California CPO: the challenge of purchasing cloud

One of the biggest challenges these days facing state procurement directors is how to acquire cloud computing and other emerging technologies as the procurement processes of the past are no longer adequate, says Jim Butler, deputy director of California’s Department of General Services and the state’s chief procurement officer.

In an interview with StateScoop, Butler said California is taking a different approach to acquiring these technologies, using different terms and conditions during negotiations for the state to get the technology it needs at the right price.

“There is a section of the law that allowed us to create this new approach where we actually sit down with more bidders to talk about the solutions they offer instead of using the old process of publishing your requirements and going through an expensive bidding process,” Butler said. “This new way of negotiating has allowed us to get more bidders and get a better understanding of what they have to offer, so we get more in return.”

California also recently organized the procurement of major IT projects to reside with the Department of Technology allowing the same experts that oversee project delivery to stay connected during the procurement phase. 

“This new alignment should improve ownership, accountability, and ultimately the successful delivery of the state’s most complex and mission critical projects,” Butler said.

Butler came to California in 2007 from Levi Strauss & Co. where he worked from 2002 until 2007 reengineering legacy-purchasing functions, implementing strategic sourcing and deploying eProcurement tools across a wide variety of categories.

From 1996 until 2001, he served in several senior manager positions with Dell Computer Corporation in Austin, Tex., including procurement, ERP systems and business development. From 1993 until 1996, he led Asia business development efforts for a portfolio of venture-backed clients at Asia Pacific Ventures, a boutique venture capital firm in Menlo Park, Calif.

Information technology is only part of what makes up Butler’s massive portfolio as he manages between $8 billion and $10 billion each year in procurements, depending on the state’s fiscal situation.

One area his team’s been working on to better source is the state’s different pharmaceutical needs. Agencies like the Department of Corrections and the Mental Health Agency within the Department of Health have large pharmaceutical needs, so they are working together to source what they need and have been able to drive significant savings, Butler said.

As for priorities, over the next six to 12 months, the state will begin implementing a new set of tools that will run California’s procurement systems. The full changeover is expected to take three to five years, but is rolling out an initial pre-wave of functionality. In the future, state agencies will be able to better advertise their contracts, track small business awards and add requisition contracts.

“It’s all about adding functionality,” Butler said.

Another area that Butler continually focuses on is the state’s small business requirements. There are laws and an executive order that require three percent of contract awards go to service-disabled veterans and 25 percent total go to small businesses.

To keep reaching those numbers, something California has done consistently under Butler, Butler has focused on continual research. His office holds approximately 150 events per year to educate small businesses and veterans on the state’s opportunities.

Butler also does a lot of meeting with key constituents such as the Black Chamber of Commerce and the Hispanic Chamber of Commerce, and disabled veterans associations, holding quarterly meetings to help improve the state’s performance in awarding contracts to a variety of different companies.