the entire life time of the
or strategic information system solu-
project. There also was an element of
tions in the open market. Key questions
participant observation as one of the
have not been addressed including:
authors of this paper was the project
what specific steps should be followed,
leader in the selection of the system.
how to deal with potential suppliers
This enabled us to gather rich data
and what critical success factors in the
about the process followed and to gain
selection process are.
insight into the difficulties faced by the
In this paper, we present a detailed actors involved in the project. The
account of the process of selection of questions we tried to answer are outli-
a radically new, mission-critical appli- ned below:
cation in Bord Gais Eireann (BGE).
Research Question 1: What process
Section 2 presents the objectives of this
did BGE follow when selecting and
research. Section 3 identifies the criti-
buying their mission-critical system?
cal success factors of this project and
section 4 reviews all the stages of the Research Questions 2: How can
process followed up to the point Project Managers ensure that the
where one supplier was selected and Business and IT dimensions are ali -
the contract was signed. We then at- gned during a system acquisition
tempt to formalise what we learnt in project?
77SYSTÈMES D’INFORMATION ET MANAGEMENT
3. THE BOARD GAIS EIREANN 3.2. Setting Up the Key Aspects of
CASE STUDY the Project – The Initial Steps
The approach taken by BGE in im-
plementing TPA was to develop,
3.1. Context of the case study through consultation with its custo-
mers, a Code of Operations, Standard
The Utility sector is undergoing
Service Contracts, Special Service
major change throughout Europe as a
Contracts and special administration
result of deregulation and the intro-
arrangements for the delivery of the
duction of Third Party Access1 (TPA).
gas product at Entry Points. In short
At the time this research was conduc-
the documents outlined the business
ted, the EU Gas Directive was being
processes and required system functio-
implemented in Ireland and Bord Gais
nality for the operation of the Third
Eireann (BGE) had to develop and im-
Party Access transportation services of-
plement a gas transportation manage-
fered by BGE.
ment system to manage the day to day
transactions and management informa- To aid in the development of the
tion systems required to facilitate such TPA business rules and principles the
major organisational development and Department Managers, Project Mana-
change. Thus, BGE were looking for a ger and IT Project Leader from BGE
complete solution involving hardware, met with pipeline companies in the US
software, project management, imple- and the UK to study their practices in
mentation, integration and customisa- terms of how other pipeline compa-
tion if an off-the-shelf package was nies operated in a similar business en-
chosen. vironment. Consultants were also em-
ployed to facilitate workshops where
With the introduction of TPA, BGE is
BGE’s business processes were re-de-
required to separate out its transmis-
signed for TPA. The consultants had
sion business from its gas trading busi-
considerable experience with deregu-
ness. The two areas are ‘ring fenced’
lated markets and business re-organi-
and ‘Chinese walls’ are to be establi-
sing in such contexts.
shed to ensure confidentiality of infor-
mation (Doyle and Adam, 1998). This Workshops were held in house with
has led to the establishment of the various business units and depart-
Transmission (BGE Transmission) and ments to discuss the options available
the Gas Trading (BGE Trading) busi- to BGE. The outcome of these mee-
ness units. The Transmission Business tings was the development of an initial
Unit is responsible for the develop- set of business rules and processes
ment and administration of TPA. under which the TPA services would
1
Third Party Access (TPA) is the process where third parties can utilise the networks of monopoly utilities for the pur-
poses of providing services, in a competitive manner.
78PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
be offered to BGE’s customers. These project steering committee, and the
were then discussed with BGE custo- project team, to the preparation of the
mers through a process of individual, ITT, to the Tender Shortlist, through to
initially, and then group consultation. the evaluation of the tenders and the
The consultative process resulted in eventual selection of the solution pro-
the formulation of the business rules vider.
and principles into two documents, i.e. As the project developed, the project
the Code of Operations and the Stan - team was expanded as additional re-
dard Transportation contract. sources were required. The primary
The resulting business processes be- methodology was that a number of
came the blue-print for the IT solution core individuals served on the project
that would support the day-to-day ac- either full time or part time over the
tivities of TPA including transaction life of the project and other key indivi-
processing, communications, reporting duals joined and left the team as re-
and billing/invoicing. These require- quired throughout the project. The
ments were translated into an Invita- structure of the project team is outli-
tion To Tender (ITT) to be distributed ned in Figure 1 (Project Team). The
to potential vendors. oval shapes represent the areas of res-
ponsibility with the shaded areas re-
presenting the areas of the organisa-
3.3. Steering Committee tion that are directly affected by the
and Project Team system solution. The oval boundaries
are not to be taken as rigid as respon-
A project steering committee was set sibility evolved over time, and areas of
up which comprised of the CIO, the responsibility were modified as a result
manager of the new transportation bu- of delegation. The dashed and conti-
siness area and an IT Project Leader. A nuous lines highlight both the formal
business analyst, later appointed as and informal communication which
project manager, joined the project’s existed within the project team. The
steering committee. The manager of formal communication involved main-
the Transmission Business Unit, who ly documentation and meetings whe-
was also a company director, took on reas the informal communication oc-
the role of project sponsor. curred every day through email or
The CIO and Transmission Business chance meetings in the corridor.
