Public authorities and suppliers need to create new commercial models for the procurement of digital services, writes Nick Roberts, head of government and public sector at Rackspace Technology
One of the features of the public sector response to the Covid-19 pandemic was the way that digital and procurement teams worked together to fast track the buying of technology to support new services.
But there is now a growing sense that they did not always get the best possible value from the process, and that it has highlighted the divergence between the direction of the tech industry in selling its services, especially those on the cloud, and the way procurement is structured and managed in public sector bodies.
This is calling for new ideas on how to approach procurements of digital, data and technology (DDaT).
This provided the subject of a recent UKA Live discussion involving myself, Bobby Mulheir of Bracknell Forest Borough Council, Owen Powell of the Central and North West London NHS Foundation Trust, Geoff Connell of Norfolk County Council, Joseph Langford of VMware and Helen Olsen Bedford of UKAuthority.
It threw a spotlight on a number of problems, including the now familiar issue of how the traditional division of capital and operational expenditure does not fit well with the move towards the fluctuating costs of the cloud ‘as a service’ model. While the latter would fit more naturally into opex, those are the budgets more likely to be squeezed, and there is a pressing need to find ways of capitalising the spend.
It is not an impossible task. Mulheir said in the discussion that Bracknell Forest was able to make a reasonably accurate estimate of costs before a migration to an Azure platform, and Connell said that chief financial officers will often work around their preference for capex spending when they can see a significant cost advantage in opex. But it is an ongoing challenge for which organisations have to find their own solutions.
Another issue has arisen with the feeling that, despite its advantages in streamlining procurement, the G-Cloud framework has its limitations. The discussion included points that it has become very large, its search function is not good for finding products similar to those already used, and that buying organisations may have to refresh products late in the lifecycle of a framework, when they will not necessarily get the best new technology offers.
It is difficult for suppliers to find places for new elements of their portfolios within G-Cloud, and this limits the chances of buyers keeping up with new innovations. There was an agreement in the discussion that the framework needs to become more agile to meet the needs of the sector.
The number of procurement frameworks, with the Crown Commercial Service offering several within G-Cloud and other bodies in local government, the NHS and policing offering their own channels, also has a downside. It can be difficult to get a clear sight of what is on offer from which one and time consuming to investigate all, and feeds into a case for a rationalisation of the number available. This would require a centralised drive for change of which there is currently no sign.
In addition, there have been concerns about some cloud vendors selling traditional hosted services as software-as-as-service, and the continuing muscle of monopoly suppliers – traditionally for niche software – who are difficult to replace but may not offer value for money.
There are a number of ideas on how to deal with the issues, including talk of finding ways of capitalising elements of spending that have previously been operational. A leasing deal for cloud services could be one approach, although this requires a degree of predictability about the level of usage that could be hard to assess.
Another is to increase the emphasis on the desired outcomes, rather than a strict specification on the product or service required, when going to market. This could provide more flexibility in the budgeting process and allow more scope for innovation from suppliers.
There is also a case for greater use of partnership arrangements with key suppliers, focused on the desired outcomes and in which individual procurements are made as needed. Again, this enables the buying products and services as the need is identified and provides the scope for innovation to meet the outcomes.
Another possibility, used by some private sector organisations, is to go to market asking potential suppliers for a quote aligned to how the organisation is currently handling the specified processes, but also suggestions on how they could take a different approach to produce better results.
There is also a widely held belief that public authorities could benefit from a lot more sharing of their experiences in procuring digital services. There is a case for a private forum, likened to a Tripadvisor for public sector DDaT, in which they compare the performance of suppliers, exchange information on the prices they have paid and talk about the outcomes they have achieved. It would provide a chance for all to learn about the wider context in which they are buying products and services.
Underlying all this is the fact that procurement is not just about money but best practice, that value for money is intrinsically linked to getting the best solution for a desired outcome. The best suppliers acknowledge this in providing advice to buyers that can extend to the most appropriate forms of procurement, which is increasingly important with the diversity of cloud services on offer.
The public sector has to respond and bring its own ideas on what will work, especially with the increasing emphasis on sustainability and social value in its procurement. This is all going to take plenty of work and time, but there is enough positive thinking to suggest the two sides will be able to develop better commercial models for the market in digital.
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