IT Purchasing - Sorting out the mess...

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MnSCU ITS Annual Conference April 2011
Breakout Session: IT Purchasing – Sorting out the mess…
The objective today is to provide you with enough detail for you to develop your on procurement strategy that aligns itself with our compliance requirements. I also wanted to take an opportunity to inform you about MnSCU’s collaborative sourcing activities regarding IT. The objectives today are to form a procurement strategy, review the mandatory requirements for compliance, a high level overview of the procurement process, and MnSCU’s collaborative purchasing efforts.
Purpose of IT Procurement - to buy the right technology, at the right price, at the right time and on the right terms to meet requirements and support the success of the organization.
Both the IT procurement function and its stakeholders must understand that IT procurement not only complements the IT function in external spending management, but also helps to achieve better vendor management. This improves decision success and avoids the struggle for power and control.

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IT Purchasing - Sorting out the mess...

  1. 1. IT PurchasingSorting out the mess…April 22, 2011 MnSCU IT ConferenceNathan Jay Sorensen, MBAOffice of the ChancellorITS Contract & Purchasing The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.
  2. 2. Today’s Objectives • Procurement Strategy • Review of Compliance • MnSCU Collaborative SourcingSlide 2
  3. 3. Procurement Strategy IT Procurement Strategy COMPLIANCE PROCUREMENT COOPERATIVE » STATE STATUTES PURCHASING » MnSCU BOARD POLICIES » FINANCE » VENDOR REQUIREMENTS » DELEGATED AUTHORITY » BUYING POWER » BID PROCESS » SOLICIATION PROCESS » NEGOTIATIONS CONVENIENCE » VENDOR MANAGEMENT AND COMPLIANCESlide 3
  4. 4. Procurement Strategy Purpose of IT Procurement • Buy the right technology • At the right price • At the right time • And on the right termsSlide 4
  5. 5. MnSCU IT FY 2010 Expenditures OBJECT CODE DESCRIPTION EXPENSES 1710 Computer Production & Maintenance $1,120,863 1725 Information Technology Maintenance and Support $2,491,963 1730 Software rental/license/subscription $5,091,541 1740 Software Purchase (under $30K per unit) $1,491,643 1745 Major Software Purchase (over $30k per unit) $140,733 1750 Software Maintenance $1,419,154 1755 On-line subscription/system access fee $1,719,219 2020 Network Services $4,665,515 3000 Supplies & Materials (Not for Resale) $47,074,168 3002 Equipment Purchased as Supplies $17,619,827 3004 Software Purchases $2,101,150 3006 Sensitive Equipment Purchased as Supplies $2,315,510 $87.3 Million *unaudited numbers for illustrative purposes onlySlide 5
  6. 6. Procurement Strategy IT FY 2010 Purchases • $87.3 Million in IT Expenditures • From > 900 Vendors • $12 Million or 14% of Purchases from State Master Contracts • > $2.1 Million Purchase CardsSlide 6
  7. 7. Procurement Strategy Types of IT Purchases • Supplies, Materials, & Equipment – Software – Hardware – Network Devices – Workgroup PrintingSlide 7
  8. 8. Procurement Strategy Types of IT Purchases • Professional/Technical Services – Contractor’s are utilized for consultation, analysis, evaluation, prediction, planning, programming and/or recommendations. – Contractor’s work results in the production of a report or the completion of a task. OGC June 7, 2010 Training: "Strengthening The Contract Process" http://www.ogc.mnscu.edu/events/workshops.htmlSlide 8
  9. 9. Procurement Strategy Procurement Methods • Open Market – A purchase of a good or service made by soliciting from any available source. • Quotations – Obtained from two or more vendors in a written form. • Sealed Bids – Bids are opened at a designated public seal- bid opening. The contract award is made to the lowest responsible bidder meeting theSlide 9 specifications.