Unit Manager ensured that support for Regular meetings were held by the
the project was at the highest level wi- project team at key points in the pro-
thin the organisation as they were ject. They were conducted with the
both members of the BGE board. This Head of Transmission, CIO, Grid
ensured that the critical issues were Control/C&I Manager, Transportation
dealt with at the highest level. Also, Services Manager, IT Project Leader
there was close co-operation at all and Transportation Services Project
times between each of the business Manager. As the system would prima-
units and IT with respect to all aspects rily be used within the Grid Control
of the project from the creation of the business area, it was agreed that two
79SYSTÈMES D’INFORMATION ET MANAGEMENT
Purchasing Bus. Unit Manager CIO – IT
Manager (1) Project Sponsor (1) department (1)
C & I Manager Transportation
(1) Manager (1)
ô ô
IT Project
Leader (1)
Project
Key Users Manager (1)
Grid Control
(14)
Formal Information Flow Area of Responsibility Project Support Node
Informal Information Project Core Node (1) Number of Stakeholders
Flow ô Key Lines of Communication
Figure 1: Project Team
key ‘super users’ should be appointed marily dealt with through the appoint-
from the Grid Control business area. ment of appropriate personnel at the
These two ‘super users’ became part of appropriate stages of the project. In
the core project team during system addition, a number of additional steps
selection and implementation. were taken with respect to the mana-
gement of risk.
The Project Manager played a key role
as the central point of contact and en- The Project Manager was involved in
suring that all stakeholders were kept the process of consultation with BGE
fully involved or informed, as required, customers and the other interested par-
during the life of the project. This ‘in- ties. Therefore, when the Code of Ope-
volvement’ of all of the stakeholders rations was completed and the final
was seen as a key element of success or functionality determined, the Project
failure in the project. Meetings, discus- Team was quickly up to speed with the
sions and presentations were underta- proposed business rules and processes.
ken by the project team at critical stages This effectively meant that the risk asso-
to ensure decisions were taken by the ciated with the evolving business pro-
group as opposed to ‘by individuals’. cesses could be minimised. This is of
vital importance to any company but
3.4. Risk Management more so in the case of BGE who were
developing a new business area and
The management of risk in the se- had put considerable effort into the de-
lection of a new system solution is cri- velopment of the business processes
tical. In the case of BGE, risk was pri- and rules of this new business area.
80PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
Communication turned out to be a dered as those people who are affec-
key means of minimising risk. Com- ted by the selection of the system, ei-
munication flows, along with close ther directly or indirectly.
working relationships, ensured that the
The key internal stakeholders consis-
risks associated with the development
ted of members of the Transmission
of the business rules and processes,
Business Unit and IT. The Project
and the formulation of the new IT stra-
Team was at the centre of the web of
tegy, were taken into account. Circula-
relationships and took responsibility
tion of correspondence, reports, pre-
for the project with the board of direc-
sentations and regular meetings
tors ultimately taking the final deci-
ensured that all stakeholders were
sion.
kept actively involved in the discus-
sions surrounding the preparation and
selection of the final solution. Internal Involvement – End
As in many IS projects, there was a User/IT
problem with ever changing and deve-
loping business rules. In order to ma- The Transmission Business Unit was
nage the risk associated with such actively involved in the project
changes, the Business Unit manager through the Project Sponsor, Project
ensured that the Project Manager was Manager, Project Leader/Business
kept fully up to date with arising busi- Analyst and the ‘Super Users’. IT were
ness issues through active involvement involved through the CIO and through
in the business area. the IT Project Leader. After the selec-
tion of the system solution provider,
It was agreed between the project IT would also be involved in imple-
team members that, although time and mentation and training, and would
cost were critical factors, the main prio- provide long term support and trai-
rity of the project was to get ‘it right’ – ning.
i.e. to get the right system under the
right conditions. This was an important This cross sectional involvement ran
decision in eliminating risk as it effecti- through the project from its initiation
vely meant that a ‘cheap fix’ solution to the final evaluation and eventual se-
would not be chosen over a ‘high qua- lection meetings. Other internal users
lity’ solution or that the selection of the included the operational and financial
system would not be put at risk through staff in the related business areas.
a ‘hasty’ or ‘pressurised’ decision. These members of staff were involved
through additional workshops and
meetings were held on a regular basis
3.5. Stakeholder Involvement and focused on the direct require-
ments of each of the particular depart-
One of the key elements to the se- ments. The selected vendor was also
lection of Information Systems is the instructed in the ITT to provide trai-
involvement of stakeholders. Stakehol- ning courses to these internal stake-
ders can be both internal and external holders prior to the implementation of
to the organisation and can be consi- the system solution.
