Introduction - spb.sa.gov.auspb.sa.gov.au/sites/default/files/Future ICT Service Arrangements.pdf · Introduction Mr Sam Minervini ... Mr Andrew Mills – Future ICT, Department for

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AGENDAIntroduction

Mr Sam MinerviniContract Services

Presentation – Practical Procurement SolutionsMr Andrew Mills – Future ICT, Department for Transport,

Energy and InfrastructureQuestions

Networking and Light Refreshments

Professional Development Seminar


SA GovernmentFuture ICT Service Arrangements

Andrew MillsDirector Procurement Projects


BACKGROUND


Milestones/Achievements

Since July 2003 Future ICT has…Had 14 Acquisition Plans approved

In conjunction with Government ICTS, negotiated 11 Contract Extensions (Mobiles x 2, Microsoft Select 5, TSA, Standard PC Panel, GRN and ISP x 3)

Had 36 Evaluation and Assessment Plans approved

Conducted 8 Industry Briefings

Released 48 Market Approach Documents (IDC, IRI, RFP, RFT and Statement of Requirements)

Received 220 Proposals from the Market

Established 22 Evaluation Project Teams (involving 34 agency staff)

Produced 57 Evaluation Reports

Had 19 Purchase Recommendations Approved (State Procurement Board)

Received and processed in excess of 1,300 enquiries/questions from industry

Held 147 Steering Committee Meetings

Provided 30 Cabinet Submissions/Information Notes

Signed 40 Contracts (Software Licensing Agreements, Head Agreements and Purchasing Agreements) with 21 Suppliers


Success Factors

No significant service continuity failuresMet all “critical” datesImproved serviceCosts less - $30m pa lower expenditure (13%)Limited media coverageMinimal industry complaintsNow have a capability


History - Future ICT

Late 2000 - research and internal studies commenced

June 2002 - Stage 1 Approved - Planning of appropriate replacement strategies - included extensive across-government consultation, peer review and research

December 2002 - Stage 2 Approved - Development of Sourcing Strategy, Strategic Sourcing Framework and high level scopingJuly 2003 – Tranche 1 ApprovedNovember 2005 – Tranche 2 Approved1 July 2007 – Move to OCIO as an operational unit


Future ICT

What do we do?Ongoing Development of Sourcing and Procurement Strategies for ICT InfrastructureCurrently undertaking Procurements of ICT-related goods and services to ensure business continuity for agencies due to the expiry of the EDS & Other contracts

What don’t we doTransitionOngoing managementApplications sourcing


Interrelated Programs


Note – Minor changes have occurred due to Government organisational changes


ICT Governance & Management ArrangementsCabinet

CrossCross--Government Government Governance DomainGovernance Domain

Department of Treasury and Finance

MPICCCabinet

Committee

Budget/CapitalNegotiations for

Across-Govt initiatives /elements

Minister for Infrastructure

Treasurer

Budget Budget DomainDomain

Future ICT

ProjectTeam

CE, DAIS

Executive Govt

Committees

Agencies

Legend

Project Teams

Portfolio Reference

GroupsCTO Forum, FICT, Transition, Other

Agency DomainAgency Domain

Agency Projects, strategy, policy, standards, contract admin, initiatives, services

Agency Representation

Responsible Minister

Government CIO

Minister for Administrative Services

ICT Transition Steering

Committee

ICT Services Steering

Committee

Future ICT Steering

Committee

Budget and Capital

Negotiations For Agency Initiatives /Elements

DAISGovt ICT

Transition

DAIS Govt ICTOperations

Across-Govt strategy, policy, standards, contract admin, initiatives, services

ED, Government ICT ServicesGovernment CTO

ICT Board

Note – Minor changes have occurred due to Government organisational changes


Future ICT Core Principles

ICT – A Strategic AssetICT – A Business Support Tool (not an end unto itself)Overall Value for MoneyStandardisationFlexibility & ChoiceCommitment to Suppliers


PLANNING


History of ICT Sourcing in SA

Special – OIT, IEPO etc

More centralised but still not fully

Driven by economic/industry development

Imposed – Cabinet decisions

Regard for business needs

Fiefdoms still exist

Many success stories

Experienced at contracting – not just ICT


Sourcing Landscape

Significant in-sourced

EDS Contract – IT Infrastructure (minus desktop)9 (10 ½) year outsource but had modified over life - 30% external spend

Implemented for economic development outcomes (i.e. ITSSED)

Acceptable but not loved (attitudes have changed)

