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MA DGS 2015 Presentation - Procurement Strategies for Cloud and XaaS by Sherry Amos, Pia Owens andTony Encinias
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Massachusetts Digital Government Summit
IT Cloud Procurement Panel
Sherry Amos
Managing Director, Industry Strategy
Education and Government
Workday
703.402.3476
Agenda
Government paths to the cloud
Who and What is Workday
Saas Evaluations – What is Different
Pre-RFP Process
RFP Process
Evaluation Process
Contracting Process
Cloud Value and Technology – Other Considerations
Recent Forums on Cloud Procurement
NYS IT Terms & Conditions – A Workshop for Attorneys
NYS OGS Procurement Input and Saas Considerations
NYS Legislative Roundtable – State Operations Sub-Committee
California Special Provisions for SaaS Contracting
GFOA Cloud Procurement Reform Panel
Center for Digital Government Public-Private Workgroup for Cloud
Procurement Best Practices
American Bar Association – State and Local Government Cloud
Contracting Panel
3
Government Paths To Cloud
Maturity and Case Studies
Strategies Case Study Examples
Data Center
Consolidation:
Shared Service,
Managed Service,
Outsourced Service
US Federal Government
Commonwealth of Virginia
Commonwealth of Pennsylvania
Cloud First Policies: US
Federal Government
All agencies identify moving 3 “services to the cloud” –
Barriers to accomplishment: staff skills and procurement
processes, security
Infrastructure as a
Service
California’s “Cal Cloud”
Texas Cloud Broker Service
Platform as a service Google Apps, Microsoft 365, Even the CIA is moving to
cloud services
“Open Government”
Initiatives
Recovery.gov
City of Boston
Enterprise SaaS
Applications
Citizen Call Centers, 311,
Workday ERP, HR, Payroll, Financials Applications
TECHNOLOGY
FOUNDATION
ANALYTICS
PROCUREMENT
EXPENSESPROJECTS
PAYROLL
TALENTRECRUITING
HUMAN
RESOURCES
FINANCIALS
REVENUEINVENTORY
STUDENT
INSIGHT APPS
TIME
TRACKING
PROJECT
BILLING
Why Does The Technology Matter?
Is it enterprise-class?
Is it scalable?
Is it secure?
Is it innovative?
Is it mobile?
Does it improve our efficiency, effectiveness, and/or
service delivery in meaningful ways?
Cloud Definitions
The Cloud Has it All – We Manage It – You Don’t
Your IT Focus Can Shift to New Transforming Initiatives
What We Manage For You
Upgrades
Patches
Availability
Backup
Network
Storage
Operating system
Database
Integration
Provisioning
Security
Data center
Disaster recovery
System maintenance
Performance tuning
“The significant problems
we face today cannot be
solved at the same level
of thinking we were at
when we created them.”
- Albert Einstein
Consumer Expectations – Employees and Citizens Want
the Same Experience
Workday Confidential
10
10
Slide Title
SaaS Evaluations – What is Different
Business services – not software or technology
Subscription not perpetual license
Operating expense not capital expense
Subscription term lengths and renewals are variable – but usually 3-5
years in government
Configuration not customization
Multi-tenant vs hosted matters – a lot
Service level agreements same for all customers – no customization
Security evaluations different
Ensure alignment early between business owners, IT, security officers
and contracting
Summary – Cloud Computing is Here to Stay
Engage in extended market research prior to formal procurement of
cloud services – understand differences in native vs hosted vs hybrid
Invite providers in for “discovery days” – give your constituents the
opportunity for dialogue of requirements and capabilities
Align your agency/business owners, procurement, legal, and security
team early in process – achieve common understanding of how to
procure “services” vs software/hardware
Have a vision and strategic plan for how cloud services fit in across
both your business needs and your IT services
WORKDAY CONFIDENTIAL
Appendix
Pre-RFP Market Research
Approximately 60% of early market research is conducted online and
/or with industry analysts with no vendor engagement
Engage early vendor involvement and discussion – you cannot learn
enough online or through 3rd parties – this can still be done in a fair,
competitive, and controlled manner
Think about “invitation to demo/preview” days vendors need to
understand your requirements and strategies prior to a formal
procurement process
Join public webinars for introductions to market solutions
Join regional events held in your area
Ask both the vendor and your network for other customers that you
can speak with
RFP Development
Skinny mandatory requirements down to what are core business functions and processes
Keep flexibility both in the breadth of solutions and the depth of requirements you require to allow you to “mix and match” the best overall solution for your organization –allow flexible bidding partners, i.e., not just the same ones over last 20 years
Scrub the use of “requirements databases” that contain thousands of static requirements from many organizations – many of which are never implemented and have led to “shelfware” - and related costs due to “scope inflation”
Include consideration for how to evaluate “innovation” in the future, not just current static requirements
If your RFP is complex – give vendors ample time to assemble quality response – 30 days is often too short if you have taken months to assemble your RFP and it’s complex requirements
Evaluation Process
Response timeframes – are they reasonable for RFP complexity
Clarification process – need active discussion – not just written questions and responses – interpreted through 3rd party consultants or procurement
Demonstration process – allow flexibility in the “scripted demo” to allow for demonstration of fully integrated business processes – not just single “checklist” requirement – eg: mobile, embedded analytics, process changes, etc
References – broaden reference mandatories – not just “5 or 10” others “just like me”. Eg – any government, university or NFP customer of certain size; any customer with “unions”, any customer with “complex regulatory reporting”, etc
Scoring – include forward looking innovation and “ability to deliver” in the formal scoring process
Contracting
T’s and C’s for true cloud solutions are different – understand this early in the process
Industry is moving to use of “Cooperative” Agreements – which are competitively bid – work with procurement to identify these suitable for your organization
Also investigate if vendor offers “piggyback” contract vehicles from another governmental organization in your region
Be prepared to negotiate “shared risk” – reputable vendors and public companies will not accept “unlimited liability” provisions
Know which T’s and C’s are actually “statutory” requirements and which are preferred practice
Do these things early in your procurement cycle, prior to RFP, and certainly not at the end of selection
For More Information
Workday Confidential
Contact: Sherry Amos
Managing Director, Industry Strategy
703.402.3476
Pia OwensAssistant General Counsel, MassIT
All views expressed in this presentation are the presenter’s own and do not represent the views of the Baker-Polito administration.
