What I Learned... From My Last Major Capex Decision

David Fletcher, CTO, State of Utah | 7/10/2013 | 12 comments

David Fletcher
In my previous post, What I Was Thinking... During My Last Major Capex Decision, I shared some of my thoughts leading up to a large capital purchase. We needed to strengthen our network architecture, which required the purchase of some new load balancing and switching equipment. Here are some lessons I took away from this and other projects:

Measure your performance in multiple ways to insure substantial justification for your purchase. That justification may have to be provided to customers, management, auditors, and in our case, even the state legislature. Each of these stakeholders may require a different level of justification so being able to measure performance and forecast improvement is a necessary first step.

Consider long-term repercussions. Making the wrong choice can have lengthy repercussions. Selecting a particular solution may have implications for other parts of your technical architecture. I have always wanted to maintain an open architecture when possible. Going with a proprietary solution may sound great when it is presented by a solutions provider, but it is not always in your long-term interest, especially at a time when technology is changing rapidly.

Manage expectations. Don't tell your customers in advance that the proposed solution is going to solve all their problems. I have learned that you usually come out ahead if you build expectations slowly and then over-deliver.

Make sure you involve the right people. Most large capital expenditures have the potential to affect many parts of the organization. A new network solution will affect hosting, system administrators, developers, network planners, and others you might not be able to predict ahead of time. I learned in this case and others that it is almost always to your advantage to let everyone know of your plans early and give them an opportunity to provide feedback. You'll almost always end up with a better solution. Five or ten years ago, we might have done this in a weekly planning meeting. Today, you might pull them together in a Google Hangout or videoconference.

Balance your plans against other priorities. If you have a solid portfolio management process, you will discover and manage priorities in advance rather than regularly being put in a reactive mode.

Make sure you understand the market. In this particular case, implementation of the solution took longer than we anticipated. Shortly after we purchased the equipment, the organization underwent some major structural changes, which affected the ability to fully implement the new technology. If we had purchased a technology that was later in its lifecycle, it might have been obsolete by the time it was fully configured.

Make sure you are able to allocate the right resources. Sometimes your organization may not be ready to implement your plans on the timeframe you have developed. You may need to provide some training as part of the implementation process or bring in additional external resources to get it done.

Understand the technology life cycle. If you make a capital expenditure with the intent that it's going to be in place for five years, don't buy something that's going to be obsolete in three. Do a little extra research about the solution you are buying and make sure that you're not just getting a good deal on the purchase because it's reaching end-of-life. Technology should be used to help provide your business or agency with a strategic advantage and you can't do that if you're always behind.

There's a lot to juggle, of course, and what is worse is that these lessons are often interconnected. If you don't involve the right people in your planning, you're likely to misunderstand the market or the technology life cycle. If you don't measure your performance correctly, you're going to be unable to manage expectations with stakeholders. You have to do it all to make sure everything is aligned and pushing the project to a proper finish.

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Kerstin Carson   What I Learned... From My Last Major Capex Decision   8/1/2013 12:54:08 AM
Re: What I Learned....
This article packs in a lot of information. The first lesson on measuring performance for various stakeholders is an important one. It shows that the organization performing the capex decision is wiling to take the time to communicate effectively (by measuring in multiple ways so everyone gets it) instead of assuming that everyone will understand performance from one general perspective.

And the stakeholders involved may very well be able to understand a more general performance measurement. But that your group, David, is willing to adjust the lens so different stakeholders can get a better view of what your doing is a smart investment of time and energy.
singlemud   What I Learned... From My Last Major Capex Decision   7/29/2013 12:44:40 PM
very good post
Thanks David, It helps a lot for planning large deployment.
SunitaT   What I Learned... From My Last Major Capex Decision   7/29/2013 5:23:04 AM
Re : What I Learned... From My Last Major Capex Decision
During taking major capex decision, this is very important to have the right vision. Before doing any purchase this is also vital to collect and analyze data. After the Action Plan has been implemented to solve a problem, management must evaluate its effectiveness. Evaluation standards must be determined, feedback channels developed, and monitoring performed.
Marif   What I Learned... From My Last Major Capex Decision   7/11/2013 11:29:12 AM
Re: Your Team is key in Everything you Do.
@hospice: you are right, sometimes the performance of an individual does matter specially when you are at the top of the hierarchy. As any division at the top is the target for the subordinates. And if the decisions are good at the top, even if it is made by a single person, it it's a success for the whole team.
eethtworkz   What I Learned... From My Last Major Capex Decision   7/11/2013 7:48:25 AM
Re: Your Team is key in Everything you Do.
Houngbo,

I don't disagree with that in some rare cases(and especially with Start-ups) but for relatively mature Businesses you need a Team to make things happen.

In the abscence of this spirit of Team work nothing happens here.

Absolutely nothing.
shehan   What I Learned... From My Last Major Capex Decision   7/11/2013 2:24:05 AM
Re: Your Team is key in Everything you Do.
While reading this article, I was thinking about the "risk" aspect. How effectively you managed to mitigate risk during these huge capex projects.
shehan   What I Learned... From My Last Major Capex Decision   7/11/2013 2:22:11 AM
Re: Your Team is key in Everything you Do.
@shamika I agree with you. It is an interesting area where it gives you more exposure in many areas, how to manage resources, meeting deadlines and working with different people.
shehan   What I Learned... From My Last Major Capex Decision   7/11/2013 2:20:29 AM
Re: Your Team is key in Everything you Do.
Yes. Most of the times it team work. When it comes to team work, their duties should be properly allocated. At the same time it is also important of meeting these deadlines has to be communicated properly.
Shamika   What I Learned... From My Last Major Capex Decision   7/11/2013 2:16:24 AM
Re: Your Team is key in Everything you Do.
Overall this is a very interesting article too as this is more relevant to what we do at office. It all about working with different stakeholders, managing you resources and making your objective accomplished which added value to both organization and employees.
Shamika   What I Learned... From My Last Major Capex Decision   7/11/2013 2:16:05 AM
Re: Your Team is key in Everything you Do.
"Make sure you are able to allocate the right resources"

This is more critical to be success in a project. When we do changes in to our core banking system, we always take the expertise and the training from the vendor make sure we obtaining what exactly we require.
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