Third way for IT procurement

The public sector typically swings between centralised and localised approaches to IT procurement. Could devolution drive a federated “third way” that offers the best of both worlds? David Bicknell reports


Scotland’s continuing timetable towards devolution heralds a decade of change in the English public sector, with profound implications for IT procurement as Whitehall governance looks set to pass to major cities and counties.

Amid an ongoing debate over centralised economies of scale versus a local approach, the recent aim has been to create a more intelligent, single government customer using its buying power to get the best deal from suppliers, while also influencing the behaviour of individual buying organisations, such as local authorities, health trusts or police forces.

One way of achieving this is by using centralised procurement vehicles, such as framework agreements and shared services.

Recent Kable research indicates that some types of IT solution are more amenable to a shared approach than others. Jessica Figueras, author of Kable’s The Good Frameworks Guide 2014, argues that most attempts to centralise procurement via framework agreements have met with disappointing results.

“Some 84 per cent of the frameworks in our sample did not achieve their forecast value and more than half achieved 25 per cent or less. Central buying organisations, such as the Crown Commercial Service, are increasingly aware of this problem and are starting to monitor performance more carefully. This also applies to the devolved governments, which are becoming more active in tendering their own framework agreements, and need to focus on the most promising areas rather than creating unnecessary duplication,” she says.

BEST OF BOTH WORLDS

John Jackson, chief information officer at Camden Council, says procuring IT in the wake of devolution means trying to get the best of both worlds.

“You’ve got the autonomy to make decisions to meet the things you need to do locally versus what you get with working together, through scale, leverage and so on,” he says. “If you are buying an application for a piece of software, you might say that this is the minimum architecture and principles we need: it has to be able to share data, comply with a set of standards. Then you let people select the suppliers they need to do that. So you get the commonality, the common blueprint, the benefits of scale and standardisation, but you also retain the local choice of how and when you want to do it.”

Jos Creese, chairman of the Local Public Service Chief Information Officers’ Council, believes traditional views on the merits and weaknesses of shared or local IT procurement have been polarised, and in practice neither of these views holds the complete answer.

An approach based on federated infrastructure involves the negotiation of shared intentions and priorities rather than the imposition of central control and direction

“First of all, there needs to be greater commonality in how technology is procured and shared, not least because of the huge obstacles we have created to sharing information and data between different systems. At the same time, there needs to be greater flexibility in how technology platforms are used, which can stimulate innovation and creativity at a local level in a digital world. This is going to be increasingly the case with the potential impact of greater devolution on IT procurement,” he says.

“The future clearly points to greater decentralisation, with the customer and the public in more control, and communities and regions being more autonomous. IT, through low-cost personalisation applications, such as social media and smartphones, is creating this opportunity. Yet through effective procurement, IT can also ensure appropriate collaboration to secure economies of scale and commonality over issues such as security and information sharing.”

FEDERATED METHOD

There may be a third way, a federated method that bridges the centralised and localised disciplines. Professor Mike Martin, of Newcastle University Business School, suggests such an approach is particularly relevant following the referendum in Scotland.

“The problem is that for the last few decades we have only been able to build systems and make investments in public administration that are monuments to the current policy and which must be jettisoned when the inevitable change in policy occurs,” he says.

“Scotland presents an interesting case because the combination of the size, the geography and the English neighbours means that an integrationist approach has been just possible and sustainable. The experience of Connecting for Health [closed on March 31, 2013] has shown that this is not the case for England.

“I believe strongly that an approach based on federated infrastructure allows the issue of central, regional and local community balances of power and responsibility to be a matter of configuration and governance rather than something imposed through hard wiring and plumbing. It involves the negotiation of shared intentions and priorities rather than the imposition of central control and direction.”

One development worth watching is Norfolk’s Digital Norfolk Ambition (DNA) project. The county council’s agreement with Hewlett Packard aims to save £10 million from its IT budget over five years while delivering more effective services for those in need.

Al Collier, Norfolk’s head of procurement, says: “There has rightly been a shift towards buying commoditised ICT through central deals, but some requirements require a more strategic relationship with the vendor. We used a lean competitive dialogue process to deliver the deal in less than six months and minimise bid costs, and we think we got an excellent deal with lots of added value for the local economy. But this isn’t the all-encompassing outsourcing of old – we are building the architecture to slot in software-as-a-service offerings from a range of other vendors, many of them procured through central deals.”