How the public sector modernizes procurement
- By Vishal Patel
- Feb 22, 2019
The U.S. government in fiscal 2018 spent over $7 trillion. Consider for one moment the impact of this spending on people and businesses across the country and the infrastructure and services they rely upon. On average, anywhere from 30 to 40 percent of this money goes toward purchasing something -- from office supplies and laptops to construction and maintenance services -- all in the name of providing the best public services to citizens.
Now, think about a typical public-sector procurement office. It’s difficult not to imagine paper-filled cubicles and uninterested employees. According to a Governing Institute survey, the tech-fueled procurement revolution has been slow to catch on in most governments. Only 35 percent of respondents, for example, said they have up-to-date spending information and market metrics in their databases even though nearly two-thirds cited such areas as critical to success.
There is a tremendous opportunity for improved spend management, more efficient processes and overall better visibility into supplier relationships in order to maximize return on every taxpayer dollar. I believe 2019 will be the year when procurement across federal, state and local governments will come out of the shadows and shake the stereotype. Here's why:
Procurement gets a lot smarter
There is no question that public procurement entities are evaluating the technology they use to streamline processes, get visibility into their data, collaborate with their suppliers, manage categories and contracts and much more. Procurement leaders in government are more aware and informed now than ever before, and as such, they want the best solution -- as opposed to “what’s worked before.” Increasingly they are learning from the digital procurement transformation in the private sector and paying more attention to technology trends. Governments are getting smarter and looking for cloud-based platforms that can cover all their source-to-pay requirements and be configured to meet the needs of individual agencies. They understand that solutions must be modern and easily accessible for procurement teams, suppliers and all end users in order to have an impact.
Focusing on the customer
Customer-centric procurement is often discussed in the private sector and will become more commonplace in government. The idea requires that procurement teams think of themselves as service providers, which means delivering expertise and insight, understanding the goals, objectives and requirements of stakeholders, managing projects and change, etc. On the flip side, this model is also about positioning the organization as “the customer of choice” for suppliers. The idea is to make it easier for suppliers of all sizes to work with government but also allow agencies to capture the latest innovation.
Rethinking quality and performance
Quality control and performance monitoring will become more important for public entities – partly because agencies are subject to evermore scrutiny, but also because these tools can help to deliver better services to citizens. Effective quality control requires a streamlined supply chain and better visibility into supplier performance, which in turn will require broad collaboration across participating agencies. The bottom line is that public-sector procurement leaders must develop a strategy to monitor and improve supplier performance across multiple metrics and make it part of the broader transformation strategy in order to truly be effective. They must be able to answers questions such as: Is there one place where suppliers register? How are maintain supplier performance KPIs maintained? Can supplies and users be surveyed? Can contractual commitments be tracked?
Making a difference with data
As with all things technology related, data is key. This is even more true as technologies such as artificial intelligence, blockchain and the internet of things move into the mainstream. Without having a handle on good, clean data, transformation and digitization efforts can be quickly stymied. A strategy to improve the quality of supplier master data, for example, is key for procurement professionals and will be required to reap benefits from any procurement transformation. Good data is also the only way to develop strong strategic plans and initiatives that will help better manage spend and suppliers.
Fostering more digital talent
Getting a good handle on data is difficult without the right talent. As with all industries, public sector procurement organizations must equip themselves with the right talent around data, analytics and all things digital. I think we will see this happening more in 2019.
Overall, 2019 looks to be an exciting year for transformation and digitization of public sector procurement. Although, transformation is a long road, for the public sector it is one that has been long overdue for an overhaul.
Vishal Patel is the vice president of product marketing at Ivalua.