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Procuring a better procurement process

01 Jul 09

The government ICT procurement process is broken and is about to undergo some serious fixing.

Activity over recent months indicates that procurement is in the spotlight for this government as it focuses on  the quality of expenditure. The discussions taking place suggest changes to make the process more transparent  and efficient, and to encourage wider involvement from ICT industry participants of all sizes.

The procurement process is delivering sub-optimal results to everyone: public sector agencies, the ICT supply  community, and ultimately taxpayers. Problems include elongated processes, high cost of sale alike for  agencies (in procurement preparation, process and evaluation) and vendors (in complying with unwieldy documents and processes).

What is pleasing is that there is widespread momentum around the need for a new approach. Recent work by  government has identified the problems and potential solutions. NZICT’s members representing software,  hardware, services, solutions, networks, education and training supplyside providers, are stepping up to proactively help drive change. We have accepted some responsibility for today’s situation and for getting involved with finding solutions. The engagement between our Procurement Sub-committee with the respective  agencies charged with addressing changes in procurement has been encouraging.

We need to take advantage of opportunities to drive more efficient public sector use of ICT in areas like  shared services and consolidated data processing. The US and Japanese governments have both signalled their  move towards cloud computing to improve state sector efficiency and stimulate industry development. The  New Zealand Government’s Broadband Infrastructure Investment plan will also help drive these opportunities with high-speed, cost-effective bandwidth. Getting the procurement process right to facilitate this is important.

The State Services Commission’s 2008 ICT survey indicates that state sector expenditure on ICT in the year to  June 30th 2008 was $1.94 billion.

Of concern was that responding chief information officers “typically perceived that they spent a relatively high  proportion of total ICT expenditure (median 79%) on keeping the business running as opposed to transforming  it (providing new and improved services)”.

What was also of interest was to see agencies independently investing in the same types of capital projects, but  just 22% of organisations were confi dent when undertaking a procurement exercise that they knew which other  organisations were undertaking similar exercises.

Nevertheless, some very good public sector solutions  have been developed in recent years. Unfortunately many agencies have been shy about publicising these successes, and in any way being seen to be endorsing ICT suppliers – when that very endorsement could  provide critical support to their ongoing expansion, within New Zealand and internationally. The Investment  New Zealand program called Government Applications Centre of Excellence is intended to unlock some of the value of applications developed for government, with commercial partners. The initial responses have been encouraging.

Current procurement problems are highlighted in the Azimuth review of the Government Electronic Tenders  Service (GETS) conducted for the Ministry of Economic Development. It is a very comprehensive view of the challenges being faced by the GETS community of 35,000 users.

The Azimuth report proposes an exciting “interim vision” for a “Next Generation GETS” that will potentially  provide sellers and buyers with a number of features:

? an electronic marketplace supporting buyer-buyer, buyerseller and seller-seller interaction;
? job aids, workfl ow support and other efficiency tools, and content in the form of guidelines and standard templates;
? an all-round tendering service comprising access to expert advisors via the website, email and telephone,  and an online e-business presence;
? a future-proofed service that can accommodate change and strategic moves to improve procurement outcomes.

Interested parties are invited by NZICT to get involved to help improve the procurement process.

Postscript: Hon. Simon Power, Minister for Commerce, announced on June 11th a Government Procurement  Reform Agenda based around four key themes: cost savings, building procurement capability and capacity,  enhanced business participation, and improved governance, oversight and accountability.

Brett O’Riley is CEO NZICT Group, representing the supply side of the industry. He is passionate about the opportunity for ICT to transform New Zealand, while acknowledging the scale of many of the challenges to  be addressed, and the need for a cohesive pan-industry approach.
+64 210 270 9021

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