Texas leads the way for US and creates Amazon-like tool for public sector buying

SUMMARY:

Following the disastrous launch of the Obamacare website, Texas State could teach the rest of the US a thing or two about online transactions

texasLast year we saw a classic example of public sector IT gone wrong with the US government’s launch of Obamacare – an enrolment website that was meant to help millions of Americans shop for more affordable health insurance. However, as most will be aware, the website was plagued with problems and the lead supplier on the project, CGI Federal, was kicked out in favour of Accenture. It even led President Obama himself to say that the fiasco made him want to rethink the way that technology is delivered in the public sector, with critics claiming the system favours the larger suppliers.

This is a problem that the UK government has been grappling with in recent years too, which it has largely been trying to solve through the launch of the G-Cloud a couple of years ago – a framework and a web portal that lists hundreds of pre-approved suppliers for the public sector to buy a variety of cloud services. The idea being that SMEs are put on a level playing field and that prices are transparent, increasing competition and driving down costs. The G-Cloud is still in its early stages of maturity, but has been a big disrupter for both buyers and suppliers – excusing a couple of hiccups.

To my delight, I am now starting to see similar models spring up elsewhere. One of which was showcased at NetSuite’s annual conference SuiteWorld this week, where the State of Texas has created an online e-commerce platform for the public sector to purchase not only cloud computing, but pretty much bloody anything. Literally almost everything – pencils, cars, gravel –  it’s all on there. The project has a number of interesting elements and compared to the disaster that was Obamacare, the Amazon-like TxSmartBuy system is a shining example of how to get e-commerce on the right path in the public sector.

On-premise pain

CTO for the Comptroller’s Office in the State of Texas, Vijay George, joined NetSuite CEO Zach Nelson on stage during his keynote this week to explain that the vision for TxSmartBuy began in 2009 – but in a very different form. He explained that he wanted to create an online platform that could be used by agencies, and smaller entities within the State, to buy all sorts of goods and services easily. George wanted to system to replicate a consumer shopping experience online, rather than the bureaucratic nightmare that public sector procurement can often be. He said:

“The controller’s Office is the financial arm for the State government for Texas, so as an enterprise it is a $100 billion dollar organisation. We do everything from ‘popular things’ like collect taxes, to account for all of the money spent by the State and where they are spending it. One of the divisions we have is procurement, where we create contracts that can be used by other agencies, as well as other entities within the State. 

“We had the idea of trying to create an Amazon like experience for our customers. So the procurement agents, when they go to the shopping-cartTexas marketplace, TxSmartBuy, they can pick products they need, put it into a shopping cart and order it. That was the idea.”

To get this in motion, during 2010, the Comptroller’s Office attempted to stitch together a number of products it had acquired over the years for the e-commerce front end, whilst also trying to integrate this with the back-end ERP systems. However, George said that the idea was probably a little ahead of what the technology allowed at the time and they found the project painful. It soon became apparent that the system was very hard to maintain, because upgrading one piece of software impacted all of the others, and the user experience wasn’t good because of a lag between all the different components.  He said:

“We did get a lot of traction with the initial project, so the vision was there, but we peaked out because of the usability aspects and the hardcore integration aspects in the back-end.”

Enter NetSuite 

Having established that the premise for TxSmartBuy was a good one, but the on-premise technologies were not up to scratch, George and his team began looking at cloud tools to help give the project legs. Although, given the problems that had been experienced up until this point, George wanted to be sure that a vendor could handle the complexity behind selling to a diverse range of customers dispersed over a vast geographic area. So, when NetSuite came to the table, George asked them to deliver one of the most complicated elements of the tool to the Department of Transportation. He said:

“We have a lot of roads, we have more roads than any other State. We buy a lot of road aggregate. You would think that’s not a very complicated application – buying gravel. But there are 10,000 different types of road aggregate and the State of Texas is huge, so you don’t want a company that’s in El Paso to be delivering to Dallas. We had all this complexity around the road aggregate application – in purchasing it, getting the right product, delivering to road-based locations, etc. 

cloudscape“So we picked the hardest use case to prove if NetSuite could meet the challenge of what we were trying to envision. We rolled it out to the Department of Transportation and they are ecstatic about it. They have been very happy with the user experience.”

In the longer term, the Comptroller’s Office would also like to allow the over 1,000 vendors participating in the programme the ability to upload their own catalogue items, of which there are 2.4 million in the system. It doesn’t make sense for the Comptroller’s Office to be constantly updating the items, which are constantly changing, and so giving the vendors the capabilities to manage that within the appropriate workflows could also save a lot of time and money.

Having come good on cloud, the NetSuite platform is now looking to be used across the entire TxSmartBuy system and rolled out across Texas. The goal is to get all State agencies, of which there are 200, and smaller partners, such as local governments, fire departments, cities, counties, all taking advantage of the pricing that the State of Texas has been able to negotiate thanks to its large buying power.

Verdict

  • I know that this is a big win for NetSuite and a unique project that CEO Zach Nelson hopes will become a great referral for the company to go and get similar deals with other governments.
  • Good on you Texas – a great idea that allows smaller entities of government to take advantage of the big State buying power. This is something we don’t see enough and could create huge efficiencies across the whole of government.

    Comments are closed.

    1. mcraddock says:

      Derek_duPreez UniSurreyNews Not widely published, but suppliers can update their services now in #CloudStore http://bit.ly/1n0pEP7

    2. mcraddock says:

      WhoStu SKellyCOO G_Cloud_UK gov_procurement Suppliers can update their services in the CloudStore today, http://bit.ly/1n0pEP7

    3. freebalance says:

      This is one of those situations where Texas & NetSuite have tapped into the narrative that government ought to be run like a business – in this case, Amazon.
      The PR appears to avoid the critical issue of where it is inappropriate or dangerous to do so. How has Texas integrated budget and commitment controls?
      It is really not clear from the PR the extent to which this is purchasing functionality (buy items from government inventory/stores and/or vendor catalogs) or procurement (public investment/large capital, complex projects – often turnkey, multiple stage proposals, contract management, multiple year commitments). Yes, public sector procurement is very complex.
      Automated and integrated purchasing and procurement systems for government are available off the shelf. These systems automatically link to catalogs for purchasing once the requisition & commitment is approved. (This often means a preceding procurement where vendors compete to appear on catalogs with standard prices.) The order/commitment, goods receipt/returned, contract and payment is automated. There is also complex procurement automated for government where procurement documents (RFI, LOI, RFQ, RFP etc.) are automatically rendered after the requisition and published to e-procurement sites. The entire process of changes, value criteria, negotiations, disputes and contract management is handled.
      It’s nice that NetSuite is giving government users an Amazon-like experience. If done correctly, the requisition should generate a narrow subset of items from catalogs – far narrower than you get with an Amazon search. Why? Those other items that come up on Amazon, or ‘what other people may have bought’ are likely to come from a different budget. To buy those things on that requisition would be illegal.