Sourcing Options for Web Conferencing. June 2011 Final Version

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1 Sourcing Options for Web Conferencing June 2011 Final Version This document is intended to be shared and developed with key stakeholders within the public sector in Scotland. It contains certain sensitive commercial information and should not be shared beyond this environment. In particular this document should not be shared with suppliers as it discusses several sourcing strategy options and makes recommendations for implementation. 1

2 Contents 1. Executive summary 2. Web conferencing Overview 3. Market analysis 4. Data gathering 5. Sourcing options and benefits 6. Stakeholders 7. Next Steps 2

3 Executive Summary Restricted Commercial In these times of detailed scrutiny of Scottish public sector spending, organisations need to be seen working efficiently and effectively as possible and having consideration for the surrounding environment. Throughout the Scottish public sector, organisations are awarding business using the non -competitive Memorandum of Understanding (MOU) approach to deliver their web conferencing through a variety of suppliers and at varying price points, service levels and without the backing off of agreed terms and conditions. A single Scottish national collaborative web conferencing agreement will assist the Scottish public sector save valuable resources by reducing travel, Protecting budgets, Reduction in carbon emissions increased productivity and enhance employee work/life balances through an ethos of smarter working. Scottish Procurement plan to drive these benefits and others through a committed collaborative National agreement for Web Conferencing, supported by Greener Scotland, stakeholders and other interested parties, which will be awarded to a single supplier during the 3 rd quarter of this financial year. The term of the agreement will be 24 months with the option to extend for a further 24 months in 12 month stages. The scope of the agreement will include:- a standardised easy to use, robust & reliable off the shelf *SaaS products & services solution. low investment and single Scottish branded entry portal option nationally IT and helpdesk support and training accessible to the Scottish public sector including Scottish registered charities and beneficial hybrid pricing for both audio and web conferencing licences based on committed volumes * SaaS Software as a Service is an on demand service where software is located centrally and accessed usually through the internet. 3

4 Web Conferencing Overview What is Web Conferencing? Web conferencing refers to a service that allows conferencing events to be shared with remote locations. The service allows information to be shared simultaneously, across geographically dispersed locations in nearly real-time. Applications for web conferencing include meetings training events, lectures, or short presentations from any computer. Participant can be either an individual person or a group. System requirements allows individuals within a group to participate as individuals (e.g. when an audience participant asks a question) depend on the size of the group. Handling such requirements is often the responsibility of the group. The service is made possible by Internet technologies, particularly on IP/TCP connections. What are its benefits? Benefits of using Web Conferencing include Reduced travel time and cost to your organisations budgets Reduced impact on the environment in terms of Co2 emissions Better work force productivity Smarter way of working 4

5 Market In Brief A consolidating and converging market place. Price driven = Buyers market. New entrants putting increasing pressure on traditional players. Growing market forecast 20% growth through 2011 (Gartner 11/2010). Common functionality across products. Good range and number of suppliers. No known indigenous SMEs. Typically all suppliers offer 3 methods for deployment Software as a Service On premises Hybrid BT MOU existing for audio and web conferencing via Buying Solutions. Typically price is determined by competition, commitment and model. Average market pricing for web hosted conferencing ranges from 35 (for 1 licence) to 2.50 (for upwards of 10,000 licences) per user per month. Gartner's Magic Quadrant for Web Conferencing 5

6 Data Gathering Restricted Commercial In March 2011 Scottish Procurement and Improvement Services issued a survey on web conferencing to Scottish public bodies. 39 public bodies responded by the closing date 6 April Summary of key findings: Over 56% of organisations that responded currently do not use web conferencing. Out of those who did, over 73% used it on an adhoc individual or departmental basis. With circa 1,500 users in total. The products deployed were mainly Cisco WebEx, Microsoft Lync and Adobe Connect. The majority (over 73%) of respondents stated to be either currently developing requirements or a business case for web conferencing. Going forward over 56% or organisations would look for a web hosted tool with 10% requiring an on premises solution. All indicated that they would be interested in participating in a collaborative arrangement depending on the scope. Overall the responses received were positive and confirmed that there is an opportunity on a national basis to take forward web conferencing. Product cost, time to deliver and ease to implement are key factors to consider going forward. A full copy of the survey report is available from Scottish Procurement. 6

