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Overview of DIR Sourcing Initiatives

Overview of DIR Sourcing Initiatives. NATIONAL ASSOCIATION OF PURCHASING MANAGEMENT September 16, 2008. Cindy Reed Deputy Executive Director Operations and Statewide Technology Sourcing Texas Department of Information Resources. Who is DIR?. DIR is the state agency responsible for

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Overview of DIR Sourcing Initiatives

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  1. Overview of DIR Sourcing Initiatives NATIONAL ASSOCIATION OF PURCHASING MANAGEMENT September 16, 2008 Cindy Reed Deputy Executive Director Operations and Statewide Technology Sourcing Texas Department of Information Resources

  2. Who is DIR? • DIR is the state agency responsible for • Effective planning, implementation and management of a statewide technology infrastructure that supports agency business operations • Pooling the purchasing power of government and leveraging it to drive down costs and add value to ICT purchases for state government entities • Adopting statewide technology rules and standards that contribute to effective enterprise management of ICT • Promoting security and privacy of state data and networks • Key operations • TexasOnline, the official State of Texas website • Data Center Services • Telecommunications and IP Network • Security • ICT Cooperative Contracts Program

  3. Sep 07 – Feb 08 ICT Cooperative Contracts – Statistics • 448 Cooperative Contracts • 290 Total Resellers • 140 HUB Prime Vendors • 121 HUB Resellers • 38% Growth in Last 2 Years (FY05-07) • Over $1 Billion Projectedfor FY08 • Customer Base • Market Segmentation Analysis • 45% Education • 29% State Agencies • 26% Local Government ICT Cooperative Contract Sales

  4. Reg. 5 $15 M Reg. 2 $133 M Reg. 8 $12 M Reg. 7 $13 M Reg. 1 $105 M Reg. 6 $11 M Reg. 3 $248 M Reg. 4 $34 M Where are DIR’s Customers Located? • REGIONAL DISTRIBUTION OF FY08 YTD SALES *Telecommunications Go DIRect sales of $36 M were distributed to regions via prorated percentage of sales.

  5. Sep 07 – Feb 08 ICT Cooperative Contracts – Cost Savings/Avoidance • DIR CUSTOMERS/TAXPAYERS • Savings calculated as difference between DIR price and price available in other states and from other cooperative contracting programs • Additional value (soft costs) not included in calculation • Time/salary savings associated with streamlined procurement process • Additional services or benefits such as “free training” • Improved performance standards and accountability requirements ICT Cooperative ContractCost Savings/Avoidance

  6. ● Industry-standard data warehouse and business intelligence portal collects data, generates information to support sourcing decisions Strategic Sourcing Strategies:Knowledge-Driven Supply Chain BUSINESS PROCESSES TECHNOLOGY PEOPLE Skills, knowledge, and organizational structure Move from traditional transactional purchasing to strategic supply chain management Revenue and Sales Reporting (RASR) analytical platform New, metric-driven business processes ● Spend analysis ● Demand/opportunity analysis ● Improved performance standards and accountability requirements ● Specifications based on market intelligence ● Category management ● Streamlined administrative requirements ● Benchmarking ●Channel management ● Comprehensive, integrated supply chain services Contracting andProcurement Services manages all phases of contract lifecycle ● DIRect Compare ● Online interactive tool enables customers to easily review and compare contract pricing Supply Chain Management provides business intelligence/analytics, bench-marking, etc., used to identify and prioritize contracting opportunities, develop new contracts, and implement new sourcing strategies ●

  7. Business Model: ICT Cooperative Contracting Program • NEGOTIATIONS (RFO Process) • Leverage state’s buying power • Benchmark pricing with competitive regional and national cooperative buying options, federal government, and other states • MULTIPLE AWARDS • Provides flexibility to meet unique business needs of statewide customer • “NOT-TO-EXCEED/QUANTITY OF ONE” PRICING • Customers allowed and encouraged to negotiate additional discounts for volume purchases • Go DIRect PURCHASING, ONLINE DIR STORE • Customers deal directly with vendors for ordering, delivery, payment • DIR ADMINISTRATIVE FEE INCLUDED IN NEGOTIATED PRICING • Capped at two percent (2%). FY07 average: .81% • Vendor invoices customers (included in contract price), remits to DIR

