Value that it can deliver to public procurement 5 eng-manuel-canno

2nd European Conference on e-Public Procurement (ECPP) - 27th May 2014 – IST, Lisbon

Value that IT can deliver to public procurement

2

VALUE THAT INFORMATION TECHNOLOGY (IT) CAN DELIVER IN PUBLIC PROCUREMENT

Author: Manuel Canno, PLYCA strategy manager at nexus-IT.

(es.linkedin.com/in/manuelcanno/)

Abstract

The economic and social context changes, steadily and rapidly, and public sector services have to adapt in order to provide adequate support to the society they serve. Public procurement can become a leading tool for generating competitive, socially and economically sustainable territories. Technology is the mean and the people are value generators through the tools and talent.

Keywords: Electronic Procurement, Information Technology, Information Paradox, ITr Platforms

The document expresses personal opinions and references to documents of other authors are in the references section at the end of the text.

This document is protected by a Creative Commons license.Attribution - NonCommercial - ShareAlike (by-nc-sa): commercial use of the original work or any derivative works are not permitted, the distribution of which should be done with the same license that governs the original work.

http://es.linkedin.com/in/manuelcanno/



3

TABLE OF CONTENTS

1. Introduction: Main messages. ..................................................................................................... 4

2. The social and economic context: highlights ............................................................................ 5

3. The concept of value (improving mangement and technology) ............................................. 6

4. Possible uses and value of technology in public procurement .............................................. 7

5. Present and future use of technology in public procurement................................................ 8

6. The stages and problems to obtain the value of public procurement. .................................. 9

7. The pyramid of transformation .................................................................................................. 12

8. Final Thougts. .............................................................................................................................. 13

REFERENCES .................................................................................................................................... 14



4

1. Introduction: Main messages.

This paper attempts to provide an overview of the new situation created by the recent approval of the new public procurement directives and mandatory electronic format together with changes in the economy, technology and social relations, presents a new scenario: public procurement in the digital economy.

The fundamental change is that the new directives makes mandatory the use of electronic format in some phases of the process of procurement of goods and services in the public sector.

Keep in mind the context, constantly pressing to perform the transformation of the procurement service using information technology more effectively to achieve the objectives set out by the society through its political representatives: transparency, efficiency, competition, equal treatment, productivity, competition, subsidiarity, proportionality ....

You also have to have the different stages of maturity of organizations within the public sector, they need and may be able to incorporate different degrees of adaptation to the digital medium. Not all organisms start from the same starting point nor do they have the same goals. Not use the same means and tools. But there is a minimum that will be required in public procurement.

Herein are to relate in passing the various possibilities of the use of information technology, its benefits and risks. Always bearing in mind that the technology can be prohibitively expensive or an excellent investment.The difference between these two states is that the organization that implements information technology to be able to use it properly.There are plenty of references to problems of implementation and about the uses of information technology in public administration [1] .

As for the risks and difficulties of transformation projects to do an overview of what the learning and experience that comes from other sectors: banking industry, services ... where transformation projects also have expensive failures normally silenced by the responsible [2] .

In the document the following matters are discussed relating to public procurement and mandatory transition to electronic format from the adoption of the new procurement directives recently approved.

the social and economic context where e-procurement has developed a marked and rapid trend towards digitization. Everything is digital.

technology can deliver value or can destroy it.The transformation to the digital economy requires technology, but technology does not automatically generate the digital transition. Organization, effort, knowledge and a strong will is needed to make organizational change.

The information technology has been little used in public procurement.Administrative law is the most demanded area of knowledge in between those managing public procurement.The digital economy requires different and additional skills among procument agents. Failure to understand this change, and the transition is not managed from the top, any use of the technology will be a cost, sometimes high, and will not produce investment returns in the form of results that all political leaders are looking in the procurement service.

Although we are able to understand the technology and make organizational change, we must be aware that the value can be realized and delivered only



5

through the people who manage the procurement service.It is therefore essential that these people, the human factor, acquire autonomy and competencies needed in electronic format, maintain those they already has in the field of administrative law and incorporated others in aspects about professionalize procurement service (Pyramid of transformation ).

2. The social and economic context: highlights

Traits that may be relevant to the topic at hand about the social and economic context are included in this section.

