A provincial government RFP was circulated just last year that ran on an every five year cycle calling for the replacement of 12,000 desk top computers. It asked for a cost breakdown per computer, along with the number of staff required to manage the transition over a 12-month period. A blind review then awarded the contract to the lowest cost submitter.
Six months later, the winning bidder and a first time supplier to the government – we’ll call them ABC – made some startling observations:
- By scheduling desktop replacement to coincide with the government’s five year depreciation cycle, 80% of the desktops were still fully functional and many could easily work for another year or two.
- And while all the computers were fully warrantied, only about a third of the desktops actually ever required warranty support.
- Another third of the computers had never had a software upgrade over the five year period, suggesting they were either never used, used only occasionally or the end users were not even operating within an enterprise wide system.
So ABC shared this information with the government and said … if you extend the use of computers, reduce the number of warranties and only replace technology as needed, you can reduce the number of transactions and increase value. So why not rewrite your next RFP? Ask your vendors to show how they can drive value and outcomes?
This was a bold move on ABC’s part. They could very well have jeopardized a lucrative, returning piece of business. But they chose to do the right thing. Which is exactly how a proper business partner should act.
And the government also had the courage to act. This year, they awarded ABC … a seven year managed service agreement. It’s a new relationship that measures the cost of equipment over seven years versus five. Warranty costs are now based on 50 percent of the computers. And they’re also measuring user experience and system uptime, both of which contribute to productivity analysis.
ABC’s value add to the government has increased from merely removing and replacing desktops, to now managing them, their performance and their upgrades.
And just so you know, I am determined to become the ABC of my industry. Along the way, I hope to cross paths with buyers who have the vision to see past what has been done before. And who are considering the possibilities of what can be.