  8. RASR Analytical Platform

  9. Supply Chain Life Cycle Deliverables-Based Information Technology Services Contract (DBITS) • RFO DEVELOPMENT • RESEARCH • With DIR customers, other states and federal government, Gartner, Forrester, Infotech BUSINESS CASE Value to state = cost savings + more effective contracting vehicle • SOURCING STRATEGY • Prequalification of vendors for IT project contracts in specific technical areas • Limited to 10 categories and projects of $10 M or less • RFO ISSUANCE • Webcast of pre-bid conference

  10. Sourcing Strategies • Augmenting RFOs • IT Staffing Services • Software • Networking Equipment • Surveillance Cameras • DBITS • Prequalification of vendors in specific technical areas • Regional-Based Contracts • Break/Fix (equipment repair) • Cabling • Managed Services • Contract with multiple qualified service vendors, to drive innovation, capacity and marketplace competition allowing customers to improve service levels, reduce operating costs and extend capabilities while remaining focused on their core missions

  11. May 2008 Operations Graybook Supply Chain Support

  12. Sales Actual vs. Projection 2008 YTD Data • Monthly sales projection = Most recent 2008 Annual Sales Plan from Finance distributed to each month based on seasonality percentages in 2007 • Sales has been performing at 5% above projection year to date • If sales meet the projection in Q4, 2008 sales will reach $1001.9 M

  13. Sales, Cost Avoidance and Administrative Fee YTD (Sep – May) Comparison

  14. Sales Seasonality By Channel (In $ Millions) • Observations: - 2008 YTD sales from all channels are performing better than 2007- Jun-Sep is the peak season, accounting for 40% of annual sales in 2007

  15. Sales By Product Type 13 Months Rolling Data

  16. Contracts with Major Sales Changes YTD (Sep – May) Comparison • (1) DIR-VPC-03-018: Large purchases by customers such as LCRA, HHSC, and City of Austin were not repeated in 2008 • (2) DIR-SDD-236: Large network purchase by Brownsville ISD in 2007 was not repeated in 2008 • (3) DIR-SDD-220: Customers switched to other vendors such as Dell and HP • (4) DIR-VPC-03-010: Contract expired and was replaced by DIR-SDD-503 • (5) DIR-VPC-03-029: Contract expired and was replaced by DIR-SDD-232 • (6) DIR-VPC-03-001: Contract expired and was replaced by DIR-SDD-506 and DIR-SDD-515 • (7) DIR-VPC-03-027: Contract expired and the vendor failed to respond to the new RFO. • (8) DIR-VPC-02-028: Vintage’s biggest customer, Texas Comptroller, did not renew the seat management services (1) (2) (3) (4) (5) (6) (7) (8)

  17. Dashboards: Monthly Sales by Channel

  18. Dashboards: Daily Sales and Administrative Fees

  19. Contract Management Information System: Active

  20. Contract Management Information System: Detail

  21. Contract Management Information System: Reports

  22. Online Contract Gateway: The DIR Store

  23. Online Contract Comparison: DIRect Compare

  24. Future Contracting Opportunities • CURRENT CONTRACTING INITIATIVES • Posted on DIR’s Web site (www.dir.state.tx.us/store/cci)to improve communications between DIR vendors and customers • Lists initiatives by procurement stage • Planning • RFO Postings – links directly to the posting on theElectronic State Business Daily (ESBD) • Evaluation • Negotiation • Recent Awards • Each initiative has a brief description, expected phase completion date, and contact information

  25. TexasOnline Reprocurement Vision The TexasOnline procurement will establish the next generation e-government infrastructure that implements the components required to support the TexasOnline vision. The TexasOnline vision leverages the state’s cooperative contracting program and the state’s existing investment in both computing and communications infrastructure. Major Procurements in Process: TexasOnline TEXASONLINE VISION STATEMENT TexasOnline will provide a single point of access to government information and services that is private, secure, convenient, efficient, service-oriented, and accessible.

  26. TexasOnline Re-Procurement Milestones, Estimated

  27. Major Procurements in Process: TEX-AN • CURRENT TEX-AN TELECOMMUNICATIONS CONTRACT EXPIRES AUGUST 31, 2009. • RE-PROCUREMENT WILL TAKE PLACE FALL 2008 THROUGH SUMMER 2009. • GOALS AND OBJECTIVES • Simplify service acquisition • Simplify service establishment and support • Enhance value from sharing • Establish solutions driven marketplace • Enhance vendor partner/supplier performance

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