The U.S. government in fiscal 2018 spent more than $1 trillion. Consider for one moment the impact of this spending on people and businesses across the country and the infrastructure and services upon which they rely.
On average, anywhere from 30-to-40% of this 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. This is a significant amount and 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.
Now, think about your typical public procurement office. It’s difficult not to think about paper filled offices 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% 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.
That said, 2019 is most certainly going to see lots of change in the world of public procurement. In fact, it would be interesting to see the results from the Governing Institute survey which is coming up again in 2019. It is my opinion that public procurement across federal, state and local spheres is coming out of the shadows and shaking the stereotype, making 2019 pivotal.
There is no question that various 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 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. There is more research on public sector procurement now with efforts such as Governing Institutes State Procurement Survey and Public Spend Forum. Government is getting smarter and looking for cloud-based platforms that can cover all their source-to-pay needs as well as be configured to meet the needs of individual agencies. They understand that solutions need to be modern and user-friendly for all users including end-users, procurement and suppliers in order to have an impact.
IT modernization starting to leave its mark on federal procurement
A model that is talked about often in the private sector will become more commonplace in public sector. Customer centricity requires that procurement thinks of itself as a service provider, which means providing 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 the government but also in order to capture the latest innovation.
Rethinking quality and performance
Quality control and performance monitoring are going to become more important for public entities as they draw evermore scrutiny but also in the effort to deliver better services to citizens. Effective quality control requires a streamlined supply chain and better visibility into supplier performance.
Getting a handle on supplier performance and risk will require broad collaboration across agencies or across different entities of a state and must be part of the broader transformation strategy in order to truly be effective. The bottom line is that public sector procurement leaders must have in mind a strategy to monitor and improve supplier performance across multiple metrics.
Is there one place where suppliers register? Do you maintain supplier key performance indicators? Do you have the ability to survey suppliers or users? Can you keep track of contractual commitments? These are some of the questions that need to be addressed.
Data will make the difference
As with all things technology related, data is key. This is even truer as we enter the era of digital technologies such as artificial intelligence, blockchain and internet of things. Without having a handle on good, clean data, transformation and digitization efforts can be quickly stymied.
Having a strategy to improve the quality of supplier master data, for example, is a key one for procurement and will be important in order to reap more 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.
Following the previous point, 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 journey, for public sector it is one that has been long overdue for an overhaul.
Vishal Patel is the vice president of product marketing at Ivalua.