7MI Series – This article is the second of a 9-part series as we introduce the 7 Economics and Market Intelligence Essentials for Public Procurement. Each part will also include videos, resources, and other materials. We will also be launching the 7MI Challenge as part of this series. Please see all related articles in this series at the end of this post.
Last week, we introduced the 7MI – 7 Economics and Market Intelligence Essentials for Public Procurement. 7MI, as depicted in the picture below, is based on over 20 years of our work and research across the public and private sectors. 7MI can be best described to include the following characteristics:
- Incorporate fundamentals of how markets work and basics of economics
- Designed to be fact-based and analytical as opposed to “hunches”
- Collaborative and two way with an emphasis on early on supplier engagement
Essential 1: Understand the need and what matters most
Today, we dive deep into essential 1, which some may describe as the most important part of any procurement. “Understanding the need and what matters most”, based on our experience, is also critical to conducting effective market intelligence. Why?
3 Key Questions to Ask: Below are three critical questions we must ask at the beginning of each acquisition/procurement. Even if we get involved later in the process and just get handed a requirements document, it is still critical for any procurement or program professional to ask the three questions in the table below.
|3 Key Questions to Ask At the Start of Any Procurement|
|What is the problem/need that needs to be addressed? Focus on need, not solution.||Too often we jump to thinking of solutions rather than diagnosing the problem. It is more important to first focus on understanding the need and the pain points associated with the need.|
|What does success look like? Goals and outcomes?||What will happen if the problem is solved? How will the pain of the current situation be taken away? This is really important to understand and define.|
|What is most critical to achieving success?||Are there any specific characteristics to the ultimate solution that are higher priority than others? The answer to this question will allow us to do everything from differentiate between the solutions and suppliers we are considering to determining our evaluation criteria.|
Let’s take each of these questions one at a time.
What is the problem/need being addressed? Focus on need, not solution.
Too often, we jump into a procurement and start conducting research without understanding why we need something. Is it because we just “want” it or do we really “need” it? Is there some specific pain that we are trying to address.
For example, say we want to switch our email platforms as part of upgrading our IT environment. There are some needs that are driving the need to switch:
- Per user license costs are too high
- The current system is not secure enough leading to security breaches
- The current system does not integrate with our other applications
We could go on but the key point here is that we must understand what the specific need is and the specific pain points users or the organization is experiencing. Too often, however, we jump to thinking of solutions rather than diagnosing the problem.
What does success look like? Goals and outcomes?
Once we’ve understood the need, we need to envision a future where the need has been addressed. What is the ultimate state of nirvana that we envision? What should have occurred for us to consider ourselves successful?
It is important to both define success aspirationally as well as in terms of goals and outcomes. Some outcomes related to the email example above include:
- Lower total cost/user
- Secure environment with X% fewer security breaches
What is most critical to achieving success?
This question may not be something we can answer without conducting market intelligence but it is something we should explore right at the outset. The answer to this question will allow us to do everything from differentiating between the solutions and suppliers we are considering to determining our evaluation criteria at a more granular level than the generic “cost, schedule, performance.
One example I like to share is related to staff augmentation of technical experts and how the future selection of a vendor was influenced by the answer to this question. A state agency had used a contractor to staff various technical experts related to environmental engineering. One of the biggest issues they faced with the contractor was related to staff turnover and the number of experts that left after only a few months.
As the agency considered an alternative vendor, low staff turnover became an important criterion. What they found during their research, ultimately, was that there were some staffing agencies that had invested heavily in creating a company environment and culture that led to exceptionally low turnover and employees with very high morale. Although their cost/hour turned out to be higher, due to the money they invested in employee well-being, the agency determined their total cost would be lower due to the low staff turnover.
The above is a very simple example of why understanding critical success factors is a critical part of understanding the need and requirement.
How should you answer these three important questions?
Typically, we should engage end users, program leaders, and other stakeholders to answer these questions. It would be part of the project/acquisition workplan and something that we spend a few days on.
However, if time is limited and we just happened to get a set of requirements already put together, it is still important to have at least a 2-3 hour meeting with the program manager and end users to at least gain some insight.
Download Resource Template for 7MI Essential 1 – please use this template as part of your research plan and complete it to the extent possible.
Links to other articles/resources in series: