Plug into data science with procurement tech

Advanced data analytics yields significant benefits in areas like negotiation, vendor segmentation and yearly planning.” This is the thesis from a March 2017 article published by Mckinsey & Company titled, “The Era of Advanced Analytics in Procurement Has Begun.” While lightly geared towards the private sector, the article’s thesis is just as valid for public agencies.

Six years later and advanced analytics and data science haven’t exactly broken into the public procurement zeitgeist. It isn’t the subject of keynotes at the annual conferences and meetings of the profession’s many acronym organizations. It isn’t a qualification line on most procurement job listings. For most agencies—even large ones—introducing advanced data science is not a priority.

The clear culprits for this delay are resourcing and complexity. Data science is a little bit like a chicken-and-the-egg situation. You need a sense of benefits, opportunities and potential outcomes from a robust data science operation to justify hiring a data scientist. But you need a data scientist to look at your processes to determine benefits, opportunities and potential outcomes.

Some big cities might have general, departmental or project-based data science teams that procurement can tap into. If that is an option for you, here are my recommendations:

Because that is what data can do—it can answer complex questions and help with decision making without the risk of using anecdotal evidence.

But for everyone who doesn’t have a data science team at their fingertips—how can procurement professionals start to leverage the power of data science today? How can teams without access to data science resources internally start to ask and answer questions about their procurement process? They can look to their procurement tech vendors.

If data is a precious resource, governments are gold mines
When it comes to data, consider that governments (and as such procurement teams) are sitting on a vein of precious ore. Step one to deriving value from this ore is to extract it.

The great news is that the procurement digitization of the last decade is essentially doing this extraction process for us. When every RFP was posted in the newspaper, when every bid was delivered as a stack of 50 8½x11 sheets stuffed into a manilla envelope, when supplier performance was submitted on an index card and filed in a basement, data extraction wasn’t worth the cost. It would be like setting up a commercial mining operation with a kid’s beach shovel.

ERP systems, eProcurement, supply chain management software and vendor performance sites like Procurated have been serving to extract this data. When your bids are digitally submitted, when your end users are digitally rating supplier performance from contract inception to service delivery, that information becomes structured, usable data—ore extracted from the earth.

Processing… processing…
Okay, so we have begun our extraction process just by implementing new technologies into our procurement workflows. We haven’t hired any data scientists to do so. But to get the most out of government data, we need to process it.

This is where the relationship with your procurement tech providers comes into play. Your procurement tech providers (and really any other technology providers) want to process your data for you. At Procurated, we take supplier performance review data, and we turn it into overall vendor performance insights for our partners.

We have an in-house data team that helps to clean and transform this data (which sometimes comes to us in disparate ways and formats) into valuable insight that we can serve back to those partners. We also anonymize and aggregate partner data to deliver insights to suppliers. This maintains privacy, safety and security, while at the same time giving those suppliers new insights on how to access more government opportunity, how to optimize their public sector business development efforts, and most importantly how to deliver the best service to their clients.

As partners and key providers of the data that makes our technology valuable, there is nothing more important to us than feedback and requests from our government partners. So, if a government procurement team is seeking specific insights from their performance data, it benefits us and all our partners to work toward those insights and deliver them within our platform.

Doing so allows procurement teams to get the most from their data and helps other agencies out as well since data analytics processes are generally incredibly repeatable once they are put in place.

Procurated isn’t the only provider focused on doing this. eProcurement companies, ERP providers and more are always going to be looking for ways to add value into their product offerings.

So, you may not have an in-house team of data scientists who can answer those burning questions—Questions like “What types of questions on an RFP are most often answered in a way that causes a bid to be deemed not responsive?” You may not have the data or data science resources to tell you where bidders tend to drop off mid-solicitation, what day of the week is best to publish your bid, when an evaluator score is a statistical outlier, and so much more.

But your technology providers may, in the aggregate, actually have access to the data, and the data science and analytics resources needed to answer these types of questions. Expressing interest in these types of insights will drive these providers towards functionality that delivers them straight to you, without needing your own data science team.

Teaming up—data’s shared benefit
Last year, I wrote about procurement’s interconnected future. For this new era of advanced analytics in procurement that Mckinsey started talking about in 2017 to come to the public sector, that interconnectivity is critical. At least for the time being, government agencies will likely need to lean on technology partners to get the most out of their data. And those same technology partners will need to lean on governments for that raw material—that data that has so muchinsight to be extracted.

If you have ever had a question—about your procurement process, about early indicators of supplier success, about cost saving opportunities and so much more—whose answers you thought were out of reach, those answers could be in your own data. You might be sitting on a gold mine. Don’t hesitate to engage with your technology partners to help you extract it.

Steve Isaac is the director of government marketing for Procurated, helping public purchasers to leverage the power of peer insights in their procurement processes. He has spent a decade working with tech startups across the fields of procurement, spatial data science, and nonprofit fundraising and communications. Isaac lives in the Capitol Hill neighborhood of Washington, D.C., with his wife Lorna and his daughter Quinn.

Editor’s Note: This article originally appeared in the June 2023 issue of Government Procurement.