The future of organizations and their activity: is digital and global.The future of the public sector as well.Today competing territories, not just businesses. Is territory that attracts investment and talent. The territory is composed of many elements involved in the overall classification, including the public sector, the private sector, population, culture, climate, education, ...

The situation of administrations. Not digital yet but it has to be by the surrounding economic and social pressure imposed each time more urgently, the electronic format.

The procurment service, has great room for improvement in the use of information technology, but also has many risks.In fact, getting the expected results in public procurement requires the use of information technology.Always keep in mind that public procurement accounts for 20% of European GDP, and is one of the most critical processes in society, because its complexity, volume and results.

The software is eating the world.All social, economic, and power relationships tend to be digitized. Products subject to constant pressure become cloud services, continuously lowering entry barriers to new competitors. And public procurement can not be isolated. In fact the societies that implement better and before the electronic public procurement will be in a better position to provide an environment (territory) more competitive and productive, to attract investment and talent.

Oil data. The data and analysis of expenditure are the main sources of improvement for both the savings and the rest of the objectives of public procurement: efficiency, transparency, competitiveness, equal treatment ... The political establishment needs data to decide, and citizens need data accessible in a timely manner, to verify decisions continuously and in a transparent way.

The main change in the new gdirectives ithat will most impact is the mandatory use of electronic format at least in the phases of publication, tendering and billing.

Administrations to use the electronic format in all phases which will generate an competitive environment that will attract to their territories investment and talent .The race began with the Smart Cities will use public procurement as a

promoter of highly competitive territories.



6

3. The concept of value (improving mangement and technology)

The value is inherent to any organization.Public procurement is a key element of the value chain of any public sector body. And the trend of the value of this element, public procurement, is to increase in quantity and quality.

In the value chain of the public administration, public procurement is an

important factor of the generated value [3] .

Value creation is not the same as efficiency.Technology can help you be efficient (industrial economy) and create value (digital economy). But what we now seeking by the top responsibles of public and private organizations is the constant value generation, and attracting talent.

John Thorp [4] , raised in the mid-90s on "The information paradox" ( ), the

value (theoretical?) of information technology is not directly related to technology spending, ie spending does not increase productivity.Only coordinated action of all elements of the organization (people, procedures, structures and technology), well led by the top responsibles, is able to show the benefits of the present and future use of information technology.This process requires the concept of governance applied to information technology.The leaders of the organization must necessarily assume the role that is required to perform an organizational change of this magnitude (the transition to electronic public procurement).

Given the continuing reports of failures, some with terrible consequences, this author, John Thorp developed a series of techniques ("The four ares") that show whether the transformation is advancing appropriately.These techniques are represented by the following four questions:

Are we doing the right things?-STRATEGY.This is a strategic issue and should have an adequate response and continued by the senior management. Represents organizational motivation.

Are we doing them the right way - ARCHITECTURE. Is to verify continuously that the means and tools used by the organization are appropriate and recognized by the industry as appropriate.Not forgetting the necessary autonomy and competence of the people involved in organizational processes that create value.

Are we getting them done well? -DELIVERIES. The technology products and services are delivered in the same way that the products and services of the organization are delivered.This question is to know if the organization is delivering products and technology services as planned and on time.

Are we getting the benefits?-VALUE. Any transformation is designed and implemented for a higher value generation that the organization itself produces and delivers.

The use of technology in their best forms in public procurement is not automatic or easy, but like other sectors, the transformation to the digital environment is a source of risk that can reach the disappearance of organizations.Not so in the case of a public administration that does not go away, but you have to be aware that the poorer performance, the worse the positioning of the territory that the public administration articulates and represents.

Error repeated repeatedly, is to leave the responsibility for transformation project using information technology to department of information systems.The organizational transformation has to be monitored, managed and

http://www.thorpnet.com/about-john-thorp/

http://www.thorpnet.com/2009/10/back-to-the-basics-the-four-ares/



7

evaluated by the high executives in the organization, regardless of whether this

project it is enabled and technology-mediated transformation or not.

4. Possible uses and value of technology in public procurement

In this section we will try to apply a classification made by IDC: the third platform [5] , on

ways to create value through information technology, with the aim of trying to generate a clear view of the route would have to be made in the transformation to the digital economy of e-procurement.

First platform (superseded) KNOWLEDGE.

o Represents computing servers, mainframes, databases and office, but with the view tool.

Second platform (still immature in public procurement) - EFFICIENCY PROCESSES AND DATA

o Represents the intensive use of the Internet for client server options, data communication, all agents, workflows and transactions online to allow efficient use of all available resources, with transparency and efficiency of the proceedings.

Third platform (future build) VALUE GENERATION

o Represents the use of the four elements following technology: cloud, mobile usage, social networking and big data.It is the platform that will allow achieving the required degree of professionalization (in people, processes, and structures) to get the results that are expected of public procurement.

In general today, e-procurement is trying to make the most of the second platform and starting to sense and understand (some authorities) the advantages and benefits of the third platform. The requirement of electronic procurement directives are developed in the second platform. This requirement will make the whole public sector use the electronic form on the procurement at least in the phases in which the format is set as mandatory.

In this graphic, a vision of this classification of the different groups where technology is offered.In it represents all sectors of the economy, trying to use the techniques and tools of the third platform.

The third platform involves a profound transformation throughout the organization and especially the people who have to gain autonomy and competence in all specific areas of the business and the new electronic format.

They will be people with talent and the right use of technology which deliver the necessary value to generate productivity gains enabling its industry or public administration territory to compete with other territories and industries within the context of increasing globalization.



8

.

5. Present and future use of technology in public procurement

Paragraphs on how you use technology today in public procurement today, how it should be used and how might be used in the future

HOW IT IS USED TODAY

Databases, data-driven applications, workflows just barely document management and integration of all agents occurs through internet communications: Basically the first platform is used.

Currently the information technology to produce paper and paper records more efficiently used.

The basic unit of work in the service contract is the dossier. It is composed of documents and transactions. The current cycle of the document is electronically produced, reviewed electronically, printed and signed on paper, is archived and consulted in paper.This flow can not be automated, is especially uneconomical and is opaque. Therefore offers little scope for improvement given the volume and the increasing complexity of the processes involved in the procurement service.

HOW IT SHOULD BE USED TODAY

With automated workflows, electronic dossiers and the inclusion of providers in this flow. Electronic format and electronic management from beginning to end. Electronic signatures on all documents representing manifestation of will for all related deadlines and responsibilities.This is the second platform. It is proposed that makes partial procurement policy, which has been limited to what is strictly



9

necessary force to generate the single market.But the organization that stays strictly in the mandatory field will not be able to exploit all the benefits of the second platform. It is understood that although compulsory misses strictly to transparency, and efficiency as a whole any public administration will advance significantly in these two aspects voluntarily by member states, or at least of some of the most representative public administrations wil do .

HOW IT MIGHT BE USED IN THE FUTURE.

Using fully integrated and consistently all elements into what we call the third platform:

o the cloud (preferably private and virtualization).Everything required in electronic public procurement can be offered as services in private or public clouds.

o mobility, the mobile phone as the most agile and more accessible screen that actors involved in public procurement can use.And the screen that allow a seamless integration with suppliers. Efficiency at minimal cost.

o social networks, as a superstructure that allows both public servants and suppliers integrated into information flows that equip the procurement service a real significant improvement in productivity and performance.The knowledge and shared and used as a merit which is capable of continuously generating value experiences.

o the bigdata.This is the element at the level of individual organizations and at the level of institutions and member state of the European Union, should be allowed, design, implement and adapt public policies with service contracts in the fields declared: Environment , social inclusion, innovation and support to SMEs and entrepreneurs. recruitment can not ignore the techniques and tools of big data, at all levels of decision and generation of public policies whose main tool procurement and budgets.

From intensive electronic format of the second platform can move to the third platform, having gone through a period of maturity and efficiency of this second platform.In fact it is the second platform that will provide the means (data, transactions, skills) to use the tools of the third platform and achieve results.These results are what we usually identify with what called as the professionalization of the public procurement service . This next cycle is what we call: pyramid transformation.

The professionalization understood as the overcoming of administrative law (unitary view dossier to dossier) to provide processes for the procurement of the overview (produce changes in the factors and means of production).This overview allows companies rebalancing of production generating more competitive environments based on merit and transparency, as determined by the spirit of the public procurement directives.

6. The stages and problems to obtain the value of public procurement.

Two main sections: the stages of logical and predictable transition and problems to achieve results when it comes with projects of information technology in the public sector.



