How is procurement important to ITAC members?

One of ITAC’s top six priorities, there are a number of reasons why procurement is vitally important to our association and the industry we represent. Let me outline just two ways procurement fits into ITAC’s modus operandi.

First, one of ITAC’s primary goals in dealing with government is to remove any barriers that prevent companies from bidding on potential business – i.e., by working to change any contract terms and conditions that could unintentionally prevent a company from participating in the procurement process. Our government does not design policies in order to purposefully block ICT companies in this way; after all, they want open, fair, and transparent procurement across the industry. But, if and when the opposite does happen, we work hard to remove the barriers and improve our members’ access to business opportunities.

Second, we want to encourage procurement because we believe that our government should be a model user, and an early adopter, of technology. If the government is both a model user and an early adopter of the latest ICT products and services, it will be able to provide better, more efficient, services to Canadian citizens, in the end ensuring a more efficient government. And when a government is more cost effective, it becomes more competitive, its citizens become more competitive, and the nation’s companies become more competitive worldwide. We want our government to be the smartest, best informed buyer of ICT products and services possible, because this demands only the best from our ICT industry – and only this will make ICT companies nationwide capable of not only competing, but leading, on the international stage.

We saw these principles work in the past with telecom, as Canadian companies like Nortel, RIM, and Mitel became world leaders – and we want this to happen in other sectors of ICT, so we can become world leaders all across the board.

We are in a good position to help make this happen. For one, the government is very motivated to talk to an industry association like ours, because it gives them insight into the industry perspective without taking a partisan stance or siding with an individual company. That’s why it is my job to seek out what our members’ expert voices have to say, and to foster an educated and transparent flow of communication between the ICT industry and the government.

It is important to note that our work in procurement supports our industry’s SMEs, as well as larger firms. Business in Canada – especially government business – would come to a halt without strong SME participation. Working with service integrators, they provide the resources for business transformation projects, as well as key expertise on many other types of projects. Canada is extremely fortunate to have such excellent ICT suppliers – small, medium and large – to supply goods and services to government and the private sector.

Finally, we believe in the importance of a knowledgeable government buyer, and that when government invests in ICT, it can achieve great successes. Likewise, members of the ICT industry can become better suppliers and use their Canadian successes to become international stars, taking the business they do in Canada with the Canadian government, and using it to sell worldwide, developing into stronger and smarter businesses all the time. This is our vision, and our work in procurement aims to bring this vision to life.

Board Member Profile: Meet Charlie Whelan

Charlie Whelan, President, CSC Canada

Having marked its 50th anniversary last year, it’s no stretch to state that Computer Sciences Corporation is a pioneer in its field. CSC’s Canadian arm, which dates to 1994, is also a veteran in the IT services sector. A leader in outsourcing, IT infrastructure and security, CSC Canada has extensive experience in selling services to the federal government. President Charlie Whelan joined the company in 1999—following stints at SHL Systemhouse, Andersen Consulting and IBM—and was named to his current position in 2005. We asked him about his experiences dealing with federal government procurement.

ITAC: Has the amount of federal government work that CSC does decreased over time?

Charlie Whelan: It has come down a little bit over the past few years, as the government’s focus on buying components has replaced its focus on buying solutions. But the large part of our revenue—and headcount—in Canada is in the delivery of large-scale IT outsourcing services in the commercial environment.

How do you approach the procurement process with government? Do you have a dedicated team that responds to RFPs or do you pursue it on a project-by-project basis?

We have a practice that sells and delivers IT infrastructure and security services to the federal government. We also do some work around engineering and logistics services. So, we have a number of people in business development, and we try to get in front of opportunities, but what we really seem to be doing now is responding to skill-augmentation opportunities.

In your area of business, are you listed on standing offers or are you responding to individual opportunities as they come out on MERX?

Both. We’re on Task-Based Informatics Professional Services and Solution-Based IT Professional Services contract vehicles, and we’re on the cyber-protection supply arrangement. We also have some other contract vehicles in place with the Canadian Coast Guard and at DND. We also look for and respond to other one-of opportunities in terms of IT consulting.

What are the key issues that ICT companies face now as they attempt to sell to the federal government?

Governments are important customers, just based on their sheer size. The public sector is one of the two largest verticals—the other being financial services—in Canada. They’re large and complex, and they’re complicated to deal with in terms of the bureaucracy you have to deal with, and that’s driven in many cases by trade agreements that they need to implement. I believe that the government has stated that it wants to build a sustainable, national competitive advantage that’s based on science and technology. I think that the Canadian government has a duty to lead by example, and by that I mean Canada needs to re-establish itself as a leader of innovation. The government needs to demonstrate leadership in this area by transforming its own service delivery through the adoption of innovative technologies and a more collaborative approach with the private sector.

Have you seen the procurement system improve over time?