7 Data Gathering Restricted Commercial Existing Agreements Currently there are no existing frameworks or agreements which have been competed on behalf of the public sector which Scotland could use. Buying Solutions have an Memorandum of Understanding (MOU) with BT for audio and web conferencing. The BT MOU is an aggregated public sector pricing arrangement which has been reached through discussions rather than competition. Individual organisations are able to enter into an agreement with BT at the MOU tariffs, further competition (via OJEU) may be required depending on total value of the agreement. BT MOU conditions for conferencing: Web conferencing tools available are Microsoft Live meeting pro or Cisco WebEx. Pricing based on a price per minute used with limitations on budget provisions. Aggregate pricing across UK public sector - based on volume pricing i.e. more minutes lower cost per minute. Option to take only audio or both audio and web. Each new customer to provide 100 names in the public sector for BT for onward marketing campaigns. 7

8 Sourcing Options Restricted Commercial Objective Implementation of this sourcing strategy for web conferencing is intended to address the following key objectives: Drive take up of web conferencing technology across the Scottish public sector; in turn deliver a reduction in travel and expense budgets, reduce CO2 emissions associated with travel and increase productivity. Leverage Scottish public sector buying power, in order to realise value for money and establish public sector pricing. Simplify the route to market for organisations and sector by delivering competed proven technologies. Consideration In striving to achieve these objectives the strategy must also consider: Impact on competition short term and longer term. Economic impact on incumbent and potential suppliers. Impact of other initiatives being considered across the Scottish public sector. The need for choice and flexibility of individual organisations and sectors. Summary The actual value of the potential Scottish public sector business is currently unknown, estimated figures indicate that the potential value could be c 4.2m* per annum which is over the EU procurement threshold and any recommendation to establish a national agreement would need to be competed. *(this is based on up to the conservative demand of 10, per user per month average market price) 8

9 Sourcing Options Route to Market (1) Do Nothing (2) Use an existing competed Framework Pros - No central procurement resource required Cons - Price variation Doesn t maximise leverage Duplication of effort Doesn t seek to promote web conferencing and the associated benefits. Pros Reduces time to procure Cons No known framework established to use The BT MOU whilst available to the public sector is not a competed contract/ framework, may present a risk to public bodies to procure directly with out further competition and risk assessments. (3) Establish a Scottish Framework Pros Fully maximise leverage Establishes national pricing Reduces duplication and resource Establishes terms and conditions Provides ability to promote web conferencing and associated benefits Provides a compliant route to market. Scotland seen to be leading the way on Greener solutions Cons Upfront resource to procure Time to conduct Not recommended Not an Option Recommended 9

10 Sourcing Options Coverage (1) Sector Specific (2) Regional constraints (3) National Coverage Consideration - No sector specific requirements identified standard commodity Consideration No regional constraints (economical or geographical) identified Consideration Standard commodity suitable for national contract. Sector Lot not required Regional Lot not required National Agreement Recommended 10

11 Sourcing Options Number of Suppliers (1) Single (2) Multiple (3 plus) Pros - No further competition required Reduces procurement effort and time Maximises leverage More attractive to market Common functionality between products Price driven at set up Cons - Potential risk of continuity of supply Reduces ongoing competition The cons can be mitigated through the tender process (assessing financials) and the duration of contract. Recommended Pros Maintains competition throughout duration Provides alternatives to end users Cons Requires further procurement Additional procurement resource Reduces leverage Maybe less attractive to market May not attract best pricing at outset Not Recommended 11

12 Sourcing Options Duration The market for web conferencing is highly price driven, it is relatively open to new entrants. The market is also experiencing increased levels of convergence and consolidation. In order to maximise the benefits of a dynamic market place the duration of a framework should be carefully considered. Too long and the ability to access new technology or price reductions could be limited, too short a duration could limit the ability for the agreement to be properly established and benefits realised. Shorter durations also require increased procurement resource to re-let and may not be attractive enough to suppliers and in turn pricing. Maximum duration for a framework is 4 years. Suggested duration for web conferencing is: 2 years with the option to extend for a further 2 years in 12 month stages. 12

