This article is one of a series covering COTS – Commercials off the Shelf Lifecycle model methodology, also know as package software. I first started working on COTS software products and their integration with other systems back in the 90’s when working for a large systems integrator. Since then I have implemented numerous COTS Commercial off the Shelf packages in sectors such as central government, local government, law, housing and higher education. In 2008 I started putting together an outline COTS methodology. I continued with this to distilled the key elements of COTS selection, procurement and implementation. In essence, what I have created is a ‘Best Practice COTS – Commercial off the Shelf Lifecycle methodology’. Whether anyone has the right to claim best practice is of course debatable. All I know is that my formula or methodology has stood me in good stead and is something I find extremely useful and beneficial to my clients. I wanted to share my experience with others who are about to embark on the process of COTS identification, selection, procurement and implementation. So, here it is. Please feel free to add comments and link to this article via twitter, linkedin etc. or directly from your blog.
The aim of this article is to set out in plain terms:
- What is meant by COTS – Commercial Off the Shelf in the context of software selection, procurement and implementation
- Key differences between COTS and ERP packages
- An outline the Pros and Cons of the COTS approach compared with the Custom Build approach
- Outline common misunderstandings about COTS
- Provide an outline model for COTS – Commercial off the Shelf selection, procurement and implementation.
Many organisations have stated a preference for the COTS or ‘Buy’ approach, as opposed to other alternatives such as custom development. The availability of a large number of specialist Commercial off the shelf products makes the ‘Buy or Build’ question much easier to answer than in the past. Whatever your sector or niche it would appear that there is a commercial off the shelf product designed with your need in mind. However, despite the attraction of ready built systems designed with your line of business in mind, The commercial off the shelf option is not the easy option many believe it is. When you decide to buy rather than build, you are accepting a product that is not a 100% fit for your requirements. You must accept this. If you go down the COTS road and then try and change the product by adding all sorts of customisations, you just end up storing trouble further down the line which will be costly and could ultimately lead you down an unsupportable blind alley. It happens all the time so beware. If you really want a system that does 100% of what you require, you should consider an alternative option i.e. build your own system. If you do decide to Build rather than Buy, ensure you have the time, skills and resources to do this properly. A staggering amount of bespoke development fails to deliver what the users want. When this occurs, you may as well have gone down the COTS route.
I decided to write this because I am truly alarmed at how many commercial off the shelf projects get into difficulties, and for all sorts of reasons. Even what I would refer to as highly experienced and mature organisations run into trouble. My analysis of failed or troubled COTS projects reveals some common threads which contribute to failed projects. I have seen these same problems occur time and time again when asked to rescue failing projects. The reasons for commercial off the shelf project failures are numerous and I will be looking at these in detail later. Suffice to say for now though, by knowing the danger areas, it is much easier to prevent problems rather than be impacted by them.
In this article I will be covering the following areas:
COTS definition – Here I will explain what exactly is meant by commercial off the shelf and the key differences between COTS and ERP. I will also provide some examples of where commercial off the shelf are used. Finally, I will list the pros and cons of using a COTS approach rather than a bespoke development.
COTS – Common Misunderstandings – Some people significantly underestimate the amount of effort and resource needed to successfully implement a commercial off the shelf (or any) system. Even worse, they can have a wrong perception about how much work the vendor will do and how much work the client organisation must do. It can come as quite a shock to many clients when they realise how much of an investment this really is. This section will enable people to take an ‘eyes wide open’ decision, enabling them to plan and prepare for a successful commercial off the shelf implementation.
COTS Lifecycle – The project lifecycle for a commercial off the shelf implementation is different to a development lifecycle. There are of course some similarities but the emphasis changes with commercial off the shelf . I will show what the key stages are and why these are so important.
COTS Identification, Selection and Procurement – Procurement is a separate stage to implementation. It is at this stage that you need to agree with the supplier what they will provide in terms of product, licenses, services, penalties and bonuses etc. Much of this will revolve around the functional and non-functional requirements. If you get this stage wrong you are on the back foot from the start.
COTS Requirements Definition – The requirements are the key to a successful outcome. If you get these wrong the project will inevitably fail in terms of scope (product not doing what the client needs), cost (money, people, jobs!, sanity) and time (every time you change your mind it will add time and cost).
COTS Governance – I hope by the time the reader gets to this section they will have understood that stakeholder management, setting expectations and allocation of the right people is essential to the success of the project. In this section I will set out a blue print for a successful governance regime to support and enable the right controls and decision making.
Cloud verses On-premise – Slightly technical but with many vendors now offering a service in the cloud or software as a service (SAAS) etc., you need to understand the pros and cons of this approach as it will have a fundamental bearing on the whole project and how it is supported and maintained thereafter.