  10. 10. Procurement Strategy Procurement Methods • Request for Proposal’s – Formal solicitation of vendors, through an exact structure and format response, to submit a proposal on a specific commodity or service. – Responses may be negotiated with any vendor other than the one with lowest cost. • Request for Bid’s – Solicitation describes the terms, conditions and specifications, and responses are not subject to negotiation.Slide 10
  11. 11. Procurement Strategy Procurement Methods • State of Minnesota Department of Administration – Competitively awarded Master Contracts with a variety of IT Vendors. – Use Master Contract Number in ISRS http://www.admin.state.mn.us/ • Office of Enterprise Technology http://mn.gov/oet/Slide 11
  12. 12. Procurement Strategy Procurement Methods • Cooperative Purchasing – The combining of requirements of two or more governmental units to obtain the benefits of volume purchases and/or reduction in administrative expenses. – You may use any of the following means of purchasing instead of undertaking the public quote or bid process. http://www.finance.mnscu.edu/contracts- purchasing/purchasing/cooperative/index.htmlSlide 12
  13. 13. Procurement Strategy Cooperative Purchasing • Western States Contracting Alliance (WSCA) • Midwestern Higher Education Compact (MHEC) • University of Minnesota (Joint Powers Agreement) • Educational & Institutional Cooperative Purchasing (E&I) • National Association of Educational Procurement (NAEP) • US Communities Government Purchasing Alliance • National Joint Powers Alliance (NJPA) • The Cooperative Purchasing Network (TCPN) • GSA Advantage (Federal) *Request the contract number on the quoteSlide 13
  14. 14. Procurement Strategy Vendor Management • Don’t be afraid to share your priorities • Create a competitive environment by seeking credible alternatives • Use vendors to help build a business case • Always get competitive bids • Negotiate with the top twoSlide 14
  15. 15. Procurement Strategy Negotiations • Essential part of the process • Prepare, prepare, prepare… • Don’t be afraid to ask • Be persistent • Listen • Be patient (planning) • Put it in writingSlide 15
  16. 16. Procurement Strategy Purchasing Authority • Each college and university has a defined delegation of authority and procedures for making purchases. • Check with your business office • VC/CFO Approval Required – Purchase > $100,000 – Contract ≥ 5 YearsSlide 16
  17. 17. Compliance • Board Policy 5.14 – Procurement and Contracts – http://www.mnscu.edu/board/policy/514.html • Procurement Dollar Thresholds http://www.finance.mnscu.edu/contracts- purchasing/docs/threshold_table.pdf Procurement Strategy ComplianceSlide 17
  18. 18. Supplies, Materials, & Equipment Procedure 5.14.5 Purchasing – Funds must be encumbered prior to making an obligation to pay – Purchases greater than $100,000 require Vice Chancellor/CFO approval – Sealed bid is not required for purchases from: Dept. of Admin., OET, MnSCU master contracts, and approved cooperative purchasing agreements Procurement Strategy ComplianceSlide 18
  19. 19. Supplies, Materials, & Equipment • <$25,000.00 – Quotations (prefer 2 or more) or Open Market • $25,000.01 - $50,000.00 – Sealed Bids (RFB) or 2 or More Written Quotes • $50,000.01 - $100,000.00 – Sealed Bids (RFB) Procurement Strategy ComplianceSlide 19
  20. 20. Supplies, Materials, & Equipment • $100,000.01 - $3,000,000.00 – Sealed Bids (RFB) – Vice Chancellor/CFO Approval • >$3,000,000.01 – Board of Trustees Approval Procurement Strategy ComplianceSlide 20
  21. 21. Software License Agreements Types of Agreements • Written • Click Agreements • Installment Agreements • Shrink-Wrap Agreements All Agreements Require • Attorney General Review • Patricia.Notle@state.mn.us Procurement Strategy ComplianceSlide 21