13 Sourcing Options Open or Restricted? Open Pros - Reduces procurement effort through single stage process No need to issue & evaluate PQQ s responses Potentially quicker process to contract award May be more appropriate to this type commodity (off the shelf) Price may be the determining factor for a standard off the shelf product. Restricted Pros Two staged process which includes a Pre Qualifications Questionnaire (PQQ) stage ability to reduce the supplier numbers at this stage. Cons - Potential risk of many responses Increased evaluation period due to may responses Difficult to target only suppliers who are able to meet the requirements ITT is issued to any suppliers who express an interest Recommended Cons May be difficult to reduce the number of supplier to receive an ITT potentially price lead procurement More procurement time and resources involvement Not Recommended 13

14 Sourcing Options Restricted Commercial Pricing The web conferencing market is price driven, with best pricing achieved by going to market with committed volumes. 1. Levels of commitment, options are: Committed contract only Identify firm commitment upfront Forecasted only Identify indicative volumes with no commitment to buy anything Hybrid part committed with forecasted growth. Hybrid is the recommended option to drive down price whilst allowing for growth, in addition the framework should look to incorporate flexibility to transfer or park licences during the term. This will look to protect the Scottish public sector during organisational changes and future budgets. 2. Deployment, options are: Software as a Service- an on demand service where software is located centrally and accessed usually through the internet. On premises- where the supplier puts their software/equipment within the customers own premises. Hybrid a combination of the two above. Survey responses indicated a high preference of Software as a Service option, however there was an ongoing requirement for on premises. It is recommended to proceed with SaaS as the predominate requirement and request On promise and Hybrid solutions as options with pricing provided. 14

15 Sourcing Options Benefits of Recommended Approach National Scottish agreement maximises leverage, establishes public sector pricing, reduces procurement and shows Scotland as leading the way on Greener technologies. Single supplier with committed levels of demand drives down price, increases market interest, reduces procurement resource and effort, easy route to market for public sector. Additional growth and flexibility to be built in to reflect changing demands across the public sector 2 year agreement large enough for market interest and pricing, maintains competition and considers consolidating/ fast changing market/ technologies. Lead requirement SaaS solution address the requirement for the majority of public bodies, easy to implement therefore a potential quick win, option to grow or take alternative solutions. Recommended Approach Establish a Scottish Agreement National Coverage Single Supplier 2 year agreement with option to extend plus 2 Initial committed purchase with growth options Lead requirement SaaS with options for On premises Supports the McClelland report on collaboration, standardisation and reflects the Governments green agenda 15

16 Sourcing Options - Benefits It is anticipated that if the Scottish Procurement can go to market with an initial committed volume of c10,000 users then:- the framework becomes more attractive to the market there is greater ability to reduce the licence cost to the Scottish public sector there is the ability to build a long term stable relationship with the supplier it drives up additional demand going forward. Savings will be achieve in two distinct areas:- 1. A reduction in the licences costs - potential saving based on 10,000 users could be circa 3.6m per annum. 2. Softer savings from- reduced travel, increased work productivity, a reduction in Co2 emissions, and *savings in staff years *Savings in Staff years - The total of dead time spent travelling A>B>A, expressed as years, that would have been more productive at the desk/workplace had the meetings been held via Audio and/or Web Conferencing 16

17 Stakeholders Key Stakeholders Name Organisation Roles & Responsibilities Tony Aitken Scottish Procurement Procurement Lead Simon Haston Improvement Services Technical Lead Alistair Skene ISIS, SG Working Group Colin Shand East Lothian Council IT Working Group Chris Dempsey Registers of Scotland Working Group David Anderson South Lanarkshire Council Working Group Peter Bromley Scottish Legal Aid Board Working Group Jav Yaqub SEPA Working Group Alan Hush NHS Working Group Karen Anderson SG COE representative Allan Doyle APUC COE representative Peter McConnell NHS NP COE representative Billy McMaster SPSA COE representative Terry Hand Scotland Excel COE representative Barry Greig Greener Scotland Support 17

18 Next Steps Restricted Commercial What Next? Request endorsement for CoEs Scottish Procurement Issue out briefing paper to working group for onward distribution to organisation-scottish Procurement Identify & collate initial committed volumes Working group Finalise and agree technical & commercial scope Working group Finalise demand across the Scottish public sector Scottish Procurement Commence with tender process Award agreement to single supplier Mobilisation/marketing Scottish Procurement/Supplier/Working group Indicative timelines High-level Activities May June 11 July August 11 Sept Oct 11 Nov Dec 11 CoE endorsement paper issued Issue out briefing paper Identify & collate initial volumes Finalise SOR Finalise demand Commence with tender Award Mobilisation/marketing 18

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