COTS – Agile verse Waterfall approaches – With more and more organisations adopting agile approaches, I consider here the relative merits or otherwise for a commercial off the shelf implementation.
Communications and Training for COTS Packages – Not dissimilar to other approaches but the commercial off the shelf approach provides some additional options, which I go through here.
COTS Data Migration and Data Cleansing – Occasionally, a commercial off the shelf solution is introduced as a new service on a ‘green field’ site i.e. it is not replacing anything that already exists. In most cases, however, this is not the case and one of the most challenging aspects of the commercial off the shelf project (and also development projects) will be to migrate and translate data from the old system to the new. In reality, you will almost certainly have to move data between several systems; some as a one off migration and others as continuous or real-time update. I cannot underestimate the complexity of this stage.
Testing COTS Packages – It goes without saying that a commercial off the shelf implementation must have adequate testing. With commercial off the shelf , the testing emphasis is slightly different to a standard development lifecycle and here I go through what this means and emphasise the need for significant user involvement.
COTS Implementation – this stage is critical to the success of the project given the number of parallel activities likely to be taking place and the direct impact to the user experience. This is another key stage and I outline numerous areas for consideration.
In summary and before you get into the detail, I hope you do find this article of use. It is my sincere hope that I can help you to implement a successful commercial off the shelf system at the best price and within your desired timescales.
What is COTS – Commercial off the Shelf
COTS or Commercial off the Shelf software, also known as ‘package software’ refers to a software application that is specifically designed to meet the needs of particular business type e.g. Human Resources (HR), Retail Point of Sale, Case Management, Finance etc. There are many such commercial off the shelf packages to suite almost every business process or niche area. The whole idea behind commercial off the shelf is to enable businesses to buy a system that is already built rather than having to build one themselves. These systems might be offered ‘in the cloud’ or ‘on premise’. What this effectively means is that you don’t necessarily have to purchase lots of hardware to run these systems. An ‘in the cloud’ service means you can access the system over the internet. You can effectively have your own copy or ‘instance’ of the system. We will be covering this option later on.
There are many compelling reasons to choose the commercial off the shelf approach, not least because many organisations lack the skills, experience and resources to build their own. Even without this constraint though, many, if not most organisations would choose to buy rather than build if there was a suitable commercial off the shelf product available. It just makes sense on so many levels. Why would you write your own accounting system when you can buy one off the shelf knowing that this will be kept up to date and compliant with any new legislation.
When you buy a commercial off the shelf product you are also buying into the experience of the Vendor and the many clients who have helped with the development of the product over time. With a good commercial off the shelf product, the vendor will have the experience of implementing their product in numerous organisations. They will have experience of seeing different practices and over time will have built a product that is based on some degree of best practice. If you were to ask a group of subject matter experts (Finance, HR etc.) to describe the perfect system for running their business, you can bet they would describe a system based on how they do things at the moment. This may not necessarily be the best way of doing things. These people are often amazed when they see how much thought and effort has gone into a commercial off the shelf product to make their life easier. The product may not do everything you want or in the way you would prefer, but it probably offers a lot more than your budget could stretch to if you were to go down the custom build route.
Before we get carried away though there are a number of considerations. Just as with any off-the-peg option there is always a compromise to be made. Your business will have developed over time and there will be processes, terminology and artefacts used in your business that you won’t find anywhere else. By selecting a commercial off the shelf product, you would have to concede some of this uniqueness in order to use the product effectively. This may not necessarily be a burden but there are some organisations who will wish to stick religiously to their way of doing things. For these organisations, commercial off the shelf may not be the way to go. With a commercial off the shelf approach you have to accept that your business may have to bend to fit the package rather than attempting to bend the package to fit your business.
That said, modern commercial off the shelf products are very flexible and allow for significant configuration, enabling organisations to build out new workflows, approvals processes, role definitions, access rights, templates, reports and screens, in order to provide additional functionality not found out of the box. They have come on a very long way since the early days when configuration usually meant allowing only basic changes such as colour, field names and logo. I should make a clear distinction here about ‘configuration’ and ‘bespoke’ changes.
When we talk about configuration we mean changes that the product supports, probably using tools that have been provided by the vendor. Reporting is a typical example. You can create as many reports as you want because you don’t need to change the underlying system or core data structure in order to do so. The commercial off the shelf product may also have tools (maybe a chargeable extra) for developing new work flows, reports and functionality. The system will come with many standard work flows but you may want to create news ones to fit your particular way of working. Providing these configuration changes are done using the tools provided and do not alter the core product, then this is viewed as ‘configuration’. It means that when a new version of the commercial off the shelf product is released it will preserve any changes carried out (you will still need to test these of course) and you will also be eligible for support by the Vendor. This really is a must.
