Manage Suppliers for Project Success

Computerworld - Most organizations begin a large system development effort by creating a business case, identifying a program sponsor and developing a work plan. These are widely recognized as critical foundations for success, and without them, your program is likely headed for failure.
However, even with a good foundation, research shows that few large projects meet their full objectives. About $75 billion is spent yearly on failed IT projects, and poor management and methodology are the chief culprits, according to Gartner. And in 2002, more than half of 134 large multinational companies surveyed by KPMG experienced a failed IT project during the year. The average cost of each failure was about $8 million. While no company would dream of throwing dollars away, failed projects essentially have the same result.
Many organizations severely underestimate another critical piece of the project foundation: the enormous impact their suppliers will have on a project's outcome. Projects frequently fail because suppliers are undermanaged, undercoordinated and, all too often, ignored. The average Fortune 500 company may have 15 to 20 suppliers directly involved in each of its major system development projects. These suppliers include providers of hardware, software packages, middleware or systems integration services. Selecting the right suppliers and managing them effectively is crucial to program success. In addition to performing traditional supplier management activities, be sure to do the following:
? Guard your infrastructure. Large projects often introduce new technologies into your organization. When you commit to an application package, you may be unknowingly committing to additional software. An Oracle-based company, for example, may choose a software package but then discover that it performs better on a SQL Server database than on an Oracle database. Furthermore, beware that many suppliers will want to change your architecture to better incorporate their technology. Make sure that all hardware and software required by your suppliers meets your architectural specifications.
• Identify and understand your suppliers. Carefully assess their corporate direction, their cost structure (how they make money), and the exact services they will provide. If possible, understand their compensation program and get your supplier to specify objectives for its staff that are aligned with the success of your own program.
• Bring key suppliers on board as soon as possible. Make sure they're committed to the total program and not just to their own deliverables. Include them in the initial project planning phases, and get their buy-in for your work plan and schedule. Include key suppliers in most of the regular program progress meetings.
• Create effective project performance measurements.