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Public Sector

Insights from New York City’s Procurement Transformation

by Alex Saric
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New York City’s Journey to Procurement Digitization

Digital procurement has the power to unlock significant capabilities for organizations that embrace change and commit to bringing formerly paper-driven tasks online. But as the rate of technology change has outpaced the public sector, many government organizations find themselves with bits and pieces of disparate digital utility and no central organizational schema.

Fortunately, there exists within the public sector a workforce that won’t accept this status quo, and who have taken advantage of opportunities and challenges to create digitization strategies that tie together the loose ends and put them on the path to the e-procurement promised land. Such a path requires a significant degree of effort and coordination, a worm’s eye view of the working processes and people pulling the levers, and vigilant attention to change management.

We know it requires all of these traits because we’ve studied government organizations that have made the shift from disparate processes to a fully digitized procurement system. A great example can be found in the Big Apple, where the New York City Mayor’s Office of Contract Services (MOCS) served as the nexus for procurement digitization in the Big Apple.

This example also reinforces the old adage to “never let a good crisis go to waste,” credited to Sir Winston Churchill. The pain felt by the city from the financial crisis of 2008 served as the impetus for the transformation, and has been further accelerated since the Covid-19 crisis first struck the city.

Back on November 4, 2019, Public Spend Forum founder and Chief Product Officer of GovShop Raj Sharma sat down with two officials credited with this digital transformation to better understand what is possible when you have dedicated people, the right plan, support at the top and a strong technology partner in the e-procurement business.

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Raj opened the discussion with a trip down memory lane, specifically to the historical challenges and needs that opened the window of opportunity for our guests, Dan Symon, New York City’s Chief Procurement Officer and the Director of MOCS, and Ryan Murray, First Deputy Director for MOCS. They opened the conversation by describing how they started their story back in 2010 in the midst of the financial crisis, a time that hit NYC’s non-profit sector quite hard.

According to Dan, the Mayor’s Office was looking for creative ways to relieve the nonprofit sector of administrative burden, so there was motivation to find efficiencies and solutions to cost drivers and administrative burdens experienced in large part because of heavy reliance on paper, opaque processes, and inconsistent practices across City agencies.

Ryan and Dan were both working on an innovation project at the time, called HHS Accelerator, and had the opportunity to relieve substantial friction in the procurement process for nonprofits. Their first steps were to centralize document and data collection, and then run RFPs through that system. The City team also launched functionality for city agencies and suppliers to manage contract budgets, invoicing and payment.

The redesign continues today and its values and implementation lessons influence the roadmap for reform across all supplier industry groups. Beyond the process efficiencies gained, Accelerator was an important formative win for procurement professionals and the project team who faced a huge change management challenge. According to Dan, “we had an opportunity to broaden our impact beyond the health and human services sector, and we took our work to the next level with the development of PASSPort.”

Navigating the Legislative & Regulatory Landscape

Raj continued the conversation with a follow-up question, seeking to understand the unique challenges they faced in terms of legislation and policy. “The procurement, policy, and guidance rules are 30 years old, everyone is following the same rule book but with divergent practices and interpretations, so that created inconsistent experiences for all parties,” explained Dan, going on to describe hurdles they would need to overcome as they developed new systems for City staff.

“Staff wanted to make sure they were heard, that we understood critical processes. So our major lesson was that the technology solution wasn’t the most important aspect. The people, process and organizational culture are what matters most, and everyone needed to know how to ‘meet the change,’ and refocus business processes which was Ryan’s focus…nothing happens in NYC without strong governance.”

Ryan explains, “While we had some helpful baseline data and anecdotes since the procurement processes were manual, those data certainly aren’t one hundred percent reliable. What we do know is that the processes are messy, painful and must be improved now, even if regulatory changes are slow to be enacted. Despite this, staff still work really hard to keep services and operations going and vendors navigate an unforgiving bureaucracy which is an outgrowth of protecting the City’s interests, preventing fraud and corruption.” Ryan joined MOCS during the first phase of PASSPort’s implementation with their technology partner Ivalua, the selected e-procurement software company. It was immediately recognized that the technology challenge would be equaled by the business process reengineering task that they would face.

“We had 40 different ways of achieving the same outcomes, so there was a ton of change management before we even got to the point of considering which critical  legislative reforms would even be on the table,” said Ryan, adding that “we didn’t just want to digitize a broken set of processes.” The change process is as hard as they imagined, a friction they attributed to the decided non-sexiness of procurement reform and the high risk/low reward optics of “making it easier for vendors to get city contracts.” But they remain motivated by the partnerships nurtured at all levels of government and with industry leaders who are eagerly awaiting comprehensive changes to NYC procurement. “We tried to make the processes more intuitive and more efficient. The momentum gained from early successes, taking weeks out of the cycle time, with only portions of the process currently digitized, has garnered even more commitment to the initiative.”

