Why Commercial Capability is Absolutely Essential for Procurement Success

How rapid technological change altered the procurement game

The traditional approach to government contracts, procurements, and suppler management no longer apply in the rapidly changing digital world. Whilst these issues are slowly starting to be recognised within Central Government, my experience indicates that Local Government and town halls are still procuring using a traditional non-disaggregated risk adverse approach.  By that I mean that buyers and procurement departments are still creating single sets of procurement requirements for larger scale contracts using an outdated waterfall project delivery approach. This approach misses the opportunity to leverage wider business knowledge and rapidly evolving commercially delivered technology solutions.

Why government is (still!) behind the curve

But why is it that the immediate cost reduction and flexibility that a move toward scaleable, commoditised, cloud based services provides are not being pounced upon for the benefit of citizens?

Through my work inside local government developing new commercial models I have found that Local Government leadership teams find it extremely difficult to move their organisations away from traditional long term service contracts and monolithic technology solutions. There seems to be an endemic risk adverse approach based on a fear of challenge that says that an equal supplier playing field will only be delivered by a single longwinded competitive tendering process.

Pace of change and expert knowledge

Whilst it is true that the availability of the technology to provide digital services is known and well understood within the government technical community, the pace of change (for supporting evidence see ITaaS article) toward a new paradigm of service disaggregation and e-government use is definetley being hampered by a risk adverse procurement approach and a lack of expert knowledge within the internal technology organisation and the wider supporting operational services. This situation is stifling the ability to use innovative solutions to provide many of the emerging requirements demanded by citizens.

My experience working alongside and supporting local government leaders indicates that a lack of up to date skills and wide ranging commercial market experience at the ‘doing’ level, is having a dramatic effect on the ability of these organisations to effectively consider risk and deliver alternative commercial models and the technology it provides.

How to create change

To enable government to procure digital services for citizens, to dramatically reduce costs, and to considerably cut lead times, the supporting services really do need bolstering with greater commercial capabilities, enhanced skills, and private sector experience.

I passionately believe that all of these things can be done because I’ve done it. Its not easy but, the cost savings and the enhanced services provided to citizens are well worth the initial effort.

Taking the first step

The first step is acceptance that that are other ways to do things. That things can improve and that there are other approaches that may not have been tried. Perhaps there is a lack of time to consider potential change, or new commercial models (if that is indeed the case DCC can support you by delivering that experience and saving you large amounts of time)

To use a simple real life example that I have come across many times;

Many procurement decisions do not effectively consider the risks of moving straight to a direct contract award against a competitive process. By doing this I’m not advocating ignoring procurement controls, but rather taking consideration of the way you are procuring, vs the costs of the approach in terms of time and effort, and the delays to realisation of user benefits.

Now consider having the capability to take an immediate decision to place a direct award which is based on the full knowledge of current and potential future market conditions and the available technology, and the potential pricing expectations whilst also ensuring the fundimental prerequsite of equal market opportunity. Its clear that this option is more efficient for many reasons not least benefits will be achieved quicker, its price effective, and it also takes account of all potential risks.

But how do you introduce this approach?

My answer is that you need to develop an effective process of commercial and supplier relationship management. The knowledge that it provides will rapidly; save money, it will save time, and it will deliver the benefits of service disaggregation and cloud based services to citizens within a time scale they will appreciate.

Article Background

 

This short article was orignally published by me in the Daily Telegraph newspaper suppliment during 2014. Its intention was to create an open debate surrounding the potential for local government to secure the massive advantages that service disaggregation and cloud based service provision brings and why local government were not taking full advantage of this rapidly changing external environment. Whilst much water has passed under the bridge since its first publication. This unabridged and updated version indicates that the challenges and solutions were identified then are still as relevant as ever to government and technology procurement. The Full Telegraph Business Technology Supplement is here

David Cox