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Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
Accountability – Managing the Risks of Innovation Procurement
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Accountability – Managing the Risks of Innovation Procurement

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-Factors for Risk …

-Factors for Risk
-Innovation Procurement Risk Management
-Frustrations and challenges
-Key Recommendations and Best Practices

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  • 1. Accountability – Managing theRisks of Innovation ProcurementA Bennett Jones PresentationCouncil for Innovation Procurement, Ottawa, OntarioLisa Abe-Oldenburg, PartnerBennett Jones LLPOctober 24, 2012
  • 2. Accountability – Managing the Risks of InnovationProcurement• Factors for Risk• Innovation Procurement Risk Management• Frustrations and challenges• Key Recommendations and Best Practices
  • 3. Factors for Risk• Government leaders and healthcare stakeholders demanding transformative improvements in healthcare and patient experience• Demonstrable value for investment returns• Funding sources require drastic cost efficiencies• Overarching framework of procurement rules (the Directive and Guidelines), governance scrutiny, stricter demand for procurement best practices, lack of tolerance for project failure
  • 4. Factors for Risk• Must follow both Federal Freedom of Information and Protection of Privacy Act (FIPPA) and Ontario Personal Health Information and Protection of Privacy Act (PHIPPA) – FOI requests, access• Technology regulation is evolving, e.g. personal health info, regulating patient management software as a medical device, emerging technology standards
  • 5. Factors for Risk• Aging legacy systems• Pressure to successfully undertake more complex and cost sensitive technology transformation• Rush to innovate• Technology transactions often entered prematurely and well before the business case for the prospective project exists• Increased complexity with wireless, cloud computing, open systems
  • 6. Innovation Procurement Risk Management• Rules appear too complicated to foster innovation, but bottom line is they have always been part of common law – codification of conduct for public sector: • Level playing field, open – equal access • Non-discrimination • No conflict of interest • Fairness • Transparency and accountability • Value for money, audits, are you getting what you contracted for
  • 7. Innovation Procurement Risk Management• Must understand the procurement tools, Directive and Guidelines, and best practices• The regulations dont prevent use of Vendor of Record, RFIs, RFQs, Single and Sole Sourcing• S.10.2.2 of Directive: Senior level individual must be given authority and be accountable for compliance and must work with advisors and consultants, as well as the funding ministry, to implement Directive• Related requirements under S. 10.2.3 of Directive: seek legal advice for compliance with Ontario Law, Contract Law, Law of Competitive Process, Privacy Law, Accessibility Legislation, Trade Agreements, Agreements on Trade between provinces
  • 8. Innovation Procurement Risk Management• It is not just about issuing an RFP with contract terms• Contract needs to reflect the business case, as well as designs, definitions and descriptions• Separate technology innovation into three stages: • Business case creation phase • Design, define and describe phase • Build or buy phase
  • 9. Innovation Procurement Risk Management• Start with research – graduated process to determine own needs and define the desired technology innovation• Understand operational requirements and desired performance results• Demonstrate value for investment returns• Undertake risk analysis
  • 10. Innovation Procurement Risk Management• Define specifications ("spec blueprint") • Operational, functional • Technical • Performance results• Define deliverables and acceptance testing criteria• Stipulate infrastructure connectivity and interoperability/integration requirements• Establish performance milestones for building to the spec blueprint• Allocate project management and accountability resources
  • 11. Frustrations and challenges• Common mistakes and pitfalls • Dont have enough time to run RFP process • Dont fully understand all procurement tools available, e.g. RFI, RFQ, Single or Sole Sourcing – which procurement instruments to use and when • Poorly drafted, vague RFP ; no specs • Ill-defined business case • Often dont have same sophistication in CIO and business leadership as private corporations – Boards of volunteers, lack of project management • Failure to use consultants to scope out design and requirements • No legal representation, deficient contracts
  • 12. Frustrations and challenges• Common mistakes and pitfalls • Dont focus on business purpose and total lifecycle • Unproven technology, innovation without graduated implementation • No staged testing, review and change process • No post-acceptance verification (through reporting obligations and service level analysis) • No contractual remedies to repair, replace, compensate, modify or adapt the technology in ways that were not originally contemplated
  • 13. Frustrations and challenges• Standard contract terms and lack of flexibility • IP ownership • Unreasonable representations, warranties, indemnities, SLAs • Privacy and cloud use concerns • Risk and liability for personal health info • Inspection and audit requirements • Data storage requirements – location and segregation, cleansing
  • 14. Key Recommendations and Best Practices• Rules arent the problem• Thorough understanding of the rules• Need improved contracting practices• Establish internal controls and project management• Implement internal accountability, dispute escalation and resolution processes• Plan before purchasing: business case, needs analysis, diagrams, flowcharts, requirements• Stakeholder involvement in defining the business case and communication of desired results/outcomes• Fully define criteria, specs (operational, functional, technical), results & outcomes (e.g. end results, efficiencies, patient experience), blueprint• Canvass the market
  • 15. Key Recommendations and Best Practices• Obtain guidance, best practices and legal review before issuing competitive tendering documents• Use advisors and consultants early to properly assess needs and scope, infrastructure interoperability and integration• Due diligence of systems, interoperability, connectivity and compatibility specifications• Proper due diligence of vendors• Select Vendors who will take responsibility for personal information within their control and breach of privacy and security, especially when providing cloud offerings (e.g. SaaS, IaaS); and who will allow inspections and audit
  • 16. Key Recommendations and Best Practices• Innovation projects are dynamic• Constant and flexible review and adjustment of project• Graduated implementation, plan for change management• Anticipate additional or different resource allocations• Consider exit and transitioning-out strategies• Transitioning away from failing technology• Risk mitigation strategies• Allocate responsibility for overall performance, contingency planning (disaster recovery), service levels, results and outcomes• Inspection and audit requirements
  • 17. Key Recommendations and Best Practices• Developmental testing, acceptance testing, post acceptance performance verification, service level analysis• Contractual remedies that practically address outcomes and performance, not just financial damages, e.g. robust repair and replace remedies• Technology currency and ongoing refreshment obligations, right to future innovation at best prices• Participation in vendors R&D programs
  • 18. Lisa Abe-OldenburgPartner, TorontoTelephone: 416.777.7475Email: abe-oldenburgL@bennettjones.com

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