6 Best Practices for Public Procurement in IT within Canada

The procurement of IT components and services comes with its own unique set of challenges and responsibilities.  This encompasses cyber security and other IT services, hardware, and software products. One must aim to meet all business requirements and maximize the value of spend.

Below we offer best practices for mitigating the many different areas of risk hidden within IT procurement and for extracting value.

1. People are Pivotal for Procurement in IT

Aligning with the right people and partners coupled with fostering healthy internal and external relationships is vital for optimizing outcomes for all parties.  

To ensure you make the right purchasing decisions and, ultimately appease all stakeholders, you’ll need to gain a thorough understanding of organizational needs and budget. This is in addition to defining how the acquisition will impact operations. 

Implement a strategic sourcing process that involves all relevant internal parties from onset and extracts as much information as possible. Procurement professionals can often find themselves in unfamiliar situations. By consulting colleagues with valuable experience, know-how, and advice, contracting officers can glean esoteric knowledge on unknown territories and new commodities that drives sound decision-making.

2. Create a Competitive Process

When evaluating potential suppliers, you want to form strategic relationships to establish logistical best practices to take advantage of economies of scale wherever possible. To maximize output, vet suppliers carefully by reviewing past performance. Ensure suppliers are readily and proactively resolving issues and increasing adoption rates. 

KPIs, agreements and service level standards act as essential frameworks for monitoring progress and ensuring continuous improvement.

To achieve cost reductions in their IT procurement strategies, procurement must include the following critical tasks in their IT procurement process:

• Thorough market research to uncover all possible options
• Issue a Requests For Information (RFI) to viable vendors
• Initiate a Request For Proposal (RFP)
• Nurture direct partnerships with original equipment manufacturers (OEM)
• Leverage your volumes and negotiate with OEMs on pricing, support and payment terms

3. Total Cost of Ownership

Although you want to ensure to make the most cost-effective choice, the upfront price is only one aspect of what a purchase will ultimately cost you. When making acquisitions, we should take a Total Cost of Ownership (TCO) approach. Widening the lens and identifying and accounting for all associated costs such as purchase, deployment, use, service, and disposal ensures you select the most long-term financially beneficial option.

By quantifying the cost of a purchase across its entire lifecycle, you provide a more accurate analysis that determines cost vs. Return on Investment (ROI) and helps you consider all elements to better determine the viability of a purchase.

To calculate TCO, you must calculate direct and indirect expenses across the asset lifecycle. By assigning a monetary value through analysis, even intangible costs and benefits such as reduced system management time and IT support can be taken into account, perhaps making up for a heavier purchase price.

Here are some tangible and intangible TCO factors to be considered and factored into acquisitions prior to supplier selection and contract negotiations::

• Maintenance
• Repair costs 
• Network integration
• Software licenses
• Upgrades
• Service and support contracts
• Security
• Insurance
• Employee training
• Electricity use
• Downtime
• Credit terms
• Other overhead costs  

4. Understand Your IT Infrastructure

Your IT infrastructure consists of more than just hardware, software, and services. As a procurement professional, you must ensure to take an all-encompassing view and aim for effectiveness across the entirety of your infrastructure.

A significant portion of your procurement efforts is likely to center around replacing old hardware such as smartphones, laptops, printers, routers, and servers. The network infrastructure that keeps your employees connected, either on or off-premises, as well as productivity programs and proprietary suites can quickly become irrelevant and out of date, falling out of compliance. 

Renewing licenses, sourcing possible Software-as-a-Service (SaaS) solutions or building custom applications all fall under procurement’s responsibilities and requires a deep understanding of the current market, as well as your needs. In addition, to be effective and extract maximum value from resources, solutions should be fitted to drive long-term strategic goals such as increasing profitability, building organizational resilience, or meeting growth objectives as well as cyber security needs and compliance standards.

5. Execution

A Deloitte study states that “60% of CPOs still believe their teams lack sufficient capability to deliver their procurement strategy.”

Implementing IT procurement strategies can be far from easy. What works, in theory, can vary greatly from reality. Purchasing the right equipment is a more straightforward process than implementing new software, but even that comes with its own set of risks. 

For software, your IT team must have the in-depth knowledge necessary to accurately identify your long list of requirements, thoroughly plan implementation and provide or arrange for all necessary training. 

This is where a skills gap is often found, leading to project failures, low adoption rates, or the purchasing of unsuitable solutions that lack key requirements, causing wasted or excessive spending. Installation delays, configuration issues, and inadequate training are all costly implementation issues caused by a lack of knowledge, experience and know-how.

Incorrectly defining requirements can poorly impact the procurement of hardware just the same. Understating or overstating needs can lead to inaccurate estimates or procuring too much or not enough of an item. It’s important to remember IT procurement not only affects your profitability but can have a significant impact on your organization’s productivity as well. Errors can have grave consequences, leading to poor performance, lost revenue, and decreased service levels.

Lastly, although you want to appease stakeholders and ensure project timelines aren’t over-extended, unrealistically tight timelines can deter vendors from bidding and set you up for project failure. Make sure you’re realistic in the targets you set for suppliers and then hold them accountable.

6. Cyber Security and Compliance

As was reaffirmed by the ransomware attack that shut down the Colonial Pipeline, cyber security and compliance continue to be a major area of risk. With cyber-attacks on the rise, the Government of Canada is looking to establish new protocols:

“Cyber-attacks are on the rise, and Canada’s allies such as the United States are establishing requirements for demonstrated cyber security in order to do business with them. Similarly, the Government of Canada is looking at ways to strengthen and support the cyber security of defense and other critical supply chains for Canadian businesses.

“The information gathered through the RFI will help inform cyber security requirements, cyber security certification and other approaches to support Canadian organizations in meeting cyber security requirements in contracting. Suppliers in defense, security, space, aerospace, and cybersecurity and other stakeholders (e.g., academia, industry associations) are encouraged to participate in the RFI.”

As things continue to progress, ensuring your cyber security and system compliance measures meet all current and upcoming regulatory standards safeguards you from costly data breaches and Government fines. This may include tasks such as ensuring all routers are equipped to support current encryption standards and procuring on-premise network monitoring and security services. For your training and consulting needs on public sector procurement, we welcome you to explore our offerings at https://theprocurementschool.com/webinars-trainingformyteam