81SYSTÈMES D’INFORMATION ET MANAGEMENT
External Customer Involvement 4. THE SELECTION PROCESS
Consultation with customers and the 4.1. Mapping the Business
public is essential to projects which Processes
concern semi-state companies invol-
ved in the delivery of services to the BGE decided to hire consultants to
public. BGE’s customers had a signifi- map the new business processes with
cant interest in the development of the the intention that the business process
new business rules and of the new sys- maps would be converted into a set
tem. Therefore, BGE considered it im- of System Requirements. They were
portant that these customers would be of the opinion that the consultants
brought on board in the selection pro- employed would also complement
cess. the formulation of the business pro-
One of the customers involved by cesses which had emerged as a result
of ‘in-house’ workshops and consulta-
BGE in the process was TILES LTD.2,
who were operating under an existing tion with current and prospective cus-
tomers and other interested bodies.
long term contract. This ensured that
an existing customer’s considerations The consultants should be experien-
would be fully considered in the se- ced in the area of TPA so that they
could assess the business rules for
lection and development of the sys-
tem. After some initial discussions bet- completeness and further aid in the
development of the functional requi-
ween the two companies it was
decided that specific system project rements.
meetings would be held between the On analysing the documentation and
BGE, and TILES LTD project teams and correspondence, members of the pro-
that the electronic interchange of elec- ject team were led to question the
tronic data between the two company value of the consultants’ contribution.
systems was a key requirement. They felt that a large amount of docu-
mentation had to be written by the bu-
In addition, on-going consultation
siness analyst on top of the work pro-
took place between BGE and the
duced by the consultants. The
wider energy community consisting
Business Analyst’s comments were lar-
of existing customers, future custo-
gely included directly into the subse-
mers, government bodies and busi-
quent drafts of both the business pro-
ness groups. Presentations were
cess maps and IT system requirements.
made by the project manager in a se-
ries of group consultation meetings. BGE had gone to great lengths to se-
Thus, BGE undertook workshops lect the most suitable consultants avai-
with its customers outlining what ‘a lable, but this was a new business area
customer’ would be required to do with limited numbers of experienced
on a day-to-day basis when TPA is people available to perform the func-
implemented. tion of business process mapping.
2
‘TILES LTD.’ is a fictitious name for an existing customer of BGE’s.
82PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
When the Business Process maps cation, time spent and content of the
and the initial IS System Requirements site visit.
document were completed, BGE
conducted an investigation into a num-
ber of ‘packages’ and consultant solu- 4.3. The Invitation To Tender (ITT)
tion providers. BGE also decided to A business case was prepared by the
speak to their clients along with a Transmission Business Unit with all the
number of companies in the same bu- project stakeholders within this unit
siness area who had developed their being involved in its formulation. The
own ‘in-house’ systems. draft business case was circulated to
the core project team, project sponsor
and key internal end users of the sys-
4.2. Search for Suitable Solution
tem. Comments were received from
Providers through Site
the project team and the business case
Investigations
was updated accordingly. Following
approval by the Project Sponsor and
The solution providers chosen for
the business area manager, the busi-
the investigation were sourced and re-
ness case was then circulated to the
searched through industry contacts, se-
CIO to enable an investment prioritisa-
minars and the Internet. They consis-
tion decision to be taken on the new
ted of a mix between suppliers of
system.
‘off-the-shelf’ package solutions;
consultant solution providers and cus- The initial draft of the document
tom built solution providers from esta- was circulated to all members of the
blished software development compa- project team and to each of the de-
nies. All of these solution providers partments affected by the tendering
had developed and implemented soft- process and the new system. Stake-
ware solutions relevant to the TPA pro- holders focused specifically on the
ject. areas directly related to their own ac-
tivities which allowed the document
The primary issues discussed with
to be turned around quicker. To high-
the prospective solution providers and
light the fact that the system require-
their clients included support, project
ments had changed between the ini-
teams, experience of staff, gap analy-
tial mapping of the business
sis, requirements definition, package
processes and the preparation of the
functionality fit, implementation ap-
first draft of the ITT, the changes re-
proaches, customisation, system up-
sulting from the process were listed.
grades, source code, logistics, Euro-
This listing proved valuable at a later
pean partnerships, development
stage as it focussed management’s at-
methodologies and software licences.
tention on the changes that had been
Other technical aspects discussed in-
requested. Test cases, specific wor-
cluded Internet technologies and po-
ked examples of the application func-
tential future developments.
tionality, were developed by the Pro-
Table 1 includes a brief description ject Leader and were also circulated
of each of the site visits including lo- to the project team. On the basis of
83SYSTÈMES D’INFORMATION ET MANAGEMENT
Site ID Site Type Duration End User Form of Site Visit
of Visit Involved
Altra Package 1 day No - Sales presentation
Techno- Solution - Technical demonstration of the product available
logies, Provider - Meeting with technical development staff
USA - Simulation of training centre
Trans- Package 2 days Yes - Day 1 (spent at TransEnergy HQ) consisted of; Sales
Energy, Solution Presentation, Technical Demonstration of the pro-
USA Provider duct, Technical discussion on functional requirements
- Day 2 spent with 2 of TransEnergy’s customers,
Shell and PG & E.