Finding the Right Technology Partner

Raj shifted the focus to understanding the role that technology played in the transformation. Dan described how they went about selecting their ideal technology. The process was competitive, as can be expected given the range of providers available on today’s market. Beyond the anticipated selection rigor used in municipal procurement, Dan shared lessons from the initial implementation period. “We needed something that could be configured to what we needed. We had to match the City’s needs, and have the capability to make updates…the technology needs to grow with us.” In today’s environment the team doesn’t just focus on if the technology performs specific functions well, they seek platforms that introduce industry best practices and provide the must-have flexibility needed to give up idiosyncratic processes not required by law. “Meeting in the middle is best as we wanted a product that can adapt and not just a completely custom product. And we wanted to work with a company that get us.”

Ryan adds,” beyond meeting due diligence requirements, we have a no-nonsense approach for selecting vendors. They have to understand our needs, but also our culture, and have a practical approach for solving our problems.” In other words, MOCS wanted more than just a subject-matter expert in technology. Ivalua works closely with the MOCS team to implement phased product design and delivery that is closely aligned to the City’s procurement transformation roadmap.

“Constant iteration and improvement is huge for us. Government tends to have technology that is 10 years behind. Ivalua gave us a chance to take a quantum leap forward, release by release,” explained Dan. As they continue on into their 3rd release, scheduled to go live in the Spring of 2020, with entire source to contract coverage, they and everyone involved with NYC procurement are optimistic about the potential to bring more efficiency, better vendor experience and finally shift to introducing strategic procurement operations.

“We’ve taken processes that used to take 7-8 weeks to complete down to one week,” reflects Dan. These results show what we can achieve with a central collaborative platform and willing partners.”

Accelerating Needed Changes After Covid-19

Covid-19 hit NYC quickly and severely, straining the procurement team and their processes to the limit. But it also created an opportunity to remove roadblocks to further transformation. As Dan explained in an interview with Art of Procurement. The limitations of a highly restrictive and regulated sourcing process risked the city’s ability to secure the mass volumes of ventilators, PPE and other suppliers needed to protect the population. Initially, they scrambled. But that revealed to many the cost of maintaining current approaches.

As conditions stabilized, New York City procurement shifted to responsive agility, opening the door to further evolution. The early challenges supported further process re-engineering, which was the foundation for greater procurement value and resilience. The digital transformation they had embarked on earlier wouldn’t alone achieve that, but it was a critical enabler. “Digital transformation is a pre-requisite for what we really want to do, which is business process re-engineering” said Dan Symon. “In this new world, we are able to open the process up and make it transparent to everyone. That, in turn, creates speed. When everybody can see where everything is, something that can take five minutes will take five minutes instead of five days, five weeks or five months.”

The city’s initial pivot during the pandemic was supported by emergency declarations that removed nearly all of their guiding regulation and pushed them to accumulate short terms suppliers as well as 90 days worth of safety stock. The next pivot is being drive from within procurement, as Dan and his team move from activity-driven to strategic, with the ultimate objective being to elevate procurement so they are part of leadership planning. This will allow him to provide valuable context to his team, developing a shared sense of urgency and need around each new program and delivering more for the city and its residents.

Charting a Path Forward

Dan and Ryan have an eyes-wide-open approach to the challenges, threats and opportunities of PASSport, and they reflected on these in a robust transformation plan they described during our interview. Dan described his team as “scrappy…a team of people who are willing to do anything, who understand that no task is too small. We have surrounded ourselves with people who take this to heart, people who appreciate being the civic nerd behind the scenes.”

That general profile awareness of the type of change agent they sought was crucial, because neither Ryan nor Dan felt there was just one specific skill set for the type of people who thrive in this sort of environment. They described certain traits that allowed them to recruit scrappy, committed people who can get the job done with resilience and grit, who can keep users front of mind, and who are capable of failing forward in a mission-driven manner.

This is a great reminder that a must for any digital procurement initiative is a focus on recruiting leaders, building teams, and nurturing partnerships and maintaining the unwavering commitment that can bring a vision into reality. Together, they can push the boundaries of possibility, using the opportunities created by introducing technology, to produce sustainable results and establish unimagined goals for procurement transformation.

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Author

Alex Saric

Chief Marketing Officer

Alex has spent over 15 years of his career evangelizing Spend Management, shaping its evolution and working closely with hundreds of customers to support their Digital Transformation journeys. As CMO at Ivalua, Alex leads overall marketing strategy and thought leadership programs. Alex also spent 12 years at Ariba, first building and running the spend analytics business as General Manager. He then built and led Ariba’s international marketing team until successful acquisition by SAP, transitioning to lead business network marketing globally. Earlier, Alex was a founding member of Zeborg (acquired by Emptoris)where he developed vertical Procurement applications. He began his career in the U.S. Cavalry, leading tank and scout platoons through 2 combat deployments. Alex holds a B.S. in Economics from the U.S. Military Academy at West Point and an international M.B.A. from INSEAD.

You can connect with Alex on Linkedin

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