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Disaggregated Procurement Series - Part 2: Is Disaggregated Procurement too challenging for the public sector?
Published: 19 April 2017
Disaggregated procurement is widespread in both the public and private sectors, but the challenges facing the public sector’s small and medium enterprises (SMEs) are of particular interest in the current climate. Purchase decisions might seem feasible for cutting costs from a procurement point of view, but they have direct implications for the business processes. A key challenge involves harmonising the procurement and management activities effectively for those who are tasked with the end-to-end management. How can disaggregation lift government procurement policies, for example? Can this improve risk management and minimise costs?
Until recently, many government departments were outsourcing IT services to large System Integrator (SI) organisations, a strategy now recognised as inadequate. That’s mainly because innovation is stunted and flexibility minimised but, most importantly, the services that citizens receive are compromised by outsourcing. By outsourcing IT services, departments think they’re also outsourcing risk and responsibility. SI specialists might have a more advanced understanding of technology, but their grasp of the SME priorities and public sector user needs is often limited!
In an attempt to move away from outsourcing, the Tower Model came into play, with varying levels of success. There’s been much debate around this model, which breaks down IT into component services, with each of those parts outsourced to a specialist supplier. Sadly, not every department has the in-house expertise to manage multiple suppliers and successfully integrate their services, which can cause departments to relapse into the comfort of old-style procurement practices. This has a direct, negative effect on cost-savings, innovation and flexibility.
We are now leaving the Tower model behind us and looking towards multisourcing. Bridging the gap between Tower Models and this type of Disaggregated Service Management requires an updated skillset and a management platform to secure a better experience. Adopting a disaggregated approach can propel business-led transformation and innovation, and government policy is supporting departments in the transition towards this method. Evolving from an outsourced environment to a disaggregated one, in which the department pedals its own services, requires a major cultural change in every aspect of the organisation.
Risks and rewards
Bringing procurement and management activities together poses a difficult challenge. Replacing a single enterprise IT vendor system with a multi-vendor cloud service provider framework, for example, is a daunting prospect for many organisations, but one which will minimise public sector client operating costs. For those people with the task of end-to-end management, disaggregation requires an overhaul of perspective.
Departments can easily slide back to their old ways of outsourcing IT to third-party groups, which, along with compromising customer satisfaction, limits the organisation’s ability to directly engage with new enterprises, particularly SMEs.
What does good IT look like?
It’s clear that the Tower Model isn’t enough to drive procurement. The benefits of outsourcing and multisourcing are both lost in this model, so we have to find a new solution. Multi-sourcing alone can deliver over 40% of savings, and its central theme comprises an understanding of user needs. The team is responsible for the IT service and knows what services are needed to deliver according to customer needs. Managing and monitoring a disaggregated IT environment must be done proactively, with the performance carefully measured over time. A technology support platform which empowers both service providers and public sector to address these management challenges and enabling organisations to take advantage of new technologies, like the Cloud, are an essential step to achieve good IT in a disaggregated environment.
At Highlight, we have a keen understanding of how to monitor and manage applications, infrastructure and cloud services performance thereby underpinning the benefits of disaggregated procurement. Providing a clear view of IT infrastructure is vital, and helps business leaders proactively manage their real-time applications, tech expert or not! Integrating operations across the whole business by employing a unique disaggregated IT procurement solution can enable the public sector to achieve their organisation’s performance objectives and most importantly, excel as enterprise innovators.
Procuring in the future
Speaking from experience, we believe that disaggregation provides departments in the Public Sector with the chance to govern their business requirements and deliver enhanced operational effectiveness for citizens, unlike any other previous methods. This can ultimately reduce risks and costs associated with the emerging digital economy. At the end of the day, understanding user needs should be at the forefront of procurement policy, whilst building a disaggregated platform using cloud infrastructure before procurement takes place.Disaggregated Procurement Series - Part 1: An Introduction
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