10

STAGE THAT WILL GO PASSING PRESUMABLY

In the section on identifying an initial way to get the value that information technology can offer to public procurement and having these great paragraphs approximation:

o Generate a convergent transposition of directives (very complicated target) in all member states that respect the idiosyncrasies of each member allowing cross-border procurement and the creation of the single market for pan-European e-procurement, interoperable and affordable./0}

o Disseminating the principles of digital transformation, enabling the optimal transition at least part of the directive marks as mandatory (second plataform) but enable and prepare the territories (public sector, private sector and citizens) to have easy access to the third platform and subsequent professional public procurement service./0}

o Building an efficient and competitive market products and services that have commonalities binding (interoperability).

o Transition projects to electronic format that use information technology intensively(see below).

o Promote monitoring and supervision process, helping any public sector organization to get the most performance budgeting efforts, personal and will have to make time to carry out this digital transformation of the procurement service.

PROBLEMS WITH PROJECTS USING IT IN THE TRANSITION TO ELECTRONIC PROCUREMENT

To address this is to be used as a reference document that issued a consultant who has studied the cases and problems of IT projects in government of the United States (see references at end of document).

"Billions in the Balance: Removing Barriers to competition and Driving Innovation in the Public-Sector IT Market" i

The situation in the U.S., can be analyzed trying to draw analogies with the transition to e-procurement, as this transition represents a profound transformation with projects that will use information technology intensively and decisively.

The U.S. federal government more than 80 billion dollars is spent on IT projects annually.This sum reaches 200 billion considering spending all U.S. administrations in IT projects. These projects are of all sizes, and support or should support vital services within administrations: safety, health, defense, education.According to the Standish Group , in a recent study, over 94% of these projects fail.And recently it has generated several activities that try to put focus on this problem and find a solution.

The transition to e-procurement projects to use in which information technology is a very important and a great weight in the ultimate success of the transition, both at each level of organization and national institutions and European.

In the baseline study have public and private experiences to try to solve this continuing failure and have come to the conclusion that even in large systems there are solutions and ways to implement technology with proven success in mind. But make a warning:

http://agmetalminer.com/2014/05/21/new-report-billions-in-the-balance-it-procurement-exposed/

http://agmetalminer.com/2014/05/21/new-report-billions-in-the-balance-it-procurement-exposed/

http://www.projectsmart.co.uk/docs/chaos-report.pdf

http://www.projectsmart.co.uk/docs/chaos-report.pdf



11

these solutions require real leadership on talent, not merely cosmetic, but a cultural change from "check the box" to a culture of intelligent risk taking (innovation?).

These are the barriers and solutions:

WHAT IS WRONG IN IT PROJECTS OF THE GOVERNMENT.

Public Administrations are a difficult and complex environment according to Professor David Van Slyke, from the University of Syracuse: The policy environment, the multiplicity of goals, the unevenness of who has access to what information as well as the uncertainty about the product itself and funding , make the public sector, more complex than the private sector "(" )

This coupled with an aversion to risk and a culture of "check the box", makes the environment in public administrations not able to follow the changes in technology, creating barriers to entry for new suppliers, leaving little flexibility to any member to propose innovative solutions.

The results of the current situation can be grouped into five categories:

1. No alignment on problem or desired outcomes.

2. Weak leadership and governance.

3. "check the box" culture .

4. Requirements too prescriptive

5. Slow procurement process and closed markets.

WHAT CAN BE DONE TO FIX IT PROJECTS IN PUBLIC ADMINISTRATIONS:

While we try to change the culture of government or make another reform, the only way to effective change is to create more success stories program to program, project to project.

The study recommends the following:

Establish clear lines of authority and accountability.

Develop a simple needs and outcomes statement instead of voluminous

RFPs.

Engaging the market early.

Develop a cost/outcome (ROI)-focused program IT strategy.

Encourage smart risk taking.

Reduce very burdensome requirements and speed up the procurement

process faster.

This study ends with the following recommendation: "not about generating new laws to fix this problem, but to make a different approach through leadership and talent by changing the administrative culture of risk aversion".



12

7. The pyramid of transformation

Not all public administrations have the same calling and the same pressure to achieve optimal results. And therefore not all of them will require, or need, to make the same efforts.The question is to give decision makers a clear vision of the transformation journey, regardless of whether achieving that vision, needs more or less long distance and associated with a more or less great efforts.