The Massachusetts Office of Information Technology, known as MassIT, is the state’s lead agency for technology & innovation. We serve more than 150 state agencies as well as cities, towns, & public schools across the state.
Cloud Procurement in the Commonwealth
November 2, 2015Digital Government Summit
20
Adoption of Cloud in Private Industry
• Forrester, 2015: Cloud spending will equal $106 billion in 2016, up 21% over 2015
• IDC, 2014: 70% of CIOs will use cloud-first strategy by 2016
• RightScale, 2014: 94% of survey respondents starting to use cloud, but most without mature enterprise strategy
Gorfor, https://www.flickr.com/photos/44412176@N05/4181323517/
21
Cloud
Enterprise
Content
Management
Adoption of Cloud in the Commonwealth
22
Cloud Procurement in the Commonwealth
• At first: ad hoc, case-by-case basis
• Now:
– Guidance and legal terms
– Pre-negotiated terms with large providers
• Coming soon:
– Enterprise policies and standards
– MassIT as a cloud broker
– Group purchasing of cloud services
23
Benefits of Cloud Services
Investment in equipment and software
Maintenance and support Quick entry and exit
Scalability Security Cost
24
Risks of Cloud Services
Access to data Lock-in / Transition Accessibility
Data privacy Security Cost
25
Pre-procurement Needs Assessment
•What kind of data will you be storing? Any specific requirements or laws that apply to the protection of that data?
•What level of security do you need? Is this a very sensitive application, or one where there isn’t much risk if the system is breached?
•What are your uptime needs? How mission-critical is your system?
•Will you be outsourcing work formerly done by union employees? If so, be mindful of the Pacheco law.
26
Conducting a Procurement: Procurement Vehicles
• Statewide software reseller contract, ITS58, supports SaaS and includes cloud legal terms
• ITT46 (Network Services) can be used for managed services and application hosting, but was not originally intended for cloud services
•MassIT IaaS and PaaS RFR / MassIT cloud brokering service (expected in 2016)
27
Conducting a Procurement: RFQ and Contract
• In RFQ, include:
– Cloud legal terms
– All requirements, including specific laws and rules for data protection and minimum SLA and support requirements if any
– Requirement for vendor to provide all applicable forms: subscription agreement, SLA, terms of use, privacy policy, security and data management policy, etc.
– Requirement for vendor to identify significant subcontractors
• In contract, attach all documents listed above, including negotiated cloud legal terms and vendor documents (subordinated to Commonwealth terms).
28
Cloud Lifecycle Management
• Provisioning and access control – centralized location for administrative logins and passwords
•Monitor metrics through vendor reporting and dashboards; enforce SLA
• Check typical usage and workloads against current offering and pricing
• Check regularly to make sure you can export your data
• Talk with vendor and look at industry news; try to figure out in advance whether this service might be discontinued
29
Thank you
Any questions?
Pia Owens, MassIT Assistant General Counsel
Cloud/XaaS andProcurment Strategies
Tony EnciniasVice PresidentPublic Sector Strategy
State Procurement Process
DOES IT HAVE TO BE THIS HARD?
Technology Changes
TRADITIONAL PROCUREMENT PROCESS CAN’T KEEP UP!
1960 1970 1980 1990 2000 2010 2020
Rat
e o
f Ch
ang
e
Cultural Challenges
THINK OUTSIDE THE BOX…
Traditional IT Infrastructure Model
stove pipe IT infrastructure
inefficient resource usage
increased deployment time
high operating costs
inflexibility for scaling
40 percent of expense
unable to leverage new technologies
Changing IT Landscape
cloud computing
social media
mobility
Demands are changing the rules…care less about technology and more
about making IT work on demand
Advances in technology (infrastructure and network)
Fiscal Realities
tax revenue still down
underutilized resources
consuming limited budget
hardware refreshes becoming more
infrequent
high operating costs
inflexibility for scaling
Unsustainable Model
Cultural Changes…the IT side
manage IT based on services and SLA’s
infrastructure isNOT yours…YOU DON’T
NEED TO OWN IT!
changing core server/storage skills to managing capacity
viewing computeas a utility
Hardest part of the equation…long term habits
hard to break!
business focused
Procurement StrategiesModify current
service contracts to accommodate
XaaS/onDemandmodel
Educate contract staff and comptroller on XaaS
onDemand model
Change from CAPEX to OPEX for onDemand
compute services (XaaS/Storage)
Leverage outside cloud contracts i.e.
GSA, NASPO Valuepoint, etc
Hardest part of the equation…long term habits
hard to break!
business focused
We have always done it this way….
Technology Changes
1960 1970 1980 1990 2000 2010 2020
Rat
e o
f Ch
ang
e
Is changing too fast…procurement processes must change to accommodate!
18 to 24 month procurement cycles don’t work!
Questions?
