State CIOs want to maintain the cost and quality of services: How procurement can help
State CIOs have made it clear that they are as focused on strict fiscal management this year as they are on aggressive IT modernization. One can assume that there is a direct correlation: States don’t have unlimited funds to execute these large-scope technology projects, but they don’t have the luxury of delaying their digital transformations either.
There is an immediate need for greater information security and privacy controls. There is also an urgent demand for more advanced digital infrastructure that can facilitate data-centric “business” models across all government functions and support a rapidly-expanding portfolio of online citizen services. As a result, states must stretch their budgets and apply firm cost controls to avoid dipping into rainy day funds. At the same time, CIOs are searching for ways to better manage risks during highly complex IT projects, deliver highly specialized IT services and find more qualified resources to help consolidate and optimize IT systems, as noted in a 2017 NASCIO survey What does this all have to do with public procurement? In my opinion, everything.
It is abundantly clear in NASCIO’s report that technology leaders are challenged to formalize digitalization strategies – and fully deliver on the well-optimized services and systems that stakeholders demand – within their narrow fiscal margins. And though state CIOs have taken it upon themselves to prioritize cost controls, fiscal management is in fact a shared responsibility between IT and procurement. Both sides should be working in concert to develop and implement savings strategies that can help CIOs succeed in their endeavors, despite inadequate funding and budget constraints. And, at the end of the day, procurement should take ownership of spend management – or at least take the lead on informing CIOs about how to maximize spend impact, reduce waste and introduce quality controls. Procurement should also be advising CIOs on how to diversify their sourcing pool, and modernize IT sourcing methods, to reduce the inherent risks of agile and incremental projects. Here’s why:
Government leaders need access to organized purchase data in order to analyze spend and make smarter decisions. It’s tough to assess the return on investment, much less manage future spend or standardize your IT systems if you don’t have visibility into what your agency has bought to-date or how it is currently being used. They also need a collaborative dashboard from which all stakeholders can monitor project status and, if needed, make adjustments to procurement actions to better control spend and quality – especially during agile projects. Procurement is in a unique position to deliver on these requirements and more:
Organization – CIOs expect full visibility into their spend. They can’t afford to take educated guesses; they need exact figures to make well-informed decisions about the scope of projects and track actual performance. That is why procurement’s use of the NIGP Code is so valuable. This purchase classification tool makes it easy to manipulate reports to extract specific spend data in IT categories. CIOs will no longer have to make assumptions or clumsy calculations using generalized spend reports or inaccurate data sets. Procurement can provide around-the-clock access to actionable business intelligence using highly focused IT sector parameters so that CIOs know exactly what is purchased for their projects.
Collaboration – It is going to take a team effort between procurement, finance and IT to meet CIO’s goals. But, if you expect every stakeholder to work seamlessly together, then every system must work seamlessly together. Fortunately, a highly-integrated hybrid” eProcurement-ERP solution can facilitate constant communication and coordination between all parties. It can also provide two-way visibility between your procurement platform and third-party systems so that everyone can access – and react to – the same organized data sets, in the most appropriate format for their business function, in real time.
Control – Procurement doesn’t just provide complete transparency into cost and vendor quality metrics, it provides a complete set of spend management tools. Built-in audit trails help you track actual spend, and monitor vendor performance, throughout the project so that you can immediately flag issues to CIOs. This enables you to adjust contract pricing terms during renewals and sourcing strategies to better manage budget reductions. Procurement can also help CIOs reduce legal, financial and regulatory risk through standardized language and reporting. eProcurement systems, specifically, make it easy to measure compliance, deliverables and performance on contracts and vendors so that CIOs maintain more quality control over their project throughout the contract lifecycle and eliminate activities that lead to wasteful spend.
Diversification – Agencies that use eProcurement technologies not only extend the reach of their solicitations to a broader vendor pool, but they receive 20% more responses – including more from small, minority, and woman-owned businesses that may have the specialized expertise and resources that CIOs require. In other words, procurement’s efforts to expand supplier networks and increase competition will not only provide access to the specialized resources that CIOs are seeking, but they can translate into more competition and, therefore, greater cost savings during bidding and negotiation processes.
Value – The whole purpose of public procurement is to maximize the value of government spend. Our job is to identify ways to lower the risk of lost revenue; eliminate inaccuracies in the sourcing and contract execution process to save money; and ensure that customers receive a quick ROI for their projects. That should be a relief for CIOs who are concerned about fiscal management. Even more, procurement can help CIOs pinpoint ways to maximize resources so that they can better manage evolving project demands – and reduce or avoid unexpected costs – throughout the entire contract lifecycle for each vendor.
Just keep in mind that procurement cannot play an effective role in helping CIOs meet these mutual cost and quality control goals if it is not equipped with the right technology tools. Cloud-based technologies are a top three priority for CIOs, but they must be the number one technology priority for public procurement this year. Cloud-based eProcurement platforms provide the framework necessary to implement better risk management and fiscal management strategies, as I noted above. They make both your job – and your CIO’s job – much easier. And, they ensure that your entire agency receives a greater ROI for all spend, whether it’s a back-office ERP system, consolidated data center or new digital citizen service.
To learn more about how the NIGP Code and eProcurement technologies can directly support your fiscal management efforts, visit www.nigpcode.com or www.periscopeholdings.com.