Commerce reaps savings through collaborative strategic-sourcing effort

Wednesday - 11/20/2013, 1:39pm EST

Simon Szykman, chief information officer, Commerce Department

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The Commerce Department has saved more than $200 million in administrative costs because of a unique collaboration. The chief financial officer and the chief information officer have teamed up to find costly inefficiencies and make advances in areas like IT and cybersecurity.

Simon Szykman, Commerce's chief information officer, told the Federal Drive with Tom Temin and Emily Kopp Wednesday that the success of that collaboration is part of an understanding that neither one of the organizations could have realized the agency's cost-saving goals on their own.

"So, it's really been a collaboration, not just between the CIO and the CFO at headquarters, but the CIO and the CFO community more broadly at Commerce, bringing together the IT, the people who are responsible for managing our budgets and spending to understand what some of the savings opportunities are and to provide some momentum and senior support for some of the initiatives that we've put in place at Commerce," he said.

Szykman spoke to Federal Drive as part of our special report, A New Era in Technology.

Simon Szykman, chief information officer, Commerce Department

Although the shared savings go beyond just IT, one of the main areas where the two teams found significant savings has been in strategic sourcing, where they've improved the way they acquire IT products and technologies by using centralized contracts.

"There have been a number of areas in which we've done this, ranging from acquisition of some of our continuous monitoring technologies to blanket-purchase agreements for end-point protection software," Szykman said. "But one of the areas where we've had the most significant savings just based on the volume of spending in particular areas is in PC purchasing, where a couple of years ago we had over 100 contracts for purchasing PCs across the Department of Commerce. We worked together collaboratively with input from organizations across the department to develop a single purchasing contract for PCs that was centralized and supported the entire department."

Commerce put that contract into place a couple of years back and has seen savings of about 35 percent for every PC it purchased.

"One additional benefit is not just the dollar-savings per PC that we're buying, but actually the hidden savings of not having a large number of people, both on the purchasing side, the requirement side as well as the acquisition organization side managing and putting in place well over a hundred different contracts for purchasing what's essentially an identical commodity across the department," Szykman said.

This new approach essentially freed up the time Commerce's acquisition staff would have spent managing these redundant contracts so that they could work on acquisitions that were unique to their particular organizations.

"Another benefit that we saw was just engendering trust for these types of savings and strategic sourcing initiatives," Szykman said. "So, some of the things that we wanted to do later on were certainly made easier by the fact that people saw what we did in this case and saw the savings that came from it, understood the fact that we can, in fact, be successful with this kind of initiative. So, as we took on future, strategic-sourcing initiatives, people were certainly more willing to come to the table, collaborate on these types of things having seen that success."

The collaboration within Commerce began as a top-down effort, originating in the CFO-CIO offices.

"There are certainly discussions between the CFO and the CIO at the headquarters level, but there are also staff-level interactions in the strategic-sourcing office that works for the acquisitions organization at Commerce," he said. "And there's also a lot of outreach to the individual communities, so there are discussions among the CIO Council at Commerce, within the CFO Council at Commerce to help educate people what we're planning on doing well before we actually initiate these types of activities."

Among the next strategic-sourcing contracts Commerce expects to put in place are ones for purchasing network equipment and smartphones.

Szykman admitted that strategic sourcing was not a new concept, but it has proved to be a successful experience at Commerce.

"We saw the success at other agencies and in the private sector and realized that given the economic climate within the federal government and where the budget trends were going, it was something we needed to bring into Commerce as well," he said.

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