Bespoke changes or Customisations on the other hand refer to changes made either to the core product or its core data structures to provide additional functionality that your ‘out of the box’ or vanilla product does not provide. Generally speaking, Bespoke or Customisations should be avoided at all costs. If they are to be undertaken, the supplier must provide assurances that they are both able and willing to support the changes. Ideally, you should lobby the vendor to include the changes into the standard product so that you can be sure your changes will be supported. Making such changes without this agreement from the supplier usually proves disastrous for the organisation for a number of reasons. Firstly, they will not have the same level of support (if any) from the Vendor because they have tampered with the product, making support more difficult for the vendor who now has to maintain two versions, with all of the associated costs involved. Secondly, you may not be able to upgrade to the later versions of the product, due to incompatibilities between bespoke changes and the vendor’s. If you can it will probably be at additional cost and require the help of the vendor.
Over time the combined changes could drive you down a blind alley with the vendor no longer able to offer support and so no ability to upgrade the product to take advantage of new features or legislative changes. Imagine this happening to an HR commercial off the shelf product. As new legislative changes come out, the vendor will ensure that the standard commercial off the shelf product is updated and remains compliant. However, due to bespoke customisations, this is no longer possible for you, meaning the responsibility for maintaining changes falls to your organisation. Eventually, the two versions become so divergent that they are to all intents and purposes separate products. Most organisations cannot maintain a product of this type by themselves. Even the ones that technically could, usually wish they hadn’t. So, the decision of whether to go Buy (COTS) or Build (Develop your own) system should really be taken in the knowledge that you won’t be making bespoke customisations. You either live with the product as is or use another option. As mentioned earlier, you must be prepared as an organisation to work with the product the way it is, even if that means changing how you work. This can be a hard message for business users who will place all sorts of demands on the project team to make the product just the way they want it.
To underline the message above, I have many examples of this scenario in organisations from small SMEs to large corporations such as Banks and Local Authorities. At one financial services organisation, they were still using an 8 year old version of SAP for claims handling. This is because it was customised by the systems integrator, who implemented the product on their behalf, to such an extent that nobody knew how to maintain it. They had fallen out with the systems integrator because they couldn’t afford the outrageous support costs of maintaining a non standard product. Consequently, rather than risk changing this business critical system, they either built new functionality into other systems or did without. It was, to be perfectly frank, a real mess. The latest version of the original product was by now a functionally rich product with many desirable features. This client was desperate to take advantage of these features but could only do this by starting again with a ‘vanilla’ product i.e. an out of the box. It took 8 months to decouple the old product from the customisations and at great expense. The industry is littered with such examples of opting to go for an off the shelf product but wanting to change it beyond what the standard product allows.
Difference between COTS v ERP
There is often confusion between commercial off the shelf and ERP – Enterprise Resource Products. This is understandable because they both refer to an off the shelf product. The difference lies in the scope of the product i.e. how much of the business it controls. ERP products such as SAP and Oracle ERP are modularised and designed to cover everything from Finance and HR to manufacturing. In the ERP scenario, a single database is used across a number of different functional areas. This means that there is no data duplication and only ‘one version of the truth’. This brings a number of advantages in terms of data quality, conformity, end to end processes etc. The problem with ERP is that they are prohibitively expensive, apply to large organisations and require a level of process maturity within the organisation that is beyond most smaller organisations.
In contrast, traditional commercial off the shelf products only cover one or a small number of functional areas. These are often termed ‘vertical slices’ or silos e.g. Finance and HR. With a commercial off the shelf approach, each commercial off the shelf Package has its own database. This is less than ideal because it means there will inevitably be some data that needs to be stored on a different database (duplication). Whilst this is not ideal, it is far from unusual and in fact could be said to be the norm. Providing agreements can be reached about which system has ‘primacy’ i.e. which system is the source of the truth, then integration arrangements can be made to ensure consistency across different systems.
Pros and Cons of Buy versus Build (COTS versus Custom Built)
Whether a COTS or Custom Built solution is right for your organisation depends on a number of factors which are unique to your situation. Therefore, the following pros and cons of a commercial off the shelf approach verses a custom built approach must be taken within the context of your organisation.
Pros associated with a COTS Approach
Time to deployment – Generally speaking, the lifecycle of a COTS implementation is shorter than the equivalent custom built approach. This is perhaps self explanatory as you don’t have to design, develop and test a new system. You do still have to understand your requirements, procure, configure the system, integrate with other systems and carry out testing but these are all activities that are common to both approaches. Overall, the commercial off the shelf approach is quicker.
Less Bugs – A COTS product can be expected to have less defects than a custom built system since it will have been subjected to rigorous testing at various levels including beta testing on a client site. That is not to say that a custom built system can’t reach the same level of quality but it would be much harder for an organisation to reach the same level of quality for the same cost.
