The following is a transcript from the Future of Public Procurement Panel, which took places taking place during the 2018 NIGP Forum in Nashville, Tennessee. This transcript has been edited for readability.
Edmund Zagorin: The main question to start off with is just what do you see happening in public procurement over the next 10 years? The single biggest change?
Hal Good: Well, I think the biggest change is probably driven by the digital capabilities that we have today so that in the past a lot of things were siloed- some were siloed intentionally because people wanted to keep things to themselves. A lot of them were unintentionally siloed because there was just no practical way to share information. When you look at the picture that we just saw of Detroit, I think one of the things that public procurement needs to look at in terms of what the future of public procurement is, is the rise of smart cities and smart campuses and smart government, smart grids, all the different things that need to work together.
I think that public procurement comes from an environment where we're very process oriented, and we looked at each thing as a single transaction and went low bid or even best value for that particular thing. But there was less looking at how those things work together. I think in the future, when you look at how smart cities operate, you have to look at the whole picture holistically. You have to look at how the whole city operates as a unit and all the different players in that unit. I think that procurement directors in the future will be part of a team that looks at how they can collaborate with citizens, visitors, industry, transportation, all those different things to make the things that the city invest money in a work together and work together congruently and seamlessly, and that's the future. Those things are not one-off. You don't buy something without looking at how it fits into the overall plan of things. I think that's the future. If you look at this smart cities program, I think it's a model for how we have to operate in. It's a team approach where we have to work with other disciplines and we have to work collaboratively with other disciplines. And those other disciplines include both public government side and private sector, industry and citizens.
Edmund Zagorin: How do you think organizations are going to react to some of these changes? I think in a way many people identified leadership priorities and things that folks are going to focus on, but the way that people are making plans right now in terms of the strategic plans that you've seen or as Hal mentioned, smart cities. Smart cities can mean quite a few different things. And of course there's an approach there of cohesiveness and, and interoperability that is interesting. I recently spoke at a smart cities conference and got to hear about a lot of different projects.
One of them that particularly struck me was a project that uses sensors on buoys across the great lakes to figure out when different sewer systems are putting out their waste into the lake and thereby able to predict algae blooms and they're actually able to do quite a lot with public procurement just by being able to predict when there's going to be a red tide or something like that.
[You] mentioned earlier before we started this about the earthquake early warning system that he helped implement in Palm Springs and I think you see these different projects that conjure up inspiration and I wonder if if there's anything that's inspiring you right now in terms of different projects that you see as being forward thinking or plans that you've seen that you think to look at as examples going forward.
Hal Good: There's an awful lot of exciting things happening. I think one of the exciting things that's happening is the whole cognitive idea where we basically don't allow things to break down, but we basically rely on smart sensors to be able to do predictive analysis and to be able to sense when there's a problem and intervene with no downtime. When you look at the implications for that in medicine, hospitals, amusement parks- anything that you can just about think of if it breaks and then you have downtime, that's a whole different scenario than if you can predict something's going to go wrong and you can basically implement a intervention and prevent the downtime.
That has so many applications. And I think it's one of the most exciting things when you look at the whole world of cognitive, it carries across and public procurement. It carries across in retail where now in predictive analysis, they know what the consumer is going to be wanting before the historical data hits so that you don't get caught with dead inventory. That's also applicable in government because when we look at historical analysis in terms of what we predict we're going to have in the future, and it's all based on history, that can be very inaccurate in this digital world that we live in, where things are changing so quickly. So I think the whole concept of cognitive is very exciting and has huge ramifications in our world.
Edmund Zagorin: Absolutely. I think demand forecasting is a theme I've seen in both public and private enterprise, talking to some folks in the water treatment world and that's a huge theme. Being able to say, "hey, here's how many gallons we're going to need to treat let's make sure that the warehouse is stocked with exactly that amount." So particularly if you have chemicals that have some type of spoilage rate, you can achieve a lot of gain by that type of forecasting. I'm going to ask two more questions. One of them's a really short one- If you're hiring someone today in your department and you want them to be as filled in as possible for this future of public procurement, what's your one interview question that you ask them. Secondly, what's one thing that you think won't exist in public procurement 10 years from now?
