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6 Reasons Why IT Procurement Requires an Investment in New Procurement Technology

Austin, TX
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Buyer New Tech

By Brian Utley, President and CEO Periscope Holdings

"We cannot continue to solve IT issues with old technology solutions."

This quote, featured in a recent NASCIO-NASPO report, takes aim at the very issue slowing government procurement reform at a time when buyers are being asked to help expedite their customers’ technological advancement. As many state CPOs and CIOs have made clear, the length of traditional “waterfall” procurement processes, along with ineffective technology systems, are quickly becoming a hindrance to more advanced IT procurements. It is impossible to rev up the modernization engine if you are restricted by rigid sourcing strategies. It is also unreasonable to expect time and cost savings using agile procurement if you don’t have the tools to facilitate fast and incremental procurements. For example, those using an ERP procurement module alone lack the flexibility to quickly adjust processes in accordance with new sourcing models – such as agile.

That doesn’t mean that public sector procurement officials should abandon the ERP or other enterprise IT standards. In fact, the NASCIO-NASPO committee noted that “having both enterprise architecture driven and centralized IT procurement reduces confusion and chaos.”  In other words, state IT buyers just need to make a concerted effort to embrace hybrid eProcurement-ERP solutions if they really want to achieve a sustainable agile procurement model. 

Here Are Six Reasons Why:

1. Conformation

To effectively transform procurement within agile’s new rules of engagement, you need a procurement technology system that can conform to the new operating model without requiring a long, expensive “waterfall” project to enact necessary technology changes. Look for web-enabled eProcurement technologies that are hardware and software agnostic. They will be able to directly interface with the ERP and other business systems to power easy process re-engineering across all functions involved in IT procurements. Plus, the best eProcurement platforms can be deployed and configured very quickly within the framework of your existing enterprise architecture.

2. Collaboration

As we like to say at Periscope Holdings, “procurement is a team effort that requires constant communication and coordination between you, finance, and your customers. When everyone – and every system – works seamlessly together, success comes easy.” That’s why our eProcurement technology platforms are designed to facilitate a collaborative procure-to-pay experience between multiple functions. Regardless of “who owns IT procurement,” all invested agency parties gain the same access to sourcing, spend and contract-related data, including finance, project managers and IT. This makes it easier to keep all in-house and outsourced team members in sync, which ultimately enables stakeholders to make smarter decisions about the execution of their collective vision. Look for solutions that provide automatic notifications about sourcing status, contract routing delays or improper spend allocations. This allows for more informed decision making along the way, which is essential in both centralized and agile IT procurements and something that most ERP and homegrown procurement systems don’t consistently support.

3. Compliance

Public sector procurement is perceived to have a lot of red tape. In fact, some states claim that agile projects have been stalled, or even avoided, due to the assumption that rigid regulatory environments will make any procurement changes too complex. What they may not realize is that eProcurement systems boast highly configurable workflows and approval paths that ensure compliance with all public procurement policies – even the ones that will be ever-changing as the legalities of agile procurement and technicalities of centralized IT procurement are better defined. Periscope helps more public sector organizations manage compliance thru optimized procurement than any other procurement provider.  Our customers include the States of Nevada, Oregon, Massachusetts, New Jersey and Illinois.

4. Resource Management

Managing massive volumes of active procurements and incoming requests with very limited personnel resources can be complicated enough. Add in the complexity of agile procurements and every agency will see the need for a more streamlined procurement management solution, such as eProcurement technologies that automate the full procure-to-pay process. Their feature-rich functionality enhances the efficiency and productivity of the contract management process, even in more multifaceted scenarios such as what we’re seeing with constantly evolving agile project requirements. As long as your processes are properly defined, it will be easy to on-board buyers to eProcurement platforms. The straightforward user experience means they’ll spend less time training on technology and more time conducting technology procurements. 

5. Vendor Management and Project Performance

The NASCIO-NASPO committee recommends that state agencies “use centralized IT procurement for better vendor management, metrics and performance—all of which contribute to improved negotiations, streamlined terms and conditions, and cost savings for the state.” 

We agree. However, it is challenging to effectively extract the benefits of a centralized IT procurement model without a single centralized procurement system. That’s where eProcurement technologies shine. They provide the tools needed to conduct “open and fair” procurement actions in a collaborative manner (which we’ve already discussed). They also drive an approximately 20% increase in solicitation responses, especially from Small, Minority, and Women-Owned Businesses. In other words, eProcurement systems lead to increased competition, which maximizes value with higher quality goods and services at lower prices. At the same time, some eProcurement systems can automatically vet vendor qualifications, which minimizes your risk of sourcing from ineligible suppliers.  

6. Quality and Cost Management

Per the NASCIO-NASPO study findings: “Most CPOs and CIOs agree that current procurement processes are effective when it comes to cost-savings and best value.” However, “there is some debate about whether it is leading to the acquisition of the most innovative technology for the state.” That could be the result of what NIGP Commodity Code President Jean Clark referred to as “prescriptive procurement” in another recent Government Technology article. Or, it could just be the common consequence of legacy technology and decades-old sourcing strategies that are incompatible with the constant contract refinements required to achieve new quality and cost management standards.

  The good news is that highly configurable “procure-to-pay” eProcurement solutions enable you to confidently report on procurement status and enhance accountability for all actions along the way. And, while they may not be able to identify technology performance issues (that’s where IT comes in), the built-in audit trails of eProcurement systems enable government agencies to better monitor documented contractor performance issues along with ROI metrics. Therefore, decision makers can quickly determine if adjustments need to be made to solicitation language, contract terms or performance metrics either immediately or in future agile phases to improve outcomes.

In short, eProcurement systems provide a “checks and balances” benefit unmatched by any other procurement technology. Since these modern purchasing platforms sit in the middle of your other business systems, they provide broad visibility into what your organization spends, contract status and terms, and overall project outcomes. Your team is empowered to make better decisions, faster than ever, and for less money. (Isn’t that the whole goal of agile?) Therefore, any government agency striving to adopt more centralized or agile IT procurement models should apply their “innovative spirit” to their own IT investments and implement flexible eProcurement systems conducive to the fast procurement changes we can expect to see in the future. 

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