Proxicom, Consultant 1 day Yes - Sales Presentation
USA Solution - Meeting with PG&E, a client of Proxicom for whom
Provider/ they had developed a system solution
End User - Discussion about business rules, technologies
employed, methodologies employed, experiences
and lessons learned
EDS/IUK, Consultant 1 day Yes - Meeting with IUK, a client of EDS for whom they
UK Solution had developed a system solution
Provider/ - Same discussions as above
End User Yes
Trans- In-house 2 days Yes - Meeting with both business unit and IT
Canada, Development/ - Same discussions as above
Canada End User
Questar, End User 2 days Yes - End User of the Altra System
USA - Same discussions as above
Table 1: Summary of the Site Investigations
the comments received, a second ted vendor takes the responsibility of
draft of the ITT was prepared, which, delivering the solution and not just the
once circulated, gave rise to more ‘glory’ of winning the contract.
comments.
Key points which were considered in 4.4. The Evaluation Matrix –
relation to formulation of the ITT Initial Vendor ShortListing
were; (1) to write the ITT so as to
place the risk on the solution provider, Prior to the completion of the vendor
(2) to seek a ‘total’ solution including shortlist, BGE were familiar with a
software, hardware, project manage- number of suitable candidates for the
ment, integration and configuration, provision of the system. However in
and (3) to include the ITT and nego- line with EU purchasing regulations,
tiated changes, i.e. the final tender, in an advertisement was placed in the Ja-
the final contract. These three points nuary ‘99 edition of the EU Journal.
are essential in ensuring that the selec- The advertisement requested parties
84PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
who were interested in tendering for ter, firstly to obtain further information
an Integrated Gas Transportation Ma- on prospective vendors and secondly
nagement System to respond to BGE to ‘weed’ out unsuitable candidates wi-
and register their interest. Eighteen thout further assessment. The remai-
parties responded to this advert and ning candidates were included in the
BGE wrote back to them requesting evaluation matrix showed in Table 2.
further information about their compa-
ny size, number of employees, profit The preliminary industry research
etc. The Request for Information (RFI) proved invaluable to BGE as it emer-
also asked them to include information ged that a number of suitable candi-
about their experience on the deve- dates, whom they had discovered
lopment of gas transportation manage- through their own research, were un-
ment systems. Nine parties responded familiar with the EU Journal and did
and they were combined with the pos- not respond to the EU advert. Howe-
sible candidates already known to ver the EU Journal ad also proved its
BGE. Candidates who did not respond value by identifying at least one other
to the RFI were excluded from the pro- suitable candidate who would not
cess. In fact, when asked to provide otherwise have been known to BGE.
information on their relevant experien- At the end of the process, eight ‘Sui-
ce, through the RFI, a number of can- table’ candidates emerged from the
didates withdrew voluntarily. This process and the ITT was issued to
highlights the usefulness of the RFI let- them.
Category Criteria Description Suitability
1 Companies which have previously developed system solutions in Suitable
the relevant business area and/or who had a strategic alliance with
a suitable solution provider in the relevant business area. These
companies supply system solutions and are based in Europe.
Experience in specific technologies is also considered an advanta-
ge and logistics with reference to long term issues such as support
and customisation is also considered.
2 Candidates who have experience in the relevant business area, via Unsuitable
consultancy, and have developed systems in a related business
area but not in the business area specifically applicable to the com-
panies needs. It was considered that there was considerable sy-
nergy with these companies but no direct experience for the type
of solution required.
2A Companies who have developed system solutions but have no ex- Unsuitable
perience in the relevant business area or related business areas.
3 Companies who did not respond to the request for information and Not in above
responded to the EU Journal are not included in the above listing. listing
Table 2: Evaluation Criteria for Suitable Solution Providers
85SYSTÈMES D’INFORMATION ET MANAGEMENT
4.5. Collection of information ceipt of bids from interested parties.
on vendors Four of the eight parties who had been
issued with the tender document were
Information on possible vendors was present at the meeting.
assembled from a number of sources
including company literature, inter- The purpose of the meeting was for
views, the Internet, phone calls, indus- BGE to clarify any queries which the
try contacts and vendor reference sites. tenders may have and to document
The information was assembled and them for inclusion in the ITT. The CIO
analysed during the process of prepa- chaired the meeting with the questions
ring the tender shortlist. Interviews being directed to the relevant parties.
