How can public sector procurement change to support digital government?

  • Posted on May 30, 2022
  • Estimated reading time 4 minutes
Public Sector Procurement Change

Digital government will be essential to support Australia’s economic rebuild. The Australian Government recognises that, now “every business is a digital business”, government services must follow suit. Already, the nation is investing in making it easier than ever for Australians to find the services they need, including expanding the digital identity system.

To support a digital economy, government agencies must actively contribute by stimulating the way in which people and businesses engage with technology. This requires government agencies to focus on what matters to people and use technology to solve real-world problems.

Great CX = Citizen trust
Keeping the customer experience at the centre of decision making will be critical as the experience of digital services correlates with trust in government. Given this, the priority will be to deliver outstanding experiences that build citizen trust. In the public sector, the focus was previously often on the technology itself. Now the focus needs to shift to operationalising technology to deliver a great customer experience.

But, to do this, agencies will need to get creative, finding new ways to engage with top-performing companies outside traditional procurement models.

Some public sector leaders are already thinking more strategically about procurement and entering into true partnerships with vendors that go beyond traditional procurement constructs. Based on their success stories – and Avanade’s experience of best practice around the world – new models of engagement to drive rapid and agile innovation are likely to include:

  • Tendering for outcomes not inputs – Rather than a “we buy, you provide” model, where agencies issue proposals with hundreds of lines of requirements, public sector leaders are increasingly using tenders that give the private sector a problem to solve. There’s a growing recognition that government doesn’t need to tell the private sector “how to do their jobs”.

  • Considering the long term – Mindful that projects need to be future-proofed, leaders are also letting vendors in to see their long-term strategies. Frequently, project planning requires teams to look beyond 3-5 years to understand how an asset will be used and its likely future role. Importantly, agencies entering into longer term partnerships must regularly revisit partnership requirements to determine how performance measures need to evolve. The business of government is increasingly dynamic, requiring changes of direction as the external environment shifts. For public-private partnerships to work, all parties must accept that arrangements will shift and adapt to keep teams focused on unfolding priorities and new requirements.

  • Asking vendors to work with competitors – Building innovation into contractual arrangements sometimes means asking two major vendors to work together. Agencies may determine that a business problem cannot be solved by either vendor individually – but rapid progress could be made if competitors are willing to work together.

  • Bringing more start-ups in – If government agencies believe their problem will be best solved by harnessing the entrepreneurship and creativity of start-ups, procurement may need to be simplified to allow small businesses to participate in a tender process. Alternatively, agencies can harness the ever-expanding ecosystems of smaller companies that surround large vendors, contracting through the bigger entity to gain access to start-up capabilities.

  • Using tenders to seed new products and services – If a solution is missing from the market, some public sector leaders are offering vendors opportunities to create new products and services, with the government poised as the first subscription customer. This approach gives government the potential to shape services to its needs and benefit from a first-mover advantage. Meanwhile, the vendor innovates with the safety net of a large first customer locked in.

  • Working collaboratively with vendors – Some of the most successful partnerships involve external partners wrapping internal capabilities into a blended agile team. Rather than a vendor coming in and working at arms’ length, using a blended team ensures the solution leverages internal IP – and often results in valuable upskilling or knowledge transfer from vendors to agency staff.

For some agencies, adopting these new approaches and setting up the right operational structures will require a mindset and cultural shift. Introducing a diversity of approach that challenges the status quo must be led from the top. It will take a willingness at the executive level to articulate the “why” of new models and encourage procurement to think and operate more strategically.

Equally, vendors will need to look beyond their quarterly sales targets and take a longer view of the value of a partnering relationship.

When all parties come together cooperatively, with a shared vision for better citizen outcomes, bold and rapid progress can be made to greatly improve the customer experience.

Find out how you can innovate citizen services with Avanade’s digital government and public sector solutions.

Avanade Insights Newsletter

Stay up to date with our latest news.

Share this page
Modal window