  22. 22. Professional/Technical Services • Intellectual in character and result in the completion of a task or a specific report or deliverable. • Contractors are utilized for consultation, analysis, evaluation, prediction, planning, programming, and/or recommendations. • Contractor is an “Independent Contractor” not employee per IRS work classification. Procurement Strategy ComplianceSlide 22
  23. 23. Professional/Technical Services • If individual, must not be current State employee or have received an early separation incentive under Minnesota State Colleges and Universities Board Policy 4.11, Board Early Separation Incentive Program (BESI), during the one year period prior to the effective date of this contract. Procurement Strategy ComplianceSlide 23
  24. 24. Professional/Technical Services Procedure 5.14.2 Consultant, Professional or Technical Services – Grants college/university authority to enter into contracts up to $100,000 – A 2-week public notice of RFP’s shall be given for contracts greater than $50,000 – Vice Chancellor/CFO approval required for contracts greater than $100,000 or longer than 5-year term – Vice Chancellor/CFO approval required for inter- agency, intra-agency, joint powers agreements, and master contracts in excess of $1 million Procurement Strategy ComplianceSlide 24
  25. 25. Professional/Technical Services • < $50,000 – Open Market or Direct Negotiations • $50,000.01 - $100,000.00 – Request for Proposals • $100,000.01 - $3,000,000.00 – Request for Proposals – Vice Chancellor/CFO Approval • > $3,000,000.01 Procurement Strategy – Request for Proposals – Board of Trustees Approval ComplianceSlide 25
  26. 26. OET Professional Services • Accelerated Staff Augmentation Program (ASAP-IT) http://www.oet.state.mn.us/mastercontract/mcp1 0ats/mcp10ats.html • Master Contract Program 902TS http://www.oet.state.mn.us/mastercontract/mcp9 02ts/mcp902ts.html Procurement Strategy ComplianceSlide 26
  27. 27. ASAP-IT Program • Temporary IT Staff Augmentation • Engagement Request – Select Eligible Vendor – Engagements ≤ $100,000 • Call for Resumes – Competitive Process (≥ 3 Vendors) – Any dollar amount ≥ $100,000 • Requires Evaluation of Vendors performance for any work that exceeds $50,000 Procurement Strategy ComplianceSlide 27
  28. 28. ASAP-IT Program • Skill Sets - Basic and Senior Levels – Architect – Business Analyst – Java Programmer – .NET Programmer – Project Manger – Quality Assurance – Security Analyst – System Analyst Procurement Strategy ComplianceSlide 28
  29. 29. OET Professional Services • Master Contract Program – 902T – The IT Professional Technical Services Master Contract Program helps agencies to complete Information Technology (IT) project work, or to provide agencies with additional IT personnel needed to assist in completing current IT projects. • Can be used for up to $2,000,000 • No need for formal RFP Procurement Strategy ComplianceSlide 29
  30. 30. Intra-Agency Agreements • An Intra-Agency Agreement is a written arrangement between or among MnSCU components. http://www.finance.mnscu.edu/contracts- purchasing/contracts/forms/index.html • Special Assignment of Personnel http://www.hr.mnscu.edu/intra- agency_agreement/index.html Procurement Strategy ComplianceSlide 30
  31. 31. MnSCU Collaborative Sourcing • Mission Statement – We collaborate to drive innovative strategic sourcing solutions to achieve sustainability and best value by leveraging the system’s buying power. http://www.finance.mnscu.edu/contracts- purchasing/collaborative/index.html Procurement Strategy Collaborative Compliance SourcingSlide 31
  32. 32. Collaborative IT Sourcing • Enterprise Software Agreements – http://www.its.mnscu.edu/contracts/index.html • Desk Top Hardware Purchasing • IT Recycling Program – http://www.finance.mnscu.edu/contracts- purchasing/collaborative/docs/computer- electronics_disposition.pdf • MnSCU CDW-G Discount Program – http://cdwg.com/mnscu Procurement Strategy Collaborative Compliance SourcingSlide 32
