In the private sector, e-procurement has been on the table well before the Internet became accessible.
I will focus only on ICT procurement: from computers to consulting, to any associated services and infrastructure.
Over the last 20 years, I saw repeated attempts at reducing the costs involved in procurement.
If we look just at technology and ICT procurement since early 1990s, some technologies that weren’t even available on the market are now part of everyday activities.
To keep abreast with technological innovation, there are only two reliable ways: either you use it, or you have somebody around you using it.
In the private sector, it is quite common to have a set of consultants involved in preparing the appropriate feasibility studies, so that suppliers for the delivery can be provided stricter requirements.
The private sector has a distinctive advantage: each organization can focus its procurement on a limited set of activities.
Government procurement has a sensible disadvantage: it needs to cater for an extensive set of needs.
There would be a logic in concentrating procurement in a single organization: efficiency, and the ability to influence product evolution, but the price would be disrupting the market.
Concentrating procurement would affect the market, as a limited number of suppliers would be awarded a de-facto dominant position.
An alternative option could be to use the sizeable procurement needs of government entities to keep the market open to innovation.
This would obviously require a leaner approach to procurement, and a more detailed definition of requirements for products and services.
Moreover, the key focus of procurement should be on vendor-independent provisioning.
As an example, in software, asking the software supplier to include also the training and a “compatibility” clause, to ensure that a switch is possible.
The complexity would be obviously moved upstream, on the selection phase.
A centralized government entity could be used to constantly monitor the technological and market evolutions, and inform each procurement entity within the government.
The overall cost? Setting up the organization to collect and share information, and defining the appropriate measures to motivate potential suppliers to provide the information.
The interesting part could be evolving this organization, as a non-profit, into a market-level information exchange, allowing also SMEs to access information on new technologies and trends, to enable them to do informed decisions without additional costs.
This further step would increase also the chance that a new technology or service is tested on the ground in a real-world environment, by companies that have an even shorter decision-making cycle.
An “innovation trial” credit could be a further help to SMEs in acting as an informed (by the organization) guinea pig, applying new technologies in their own activities, receiving further support during the “innovation trial”, in exchange for sharing back the lessons learned.
This approach would increase the usefulness of a vendor-independent, government-sponsored, market-based information exchange.
Most governmental organizations created in the past to play this role unfortunately faced three risks:
- becoming large enough to need to self-sustain, turning into a market player (consulting, certifications, audits, etc.)
- becoming too distant from the application of their advice, and therefore often subject to the interested advice from potential suppliers or “independent” research centres (usually financed by the industry)
- becoming so bureaucratic that, also when incentives were provided to SMEs to use their advice or services, they were really used mainly to access cheaper credit or other forms of support, than as a partner in innovation
A key issue would be sizing the organization: large enough to act as an “information exchange”, but using mainly competing industry sources to keep being informed on innovation.
The “innovation trial” activities with SMEs and other entities would be a way to keep its own staff able to deliver advice, and avoid growing a bureaucracy.
As for the government entities using their advice, they could benefit by an increasing collection of case studies- and this is the other technological issue.
If you need to procure, say, a new database system, you need to identify the needs and the means to satisfy the needs.
I have been doing business analysis from late 1980s, and, frankly, I always considered critical not to re-use what I already delivered to somebody else, but to listen and help the customer understand how to express their needs.
If you separate the “express your needs” phase from the “identify the means”, then the aggregated expertise from all the monitoring, application, case studies, and so on could be converted into an information repository.
As soon as they have identified their basic needs, the government entities could use this information to retrieve from the repository information, with the associated links to the appropriate people, and identify how to involve them into preparing whatever document they would consider needed to select the right suppliers.
The alternative? If the needs are too complex, and the expertise to prepare a call is not available inside the organization, eventually some potential suppliers will “help” in structuring the information.
Due to the lack of expertise from the requiring organization, also in the best case the potential supplier will be providing advice that would mirror his/her experience, de facto enhancing the chance that his/her organization will be selected.
And a formal barrier (i.e. whoever supplied information is automatically ruled out from becoming a supplier in the implementation phase) is irrelevant, as anyway the advice provided would “constrain” any suppliers within a framework that is not really linked to the needs, but to the needs as understood by the advisor.
Often, when an organization (governmental or private) asks for help while preparing the procurement documentation, it cannot justify paying the advisor, and therefore the advice is given informally by an existing supplier, as a “goodwill” toward future activities- not really a transparent process.
A transparent procurement process would probably be apparently more expensive than the usual all-knowing approach, but it would certainly allow to produce informed decisions within the organization, and to increase the efficacy and efficiency of the procurement activities.
Tags: 2.0, consulting, credit, exchange, government, ict, information, infrastructure, innovation, procurement, public, repository, sme