Insider Tips on Buying a SCADA System

Organizing the Process

One of the most important and difficult decisions is often the very first decision: do you upgrade with internal resources or hire an outside consultant?

Some of the arguments for each side in this debate are obvious. You know what you want better than anyone, but a consultant may have more experience in the actual process of acquiring a SCADA system.

There's a lot to be said in favor of both approaches. Neither is an inherently good or bad approach. We summarize below the key issues and how they affect both of these approaches.

Have a Clear Purchasing and Evaluation Plan

Whether you go it alone or hire a consultant, a clear purchasing and evaluation plan needs to be in place.

Consultants are usually technically proficient but can be organizationally challenged. They might know all the latest buzzwords and jargon. But their last actual involvement in the procurement process may be dated. If a consultant does not bring to the table a clear procurement process based on recent experience, his or her excellent technical abilities might serve only to waste time and frustrate the project team.

Make sure your consultant has a documented plan for identifying your needs, for documenting those needs, and for identifying the best vendors to approach for proposals and/or bids. Whether you hire a consultant or do this yourself, the purchasing and evaluation plan needs to include a time line for at least the following major tasks:

• Requirements development
• Procurement process
• Bidder selection process
• Bidder evaluation process
• Vendor award process
• Configuration
• Factory acceptance test
• Start-up

The plan should also indicate what percentage of each stage will be performed in-house and what percentage will be performed by the consultant, vendors, or others.

This is your road map. As the philosopher once said, if you don't know where you're going, how will you know when you've arrived?

Politics and Lines of Authority

One ineffective technique is to appoint a project team to oversee the upgrade process and give everyone on the team equal authority. This is a recipe for inaction, schedule delays, and, eventually, cost overruns.

Actually, we believe in having a project team that participates in the upgrade process from the very beginning stages. This team should include all of the major stakeholders in the SCADA system, including field engineers, technicians, analysts, operations personnel, IT people, and management.

Certainly, the field and operations people will not take kindly to a system that management imposes on them. So for political reasons, it is important to make sure that their experience, needs, knowledge, and points of view are represented from the beginning. Besides being good politics, the field and operations people are likely to add the most value to the project; they know in detail what will and won't work in daily practice.

By the same token, it doesn't make sense to turn the entire process over to the technical staff. If everyone does not keep a sharp eye on bottom-line goals - regardless of the technical issues involved - then the process will not succeed.

Once you have a project team, make sure that a single person is in charge. That person must have the authority to make decisions and to ensure that the system meets both the company's technical and business goals - especially the company's business goals. When one person has his or her reputation on the line, the project succeeds.

The same goes for a consultant. If you hire one and then ignore his advice or undercut all his proposals, what good is he? The consultant must report to someone high enough up the management chain to ensure that the consultant's proposals can be objectively evaluated.

An Alternative Approach

Before we leave this first stage of the process, I'd like to discuss an alternative approach to the usual way of acquiring a SCADA system.

The usual approach is to do things by the numbers. In other words, develop a specification that reflects what you've got now or that reflects what you want. Make that specification so detailed that it leaves nothing to the imagination. Then send the specification to a number of vendors. Then evaluate the vendors' responses by the numbers: The vendor with the fewest exceptions and/or lowest bid wins.

However, the specification on which those bids are based is usually written to ensure a reasonably broad number of competitive bids. That means each vendor might have the best technology and lowest price in one area but not in most areas that you ask them to bid on. The winner isn't necessarily the best match, but rather the least objectionable match.

We have been impressed by an alternative approach that we have witnessed among some SCADA users. We didn't invent this approach, but we are impressed by the successes that the approach has generated. It goes something like this.

You appoint a project team much as we outlined previously. But rather than starting by identifying your company's needs and then writing a specification, this team goes on a fact-finding tour. They use vendors, trade shows, other companies in their industry, and other sources to educate themselves. They learn about the latest technology and SCADA procedures that have become available since the last time they bought a SCADA system.

The concept here is simple: What you can do is limited by what you think is possible.

One organization spent two years researching the latest technology and potential vendors. They visited numerous vendor corporate offices and customer sites. Basically, they used vendors as free instructors.

This organization realized that they needed to find out what was technically possible in a replacement SCADA system. They didn't want to miss any opportunities. One of the things they discovered is that they didn't need to replace all their equipment just to upgrade to the latest, cutting-edge SCADA technology. They didn't know that before they embarked on their educational efforts. Finding that out before they wrote their specification saved them a large amount of money.

In the end, this organization says that they not only got the lowest bid, they also got the best match in a vendor.

If you don't know all that is technically possible to accomplish in a new SCADA system, then you are likely to miss opportunities that would otherwise put you at a competitive advantage.

Once you have determined what is possible, you can write a specification that realistically ties your needs to available technology. That way you successfully avoid pie-in-the-sky requirements that are either technically impossible or impossibly expensive. You also avoid writing a specification that puts you no further ahead competitively than you are now - or were ten years ago when you originally bought the system.

However, even with all that education, you may still end up with a winning vendor whose bid is the best compromise, not the best match for your needs. Here's how some companies avoid that pitfall.

Some companies decide not to engage in the traditional specification and vendor selection process, as we know it. Instead of writing a spec, soliciting bids, and choosing the lowest bidder, they look for a SCADA system partner. These potential partners are, most likely, the same vendors that would appear on a bid list. But instead of evaluating them by the numbers, you evaluate them by more subjective criteria: their depth of experience, the judgment of their other customers, their experience with the challenges you face, their ability to communicate with you, their technology, and their general estimate of what it might cost them to develop a system for you.

Once you choose such a partner, you work with them to develop a detailed specification that not only meets your needs but also takes full advantage of their resources. The more you and your partner know about each other, the more opportunities you see for each other.

At first glance, you might think that this approach would be more expensive than the traditional approach because it eliminates some of the competitive aspects of the process. However, in practice, the companies that we know who have used this approach actually saved money. Typically, the actual expenses came in at less than the company's original budget. Why? Because both sides worked to maximize each other's strengths. That is not necessarily the case in the more traditional, more adversarial vendor/customer relationship that is the hallmark of the traditional bidding process.

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