were also conducted with possible Questions/clarifications were sought
vendors. They proved useful as BGE with respect to;
were able to target specific areas of in- 1. The process of selection, i.e. pro-
terest in the assessment of the suitabi- cedure, timescales,
lity of the various candidates. There
2. The required solution in terms of
were a number of instances where
functionality, technologies ap-
candidates claimed to have experience
plied,
in certain areas but when questioned
to confirm such experience in writing 3. Availability of the required solu-
were unable to do so. tion,
The discussions with the clients of 4. Business process change and futu-
these vendors and requests for written re growth path,
information were also useful in deci-
5. Alternatives to existing pro-
phering myth from reality. The clarifi-
cesses/business functionality,
cations often highlighted the vagary of
sales tactics which can be used by mar- 6. Conference room pilots/prototy-
keting personnel and the gulf which ping,
can often appear between marketing 7. Terms and Conditions of Contract,
and the reality of engineering. In the
words of the project manager ‘Marke- 8. Project Teams/Project Structure.
ting may sell you the sun but the engi- It was generally felt by the BGE pro-
neer will take you to the moon’. As in- ject team that the discussion during the
formation was collected and candidates pre-bid meeting was quite limited and
were questioned about their particular that the tendering process did not be-
experience it became a lot clearer who nefit as much as it should. However,
was suitable and who was not for the the tenderers obviously approached
purpose of sending the ITT. the meeting with care and were aware
of the competition in the room.
4.6. Pre-bid Meeting
4.7. Tender Evaluation
A pre-bid meeting was held two
weeks after the issue of the ITT and The criteria under which tenders were
four weeks prior to the deadline for re- evaluated is outlined in Table 3. The lis-
86PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
ting was not in order of priority and was project steering committee, that the
described as ‘headings under which focus of the project was to get the right
BGE will evaluate the responses to the system solution under the right com-
ITT’. The headings were weighted prior mercial conditions.
to the bids being received. In the weigh-
Four responses were received by
ting of the selection criteria each of the
BGE. Two of the responses were in
listed items were grouped under seven
the form of alliances between consul-
headings which included extent of com-
tant solution providers and vendors.
pliance, experience of tenderer, expe-
The third response was in the form of
rience of project team, approach to pro-
an existing bespoke solution which
posal, support, commercial and joint
could either be accepted as is, i.e. BGE
venture relations/future relations.
would be required to change their bu-
The weighting of the selection crite- siness processes to mirror the existing
ria was such that extent of compliance, functionality of the current system, or
experience of tenderer and commer- be customised at a cost. The fourth so-
cial terms accounted for 75% of the lution offered consisted of a customi-
evaluation weighting. This was consis- sed solution based on the use of a de-
tent with the position adopted by the velopment kernel.
87SYSTÈMES D’INFORMATION ET MANAGEMENT 88
PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
The initial tender evaluations cove- The Tender Evaluation and Summary
red a wide variety of areas and raised document was circulated to the entire
a number of issues which required cla- Project Team and the members of the
rifications to be sought. Table 3 sum- Steering Committee. A meeting was ar-
marises the clarifications sought from ranged to score each of the proposals
the tenderers by the BGE project team and compile the tender shortlist. The
in relation to each of the criteria. meeting was attended by the Project
Manager, the IT Project Leader, the
During the initial evaluation of the
Super Users and the Departmental Ma-
tenders it emerged that one of the
nagers. Each of the three remaining
companies involved in the bidding
candidates were scored on the basis of
process took over the partner of one
their original tender submission and the
of the other bidders. This led to the
subsequent clarifications received. Two
elimination of one of the candidates
candidates emerged as being front run-
and left BGE with three possible solu-
ners and their total scores were within
tions to pick from.
5% of one another. The tender score
sheet and final scores were agreed and
4.8. Shortlisting of Tenders signed by all those present at the mee-
ting. The completed score sheet was
The tender evaluation report strove to circulated to all members of the project
clearly compare each of the three re- team and to all members of the Project
maining candidates. The assessment Steering Committee, Purchasing and
was based on the evaluation criteria the Project Sponsor.
outlined in the ITT. One of the primary Both candidates were shortlisted,
areas in assessing each of the proposals but two key issues remained. One of
was ‘Extent of Compliance to System the candidates provided a very good
Requirements’, which included the solution but the commercial terms
functional requirements, the IT Techni- were quite unsatisfactory and well in
cal Requirements, On-Going Require- excess of the Project budget. The com-
ments, Testing/Validation, Data, Inter- mercial terms of the second candidate
faces, Implementation Methodology, were within the project budget but litt-
Year 2000 compliance and Euro com- le was known about their actual tech-
pliance. The Functional Requirements nical capabilities. It was decided that
described the requirements of the gas these two key areas, along with all
transportation management system. other aspects of both proposals would
Suppliers were asked to indicate the be further clarified through meetings,
extent to which each requirement was site visits and conference room pilots.
