Cut Costs, Not Corners: Evaluating Public Procurement Software

Selecting the appropriate procurement software for a Public Sector organization demands meticulous consideration. Public Sector procurement teams must dedicate significant time to collect and articulate requirements and tender documentation. Equally important is the creation of thorough evaluation plans that meticulously assess the criteria and respective weightings of both commercial and non-commercial aspects in prospective vendors’ proposals.

The importance of carefully considering evaluation criteria cannot be overstated. When determining evaluation criteria, we must take into account various factors such as price and quality. Additionally, more recent considerations like social value, environmental impact, and ethical issues have become crucial in public procurement decision-making processes.

Once the criteria are determined, it is essential to consider their respective weightings and how they compare and interact with one another. Finally, conducting modelling to ensure the chosen criteria and weightings are effective is highly recommended. If these steps are not followed the consequences can be detrimental to the buying organization.

To better understand my main point, let us first examine the definition of a widely recognized criterion: ‘price’. According to Collins dictionary, price is defined as:

‘The price that you pay for something that you want or an unpleasant thing that you have to do or suffer in order to get it.’

The concept of price has a profound impact with two distinct interpretations. The first meaning relates to the familiar idea of the cost we incur when procuring goods, works, or services. The second meaning, which I find intriguing, highlights a common error we often make in procurement. We tend to place excessive emphasis on price, leading to subpar purchasing decisions and consequent “suffering”. In my opinion, it is crucial that we reassess (pun intended) our perspective on price when establishing our evaluation criteria.

Price is merely one aspect of the overall cost. This is not novel information in procurement, as we have become more skilled at considering total lifecycle costs. However, have we also considered the cost of selecting the wrong vendor and the necessity of replacing our software every 2-3 years? Shouldn’t this be a fundamental part of our decision-making process when assessing evaluation criteria?

Before we proceed, let’s define another common evaluation criteria; the slightly less common and underutilized, ‘value’:

‘You use value in certain expressions to say whether something is worth the money that it costs. For example, if something is or gives good value, it is worth the money that it costs.’

In the same way, let’s suggest weighing the cost of selecting the wrong vendor, I would also recommend contemplating the value which can be realized if the right vendor is selected. For example, you select a system that offers features and functions that meet your basic requirements today. But what about the future? What if your needs change? What if public procurement regulations change? Can the system grow as your organization scales up? Can the system offer you the chance to innovate? Can the system manage your non- public / low value (below threshold procurements)?

This type of thinking can help you determine if any procurement software is truly ‘worth the money that it costs’. The value to be gained, or indeed lost, from the selection of procurement software must be thoroughly considered before going to market.

5 Things to Consider When Selecting Government Procurement Software:

●        Cost is more important than price.

●        Value is more important than cost.

●        Weighting your evaluation criteria correctly is more important than both value and cost.

●        Evaluation criteria therefore have to be carefully selected, weighted, and then tested.

●        If the criteria and weightings are not correct then the result of your procurement may be that you choose the cheapest, not the optimal procurement solution for your organization.

If you are going out to the market in search of a new procurement technology, please do consider the above points and also reflect on what is important to your organization when making your selection. The correct decision can open up so many opportunities to make savings through efficiencies; can enable speedy response to change / risk events and even allow you to innovate in ways that may not have seemed possible for the public sector. For example, create a forward auction tool to sell used but still useful equipment to business or other entities thus providing your organization with a new revenue stream and contributing to social goals by promoting reuse of items!

Buyer’s Remorse–Not So Fast!

Don’t let price-based decisions lead to regret in procurement software purchases. Buyer’s remorse can have serious consequences, especially for public sector organizations. Transparency, accountability, and efficient use of resources are crucial in this context.

To avoid these negative outcomes, prioritize value over price. Carefully evaluate potential purchases to ensure they meet your organization’s needs and provide the best return on investment. Don’t let buyer’s remorse slow you down – make smart procurement choices.

At Ivalua, we firmly believe in offering a solution that empowers public sector organizations to unlock value and achieve their goals. For more resources, you may download our Public Sector Datasheet or check out our Public Sector Industry Page.