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Case study - Reducing the cost of developing specifications & contracts while improving purchasing conditions are the main challenges for public research organisations

The Procurer

We are an intergovernmental organization with 21member states. Member states have special duties and privileges, contributing to the capital and operating costs of our programmes. Our mission is to enable international collaboration in scientific research. At present more than 11000 scientific users from research institutes all over the world are using our installations for their experiments. We purchase goods and services according to our procurement rules. Contracts or orders are awarded to suppliers or service providers following a selective procurement procedure.
This is divided into two categories as described below. 
» Price enquiries: for contracts below the value of €190,000, we send a price enquiry to companies we have selected by. These companies are encouraged to register in our suppliers’ database and indicate their core activities. 
» Invitations to tender: for contracts above the value of €190,000 companies must participate in a market survey. Companies receive the market survey if they are already registered in our suppliers’ database or in contact with the relevant procurement officer or technical contact. Alternatively, relevant documents can be downloaded from our market surveys and calls for tender page. Based on the results of the market survey, our organisation selects companies that meet the tender requirements before inviting them to tender. 
 
Our Procurement rules define two adjudication principles:
“lowest compliant” or “best-value-for-money” for service contracts.
The adjudication basis is specified at the market survey stage. The country of origin for supplies and services is restricted to our member states, unless stated otherwise in
the contract.
 

Why the cloud?

We need cloud computing resources to provide additional capacity for researchers while keeping costs at a competitive level compared to in-house solutions.

 

How we procured cloud services

In 2014 we performed a cross border procurement of cloud computing resources to provide additional capacity for researchers.

The procurement action was defined with three main objectives in mind:

1. To test the suitability of our organisation’s procurement process for commercial IaaS;

2. To track the evolution of the commercial IaaS compared to in-house costs;

3. To obtain acceptable contractual terms and conditions.

The first two steps of the procurement action were the definition of the procurement objectives and of the IT requirements. The main procurement requirements defined by the project manager were a good balance between price and performance and accurate billing. The main IT specifications were a service availability of 99.5% and the network access via a public provider.

The overall amount of the procurement action was less than €48,000 and therefore a market survey procedure was not necessary. To identify the most suitable cloud service provider a price enquiry was prepared outlining the technical specifications based on the experience we had gathered through a previous pilot phase. This was then sent to a number of selected suppliers. The selection criteria were uniquely based on the lowest cost response to a price enquiry document including a technical specification and service definition. A total of 5 suppliers answered the price enquiry and at the end of the evaluation process phase one provider was selected. The selection was based on the provider who could meet the technical specifications at the lowest cost. Only one supplier was required due to the limited scale of the procurement action and because business continuity was not an issue. Following this, our organisation signed a purchase order with the supplier.

The full procurement process took three months. The experiment’s workflow management system, for which the procurer was sought, has a built-in monitoring system which is used to measure usage and performance. In 2015 we intend to make further procurements to explore data-intensive applications. We have submitted a proposal with other research laboratories across Europe in the context of the H2020 PCP/PPI actions for future joint procurement activities. As long-term action, as we are targeting IaaS, we envisage an open cloud marketplace as the framework to buy cloud services in the future. An open marketplace could enable a large choice of providers with competitive prices, even if currently they are still immature.

What we learned

What worked well:

» Given the skills and the high expertise of our IT staff in cloud computing the price enquiry technical specifications were relatively easy to define

» The definition of technical specifications was facilitated by the fact that we were procuring IaaS. There is not the same level of confidence for SaaS/PaaS for which technical specifications, which are vendor neutral, are difficult to define.

» An in-house system was used to monitor the performance of the procured services » Buying IaaS, combined with an independent performance test, is similar to purchasing traditional ICT goods. The suppliers’ offers were easy to understand in terms of the proposed pricing.

What didn’t work well:

» In a first iteration only one supplier met the technical specifications which was not acceptable to our procurement office. The price enquiry was therefore reissued with a broader specification.

» Some suppliers had questions linked to the tendering material concerning testing, monitoring & network access via the public provider.

» The full procurement process was time consuming mainly because the purpose of this procurement action was to use our organisation’s procurement model to understand if it is suitable for the cloud services. Previously our organisation had successfully performed procurement of cloud services in a couple of days for smaller values (<€4,800). The procurement process was shorter if compared to an equivalent purchase of traditional ICT resources (a typical large-scale H/W procurement cycle for our data centre usually takes about 1 year from start to finish).

» The main barrier that we had to overcome was developing a standalone test that could be used to verify the suitability of the services offered by the suppliers.

» A standard contract template for cloud services does not exist so analysis of the different offers proved to be time consuming.

Wish list:

» A contract template for cloud services,

» Transparent catalogue of services

» Catalogue of cloud service providers.