How the Government tackles IT purchasing?
The Government's G-Cloud is being praised for tackling head-on the subject of benchmarking IT product purchases, a subject highlighted as pivotal to driving down the cost of Government IT by the Public Administration Select Committee (PASC) in its report, 'Government and IT - A recipe for rip-offs'. And a search for benchmarking on the CloudStore finds just one tool, KnowledgeBus IT Edition, which directly tackles this subject. It provides daily updated market guide price and stock levels on over 150,000 ICT products from more than 2,500 manufacturers.
Benchmarking is broadly recognised as a best practice procurement methodology that helps drive best value and consistently transparent pricing. A point raised by Sir Phillip Green's Efficiency Review, which found wide price variance on products across the public sector and 'very poor' quality of data, both of which hamper cost management.
Research by IT Edition across 1,000 public and private sector organisations found that 81% are not securing the IT margin they expected and some were paying up to 474% margin for certain items. The research concluded that the scale and volatility of the IT supply chain made it difficult for buyers to conduct validated price benchmarking.
A recent SOCITM Annual IT Trend survey confirmed a 3% margin paid for ICT products is a benchmark of good practice.
The G-Cloud framework, therefore, clearly sets out to drive best practice margins by empowering the procurement 'front line' to negotiate better ICT product deals, police the performance of supplier pricing and drive continuous value for money.
Chris Haynes, former Cabinet Office eDelivery Team Director, said: “Benchmarking is an essential first step towards more joined-up professional procurement and radically driving down costs. Traditionally it has been difficult to obtain and manage comparative data on ICT product costs, particularly in such a highly volatile market where price and stock change daily.
“It is widely accepted that 3% margin is good practice but without a validated trade price to use as a benchmark, buyers have had little in the way of insight on which to conduct 'intelligent purchasing' - qualifying transparency of relationships and whether best value is being reached or not."
“The fact that only one 'tool' has made it on to the framework is testament to the challenges of bringing together highly disparate and dynamic market data into a useable browser based tool. Government Procurement Service should be highly commended for delivering such a solution to the public sector community via G-Cloud."
“It will help the public sector overcome paying higher than average prices for ICT products at a time when best practice CIPS approaches are readily influencing how government professionalises it's procurement.”
IT Edition has proven to save organisations up to 24% of their IT spend, helping ICT buyers stretch the reach of their existing budgets. Mercato technology is accredited by CIPS for offering Procurement Excellence and the Institute of Chartered Accountants for its financial credibility. IT Edition is used by 30% of UK Police Forces, a number of Local Government organisations and an extensive amount of private sector businesses.