The Public Sector and the Cost of Resisting Change

Spend Matters welcomes a guest post from Mark Digman, VP of product marketing and strategy at SciQuest. Be sure to join Spend Matters and SciQuest for a webinar on May 30 from 10-11am CDT:  Good Data: Spend Analysis Tactics to Attack Supplier Performance Management.

One of the things I like about the Spend Matters community is that it’s filled with procurement professionals who embrace change – people who understand that change is not only beneficial, but also necessary to any organization’s survival. Because we tend to work with – and therefore surround ourselves with – forward-thinking, solution-oriented customers, it can sometimes be easy to lose perspective and get comfortable with the progress our industry as a whole is making. I know I occasionally fall into the trap that organizations must be on-board with what we so clearly see as necessary (if not obvious.) But then I read about the recent procurement struggles of a great American city like New Orleans, and I snap back into reality and the hard truths of the world: change is hard. And the ability to effectively lead change is an incredibly difficult skill.

Legislating Procurement Accountability

Unfortunately, in the public sector, organizations are running out of time to get better at change mangement. New Orleans is facing (and getting called to task on) a litany of procurement issues, ranging from an inability to identify delinquent payers to inefficient processes and insufficient internal controls. As it stands, the Office of the Inspector General is making recommendations – what amounts to a slap on the wrist – but it’s easy to envision a scenario where failure to turn it around will result in very unfavorable results.

In fact, we’re starting to see increasingly strict regulations placed on state and federal organizations – regulations with real teeth that go much farther than the recommendations of the Inspector General in the case of New Orleans. Illinois, for example, recently enacted into law a procurement reform bill. As a result of that legislation, much tighter controls have been put into place in regards to vendor restrictions, subcontractor requirements, and transparency provisions. The state has, in essence, legislated procurement accountability.

From Want to Need

We’ve made progress in procurement – we have tools that can automate, track and analyze spend in real time. The speed of change at the front of the pack is dramatically outpacing the speed of administering change for many public sector organizations. A few years ago, high-tech procurement was in the “nice to have” bucket – for enterprises and public sector procurement organizations alike. But as early adopters reap the benefits of now-mature procurement technology investments, the gap between those organizations and those slower to adapt is increasing every day.

Cases like New Orleans and Illinois have demonstrated to me that technology to automate procurement processes and contract compliance have moved out of that “nice to have” bucket and squarely into the “must have” bucket. The cost of resisting the change has become painful (if not embarrassing in some cases) and prohibitive.

In this post, we’ve focused pretty heavily on the problems that public sector organizations are experiencing. In my next post, we’ll focus on the solution – the combination of people, processes and technology.

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