supported in their systems using the
convention: C – requirement complete- 4.9. Site Visits of Shortlisted
ly supported, P – requirement partially Candidates
supported and N – requirement not
supported. This convention was subse- During the site visits, it was decided
quently used to analyse the functional to focus on the remaining key areas of
requirements of each of the proposals. concern. The primary concern with
89SYSTÈMES D’INFORMATION ET MANAGEMENT
ABC Software3 was the commercial derer could provide the required solu-
terms and it was decided that the most tion. Therefore a Conference Room
appropriate parties for this site visit Pilot was organised with the focus pri-
were the Manager of the Transporta- marily residing on the candidates’ un-
tion business unit and the Purchasing derstanding of the business require-
Manager. The agenda for the site visit ments and their ability to deliver a
included: software functionality, pro- suitable solution.
ject approach, implementation, project
management, Client/Vendor Relation-
ship, product customisation, and bot- 4.10. The Conference Room
tom line costs. Pilots (CRP)
After this visit, ABC Software agreed At this stage in the selection process,
to review its pricing. Effectively, they BGE were confident that it could pro-
recognised that their pricing may not ceed with both candidates for the pur-
have reflected the true nature of BGE’s poses of the preparation and conduc-
requirements and requested to hold off ting of the Conference Room Pilots. It
on the cost of their proposed solution was agreed that the CRPs would last
until after the conference room pilot. for four to five days and would invol-
The primary concern with DEF Soft- ve the tenderers demonstrating both
ware4 revolved around their technical the business fit of the proposed solu-
ability to deliver the solution. Therefo- tions, their knowledge of the industry,
re it was decided that the most appro- technical configuration and project
priate parties for the second site visit management/implementation issues.
would be the Project Manager, the IT The team for the CRP consisted of the
Project Leader and the two project Project Manager, the IT Project Leader
Super Users. The Technical Site visit and the two super users.
would focus on: the history, experien- On completion of the CRP the ten-
ce and technical abilities of the candi- derers were requested to make final
date, presentation and technical discus- submissions with regard to complian-
sion on the core product, business ce to functionality and commercial de-
processes, technical architecture and tails. The BGE CRP team performed a
project approach. A demonstration of a review of the CRP and conducted a
previous implementation similar to that preliminary scoring exercise of each
of BGE requirements was also sought. of the candidates. A CRP Summary
This site visit proved very useful in and Assessment report was completed
that it exposed the Project Team to the and circulated to all members of the
technical capabilities of the candidate. project team prior to final scoring of
They felt more confident that the ten- the tenders.
3
Not the company’s real name.
4
Not the company’s real name.
90PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
It should be noted that prior to the rification, but these issues did not af-
CRPs, BGE entered into a mutual bin- fect the scoring. The decision was then
ding confidentiality agreement with presented to the Project Steering Com-
both candidates. These confidentiality mittee and the BGE Board for appro-
agreements would stand for the remai- val. Following board approval a letter
ning lifetime of the project. of intent was issued to the successful
candidate and a contract for the supply
of the system solution subsequently
4.11. Returning a Verdict negotiated.
A meeting was held between the
team involved in the CRP and the bu-
siness unit managers to review the 5. SUMMARY OF THE
conference room pilots, to discuss and SELECTION PROCESS
analyse the final submissions from
both parties and to score the two The steps in this rather complex se-
shortlisted tenders. The criteria used lection process are outlined in Figure
for scoring and selecting the winner 2. The diagram outlines the key steps
remained the same as that outlined in in the selection process from the pre-
the ITT and used in the shortlisting paration of the business process maps
scoring exercise (see Table 3). Howe- to the selection of the supplier. The ti-
ver, the evaluation headings were fur- meframe of the key stages in the pro-
ther detailed to highlight the risk ele- ject is highlighted on the left of the se-
ment associated with a number of the lection processes. Even though the first
evaluation criteria. set of business process maps were
completed in October ‘98 it was May
On completion of the scoring, one of
‘99 before the ITT was issued. This
the candidates emerged as a clear win-
was as a result of the continued pro-
ner and the decision to award them
cess of consultation with customers
the contract was taken unanimously by
and the public.
the project team and the business unit
managers. There were a number of The case study points to a number of
minor outstanding issues for which the key conclusions which are presented
Project Manager was asked to seek cla- in the next section.