On the contrary, I think it’s going the other way.

What are the primary challenges you see?

They’re really focused on buying inputs as opposed to outcomes. They’re focused on the Crown acting as the systems integrator, and they’re not taking advantage of the investments that industry has made in changes in technology and processes as it relates to large-scale IT operations or projects. Right now, I think there are two compelling events that should drive improvements to government procurement. First, about 40 percent of the public sector will retire over the next five years, so there’s a huge amount of skill, resources and experience that will be leaving the system. Exacerbating that is the Canada-wide IT skills shortage. Secondly, the Economic Action Plan and associated stimulus spending is driving the government to build huge deficits. So, there’s an opportunity right now to recognize that the skills are going away and we need to be more cost effective. The opportunity exists for government to collaborate with industry and, from a procurement point of view, work toward buying outcomes and solutions as opposed to inputs. Those inputs—like skilled IT resources—are going to become more difficult to come by. I think they need a significant change in how they address procurement.

With the appointment of Stockwell Day as Treasury Board president we’ve been reminded that the Harper government intends to focus on reducing the deficit by cutting spending. What are the challenges for ICT companies as they face selling into this kind of environment, and what can be done?

Right now, there is a fear of large IT projects in the government. There is a belief that they are very expensive and risky, and there has been a history of delays, overspending and performance shortfalls. What we need to do is to get at the root of the problem of why these big IT projects have not been as successful as they should have been. In my mind, that’s all to do with governance and project management. We in ITAC would be delighted to work with the government at the senior level and help them implement a regime of good governance and project management around large IT projects and operations outsourcing. I think that we could help government become much more effective and efficient. The current approach, in many cases, avoids Treasury Board project approval processes and PWGSC procurement processes. So, you have a huge amount of the ICT spend that’s actually under the radar, and in my belief, not very cost efficient. We have to get the government to get around the fear of IT projects, figure out how to manage them, and then go out and buy solutions. That will allow them to leverage best practices that are working very well in the private sector and in many other public-sector institutions.

Serving the Public Service

Neil Russon, co-CEO, Accreon Inc.

The procurement of public-sector business has long been touted one of the most difficult, competitive aspects of operating in the ICT industry. But a Maritime professional services firm has found a way to establish public-sector contracts as a significant portion of their work. Based in Fredericton, New Brunswick, Accreon Inc.’s approximately 100 employees represent one of the largest privately held business solution and information technology consulting firms in the Atlantic Provinces. Specializing primarily in health care, financial services, and government, Accreon is a multiple award winner, having been named to the Branham300 list of Canada’s top 300 ICT companies within its first four months of operation, as well as one of Atlantic Progress’ Top 100 companies in Atlantic Canada, and having won multiple KIRA awards and a Business Excellence Award. For an inside look at how the company competes for government business, we spoke with co-CEO, Neil Russon.

ITAC: What opportunities are there in terms of procuring public-sector business on the East Coast?

Neil Russon: It’s a very, very competitive marketplace, so with most opportunities – whether public-sector or private-sector – our work in procurement starts before the RFP is ever released. You need to know your client, and your client’s requirements. Your client needs to know your skills, and your ability to deliver a quality team, so that when the RFP comes out and the selling is over, the client knows who you are and has a level of trust that you can deliver on their project.

What sort of unique strategies does Accreon put into place in order to win business before the release of an RFP?

We think of some unique differentiators not only in this market, but in the IT professional services business, and we really work hard to let clients know what that differentiator is, and how we’re able to step up to fixed-price opportunities with a significant level of certainty on our own part. Fixed-price opportunities are a challenge for professional services firms, but we have processes in place that allow us to be confident in our quotes and our pricing, and we believe that our methodologies allow us to enter the market at very competitive pricing.

How much of your business is private-sector, and how much is public-sector?

It’s about 50/50. We do a lot of work outside Atlantic Canada. We have major clients in Ontario and in the United States; and we deliver service following a near-shore type of model. We have about 100 employees, all but a handful of which are here in Fredericton.  We have a few employees outside of Fredericton in Ontario and in Atlantic Canada but our focus has been near shore opportunity. Going forward, we may need to establish offices in other jurisdictions to allow us to better serve new markets.

As mentioned, we have a near-shore model, which allows us to leverage the efficiencies of our tools and methodologies and reduce travel cost to our client’s advantage. We do not have a low-cost workforce, but by leveraging our methodologies and our toolsets we can successfully win near shore business.

Are there differences you notice between dealing with clients in the Maritimes versus outside the Maritimes?

Not really. All our clients are looking for pretty much the same thing. They want quality services and excellent resources, at the lowest possible price – they want value. And most clients, I think, get their best value from longer term relationships, because that allows their vendor – or their professional services firm – to begin to demonstrate to them the value that they can bring, and provide some support that you might not normally provide for a client that you’re only going to be with for two or three months.

