New Opportunities in Public Procurement Magnus Josephson Kelvin Prescott 26 April 2013

New Opportunities in the Public Sector The dynamics of IT sourcing have transformed in the 21st century – public sector buyers have become more sophisticated – the number of service providers has increased. – There is huge pressure on public budgets, and major changes in the routes to market. How can IT providers win in this market?

Survey Question: How Much Does The UK Government Spend on IT?

Rumours of the death of public sector IT have been greatly exaggerated The UK outsourcing and IT market remains the largest in the world (outside the US) No-one really knows total public sector spend (estimates range from 14 – 17BN per annum) The data that does exist suggests that spend is flat ( BN to BN) ++

How Can You Win In Public Sector IT? Planning Establish Intellectual Leadership Market Solutions, Not Brands Procurement Process Qualify Opportunities Hard Deliver Perfect Proposals Contract Period Make It Easy to Place an Order Build Barriers to Recompetition

Procurement Planning The majority of pre-procurement sales and marketing to the publíc sector is a waste of time and money – for both parties Reason: it doesn´t affect the decisions that the client will make in the upcoming procurement in any critical way Solution: The focus of planning work must use marketing and sales for more than just the brand. Market solutions to common client problems, e.g.: a wholesale partner solves the problem of having lots of contracts with lots of suppliers.

Case Study: How Boeing Established Intellectual Leadership in Logistics Applications The MOD selected BAE Systems as its prime contractor for an £800M contract for the support and development of its logistics applications. BAE won out over a number of established systems integrators such as EDS, IBM, CSC and others, even through it no established SI capability in the UK. How? Because it set out a simple, clear strategic vision for the delivery of logistics information and gave the message "everything else is in the detail, which we will manage, but we are the ones who know how the end to end military logistics process works”

Public Sector Buyers Want To Understand The Market, Not The Company The supplier who knows most about the market behaviour is the most interesting to talk to Market knowledge like – Common evaluation criteria and why they are used – Common contract periods and why – Common results from the procurement, long term E.g.: Sourcing contract aimed to reduce costs but they didn´t evaluate suppliers process and ability to do that – so costs actually increased The supplier that can only talk about their own products and services will stand in a long waiting line together with other ”peddlers” to get a meeting…

Basic pre-conditions for a company that wants to succeed on the public sector market Before the Procurement Go from reactive to proactive in the pre-tender phase – Map the market, choose the clients you want long before they start the procurement, 1- 2 years at least – Analyse the contract documents from their last procurement What did they buy? How did they buy it? Budget? Final prices? – Make contact with decision makers and budget holders but run it through the procurement department – Discuss the result they want to achieve. What problem/pain is it that they want to solve together with the supplier – Answers the question WHY they buy as they buy – Then show what other buyers in similar situation have focused on to solve that problem through public procurement

Procurement Process Ask questions, but close them to get a yes- or a no- answer Have a Go/NoGo-policy, don´t spray and pray Have a clear time line for the project Have well-defined roles in the bid team – Who writes – Who makes quality control? – Who´s in charge of the process? – Who owns the client if you win – must participate in the work

Case Study: The Importance of Perfect Proposals The Ministry of Justice was evaluating software vendors for the provision of an integrated document management and workflow system to support the civil courts in the UK. There were 3 leading contenders in the market who had implemented similar systems in other countries, and the competition was initially assumed to be a 3-horse race. However, one of the 3 submitted a response that was poorly written and, in a number of cases failed to answer the questions in the tender pack. As a result, it was deselected, even though the project team believed that the company had a credible and capable solution. By contrast, a fourth bidder submitted a response that was both fully compliant and met all of the evaluation criteria. It was selected even though it had never implemented a similar solution in the past

Contract Period If you win: how can you get as quick a start as possible? What can you do before Day 1 of the contract to make it well known that you are the winner and to make it work when it´s time? How can you use the contract period to prepare for the next competition? Build barriers to your competitors now! If you lose: Who won and why? Read the reasons in the decision and dont forget to read the winning tender In what situations should you appeal? There must be a policy

Case Study: Building Barriers to the Competition The MOD undertook a major procurement to consolidate its desktop infrastructure and support arrangements. Two incumbent service providers held the majority of the existing estate, in addition to in- house support teams. However, the MOD was concerned that two bidders was insufficient to generate real competitive tension, and consequently went to great lengths to encourage alternative bidders to form consortia to bid. The incumbents didn’t fight the competition, but they did spend 18 months proactively building pilot solutions to the MOD’s requirements, and highlighting the cost and risk of change to a new provider In practice, two other consortia were formed and submitted proposals. They were eventually deselected after investing, conservatively, £4m each in bid costs, and the two incumbent providers then went head to head for the contract

Magnus Josephson Growing your public sector business Legal expert on EU Directives Business developer – Tel: – Stockholm, Sweden – – Contacts Kelvin Prescott Winning in IT Commercial Strategy Business Development – Tel: – London, UK – –