91SYSTÈMES D’INFORMATION ET MANAGEMENT
Sept ‘98 Ongoing development
of Business rules/
consultation
Oct ‘98
Business
Business
RequRequirements
irements Business Process Maps
March ‘99 (Updated as Required)
April ‘99 IT Technical IS System Requirements
Requirements
Vendor Requirements Invitation To Tender Conditions of Contract
May ‘99
Selection of Tenderers Tendering Process
(Pre-Bid Meeting)
June ‘99
Evaluation of Tenders
July ‘99 (Clarifications)
Aug ‘99
IT Technical
Requirements Business Requirements
Sept ‘99 Shortlist Candidates
Oct ‘99
Clarifications/Site Visits
Conference Room Pilots
Nov ‘99
Nov ‘99 Scoring of Candidates
Dec ‘99
BBoard Approved
oard Appro ved
Recommendations of
(Solution
(Solution Selected)
Selected)
Dec ‘99 Selected Vendor
Figure 2: The Selection Process
92PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
6. REVIEWING THE FINDINGS We are aware of the case of another
AND CONCLUSIONS utility company in Europe where the
process followed was reversed. Faced
The following section puts forward with very tight deadlines, the project
the most important lessons that can be leaders decided to rapidly acquire a
learnt by practitioners and researchers system that matched the overall requi-
from the case data reported in this rements and to use this system as a
paper. It focuses on two significant training tool for the organisation. In
areas that emerged from the case: (1) this case, speed was the key concern
the process that was followed in and the specific analysis of require-
buying the mission critical system and ments never took place. The managers
(2) the necessity to align information committed to a particular system and
systems with the business strategy of hoped that it would fully accommoda-
the firm. te all their needs. These two contras-
ting examples illustrate that the requi-
rements for IS solutions are
6.1. What process do firms follow determined not only by the business
when selecting suppliers processes to be supported, but also by
of mission-critical systems? the timeframe and other constraints
under which new systems must be de-
livered and by the business context
Sources of the requirement surrounding the project.
for new systems
The primary concern of organisations The process of selecting
seeking to buy off-the-shelf packages information system
should be to identify the source of the
changes driving the requirement for The selection process undertaken by
new systems. In BGE, the requirement BGE went through many key phases
for change came from the EU Gas Di- and steps. Its primary feature is that it
rective which stated that gas pipeline was complex, relatively slow and in-
companies within the EU had to open volved many recurrences of the same
up their networks for competition by issues. This process of solution selec-
February 2000. BGE required a new tion deserves the full attention of pro-
system with regard to Third Party Ac- ject leaders in a way that is fundamen-
cess (TPA). Because BGE had defined tally different from what happens in
rules and had started implementing traditional development projects.
TPA via a set of manual procedures and In BGE, the process of solution selec-
spreadsheets, a ‘package’ solution tion involved the following key steps:
would only be of use to BGE if it could
• a project steering committee was
match the functionality of the business
established,
processes already agreed upon. If the
functionality of the package could not • teams with a variable mix of busi-
match these processes then extensive ness and IT competencies were set
customisation would be required. up,
93SYSTÈMES D’INFORMATION ET MANAGEMENT
• solution providers were resear- minimise the level of risk associated
ched extensively and shortlisted, with the selection of the system by ex-
ploring all areas where uncertainty re-
• candidates were tendered,
mains and highlighting at the appro-
• conference room pilots were used priate hierarchical level.
to test the strengths and weak-
nesses of the tenderers,
The evaluation criteria used
• the most appropriate solution pro- in the shortlisting and selection
vider was selected based on a set of candidates
of strict selection criteria which
were used consistently throughout When shortlisting the candidates,
the entire process. BGE established evaluation criteria
based on their business and IT Strate-
It is interesting to note that both BGE
gies. The evaluation criteria and their
and the other utility company mentio-
relative weight were set out prior to re-
ned above conducted conference
ceipt of any of the tender documents
room pilots with the same candidates
and were agreed between the business
but as a result of their different requi-
unit and IT. These criteria were coded
rements, selected different suppliers.
in an evaluation matrix including a
Both organisations followed similar
summary of each candidate’s strengths
processes, but the other utility compa-
and weaknesses based on the literatu-
ny required a packaged type product
re provided and on BGE’s own resear-
whereas BGE required a ‘kernel’ type
ch. Based on the matrix, each candi-
product on which specific business
date was given a ‘rating’. The
rules could be applied.
assessment criteria for each of the ca-
There is a key element of risk in the tegories was used to determine whe-
selection of any system solution, ho- ther candidates were ‘suitable’ or ‘un-
wever it is critical to manage the risk suitable’.
such that it is minimised for both the
The tightness of the evaluation crite-
solution provider and the client orga-
ria is a critical factor. If the evaluation
nisation. In the case of BGE, the solu-
criteria are too tight, too few candi-
tion providers tried to transfer all the
dates (or even none) will be deemed
risk on to BGE by being unclear and
suitable. This may lead to a conside-
unambiguous in their responses to the
rable waste of resources. On the rever-
ITT. The ITT asked for a ‘Firm and
se, if the evaluation criteria are too
Fixed’ price yet only one of the four
loose, too many candidates may be
responses included such a ‘Firm and
shortlisted. Therefore the project team
Fixed’ pricing arrangement. Also, the
must be prepared to modify the eva-
tenderers stated that they had made a
luation criteria so that it allows an ap-
number of assumptions in their res-
propriate number of candidates to be
ponses without clearly outlining what
selected.
