This is the third in a series of articles covering the various stages of a live Competitive Dialogue procurement process, from its inception through to, we hope, contract signatures. The first article was published in the September 2012 issue of Housing Technology.
An important part of procurement projects based on competitive dialogue is the idea that the solution can evolve throughout the process and that has certainly happened with the procurement I have been doing for the past few months. It’s easy to get so caught up in the procurement process that you lose sight of the big picture which is usually to help an organisation achieve its objectives.
Well, the big picture has certainly been very present in this one. The procurement had the original aim of replacing a number of existing applications and while a core set was definitely in scope, on the fringes there were decisions to be made about retaining or replacing others. As the detailed solution stage approached, it was clear that some of the proposals could not only replace everything that was potentially in scope but could go much further and deliver wider benefits.
The difficulty here is that having set the scope at the outset of a ‘traditional’ OJEU procurement project, there is only limited room to expand it as you go through the dialogue process. At the other end of the spectrum, we had become aware of new market entrants offering cloud-based solutions aimed at specific areas. Things are moving fast in the area of cloud solutions and there are options available now that didn’t exist when the procurement began. The big decision on the table was now about scope and some of the choices could not be accommodated within the scope of the OJEU notice so the only sensible option was to suspend the procurement to allow time for consideration.
At first this feels like a lot of wasted time, effort and money but there is another important side to it. There are many examples where projects have pushed on despite changes in the operating environment and many of these have had unhappy outcomes (see www.bpic.co.uk/articles/deadhorse.html for advice on pursuing projects beyond the point of usefulness). The other way of looking at this is that the dialogue process had built a consensus that the original scope was not what was needed. A new clarity had emerged and also new developments in the market place had been recognised.
Making the decision
Now you can say that this is all fine but if you keep changing you mind, you will never make a decision, but is that worse than making a decisive choice that proves less than ideal? Okay, the concept of ‘ideal’ may be a bit of a Holy Grail in information systems but let’s look at the practical impacts.
The primary aim of replacing an expensive and difficult to support legacy system could now be addressed using a cloud-based option that had only recently become available. The second aim of reducing the number of applications in use had been shown to be under-ambitious as the scope had been too tight. The game had changed and was now in fact two requirements: one short term and of limited scope; and the other much bigger. The first goal of replacing an old system and reducing costs could now be achieved with much lower investment than originally expected and it had been accepted that the longer-term goal needed much more thought, engagement and assessment. So we have short-term savings on investment and running costs firmly in the sights and a strategic direction under active consideration – not a bad outcome in my book.
Instead of proving that the OJEU competitive dialogue process is a lengthy and expensive waste of time, I think it has demonstrated that it takes time to discover what is really needed. The downside is that the suppliers involved have also spent time and money taking part in the process and these costs must be recouped through charges to their customers.
New market entrants
With that in mind, we have learnt that some new entrants have made a decision to market their products in a way that avoids the traditional procurement approaches. One way they do this is to keep their costs down by not chasing tenders that they can only ever win a small proportion of and pass those savings on in lower charges. To avoid OJEU they must keep their charges below certain thresholds and this also means a limit to customisation. It’s more of a utility computing model, supplying service rather than product, and it’s gaining ground fast.
The next few years will hold some big challenges for the traditional suppliers and I believe we will see a new range of lower cost solutions emerge. The world of information systems is being driven by consumerisation and many of the old certainties are changing. The world of housing is also changing; the introduction of universal credit combined with likely rent increases will mean that the difference between the social housing and private rented sectors will shrink. Providers and developers of cloud-based solutions are producing lower cost, standardised services and I believe they will very soon be a real alternative to more traditional solutions.
John Paul is the technical director for ConsultEast.