Emptoris IBM UK Public Sector Strategic Sourcing Crash: Background

We've been taking our time in researching a story about a strategic sourcing event failure in the UK government. My colleague, Peter Smith, has covered and analyzed the news here and here. Our coverage of the news continues in a three-part series on this side of the Atlantic. And in our final analysis on Spend Matters PRO, we'll provide key takeaways for public and private sector organizations considering working with Emptoris and other competing vendors with similar requirements.

But first, let's get to the bottom of the incident. At the root of the problem, there was a really large bid covering over a billion of pounds of business. According to one source, "the bid covered 35 lots ranging from HR and Payroll IT Solutions to Big Data, Security and Application Support and Maintenance with between 15 to 25 suppliers wanted on each one." A large bid indeed. But we rarely hear of sourcing failures anymore, even with massive quantities of line items and suppliers. Yet this one did indeed crash the system. As we quote on our UK/Europe site, the UK Cabinet Office put out the following statement (which we added further color to based on interviews with the UK government agency responsible for the bid):

...the ADDSS (Application Development, Delivery and Support Service) procurement was affected by hardware capacity issues for the servers running the eSourcing system. The servers are provided through the agreement with IBM Emptoris ... Due to hardware capacity issues affecting the procurement ... caused by unusually high volumes of supplier responses, the decision has been taken to pause this procurement so that we can review the current situation and consider future action. This is an important procurement and it is essential we take the time to get it right.

In response to shutting down the event, the UK government agency "asked suppliers to re-submit documents manually... but compliance checks identified incomplete and in some cases altered tender responses from suppliers." Further, Peter observes, "We've learnt that not only did some suppliers submit different information in hard copy, others refused to comply or even immediately threatened legal action. So in the end GPS really had no choice but to pull the whole procurement process, affecting the 400 firms who were involved."

IBM Emptoris provided Spend Matters with the following statement regarding the situation:

GPS [the UK entity] is sourcing common categories across government as part of the centralized procurement strategy, utilizing the IBM Emptoris tools.

In addition to the advanced capabilities provided by the Emptoris tool set, it also facilitates a change in how procurement is undertaken, moving away from the legacy model of "mail box" procurement with large volumes of attachments uploaded for lengthy and complex evaluation, to the more advanced online procurement and rapid evaluation. This then results in both faster Procurements and increased savings.

The implementation of the eSourcing tool is supporting GPS in its wider objective to improve the efficiency of the procurement process and deliver savings for the public sector. GPS is currently going through the business change to facilitate faster and smarter procurements, following on from other Agencies who have also utilized this procurement model.

To ensure further GPS procurements do not incur future delays IBM and GPS are working in harmony to embed the change in business model and are deploying additional capacity within the solution to address the current and future procurements planned.

There are a range of fundamental questions the failure of the bidding event begs us to answer, many of which have more to do with the usage of sourcing technologies and deployment approaches in general beyond the question of the Emptoris tool itself. Stay tuned as we investigate these in more detail.

- Jason Busch

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