When attempting to drive organisational technological innovation alongside policy changes there is a whole series of challenges to be managed by government departments. In procurement departments in particular, the need to innovate and to drive more and more value from suppliers is highlighted in the UK Government’s recently published Industrial Strategy paper.
The paper targets public sector procurement with encouraging investment in UK business and driving revenue for SMEs. It also challenges buying departments to work with suppliers to stimulate innovative procurement and to balance social, economic and environmental considerations against project requirements. This should have the effect of encouraging innovation and SME involvement whilst maximising the positive impact of public procurement in strengthening the economy.
Ten ‘pillars’ are identified in the paper, each one setting out a programme of new policy and identifying areas of focus for further consultation and discussion. The pillars are designed to drive reforms aimed at increasing growth across the UK’s economy. Pillar 5 is focused on ‘Improving Procurement’ to drive innovation and stimulate UK supply chains; with innovation and technology widely featured throughout the strategy document.
From a practitioner’s perspective, the paper’s appreciation of the necessity for ‘lifelong learning’ is worthy of note. The speed at which technology is developing requires that people are both retrained in new skills and able to keep up with the fast pace of change. ‘Developing Skills’ is addressed by Pillar 2 – focusing on building a solid platform of training to enable people to feel more confident and capable, for example when adopting new procurement technologies and integrating new policies.
It’s rightly pointed out that transformation will not happen unless we have leaders in technology as well as people who have the right digital skills and expertise. From the perspective of procurement, transformation stands a greater chance of gaining traction when all stakeholders involved in the process are willing to embrace process improvements and technological advancement.
Both technology and policy innovations are already being adopted by the procurement sector, and are being incorporated in to everyday working practice. Key examples of this are the ‘Balanced Scorecard’ and the GCloud purchasing framework.
Pillar 5 showcases how GCloud has driven improved outcomes around technology adoption and innovation. With less bureaucracy and restrictive processes, £1.7bn of spend to date has been channelled through GCloud’s Digital Marketplace to suppliers of cloud-based services.
My take on it is that whilst the contribution G-Cloud has made to supporting SMEs is encouraging, surely there’s an opportunity here to look deeper in to building on the successes of the Framework; helping suppliers to drive even more of their business through this effective and efficient channel – “What next for G-Cloud?”
It’s fair to say that post-Brexit procurement policy reform and improvement remains uncertain, insomuch as policy and trade agreements are still to be negotiated or revised. Currently, public sector organisations are still aligned with and executing on the EU Procurement Directive 2014/24/EU.
Despite this uncertainty, the stimulation of innovation between buyers and suppliers is seen as a way of delivering value for money in public spending. The Government is introducing the option for “innovation review points,” where contract extensions can be awarded for innovative solutions that add value or make cost savings. Whilst this should not detract from having a client-led approach to working in partnership with end users, senior stakeholders and buyers, this incentivisation to suppliers to continually enhance their solutions can only be positive.
To help stimulate growth across the value chain, the ‘Balanced Scorecard’ (BSC), launched by the Cabinet Office at the end of 2016, is being mandated for immediate use on all construction, infrastructure and capital projects over £10m. The BSC is designed to help procurers think about cost and social and economic factors when planning a procurement. This in turn should help UK-based suppliers, including SMEs, to compete for contracts throughout the supply chain.
But how does the BSC help procurement define value for money (VfM)? One of the areas determined by the scorecard is a contract’s whole life cost. From Commerce Decisions’ extensive experience in helping organisations optimise VfM, we understand that whilst whole life cost is a contributory factor, used alone it limits the achievement of the best VfM outcomes. Cost must be modelled and effectively attributed to each of the elements of a project to be scored. Borne out of our 15 years of experience in this area, Commerce Decisions has developed and enhanced the AWARD® evaluation solution to assist supplier cost modelling, stakeholder collaboration, and the actual definition of value for money for each £1 of the solution offered (more details can be found here: www.cd.qinetiq.com/rvfm).
It would be great if the innovation-focused elements that are woven throughout the strategy document were seen as a rallying cry to herald the exciting new frontiers and challenges being faced across all facets of Business and UK Public Sector.
The proposal covers a great deal about the collaboration and facilitation of ideas between Government and Public Sector Suppliers. For these to succeed, the same also needs to be applied to Government Departments and Bodies who must break down more of their boundaries to better communicate and share their respective digital agendas.
As well as transforming policies, creating new institutions and training people, I believe accountability for driving change must sit with each and every person from the ground up. By sharing responsibility, there is the potential for a far larger impact to be achieved by implementing technology and policy changes. People will be more effective when equipped to work with innovative applications and strategies in ways some people thought not possible.
The full Green Paper policy document can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/585273/building-our-industrial-strategy-green-paper.pdf< Back