Hal Good: It's hard to break down to one question what you would ask an applicant, especially in today's complex world, but maybe the question would be- who do you see as public procurement's customer? And how do you believe that your skills would best serve the entity that you define as the customer? That might be the question that I might lead with, just to broaden the perspective a little bit.
What we're looking at in terms of hiring today is that procurement directors are faced with a big make or buy decision. And that is basically- do I develop an RFP? Do I compete this internally or do I look at a contracts on the outside such as cooperative procurement? The stress in today's world is that everyone says, "why can't public procurement be more like Amazon?" Indeed in commodities we probably will be like Amazon because you can simply take all the commodities that are bought by some agency that really knows what they're doing and is made available through a cooperative contract and people can buy those things in an Amazon like-style. Therefore, what we're looking for, in hiring, is people that are leaders, that are close to the customer, that have the agility to recognize value when they see it, and to be able to communicate and to speak the customer's language.
One of the big things that our internal customers are the most sensitive about is when somebody represents them at the table, such as procurement, and they don't speak their language. Every discipline has its own language and if the person sitting there representing that discipline is obviously not conversant with the language of that discipline, that's embarrassing to the end customer. And those are the sorts of things that you'd look at- hiring for someone that can basically take the time and effort to learn the customer's language and be close to the customer. I think one thing that we won't see 10 years from now in public procurement is this ancient idea that the people that buy things cannot be involved in the payment process. That had its day. It had its day before we had the digital technology that allowed you to be able to audit like we can in a digital environment.
The other thing that I think he will go away because it'll go the way of Blockbuster, and that is if you have procurement departments that don't follow the contract the whole way through, in terms of monitoring how the contract is managed, get the feedback from whether the contractor works well or not, and they end up putting a contract in place and then handing it off. Then two years later they're surprised when the customer says, "we don't use that because that didn't work" or "those were the worst people we ever dealt with." If you don't put the resources in place to be able to monitor contracts, you're quickly going to be obsolete because those kinds of contracts are not going to have the tolerance of today in the upcoming world and the whole upcoming role is going to be a lot more risk adverse in terms of outcomes. You still have to take risks, but you have to be able to protect the organization from adverse outcomes and involved in risky contracts.
Edmund Zagorin: I think the last question for [you] is "What if you had to give one piece of advice to the practitioner community”, and I'd ask either or both for a ‘Watch out’ or a ‘Hey, don't do that,’ and maybe something that you have some earnest enthusiasm about that you think people maybe aren't paying attention to. I think this is a good note to conclude on and really just to share something that's driving you that you think is coming down the line, either a danger, risk, an opportunity or reward.
Hal Good: I think perhaps the best word of advice I could give is be open to change because change in this digital environment happens almost daily. If you're adverse to change, it's deadly. I know now from being kind of semi-retired, if I were to get out of the mainstream and stopped going to a meeting like this I would very quickly be lost in today's world. I don't care what you did 10 years ago, I don't care what you did a year ago, and in some cases I don't care what you did last month because the world is changing so rapidly. With those changes is a huge amount of risk because communications go very quickly. Things become viral overnight, and that opens us up in public procurement to a world of risk. We have to do our market research very effectively.
When you look at the fact that in the private sector, if a second or third tier supplier uses slave labor or is cutting down jungles wholesale or contaminating huge bodies of water or whatever; those sorts of things, if we're privy to being collaborative, using that particular provider subjects our organization to an incredible amount of risk and we're going to be the ones the next morning to hear "how did you let this happen?" So I think that along with the ability to change rapidly is also you got to be very, very careful to do your market research and protect your organization's reputation and exposure in the risk area.
Edmund Zagorin: This has been a treat. I think folks in the practitioner community benefit from this tremendously and it's just good to make space to come together and share some ideas about the future.