DoD ESI historical purchase prices database: an unprecedented tool for software buyers and cost analysts.

AuthorAnderson, Ian

The Department of Defense (DoD) Enterprise Software Initiative (ESI) is a joint Information Technology (IT) Strategic Sourcing Initiative of the DoD Chief Information Officer (CIO). Now in its 17th year, with a successful record of collaboration among the DoD Components, ESI seeks to reduce the cost and risk of acquiring commercial software.

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This article focuses on initial results from an ongoing collaboration between ESI and the Naval Center for Cost Analysis (NCCA). Given that one of NCCA's missions is to improve the accuracy, credibility, and completeness of independent cost estimates, ESI data is a rich resource for analyst use in comparing commercial software prices.

The NCCA analyzed more than 10 years of ESI data to identify potential trends, insights, and correlations for commercial software purchases. ESI purchase prices were used to baseline commercial software costs in Department of Navy (DON) IT Program cost analyses. With billions of dollars spent annually by DoD for commercial-off-the-shelf (COTS) IT, the IT subset of COTS immediately became the focus for data analysis.

Background

The ESI provides centralized mechanisms for entities needing to acquire COTS software. It delivers a unified contracting and vendor management strategy across the Department. The program was created in 1998 to save time and money on commercial software. The ESI's joint team of experts-typically Software Product Managers (SPMs) and Contracting Officers (KOs) from the three Military Departments and the Defense Information Systems Agency-consolidate requirements and negotiate with commercial software publishers, hardware sellers and IT service providers. ESI offers vetted terms and conditions (T&C) and reduced pricing compared to the General Services Administration's (GSA's) IT schedule.

During the past two years, ESI, NCCA, and SPMs at the Space and Naval Warfare Systems Center Pacific (SSC PAC) worked together to analyze more than $8 billion of software purchase records and turn the data into a valuable knowledge source. This source has produced a myriad of analytical possibilities, yielding results that may assist ESI in greater cost reductions.

Purchases of commercial software through the ESI-managed Enterprise Software Agreements now are included in a single authoritative database. The SPM team improved the database during development through early and recurring collaboration with NCCA.

The DoD ESI Working Group (WG) monitors cost avoidance, as well as software purchases. According to submissions by SPMs to the WG, recent calculations of cumulative cost avoidance exceeded $6 billion. Smart purchasing practices and incorporating best practices have resulted in better contracting T&C for DoD programs and users of ESI Enterprise Software Agreements (ESAs). These ESAs include negotiated discounts from list prices for software, hardware and related services.

In the mid-to late 2000s, ESI collaborated with the Joint Information Technology Team (JITT)-a team of personnel from DoD cost analysis organizations including NCCA-on a price benchmarking initiative to analyze the cost of major COTS software systems integration projects like Enterprise Resource Planning (ERP). This effort gave program and financial management greater insight into the cost drivers and risk factors inherent in major information system development. The effort foreshadowed a push for smarter buying decisions within the Department, a direction broadly defined by Mr. Frank Kendall, the Under Secretary of Defense (Acquisition, Technology and Logistics), as "Better Buying Power."

In his April 29, 2014 article in Defense One (Better Buying Power 4 Years On: Is It Making a Difference?), Mr. Kendall...

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