5 Procurement Focus Areas for States in 2020

by Jarrod McAdoo

All states want to use public resources wisely and efficiently but doing so quietly is not enough to meet expectations. It must be clearly visible to everyone in the state that procurement is well run.

This additional level of requirement provides a perfect opportunity to leverage the capabilities of technology to communicate and centralize spend and supplier information state-wide.

1. Modernization: Whether large or small, all states are dealing with the mounting technical debt that comes from managing decades old systems that don’t enable strategic initiatives or the sharing of data, provide a poor user experience, and are prone to security vulnerabilities.  These legacy systems include many different processes, including sourcing, procurement, and payment systems used by the states. Although all states will benefit from modernizing their procurement processes and systems by eliminating this technical debt, modernization has other benefits that can look differently for each of the states.  For example, smaller states have more incentive to work together to increase their buying power, running joint sourcing events, and using co-operative contracts. While larger states may have more buying power than the smaller states, but they may have many well-funded state agencies that act independently, with their own systems, resulting in data and visibility silos that erode this buying power.  Modernizing procurement systems can enable states to manage their data and engage in strategic sourcing and management programs, as well as ensure compliance with these programs. With the proliferation and maturity of cloud solutions and automation, the time to overhaul these legacy systems, reduce this technical debt, and enable the strategic management of spend is now.   
2. Risk Reduction & Transparency: The biggest risk in public sector procurement is the perception that state spending has gone awry. The only publicity seems to be bad publicity, with no one looking to provide news coverage when things are going well. Increasing transparency is a frequently cited fix for perception problems, but it is not a cure-all. For instance, the recent construction boom has resulted in a shortage of some subcontractors. If transparency makes it possible for constituents to discover that out of state service providers have been used when hiring local should have been possible, procurement may have a problem on their hands – unless they have a system that helps them demonstrate local options were exhausted first. Transparency is not simply pulling back the curtain, there needs to be a strategy for educating and communicating.  
3. Constituent Value: This is where we focus on the difference between states doing an effective job managing spending and states making it clear to their constituents that they are doing so. State-level procurement is more complex than most people realize. Without procurement experience it is difficult to understand all the elements of large project management, especially when there are non-price related considerations to an award decision. Investments in communication and outreach can help manage the constituent experience, even when most public sector procurement activities do not affect them. How State procurement creates value from the constituents’ tax dollars is a great story, technology can help you show and tell it.
4. Improved Data Management: There is a two-fold challenge related to data management. Data must be made accessible, but it must also be kept safe. Paper based processes drive down accessibility while increasing the cost to manage information and raising the risk of human error. Updates are slow and present an overwhelming challenge to states looking to modernize and bring their legacy data forward. Data that exists in systems or databases has its own problems. Systems are often siloed, and no one is trying to interconnect them. Valuable data may not be stored in a place where it is available for analysis, and so it sits unused and ages. If you have a master data management strategy, constantly reviewing and optimizing it is imperative. If you don’t have a master data management strategy, now is the time.
5. Talent Management: Talent is a challenge in all sectors and industries and at all levels. Low unemployment rates increase the competition for top talent, especially for the most strategic positions, where experience is highly prized and leadership skills are a requirement. Even lower level positions can be challenging to fill. As the workforce shifts and Millennials make up an increasing percentage of new hires, expectations around technology and a forward-thinking culture become far more prominent in recruiting and retention – potentially at the expense of ‘tribal knowledge’ built up over years or even decades.

Much of what state-level procurement has to accomplish is about the approval of external third parties. The Federal government establishes requirements that affect eligibility for grant money. The public wants to be kept informed, even if they do not have the background context to understand what they are told.

In the past, this has led to information sources that meet the letter, rather than the spirit, of requirements. Now that procurement technology has evolved, and significant effort has been made to ensure that it is capable of meeting the public sector’s unique needs, states should be able to satisfy all that is asked of them in an efficient and cost-effective way.

Read the 5 focus areas for Cities & Counties