Telstra Contract – Data & Fixed Voice (10% external spend)

5 year contract influenced by economic development

Other – Optus (mobiles), Equipment Panels (PC’s, Photocopiers), GRN, Microsoft

Leakage from current contracts


Sourcing

We started at the sourcing level

Excellent research – case for change

We have an approved sourcing strategy but:Wasn’t fully understood by senior management

It took too long

Over analysed & overly complex

Too technical

Needs review

Analysis lead to some paralysis – procurement process started late


Procurement ApproachNot different or special – involvement of State Procurement BoardGovernance by non-ICT executivesOutcomes required

Replacement contractsOpen, transparent & clean processBuild a capability – human & organisationalNo worse than budget neutral – macro analysis

Single focus - purely ICT goods & services – no economic development


MARKET APPROACH



Market ApproachAsk questions – not provide answersWhat not necessarily howBalance – ease of evaluation versus best value solutionBe wary of mandatory requirementsOverlap vs gapsDo not assumeBreadth of scope extremely importantPhasing – flexibilityBe prepared to adjust outcomesIndustry knowledge & ability


EVALUATION


EvaluationBe clear on the value being soughtAlways – separate financial from the restApproach

Non numericLower and upper hurdleIndividual to group assessmentsUse of specialist advisersReport – options not recommendations

Quality assurance and control criticalOther inputs to final decision


NEGOTIATION


NegotiationSpecialist team activity – not for everyoneInvolvement of contract managers?Clear roles and responsibilities a mustDo it – imposition of outcomes has its dangersIt is a journey The team needs clear and unambiguous delegations – never full authorityHave clear understanding of gives & takesRecord keeping essentialControl the drafting


Negotiation

Continually modify negotiation approachBe cautious of deadlines – always have a contingencyUnderstand that it must capture the intent and value of the “deal”Monitor value continuouslyBe prepared to walk if the value is not capturedCelebrate the conclusion but understand the result will always be flawed


CONTRACTS


Contractual Objectives

Contracts to articulate not drive policyDevelop “Rules” as policy in parallelRecognise the allocation of risk between State & supplierNeed to capture the value proposition contained in the selected bid/sExplicit recognition of multi vendor environmentStandardized contract structure & subsidiary contract documentation


Contractual Objectives (2)

Consistent implementation of contracting related policiesConsistent management and administrative practices including change controlFacilitate change across multiple contractsBroadest possible access to contract documentation


Contract Structure

Head Agreement (HA) (16/20)One for each vendorCentrally managed

Purchasing Agreements (PA) (21/35)Defines goods and services to be procured (“the deal”)Service options

Customer Agreements (CA) (369/736)Actual services required by a customerAgency managed

Exceptions – software etc (18/19)


Types

Contract types include:PanelMulti-vendor &Sole supplierBut – usually mixed

Many variations including:Fixed or firm priceOptionsVariable PriceNo price (at PA level)


Consequences

Shorter term contractsMore ICT companiesMore flexibility for agencies but not what they expectedShift in accountability for contract & service

management - more agency responsibilityManagement of overlaps

Better value for money


LESSONS


Lessons & Homilies (1)

Strategic vs pragmatic

Semantics is important – common understanding

Its hard, laborious & boring (most of the time)

It is complex and difficult so it needs to be broken down to achievable outcomes

Persistence pays

It takes longer than is wanted (18 month rule)

Smaller does not mean easier and shorter



Aggregation – to a point

One size does not fit all

Competition works

Ask questions – do not dictate outcomes

Be willing to change/stop mid process

It is resource intensive – not only for the visible 10%

Asset detail is not available - ever



Impact of non-core effort - renewals

Change agent or catalyst ??

Inevitable resistance – can dictate pace

Governance is king

Great opportunity to “educate” on ICT

Special project approach or operational capability

Rigour – quality, quality, quality

Time for approvals



Attention to detail

Devil is in the detail – but it has to be worked out – either once or many times & early or late

Stress is a constant – team dynamics important

Group think a major risk

Learn to let go

BALANCE



Knowledge & skill sets required to make up a sourcing team

Executive leadership & people skills

Program & project management

Procurement & process engineering

Domain technical & operational knowledge (eg ICT, ITIL)

Organisational & public sector management

Market & commercial

Contract management and administration

Legal, financial analysis & negotiation

Communication, writing & presentation

Administrative and quality processes


FUTURE


Future

Move to OCIOConcept of Specialist Procurement UnitThree year commitment – to be reviewedRenewalsBroaden scope of workContinue evolution


Questions

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