For a number of decades many parts of the public sector were encouraged to outsource their IT services to third parties. As a result, many of these departments are largely beholden to outsourcers for the delivery of many of their long-term goals, with digital transformation being no exception to this.
Any talk of digital transformation by these public sector CIOs is moot because they have very little control over it. As a result of the outsourcers holding all the cards, the effective digital transformation of the public sector is largely impossible without first looking at the overall supply chain, which is easier said than done.
Who needs IT anyway?
The public sector’s love affair with outsourcers is a by-product of seeing IT as a non-core activity. Do you really need to own the infrastructure, the hardware, the development capability? If not, why not outsource it, or consume it as a service?
Organisations are now looking at digital transformation and asking a different question – “After years of outsourcing, what exactly do I have control over? Can I still digitally transform if the majority of my IT services reside outside of the organisation?”
Taking back control
Thankfully, a complex supply chain does not render transformation impossible, but it requires a change in approach. Since you cannot transform what you don’t control, the public sector needs to take back control of its supply chains. This, however, does not mean bringing everything back in house. That is simply not practical or desirable. The best way to take back control of your supply chain is to transform it. Here’s how you can do that:
- Don’t be afraid to change processes: Making a change in the way in which your supply chain works often involves the use of new technology and a fundamental review of the processes you use. While it isn’t always possible to change the approach or processes, you might be able to implement some technology changes that will support the organisation’s transformational change.
- No more long-term, single-supplier deals: DOS (Digital Outcomes and Specialists), G-Cloud, Crown Hosting (for data centres) and other frameworks allow you to get SMEs on board with ease and confidence. Keep control of your IT by avoiding long-term, single-supplier deals, whether you are buying “as a service” or via more traditional outsourcing contracts. This allows you to spread the risk of supplier failure.
- Use the available Frameworks: There are many frameworks to choose from, in the UK for example, Digital Government Services (DGS) and Crown Commercial Services (CCS) will train your staff according to their needs — no need to reinvent the wheel.
- Procurement must share contract and deal knowledge with the project teams: Don’t just back off, make sure the knowledgebase is fully populated, whether you use technology to do this or become an advisor to the project or preferably both.
- Training: Enhance the skills of your supply chain people, but remember that training shouldn’t just be about procurement. Project management and some technical training will help improve effectiveness. Embed procurement staff in the heart of the area where the change is needed so that they fully understand the requirement.
- Work with your suppliers, not against them: Keep your suppliers close, build trust and allow them to help you with your ideas. We know this is difficult to do because of the need to keep within the rules, but often the “rules” make us fearful of engaging with the people who understand the specific issues you will encounter and have wide, market-led knowledge. Use early market engagement techniques to get the best from your potential suppliers.
- Use consultants (sparingly): Consultants are often essential to deliver transformation successfully, but they should only be used for short periods to fill specific skills gaps; don’t allow them to become the norm. Use companies that will pass their knowledge on to the team and not keep it to themselves. It is important that organisations improve and retain the skills they need to manage the transformation going forward.
- Embrace the necessary cultural change: It’s not easy to influence internal organisations, especially if they are conservative, but the supply chain function can lead the way by being more involved at all stages of procurement. It can also lead the cultural change. Show how much market knowledge you have and how you can help to get the department what it needs. Be involved with messaging the department or organisation to help make the cultural change for your people.
- Where it makes sense, shift from long-term contracts to frameworks and outcome-based Statements of Work (SoWs): This may require more management and effort, but that will be outweighed by the benefits of success. Change from outputs to outcomes as a way of expressing your requirements, manage your KPIs based on what is needed now and be willing to engage with your suppliers to assess the best ones to use. Also be willing to work to change your suppliers if you are not getting what you need.
- Price isn’t everything: While we may instinctively know this in our daily lives, procurement is still so often dominated by price. Value is the most important driver for supply chain. We need to ensure that when we undertake bid assessments that we truly understand where the value is. So many companies are now offering “as a service” options, moving us from capital purchases to ongoing operational costs. A proper assessment of what value that brings, including all aspects including business continuity and disaster recovery is required to ensure you get the right service.
Ultimately, if you do not align your suppliers for digital transformation, you will always be playing catch up. Now is the time to get these contracts right for the future.
With proper handling and support for procurement, you can improve costs, value, service levels and realise all the benefits of digital transformation without project delays, diminished staff morale or capital budget over runs.
Author, Gail Evans, director at Brightman.