How do you think ICT companies, in general, look at the procurement of public-sector business?

The problem with public-sector procurement is that it can tend to be a bit of a crapshoot. You can do all your homework, you can do everything you need to do to be ahead of the opportunity, but you can have a dark horse come in and get the business. You really can’t predict who is going to bid, and often, procurement processes are somewhat binary. You’ve met the criteria, or you haven’t. As you move through the proposal assessment process, you can be out on your ear pretty quickly because most times you are not given the opportunity to provide clarification.

In a private-sector process, there’s a bit of a negotiation along the way, so that the vendor knows exactly what the client is looking for, and so the vendor can more precisely propose a solution that meets client requirements and price it accordingly. When you’re going through an RFP process, often the RFP itself isn’t as clear as it needs to be, so you’re making assumptions as to what the client is looking for. Obviously you need to document your assumptions, but if you miss an assumption or if you miss something along the way that is critical to your response, then it can be devastating to your ability to win.

To have 50 percent of your business coming from the public sector is a high percentage, comparatively speaking. Do you have any advice for other ICT firms who are looking to procure more public-sector business?

It’s a tough market, but because it’s public-sector – generally speaking, there aren’t any payment issues. If you win a contract, and you deliver, you get paid, and generally within 30 or 60 days. That’s pretty steady revenue. As a result of that, everybody is pursuing public-sector business. So, if you’re not doing your homework, if you’re not well differentiated, it can be a pretty tough sled.

What would you like to see change in the ICT industry, in terms of procurement?

I think there needs to be renewed thought and effort put into how one procures in the public sector, that is reasonable from a vendor’s perspective in terms of cost. Some procurement can be cost prohibitive. 

Some enterprises bring benefit to projects in addition to skilled resources: flexibility, quick decision making, and limited hierarchy to name three. These factors provide the client with a value-add which cannot easily be measured or quantified. Some have the added benefit of having resources available for ongoing support in the local market, or have processes in place to assure the client of  a “local market feel.” It would be interesting if procurement processes could be modified to consider these factors.

Respecting the Public Purse

Craig Sisson, Director, Ontario Public Sector, Microsoft Canada

With the entire citizenry as shareholders, government can be a particularly challenging client to sell to—especially during trying times. In Ontario, the current challenges include a record-setting provincial deficit and the fallout from the controversy in healthcare spending. As Microsoft Canada’s Director, Ontario Public Sector, Craig Sisson has a decade of representing one of the world’s largest ICT vendors in a marketplace that accounts for up to 40 percent of the company’s business. We asked him to share some of his views on dealing with the province.

ITAC: What’s the extent of Microsoft Canada’s product offering to the public sector?

Craig Sisson: We sell our entire range of Microsoft system management and information worker productivity products to governments, at all levels, throughout Ontario. We verticalize the public-sector business into healthcare, provincial and municipal, and we regionalize it, so I have a colleague in the West, one in Quebec, and we also have an organization in Ottawa that manages all our federal business.

From your experience, what are some of the key issues that face ICT suppliers who are trying to sell to the Ontario government?

Right now, the government acknowledges that there is pressure internally to make procurement more transparent across the board. So, establishing an element of fairness and transparency that provides a balance between enforcing government policy and maintaining efficient, timely procurements is a challenge, and government understands that. Certainly, the health scandal brought that out in spades. It’s a challenge for vendors to understand that too, but we’re pleased to see that government recognizes that transparency and fairness are important while at the same time we caution against paralyzing the process to enforce policy.

Given the huge deficit that the Ontario government is facing over the coming years, how does that affect the value proposition that Microsoft and other ICT vendors need to present?

From Microsoft’s perspective, we strongly believe that IT is not just a cost centre, but a powerful business enabler. Technology enables businesses and government to reduce costs by driving efficiencies for the public service and hence better outcomes for taxpayers. We advise that, in this kind of economic environment, governments should be investing in technology, to reduce costs and increase citizen service delivery, to do more with less.

As you look over your experience in dealing with the public sector, what would you cite as the best practices that ICT companies should follow?

Being in the position to set up standardized agreements with government—a single procurement contract—is important. That allows you to establish a set of terms and conditions that meet the risk requirements of both the vendor and the government. Then you don’t have to re-examine each procurement under a different lens.

I think, overall, it’s the ability to strike a balance between the level of risk that protects the taxpayers’ interest and the risk that any particular vendor is willing to build into their relationship with the government. The more risk that the government chooses to push into the marketplace lessens their ability to negotiate the best price.

Any closing thoughts?

Just in summary, on behalf of the industry, I want to say that we believe that the Ontario government is sincere in acknowledging that there are challenges in the procurement process, and the industry is very compelled to work with government policy makers to bring about change that benefits all stakeholders; the Ontario Public Service, technology vendors and the Ontario taxpayer.

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