Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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30 LEXPERT MAGAZINE | OCTOBER 2019 Internal Governance So, how to gear up for such a major procure- ment. First, you have to cobble together the right team, ideally, people who have done this before. A major ERP clinical acquisi- tion is not an entry level project for some- one just out of IT procurement school. Ide- ally, you will have a Project Manager who has the scars of past similar projects; and legal counsel who has seen this movie be- fore. e procurement lead has to be savvy to the marketing and other dynamics of big American suppliers – this is no place for rose coloured glasses. What about your Board ? Do you have a couple of IT veterans on it ? If not, this is the time to recruit those people. Ideally one is well versed in medical IT; but the other can bring a skill set from the private sec- tor IT world. Banks, insurance companies, telcos, and a number of other industries in the private sector have gone through these mamouth ERP projects before – having their experience to draw on can be invalu- able. e key is to learn from the mistakes of others (our parents told us to learn from our own mistakes, which is good advice, but quite painful – better, by far, to learn from the mistakes of others !). Your CFO will need some support as well. e algorithms around the financials for these large ERP clinical buys are very complex, and the suppliers make them so on purpose (sorry, no way to sugar coat that). ey could make them simpler, but there is ultimately more revenue to be had with the complexity, particularly for the unwary user. Calculating the total cost of ownership ("TCO") over a 10-15 term is difficult at the best of times with even sim- ple systems – with clinical ERP purchases, calculating the TCO will wear our several spreadsheets before you even start to get close…it's just that complex. en, on top of everything, you have to negotiate a mean- ingful discount, and have to fold in financ- ing if that is the route you are going to take. Your CFO will have to delegate some of their day job functions to others to be able to devote the serious time they will need to unravel the financial proposal, and then to negotiate a credible deal. Procurement Strategy One of your early decisions is to determine how to approach the market for this su- per important procurement. Of course as a public institution, you will be governed by a host of public procurement rules and regulations. But within those regulatory parameters you have some choices. My own strong recommendation is to have a process that includes, towards the end, a dual track negotiation component. Under the dual track system, at some point you have nar- rowed the suppliers down to the top two. en with both of them, you conduct si- multaneous negotiations (sometimes called "confidential commercial discussions"), af- ter which they both submit a "best and final offer" (the "BAFO"). rough such a BAFO process you and your team stand the best chance of learn- ing very important nuances about how each supplier goes about its business, and in turn what you will have to do to pre- pare for each. Remember, and this is key – a major ERP clinical implementation will test your organization to the core. Its kinda like running a marathon. You have to prepare for it if you hope to have any chance of finishing the race. And the dual track process, capped by the BAFO, is a critical piece of preparation. More on the marathon analog y. A very big question you need to answer is: will you do "big bang" in terms of implemen- tation approach, or will you do a slower, more incremental implementation. By the way, there is no right answer – there is, ideally, the process of you and your staff figuring out which is the most appropriate for you, and then going with that one. Yes, each has different cost implications; but so does picking the process that is wrong for you. It`s like planning a marathon – do you go out strong, and finish slower; or do you hang back, and then pick up the pace at the end. Olympic medals have fad- ed because bad strateg y was chosen. If you want to see the results of bad decisions on implementations of ERP clinical systems, just search the internet – there are several high profile ones. Another threshold question you will need to answer is do you want a system that your organization will be hosting (a so-called "on-premise" soware system), or will you be looking for the supplier to host the system (on a "soware as a service" ba- sis) ? is question, and its answer, has ma- jor ramifications for you for years to come. One last point on staffing. For the ac- tual implementation, you will want to have someone on your team who has actually implemented the specific system you are acquiring. So, don`t hire this person until the end of the BAFO process, when you know precisely which ERP clinical system you will be intstalling. e contract you sign is also impor- tant. e standard paper presented by the suppliers will not be sufficiently robust around a number of customer concerns to adequately protect you. So, you`ll have to buttress your interests with some choice additions and amendments. Next month, a review of some of the more important provisions for the contract, in Part 2 of this two part series. "SO, HOW TO GEAR UP FOR SUCH A MAJOR PROCUREMENT. FIRST, YOU HAVE TO COBBLE TOGETHER THE RIGHT TEAM, IDEALLY, PEOPLE WHO HAVE DONE THIS BEFORE." COLUMNS TECHNOLOGY