I’ve been managing IT for almost thirty years across a number of sectors, with the last sixteen dedicated to social housing. Throughout this time, whether it was the head of IT for an oil company or the time I spent at a worldwide telecom’s provider, there are some lessons and rules that I have learned that should be, indeed need to be applied to the deployment and management of technology. One specific area where I feel needs some rules and guidance is procurement.
Sometimes in business you need to look at improving or replacing an IT service or application. This may be due to failures from a supplier in not delivering, sometimes it is due to poor customer service, their technology not keeping up with their competitors or simply that you have an internal policy to review suppliers, systems, services a set time prior to a contract finishing or on a regular set period.
So, what options are open to you and what can you do when you discover you are not getting best value from your technology suppliers? We will cover these below, but it is worth noting that a good procurement cycle starts not with procurement itself but with having all your ducks in a row.
You should of course know your existing estate inside out, and we don’t mean a list of systems, infrastructure, and services in a simple spreadsheet. The following are absolutely essential to be on top of.
TOTAL COST OF OWNERSHIP
Simply put, you need to know how much you are spending as an ongoing concern. I am not just talking about the annual maintenance cost of systems, I am talking about other factors such as specialist support you may occasionally need to write a report, hidden upgrade costs, training, customisation/changes needed due to legislation or regulatory change, and so on.
You NEED to know this. It’s always worth doing it properly as it is the main driver in being able to calculate true VFM.
The reason this is so important is that it will provide a benchmark for costs you will receive from bidders, but also allow you to set expectations and budgets.
See the article link below to give you some pointers
Next up is your Applications strategy. Have a plan, know what you need and know what you want. It highlights how to align your systems strategy to your business plan, developing future state roadmaps and how to get the best from your technology. You will base a considerable amount of your procurement decisions based on this.
See article link below to give you some pointers
You may think you know everything, but I have seen on quite a few occasions the situation where when asked questions such as: How many licenses do you have? Is there a data map? Do you have a data strategy? Is there somewhere we can see when all your contracts end?, the answer to these being a look of bewilderment, or simply ‘No, we don’t have that’.
Know your onions! Ensure you have the knowledge and the procurement (if indeed you need to procure) will flow a lot easier.
TO THE PROCUREMENT THEN – OUR 3 GOLDEN RULES YOU NEED TO LOOK AT
With the above all in place you can safely start looking at your procurement. I have set out some rules of procurement that we believe all should follow.
DON’T JUMP IN
Whatever you don’t assume that sprinting to the procurement stage is the only way forward. We suggest that you regroup and rethink your strategy. It’s worth taking stock.
A successful procurement exercise should include the following:
- Asking/checking if what you are seeking addresses the business strategy/plans and approach to customer service.
- Does it address the cultural ambitions of the organisation?
- Carry out a full options appraisal
- Carry out an assessment of your data
- Specification of and reviewing new technology (re-thinking your approach – perhaps one example is cloud and SaaS against on-premise)
- set target costs and service levels, is it within a budget cycle, 5 year spending plan.
- a pre-procurement exercise to scan procurement options e.g. frameworks or direct
- Carry out a risk v reward exercise.
Now you can see why it is important to do these early checks/actions. If you don’t you may just get into a bit of trouble. Some we work with have procured systems and need help because they have not done some of the above.
It’s worthwhile checking you have done all you can to prepare before procuring.
More often than not procurement is rushed through because existing contracts are coming to an end or at a renewal point. We have seen landlords panic as the contract has expired and is now running monthly without anyone realising. Our golden rule of thumb is that you should be considering a re-procurement exercise a minimum of twelve months before the deadline to allow for proper planning. The timing of your management and procurement route is crucial. It can also be costly.
There is always room for genuine commercial innovation in contracts. If you don’t ask you don’t get. Suppliers will not mention the ability to negotiate on cost. Why would they? It’s just the same in your personal life. Your Satellite TV company won’t tell you the latest deals until you have phoned and threaten to leave. There isn’t a Martin Lewis for social housing, but it is rather straight forward……just ask.
Although there are rules, or to put it another way, activities you really should do in procurement, it is just as important to prepare well before you actually need to procure. As we said above, having your ducks in a row is just as important as the actual procurement itself. With the preparation in place and the prerequisites carried out, your procurement will carry less risk, very likely result in a better selection, cost less and at the same time align better to your business culture and strategy.