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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Sorting Out IT Procurement Mess
1. IT Purchasing
Sorting out the mess…
April 22, 2011 MnSCU IT Conference
Nathan Jay Sorensen, MBA
Office of the Chancellor
ITS Contract & Purchasing
The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.
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 COMPLIANCE
Slide 3
4. Procurement
Strategy
Purpose of IT Procurement
• Buy the right technology
• At the right price
• At the right time
• And on the right terms
Slide 4
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 only
Slide 5
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 Cards
Slide 6
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.html
Slide 8
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 the
Slide 9 specifications.
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. 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. 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.html
Slide 12
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 quote
Slide 13
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 two
Slide 14
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 writing
Slide 15
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 Years
Slide 16
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
Compliance
Slide 18
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
Compliance
Slide 19
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
Compliance
Slide 21
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
Compliance
Slide 22
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
Compliance
Slide 23
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
Compliance
Slide 24
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
Compliance
Slide 25
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
Compliance
Slide 26
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
Compliance
Slide 27
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
Compliance
Slide 28
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
Compliance
Slide 29
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
Compliance
Slide 30
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 Sourcing
Slide 31
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 Sourcing
Slide 32
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 Sourcing
Slide 33
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 Sourcing
Slide 34
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 Sourcing
Slide 35
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 Sourcing
Slide 36
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 Sourcing
Slide 38
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.html
Slide 41
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.html
Slide 42
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.html
Slide 43
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
– 651-201-1524
Slide 44
45. Thank You!
IT Purchasing
Sorting out the mess…
April 22, 2011 MnSCU IT Conference
Nathan Jay Sorensen, MBA
Office of the Chancellor
ITS Contract & Purchasing
The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.