  33. 33. Enterprise Software Agreements – Microsoft Campus Agreement ($1.4 M) – Autodesk Academic Initiative ($280 K) – Symantec Antivirus Agreement ($230 K) – Novell Academic License Agreement ($130 K) – Lumension ($50 K) – Microsoft Premier Support ($60 K) – WebEx ($180 K) – VMware (???) System Savings > $2 M Annually Procurement Strategy Collaborative Compliance SourcingSlide 33
  34. 34. Desk Top Hardware Purchases • Estimated Refresh Quantity – > 3000 units annually • Top Brands – Dell – HP/Compaq – Lenovo • Consolidating purchasing from April – July to leverage volume for additional savings Procurement Strategy Collaborative Compliance SourcingSlide 34
  35. 35. IT Recycling Program MnSCU Master Contract CST-125 http://www.finance.mnscu.edu/contracts- purchasing/collaborative/index.html Meets ITS Security requirements for disposal • Asset Recovery Corp. – Joy McClellan, 651-621-2680 http://www.assetrecoverycorp.com/ – MnSCU may receive a credit for the disposition of computers and other Procurement Strategy miscellaneous electronic equipment Collaborative Compliance SourcingSlide 35
  36. 36. MnSCU CDW-G Discount Program • Cooperative Purchasing Agreement – NJPA Contract #111309-CDW – MnSCU Purchases > $5 Million Annually http://cdwg.com/mnscu • Cisco SMARTNet – Currently negotiating with Cisco and CDW-G on a system wide maintenance agreement. Procurement Strategy Collaborative Compliance SourcingSlide 36
  37. 37. MnSCU CDW-G Discount Program CATEGORY DISCOUNT CATEGORY DISCOUNT Accessories 8% Sound/Multimedia 6% Battery Back- 5% NetComm Products 7% up/Power/Surge Desktop Computers 4% Office Equipment 7% Data Storage/Drives 6% Printers 6% Digital Imagining – 6% Warranty/Installs 3% Camera/Scanner Servers 4% Software 6% Keyboard/Mice/Input 6% Telephony 7% Devices Laptops 3% Memory/System Components 11% Companion PCs 1% Video/Monitors/Cards/Projector 8% Mobile Devices 5% Cables 12% Training (AT Services) 3% Books/DVD Movies 6%Slide 37
  38. 38. MnSCU IT Research Subscriptions • Burton Group – Membership available to all IT staff – Enter all of the required information, including your MnSCU email to request access – Login credentials will be sent via email www.burtongroup.com/newuser • Gartner – CIO Access – IT Staff Access Coming Soon Procurement Strategy Collaborative Compliance SourcingSlide 38
  39. 39. Today’s Objectives Procurement Strategy Collaborative Compliance SourcingSlide 39
  40. 40. QuestionsSlide 40
  41. 41. Employee Code of Conduct • WHY IS EMPLOYEE ETHICAL BEHAVIOR IMPORTANT? • We are obligated to comply with law. • Violations can result in – Criminal penalties; – Employment sanctions-including termination. http://www.mnscu.edu/board/procedure/1c0p1.htmlSlide 41
  42. 42. Business Office Resources • Purchasing Web Page http://www.finance.mnscu.edu/contracts- purchasing/purchasing/index.html • Contract Forms Web Page http://www.finance.mnscu.edu/contracts- purchasing/contracts/forms/index.html • Contracts Web Page http://www.finance.mnscu.edu/contracts- purchasing/contracts/index.htmlSlide 42
  43. 43. Resources • MnSCU Finance Contracts Web Site http://www.finance.mnscu.edu/contracts- purchasing/contracts/index.html • MnSCU Board Policies and Contract Procedures http://www.mnscu.edu/board/policy/index.htmlSlide 43
  44. 44. Assistance for RFP, Procurement & Tax • Mike.Nordby@so.mnscu.edu – Campus Assistance Supervisor – 651-201-1723 • Steve.Gednalske@so.mnscu.edu – System Director – Tax and Financial Services – 651-201-1886 • Nathan.Sorensen@csu.mnscu.edu – ITS Contract and Purchasing – 651-201-1524Slide 44
  45. 45. Thank You!IT PurchasingSorting out the mess…April 22, 2011 MnSCU IT ConferenceNathan Jay Sorensen, MBAOffice of the ChancellorITS Contract & Purchasing The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.

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