these assumptions were. Responses
were often qualified with ‘subject to’. It A strict balance must also be achie-
is the project team’s responsibility to ved in the weighting which applies to
94PURCHASING KEY INFORMATION SYSTEMS – THE BORD GAIS EIREANN (BGE) CASE
the different criteria. Obviously, the 6.2. How are the Business and IT
weighting determines how a candida- dimensions aligned to meet
te’s weaknesses can be compensated the objectives of the project?
by its strengths. Thus, a cheap pro-
posal can rate higher than a more
complete but more expensive one. In Aligning the Business
the case of BGE, it was decided from and IT strategy
the outset that the commercial as-
pects of the project would have a Within a traditional organisation, the
capped weighting so that cheap solu- business expertise resides within the
tions which only met some of the re- business area and the IT expertise re-
quirements would not come out on sides within IT. In order for the busi-
top when they clearly did not provi- ness to be supported effectively by IT,
de a sufficient match to the require- information systems must closely meet
ments of the firm. Thus, it is well the business requirements. The BGE
worth it for project managers to case shows that there should always
spend time in setting up their evalua- be a close, on-going relationship bet-
tion criteria and in deciding how they ween IT and the Business Units.
will be applied. In BGE, the project team was com-
prised of a combination of business
and IT personnel with the Project Ma-
The right solution provider
nager coming from the Business Unit.
The conference room pilots and the
This study also illustrated that,
selection process were conducted by a
when buying off-the-shelf systems,
mixture of both business and IT per-
the quality of the system ultimately
sonnel. IT played primarily a support
acquired is fundamentally determined
role with the business actors taking a
by the solution provider. Thus, fin-
lead role in the selection of the system.
ding the right solution provider is as
This close working relationship was
important as getting the analysis of
maintained during the whole selection
the requirements right. BGE under-
process.
took significant research into the pos-
sible solution providers available.
Different solution providers provided An Integrated Project Team
different types of systems including
packaged solutions, bespoke system As outlined in Figure 1, the project
solutions and kernel solutions and team consisted of a Project Sponsor, a
BGE were in a better position to se- Project Manager, a number of key ma-
lect a solution provider who could nagers and a number of key users
meet the business requirements wi- from the various departments along
thin the IT Strategy of the organisa- with key personnel from IT and Pur-
tion. Thus, it is well worth it for firms chasing. This mix of competencies was
seeking to buy mission-critical sys- essential in ensuring that the views of
tems to spend time finding many po- all stakeholders were represented. Not
tential solution providers. only were each of the various disci-
95SYSTÈMES D’INFORMATION ET MANAGEMENT
plines represented on the project team, tings, is essential to ensure all stake-
but stakeholders’ involvement in the holders are properly informed throu-
project was at the appropriate level. ghout the decision making process.
BGE established a project steering Good communication ensures that
committee which consisted of the CIO, there are no misunderstandings or mi-
the business manager with responsibi- sinterpretations of what the solutions’
lity for the project, a project manager requirements are, of what the tende-
from the business side of the organisa- rers are proposing and what process of
tion and an IT Project Leader. selection is being followed. It is the
only way to ensure that all the project
This method worked well and the
team sign into the selection of the
solution selected was supported at all
eventual winner and that there is no
levels, from the users right up through
surprise for anyone.
the Project Manager to the CIO and
Business Unit manager. As a result of
the Project Management structure all
stakeholders were allowed to make a 7. BIBLIOGRAPHY
contribution, be involved in the reso-
lution of conflicts and have concerns Adam, F. and Cahen, F.D. (1998), « L’achat
aired in the appropriate forum. des systèmes d’information informatiques
comme alternative au développement spéci-
fic : le cas Socrate », Systèmes d’Information
et Management, Vol. 3, n° 4, p. 79-100.
Good communication between
project stakeholders Doyle, E. and Adam, F. (1998), « Board
Gais Eireann: Exciting and Dynamic Times
Good communication is not only im- for the Natural Gas Industry », in Johnson
and Scholes (Eds.) Exploring Corporate
portant within the project team. Regu-
Strategy, Prentice Hall, p. 827-837.
lar meetings and workshops were also
held with external users of the system Marciniak, R. and Rowe, F. (1998), « En-
and with members of the Project Stee- jeux et Complexité des projets de systèmes
d’information », Systemes d’Information et
ring Committee. The Project Manager
Management, Vol. 4, n° 3, p. 3-16.
was responsible for the co-ordination
and circulation of documentation wi- Rowe, F. (1999), « Cohérence, Intégration
thin the project team and the relevant informationnelle et changement: esquisse
business unit managers. d’un programme de recherche à partir des
Progiciels Intégrés de Gestion », Systèmes
Thus good communication, through d’Information et Management, Vol. 4, n° 4,
documentation, email, memos or mee- p. 3-20.
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