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Driving value in ICT procurement

Capital Letter

Paul Ellis

3 June 2014


A recurring theme for governments around the world over the last 20 years has been the failure of ICT projects to deliver anticipated benefits. These failures are often pinned on unsuitable procurement decisions and the subsequent mismanagement of contracts and vendors. As a result, successive governments have sought to reform their policy on ICT contracts.

In the UK, a policy now sets a cap of £100 million on government ICT contracts and prevents the automatic renewal of existing deals. But will this really make much difference? International research by PA Consulting Group suggests governments can get better value from their ICT dollars by addressing four key issues.

Recognise and accept the risk of integration

Over the last 20 years, many government organisations have outsourced integration projects to the private sector. In turn, the market has consolidated around a small number of global players. What has often been overlooked is that residual integration risk remains – and governments face the consequences of failure alone. To address this, governments must recognise, and embrace, their rightful role as solution integrators.
At GITEX this year, the UK government minister for IT strategy promoted the use of small and medium sized enterprises to develop government IT solutions. For this strategy to succeed, the buying community must upskill around technical integration, support and maintenance, and programme management. These aspects were often surrendered during the years of large consolidated contracts.

Establish an appropriate relationship with ICT suppliers

To drive value, buying organisations need the right working relationship with suppliers. There is a view that contract managers should not treat their IT suppliers as their friends, but it is equally true that delivery happens as much through relationships and behaviours as it does through plans and contracts. Getting the balance right is key. Buyers must therefore be prepared to monitor and challenge suppliers to achieve value and not be timid about applying remedies within a contract.

Improve skills and enhance capability

Governments have recognised the need to have the right skills, but still tend to focus on securing good negotiators. In fact, what they really need is people who can make effective judgments across the procurement and project implementation lifecycle – and integrate at all levels to ensure that the commercial and business models align with technical solutions and service management arrangements.

Be more flexible

Many government procurement exercises focus on compliance with the rules at the expense of delivering sustainable benefits. A more flexible approach, focused on solution and business gain rather than cost, would deliver greater sustainable value. For example, when the UK government set out requirements for a new passport provider, considerable effort was invested in understanding the market dynamics and the technical issues of changing supplier. As a result, the change of passport provider went smoothly and delivered a 20% cost saving.  

The research shows that these four steps can lead to considerable improvements in ICT contract performance. While it has been easy to blame suppliers for the failures of the past, buyers should take control to avoid
the failures of the future.

Paul Ellis is an IT programme delivery expert at PA Consulting Group.


To find out more about how PA's government and public services practice can help your organisation, contact us now.

   
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