The economy tends to group into the cluster concept, usually around cities [6] , we

grouped these territories with their administrations that order and articulate them, along with citizens, institutions, companies, citizens, culture, climate, ....Europe tend to build and enhance these clusters and professionalism in public procurement can be an important driver of progress and sustainability, because it will help these areas to be more competitive.

Administrations that reach the top of the pyramid will have the ability to model and shape its territory, through tools such as e-procurement, smart cities, making the most attractive country for investment and talent.

But to reach the top is required to go through all the previous phases and generate trained and empowered people by the information technology. These transitions take time and effort, so it seems logical that you have to give the process of transformation a sense of urgency, in accordance with the aspirations of each territory..

Paper + DATA

Electrónic format Mandatory

Cloud, BigData,

Social networks, Mobile

Profesionalization

Intensive

in IT use

1st Plataform

2nd Plataform

3rd Plataform

Paper + DATA


Cloud, BigData,


Profesionalization

Intensive

in IT use

Few

IT use

1st Plataform

2nd Plataform

3rd Plataform

Paper + DATA


Cloud, BigData,


Profesionalization

Intensive

in IT use

1st Plataform

2nd Plataform

3rd Plataform

Paper + DATA


Cloud, BigData,


Profesionalization

Intensive

in IT use

Few

IT use

1st Plataform

2nd Plataform

3rd Plataform



13

8. Final Thougts.

In this last section a list of reflections that can be drawn from the discussion in this paper is:

In the digital economy value is not extracted, it must be created. There are already public and private organizations that are using all the resources of the digital economy. People should use the resources of the third platform regularly and focused on generating value in a constant manner.

The era of bigdata, cloud, the mobile, and social networks eliminates sustainable advantages in the long term and the entry barriers to new competitors and new management forms.The benefits are temporary and must be continually refreshed by new value generation. This is not only applicable to companies, it is also applicable to the territories and therefore to their public administrations. Today competing cities.

The value will not be something that will extract (industrial economy), but something that must be created continuously.The value chain of administrations, public procurement at the helm, can and should do more competitive territory.

It is not about efficiency is to generate value from the budgets used.Value generation serves the territory to attract investment and talent, smart cities are not for the use of technology but by generating value (and thus require technology).

Public procurement is a substantial part of the value chain.Public Administration is the organization that society uses to articulate the territory and procurement services is the most important service that allows to realize efficiently and to generate that value. Failure to understand and communicate, the use of technology in public procurement can be an unaffordable cost.If you understand and communicate well, the use of technology in public procurement, as appropriate, will be continued and based on merit and competition returns for any modern society investment.Not as a way of seeking financial efficiency but as a way of generating sustainable economic and social value.

For public procurement support the achievement of the objectives set by

the Europe 2020 strategy [7] , it is necessary that the electronic format is

used and professionalising in public procurement service is performed. To this we must bear in mind that projects information technology are often fraught with failure, and will need to make an effort in the line of leadership, risk-taking in the public sector, greater transparency, and promote autonomy and competence in the electronic form and subsequent professionalization of those involved in public procurement

pyramid transformation can serve to the higher responsible people in society to have a vision of the ultimate goals they want to achieve and the effort they have to use and the results you should expect at the top of the pyramid. It is also important that the agents involved in recruitment have a clear vision that allows them to understand what new knowledge and skills they have to acquire.



14

REFERENCES

[1] "Billions in the Balance: Removing Barriers to Competition and Driving Innovation in the Public-Sector IT Market http://publicspendforum.org/download-billions-balance/

[2]

Set up to Fail: Managing Digital Transformation as an IT Project

http://www.thorpnet.com/2014/05/set-up-to-fail-managing-digital-transformation-as-an-it-project/

[3] "The value chain" Porter http://en.wikipedia.org/wiki/Value_chain

[4] John Thorp http://www.thorpnet.com/about-john-thorp/

[5] "IDC's third platform" http://en.wikipedia.org/wiki/Third_platform

[6] "Cities, not country clubs, are the key for tomorrow's economy," Financial Times http://www.ft.com/intl/cms/s/0/0221bb6e-cb9d-11e3-8ccf-00144feabdc0.html # axzz32SN2kAPJ

[7] 2020 http://ec.europa.eu/europe2020/index_es.htm

Value that it can deliver to public procurement 5 eng-manuel-canno

Technology

Transcript of Value that it can deliver to public procurement 5 eng-manuel-canno