This is the second article on the Global Public Procurement Conference held in Washington in September, and looks at some of the issues of implementation. The conference looks like it is designed to be a gift to the world and, other than the smaller panels on the afternoon of the second day, virtually the whole thing is available on YouTube. The organisers have even made a little play list which will take you a full day to get through if you build in your own networking breaks: see that here.
This resource is worth looking at, as the speakers I have highlighted are those that support the narrative of my summary of the discussions or are of most general interest. They are not necessarily the ones of most interest to everyone. I did have the advantage of a translator for the Spanish sections though.
I would particularly recommend Jose Arrieta ‘s keynote speech and, in terms of being right on the button as scene setter for the two days ahead, it was excellent. There is no downloadable PowerPoint for this so you will have to listen to the full 40 minutes. As the conference went on you began to see how far some places are a from the machine learning, block chain driven procurement approach outlined to us. Throughout the conference countries presented their transformation programme, or e-procurement system, and although excellent in many cases, they never quite reached the sci-fi approach hinted at in the first session.
There was a panel that covered national transformation programmes which included presentations from Government bodies and the private sector partners who have supported them. These are published with the presentations from all the other sessions here. It was clear that despite the vast differences in the way that government and public procurement work in different parts of the world, there is always a tailored solution that can be drawn up and project managed through to implementation. Even in some of the larger decentralised countries with multiple systems (of which India has over 50) it has been possible to develop common identifiers to enable open source systems with shared access to information.
If a country as large and complex as India, and as famously bureaucratic, can develop a single approach that can share data, identify unique suppliers, share verified information relating to a company, and utilise block chain, then a roll out of a single source of data for commercial relationships and purchasing on a global basis, seems inevitable. Our current data storage seems to be going the way of the CD, and you sense that, as with modern music, you will be able to turn data on like a tap (although there are still those who believe that the quality is better on vinyl).
For many organisations and territories, embracing blockchain, the Internet of Things, and machine learning is daunting. One speaker informed the conference that 80% of the worlds data was created in the past two years and the amount is increasing exponentially. That is a huge amount of noise and the advice from Manuel O’Brien of IBM was to think big, start small, and move fast. Design thinking is the key. Projects have to be iterative and progressed at speed. There will be failures but speed means that they can be addressed quickly. Fail fast and move past those failures.
The idea that information is becoming a natural resource was featured in many of the presentations and determining what to do with the data will become the key skill of the procurement professional. You need “a surfboard not a raft” said Sandra Snide of IDOM Consulting in Spain, and the new ways of working should be solution-focused and designed to capture the innovations that the market has to offer. New entrants to the procurement profession will be coming in with an entirely different view of what procurement is.
Ian McGill the Director of OpenOpps gave a very considered view of the role of data, or the problems caused by the lack of data at the moment. Data creates competition. Presently it is used to inform commissioners about spending patterns, suppliers and markets, but free and open data about past and current contracts creates a purer market. At present we are sharing data with suppliers mainly through the traditional tendering process and the effect of that approach is clearly not optimal. The number of single bids is increasing, presumably because the more successful bidders of the past have a better understanding of how to deliver a profitable service that meets the commissioner’s requirements.
Large long contracts can create short-term savings, but only because the market has imperfect knowledge, and this does not create the most value in the long run. Competition means you don’t have to be big to win, and excelling in the tendering process should not be the most important characteristic of a supplier. If details of who does what for whom, and for what price, is readily available then SMEs can start to look at how they can do better. Data also allows whole organisations to monitor performance. Procurement teams are small relative to the value of external spending and the use of big contracts is a means of enabling them to cope. Open data meets the needs of all, and enables more people to have oversight of the procurement cycle.
It also leads to the development of different analytical techniques. This includes descriptive, diagnostic, predictive, and prescriptive analysis. This will move public procurement from the “hit and hope” approach, which is prevalent, to one that can predict poor performance and determine the optimum sourcing strategy based on vast quantities of information of past experience.
This sounds easy but clearly it is not, and open data is just the start. Trinidad Inostroza from Chile described how a 15-year procurement transformation is now updating itself to embrace the digital revolution with a view to not only making procurement more efficient, but to bring it closer to the people. They call it an evolutionary leap. This includes rapid purchase to pay, and models for centralised and coordinated procurement. They also include an on-line efficiency observatory which demonstrates in real time the savings being made in public procurement. In Part 3 of this series I will look at why this isn’t necessarily all as “global” as it appears.