Procurement in the Big Information Society

It is sad to see the Computer press terminating paper based publications. Meanwhile, as the Internet slows down, clogged with video and music streaming, the influence rich, time poor, appear to be switching off. This poses interesting problems for those who really do wish to communicate messages to decision-takers and budget-holders. I have been asked to make available an easy-to-find on-line version of my article on the Procurement Challenges faced by central government which was published in the penultimate issue of Govenment Computing , so that it can be linked to by those who wish to build on some of the messages via Tweets and Facebook and LinkedIn messages. I cannot find it on-line so I have used the original unedited text – which I assume is my own copyright, because I cannot remember signing anything which gave it away. .   

 


 

Procurement in the Big Information Society   

 

The Coalition Government is seeking to reverse a century of centralising, standardising and controlling service delivery via national silos. But “power is like chewing gum. It has to be torn off”. That is also true of procurement policy. The siren voices say centralisation saves money. Experience says that is rarely true with regard to IT.

 

The reasons given for centralising IT procurement include the variety of prices paid for commodity products and services by the different agencies of central government and the need for inter-operability to achieve savings from merging and sharing operations and re-using what works. The procurement operations of the supermarkets have been used to illustrate the potential savings. But the data in the latest SOCITM IT Trends survey shows that local government already pays less than the main private sector benchmarks (let alone central government catalogues) for commodity ICT products such as desktop PCs. The reasons include voluntary co-operation to achieve economies of scale (while avoiding the overheads of negotiating long term agreements) and using competing procurement services, catalogues and reverse auctions.

 

A further look at supermarket chains and globally competitive players indicates a mix of centralisation, standardisation and local choice but also clear and simple policies, reinforced by common staff training, motivation and career development routines. We also see “lean production” techniques and benchmarking used to strip out overheads in supply chains: monitoring performance, including how prime contractors treat subcontractors, so as to ensure continuity of supply and quality and competitiveness of service.   

 

Meanwhile private sector IT procurement policies are evolving. Central Government has been promoting “framework agreements” to cut the cost of ownership (including maintenance and support) of end-user equipment by 20 – 30%. Some private sector organisations are claiming to save 70% – 80% by scrapping the corporate ownership and support of personal systems. Instead they give staff allowances to buy what they like and use it where they like, provided it will run corporate applications in a java sandbox or equivalent, to give the necessary security.

 

Cabinet Office faces a major challenge in trying to cut costs by centralising procurement across the silos of Whitehall at the same time as getting better value from its existing suppliers and moving towards open standards and re-usable code. It is also trying to get savings by encouraging innovative, “Big Society: small state”, approaches from below.

 

One certainty is that top-down change programmes run out of steam while bottom up. empowerment programmes gather momentum. The EURIM Public Service Delivery Group is seeking to identify examples of good practice that work and can be replicated, linked and scaled. The current review of the EU procurement directives gives a great opportunity to benchmark UK central government performance against its peers in local government, some of which serve populations larger than many of the member states held up as exemplars.

 

Philip Virgo, Secretary General, The Information Society Alliance (EURIM)

 

 

The reasons given for centralising IT procurement include the variety of prices paid for commodity products and services by the different agencies of central government and the need for inter-operability to achieve savings from merging and sharing operations and re-using what works. The procurement operations of the supermarkets have been used to illustrate the potential savings. But the data in the latest SOCITM IT Trends survey shows that local government already pays less than the main private sector benchmarks (let alone central government catalogues) for commodity ICT products such as desktop PCs. The reasons include voluntary co-operation to achieve economies of scale (while avoiding the overheads of negotiating long term agreements) and using competing procurement services, catalogues and reverse auctions.

 

A further look at supermarket chains and globally competitive players indicates a mix of centralisation, standardisation and local choice but also clear and simple policies, reinforced by common staff training, motivation and career development routines. We also see “lean production” techniques and benchmarking used to strip out overheads in supply chains: monitoring performance, including how prime contractors treat subcontractors, so as to ensure continuity of supply and quality and competitiveness of service.   

 

Meanwhile private sector IT procurement policies are evolving. Central Government has been promoting “framework agreements” to cut the cost of ownership (including maintenance and support) of end-user equipment by 20 – 30%. Some private sector organisations are claiming to save 70% – 80% by scrapping the corporate ownership and support of personal systems. Instead they give staff allowances to buy what they like and use it where they like, provided it will run corporate applications in a java sandbox or equivalent, to give the necessary security.

 

Cabinet Office faces a major challenge in trying to cut costs by centralising procurement across the silos of Whitehall at the same time as getting better value from its existing suppliers and moving towards open standards and re-usable code. It is also trying to get savings by encouraging innovative, “Big Society: small state”, approaches from below.

 

One certainty is that top-down change programmes run out of steam while bottom up. empowerment programmes gather momentum. The EURIM Public Service Delivery Group is seeking to identify examples of good practice that work and can be replicated, linked and scaled. The current review of the EU procurement directives gives a great opportunity to benchmark UK central government performance against its peers in local government, some of which serve populations larger than many of the member states held up as exemplars.

 

Philip Virgo, Secretary General, The Information Society Alliance (EURIM)

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