Cost – When looking at the costs of software you must look at the up front costs (licenses or development) plus the on-going costs of support and maintenance. Generally speaking, the costs of associated with a commercial off the shelf product are less than the custom build product simply due to the economies of scale whereby the costs are shared out amongst the many clients using the product. Of course, the vendor will make a considerable mark up but even allowing for this, the cost for a COTS product is typically less.
Legislation – COTS products related to regulatory and legislative requirements must be kept compliant by the vendor. Often organisation struggle to maintain custom built systems or are slow to react to these changes, leaving the organisation vulnerable and non-compliant.
Support and Training – The vendors will provide training or ‘train the trainer’ events so that your users are ready to use the system. It is difficult for organisations to maintain this level of service for in house or custom built systems. Similarly, support can be provided immediately or in line with service level agreements (SLAs).
Cons associated with a COTS Approach
Not a 100% Fit – It is inevitable that there will be aspects of the commercial off the shelf product that do not work exactly as you would wish. There may even be elements of functionality you require that are missing altogether.
Functionality you don’t want – Given that the development of commercial off the shelf products are often driven by user groups and forces outside of your control, you may find that the product contains a lot of functionality that is not relevant to your needs. In some commercial off the shelf products there may be an ability to hide this. However, it is often the case that the presence of these features forces you to work in a way that is not optimal for your needs and can be confusing for your users.
Pros associated with a Custom Built Approach
Perfect Fit – Only the custom built option provides an opportunity of providing a perfect fit which meets 100% of all your requirements and works in the way you want. However, to get to a point of 100% fit would in most cases be expensive and time consuming. Also, many organisations are not mature enough to define what a perfect system would look like.
Immediate Support – The custom built option also provides the opportunity for fast support – assuming the support team is available during the required hours of service.
Product Roadmap – If you own the product you are in control of how the product will grow over time in terms of functionality and priorities. With a COTS product you have far less influence in these areas.
Cons associated with a Custom Built Approach
Costly Changes – Changes to the custom built changes will be costly and budgetary provision may not have been made to address urgent changes such as regulatory and legislative changes. The cost of change will constrain the development of the product or would have to compete with other projects. This could be to an extent that it does not develop in line with business aspirations.
Skills – The organisation responsible for supporting and maintaining the product, whether in house or external may loose expertise over time, making it difficult to support the product. This is less likely with a commercial off the shelf product, providing the vendor is a reasonable size.
Table showing summary of Pros and Cons between COTS and Custom Build approaches
|Time||Faster to market|
|Cost||Lower in relative terms|
|Functionality||Cost per function is lower||Potential for better fit|
|Quality||Higher since used by many organisations|
|Support||Likely to be Higher||Potential to respond quicker|
|Training||Available on an on-going basis|
COTS – Common Misunderstandings
There are a number of misconceptions associated with COTS implementations. It is important from the start that everyone is on the same page so I list below the ones that I have come across the most.
COTS implementations are simple and quick to implement – If only this were the case. The source of this misconception is probably the idea that you are buying something that gets installed just like installing Microsoft Word. Unfortunately this could not be further from the truth. Commercial off the shelf implementations are every bit as complicated as any other project. They are all about changing the way the business operates which means schedules have to be agreed, users need to be trained, data has to be cleansed, new processes and roles have to be defined. These are all complex activities and cannot be performed without total commitment from all stakeholders.
The supplier does all of the work – This is one of the biggest assumptions and misconceptions around commercial off the shelf implementations. The supplier does do a lot of work and they will provide a project manager. The reality of this though is they also expect the client to do a lot of the work and provide their own client side project manager, which is entirely correct. These misunderstandings account for the larger part of COTS project failures. If the client is not set up for success with their own project manager and significant buy-in in terms of resources from the user community and IT, the project will come to halt. For example, it is the users who will be shaping requirements, carrying out user acceptance testing, signing things off etc. This takes a significant amount of time and therefore it is not unusual to have people seconded, sometimes full time from their normal role to work on the project. This might require back-fill and the whole thing takes a great deal of organisation and dedication.
This is an IT led project – Many organisations assume that because this project is IT related and IT typically has project managers, it must therefore follow that IT will lead the project. The truth is that the project is an IT supported project and the ‘business’ should ideally lead the project, or some form of partnership between IT and the business. After all, it is the business who will no doubt fund the project, they who will reap the benefits and they who stand to suffer most if things don’t go to plan.
COTS Lifecycle Model
Just like any project, there is a lifecycle associated with the selection, procurement and implementation of a commercial off the shelf product. This is set out in the diagram below. In the following articles I will be going through each of these stages in a step by step approach and explaining what needs to happen in each.
Next articles (coming soon):
- COTS – Identification, Selection and Procurement Lifecycle Model
- COTS – Implemtation Lifecycle Model