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The IT Build Versus Buy Dilemma:
COTS, GOTS, and MOTS (Oh My!)
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Federal government IT professionals have three broad categories
of software available to meet their agencies’ needs:
Commercial off-the-shelf (COTS) software Government off-the-shelf (GOTS) software Modifiable off-the-shelf (MOTS) software
The mid 1990s saw the greatest shift toward COTS software systems
in the federal government, the biggest driver being overall system
lifecycle cost and the adoption of the “best practices”
that were purportedly built into COTS software. Congress believed
“if Dupont can run its infrastructure with COTS ERP (enterprise
resource planning) systems, so can government.” Of course, it
was not that easy. Many agencies jumped on the COTS bandwagon, discarding
the systems they built in-house, and failed to perform the required
analysis—most failed miserably. (It should be noted that government
is not alone in this predicament. According to Forrester, the industry
average for any “successful” IT system projects is approximately
40 percent for 2005.)
As government agencies have experienced the limitations and drawbacks
of COTS software in both total ownership costs and flexibility, many
are starting to return to custom in-house developed software or GOTS,
and in some cases MOTS. MOTS is a relatively new phenomenon in government
in which the organization purchases a COTS product that is specifically
tailored to the agency’s needs, in some cases down to the source
code.
Although government agency IT needs are highly complex, there are
a couple of key places where system selections generally go wrong:
the type of system selected and the fit of the system to the business
problem. In many cases, both may be the culprits in bad software selection.
The lines separating COTS, GOTS and MOTS software are blurry. However,
the smart IT manager will ensure that the line is very clear for his/her
set of projects before deciding what route to take when launching
new projects.
How to Choose
Every business problem is unique and has to be considered individually.
So, too, is the acquisition capability of each organization. As good
an idea as it seems to reuse old material and learn from the mistakes
of others, it is your mistakes that will count. Just because the GSA
failed at rolling out COTS Siebel across the its three services does
not mean that you will fail at deploying a Siebel solution in your
organization. In other words, don’t disregard any potential
solution. Make sure you have a viable requirements and selection process,
and then let the selection process and requirements make the decision
for you. GOTS Solutions
Several examples of situations in which you should consider GOTS
or an in-house solution are outlined below.
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Unique business need.
You maintain buildings and need a facilities management system,
but the buildings you maintain are super complex buildings that
are funded with purple money and shared by four military services.
And, you need to track spending down to the light bulb level.
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COTS overkill. The
COTS solution does what you need, but is tied to something you
don’t need, and is very expensive. In an effort to capture
market share, COTS vendors continue to add bells and whistles
to application modules and sometimes make one module a requirement
for another. Very often this added “functionality”
has only marginal impact to the core business function and is
used to justify high tailing maintenance fees (20 percent of
the total price on average).
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Complex interfaces.
By the time you figure out how to pull data from the system
to feed your enterprise data warehouse you could have coded
it four times over. Many COTS vendors shield their databases
from prying eyes in an effort to keep buyers from “tweaking”
the system. In some cases this means limited access to your
data and reliance on the vendor’s professional services
to build interfaces to your legacy systems. Interfaces make
up 30 percent of the total cost of COTS implementations.
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Usability. The federal
government has one of the most diverse IT application user populations.
Users range from neophytes to super users, and platforms range
from DOS to client/server to web-based systems. Make sure that
your user population can adapt to the new user interface. If
they don’t use the system, you will fail.
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Vendor hostage. Remember
when you sign up to use a COTS application you are signing a
long-term contract. Generally, a COTS application is a minimum
three-year ROI and a five-year system lifecycle.
COTS and MOTS Solutions
On the other hand, there are several circumstances in which it is
most beneficial to consider the using
COTS and MOTS solutions.
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Acquisition speed.
Many new US Codes and FAR regulations have greatly streamlined
the procedures and costs for acquiring COTS software. In addition,
many CIO organizations have added processes that add cost and
time to in-house efforts.
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Cost sharing. If the
capability exists to leverage an investment that someone else
has made—and it truly works for your business need—COTS
or MOTS may be a good solution. For example, if you run the
facilities management branch and the logistics division moved
everything over to SAP, you may want to explore whether SAP
has a facilities management module that can meet your needs.
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Process reengineering and streamlining.
COTS products often force organizations to change they way they
do business. Some organizations have difficulty implementing
much needed change. If best practices really are built into
a COTS system—and you will need to do the due diligence
to determine if they are—a COTS system is one way to shake
things up.
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Consolidation and standardization.
Any time you can simplify your IT infrastructure you create
the opportunity to reduce cost. COTS solutions often allow for
system simplification. Beware, however, of unintentionally redeploying
that cost to the COTS vendor.
Of course, these are only a few examples of situations in which
COTS, GOTS, and MOTS choices make sense; the lists are far from exhaustive.
However, they should provide a good starting point for IT managers
getting ready to launch their next IT project.
Additional Information
For more information on how Pivotal Insight can help with IT solution
selection, visit our website at www.pivotal-insight.com,
call us at 703-914-2760, or send an e-mail to inquires@pivotal-insight.com. |
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