Why vendor fees should be avoided in public sector organizations

With the fast-pace of technology innovation and the increasing need for smarter sourcing platforms, the on-going debate over the vendor fee supported model is gaining more attention – a topic many public procurement professionals have heard about or considered themselves.

In our latest ebook, we uncover the true impact of vendor fees on public sourcing performance. Take a look here and share your thoughts.

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Benjamin de Groot
Research and Publishing Lead
519-990-1285
GoBonfire.com
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Replies

  1. Ben – thanks for this insightful paper! ┬áWhile i generally agree that there’s “no free lunch”, ┬áI do think there are other considerations at play that need to be considered. ┬áFor example, doing government contracts is a cumbersome process to say the least. ┬áIf instead of signing a big govt contract, a tech provider could recoup costs through supplier fees, it may be a easier route. ┬áAdditionally, vendor fees may be more directly correlated with usage, sort of a usage tax. ┬á

    Nonetheless, the paper makes a number of real valid points that i think everyone should consider when structuring their procurement technology relationships.

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    Raj Sharma
    Public Spend Forum
    Washington DC
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    Original Message:
    Sent: 05-16-2017 17:12
    From: Joseph Sandor
    Subject: Why vendor fees should be avoided in public sector organizations

    Obviously supplier “fees” to pay for anything is sub-optimal.┬á Routinely, in the private sector and perhaps the public sector as well, various tooling and design costs are amortized into the unit selling price.┬á Invariably the buyer pays too much – something┬áakin to┬ámy mother’s 50 years of AT&T rotary phone rental.

    The bigger question is why we “need” these fees when it typically makes sense to unbundle.┬á The answer, as is often the case, lies in our accounting systems where a dollar is valued differently depending on the budget allocation.┬á The solution, as also is often the case, lies in TCO understanding

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    Joseph Sandor
    Professor
    Michigan State University
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    ——————————————-
    Original Message:
    Sent: 05-16-2017 09:49
    From: Benjamin de Groot
    Subject: Why vendor fees should be avoided in public sector organizations

    With the fast-pace of technology innovation and the increasing need for smarter sourcing platforms, the on-going debate over the vendor fee supported model is gaining more attention – a ┬átopic many public procurement┬áprofessionals have heard about or considered themselves.┬á

    In our latest ebook, we uncover the true impact of vendor fees on public sourcing performance. Take a look here and share your thoughts. 

    —————————-
    Benjamin de Groot
    Research and Publishing Lead
    519-990-1285
    GoBonfire.com
    ——————————

    0
  2. Obviously supplier “fees” to pay for anything is sub-optimal.┬á Routinely, in the private sector and perhaps the public sector as well, various tooling and design costs are amortized into the unit selling price.┬á Invariably the buyer pays too much – something┬áakin to┬ámy mother’s 50 years of AT&T rotary phone rental.

    The bigger question is why we “need” these fees when it typically makes sense to unbundle.┬á The answer, as is often the case, lies in our accounting systems where a dollar is valued differently depending on the budget allocation.┬á The solution, as also is often the case, lies in TCO understanding

    ——————————
    Joseph Sandor
    Professor
    Michigan State University
    ——————————
    ——————————————-
    Original Message:
    Sent: 05-16-2017 09:49
    From: Benjamin de Groot
    Subject: Why vendor fees should be avoided in public sector organizations

    With the fast-pace of technology innovation and the increasing need for smarter sourcing platforms, the on-going debate over the vendor fee supported model is gaining more attention – a ┬átopic many public procurement┬áprofessionals have heard about or considered themselves.┬á

    In our latest ebook, we uncover the true impact of vendor fees on public sourcing performance. Take a look here and share your thoughts. 

    —————————-
    Benjamin de Groot
    Research and Publishing Lead
    519-990-1285
    GoBonfire.com
    ——————————

    0
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