Procurement Transformation: Traditional vs. Revenue-First Approach
April 14, 2025“To transform or not to transform?” is not the question, Shakespearean as it is. Government agencies know that procurement transformation is an essential part of adapting to changing environments and meeting the growing needs of communities.
Procurement professionals who want to modernize successfully ought to be asking, “Is the traditional approach to procurement transformation the best way forward?”
As community needs, economic environments, and policy initiatives evolve faster than ever, the traditional approach to public sector modernization doesn’t always empower procurement teams to respond as effectively as they could.
Here, we’ll cover the challenges involved with traditional procurement technology investment in the public sector and highlight another option that drives self-sufficiency, efficiency, and better outcomes.
Here’s what we’ll cover:
What Is Procurement Transformation?
Procurement transformation involves restructuring, enhancing, and optimizing an organization’s procurement processes. This is typically done by implementing new strategies and more updated technology solutions.
For many teams, the main goals of procurement transformation are increased efficiency, effectiveness, and value creation. All of these results can help propel procurement teams into a more strategic role that drives overall government efficiency. Given the opportunities that arise from modernization, the National Association for State Procurement Officials (NASPO) has made it the top priority for public procurement in 2025.
To help procurement professionals modernize successfully, it’s worth considering how to best go about the process. Let’s start by taking a look at the traditional approach.
The Traditional Public Procurement Transformation Strategy
Public procurement transformation usually involves updating tools and technology, often implementing a comprehensive solution all at once in a single large project. Departments may work with consulting firms to find and onboard new solutions.
If you were to look at a timeline of the traditional approach, you would likely see:
- Budget and planning (12 to 18 months): Needs assessment, legislative approval, and budget requests.
- RFP process (6 to 12 months): RFP reviews, product demos, and negotiations.
- Implementing technology (18 to 36 months): Initial launch of technology to get basic functionality, with upfront costs ranging from $2 million to $6 million.
- Managed services: Post-implementation support is needed to help manage the ongoing operations of overly complex systems.
With such a heavy upfront investment and no strategy for generating revenue to support modernization, this approach is like building a new home on a shaky foundation. Understanding the precise challenges the traditional approach presents is crucial to finding the best way forward.
Challenges With Traditional Procurement Transformation in the Public Sector
The obstacles of the traditional approach to procurement transformation and modernization include:
- High initial investment: The cost of purchasing a whole solution upfront is often very high and puts undue burdens on public procurement departments.
- Long planning period: Due to high initial costs, departments often need a year or more to pass legislation and prepare their budgets.
- Investing in unnecessary features: Technology providers may sell departments on unneeded features. This risk is higher for departments that opt for all-in-one investments upfront.
- Long time to recoup investment: It may take governments three to five years (or more) to recoup their initial investment.
In short, the existing approach often requires heavy upfront investments and doesn’t deliver measurable benefits for a few years. This length of time can be too sluggish for departments and the communities they serve to drive real change and positive impacts.
The good news is that the traditional way isn’t the only way. Here’s a look at SOVRA’s innovative approach.
The New Approach: A Revenue-First Procurement Transformation Roadmap
At SOVRA, we know that modernization and transformation are part of procurement departments’ regular growth cycle. However, we don’t think they need to be cumbersome processes.
That’s why we’ve reimagined procurement transformation and arrived at a more efficient and effective approach that addresses the challenges of traditional modernization.
Instead of spending 12 to 18 months budgeting for new solutions, SOVRA empowers state departments to build a revenue-driven financial foundation. Here’s a timeline of how SOVRA’s transformation model works.
Step 1: Implement Fee Optimization (3 months)
First, our team implements a Fee Optimization Program. This involves collecting retroactive fees, reviewing contracts, and engaging with suppliers. Once the structure is in place, we focus on setting the program up for success.
Step 2: Optimize Contracts (3 to 12 months)
At this stage, SOVRA works with procurement departments to optimize contracts and increase engagement. We market the benefits of a vendor admin fee structure to agencies and local governments to increase the usage of statewide contracts. The goal is to turn procurement into a revenue-generating department within a year of implementing the program.
Step 3: Implement Technology (18 to 24 months)
Once states generate a revenue surplus, they can invest that income in new technology, leading to a self-funded procurement transformation. This approach gives states more flexibility on how they want to modernize: all at once or sequentially. Our team helps you identify solutions that provide the tools you need without having you pay for features you won’t use.
Step 4: Continue to Optimize
SOVRA’s team provides ongoing support to optimize contract management and transform procurement processes.
SOVRA’s approach requires no upfront investment and takes an estimated two to five months to impact revenue. In contrast, it can take five years or more to see benefits with the traditional approach.
Benefits of Revenue-First Transformation
SOVRA’s approach is designed to empower procurement teams to become more agile and self-reliant. As a result, they can step into leadership roles in driving goals like government efficiency.
Here’s a closer look at the benefits of taking a revenue-first approach to procurement transformation:
- Solid foundation: The program focuses on driving revenue first, then adds technology.
- Tailored approach: Teams get the features they need most instead of paying for a full suite and not using all the components.
- Expert driven: SOVRA’s teams understand the unique and complex needs of public procurement.
- Purpose-built technology: Tools are built with the public sector in mind.
- Faster realized benefits: Departments start driving revenue in a matter of months and see increased adoption and engagement with the help of SOVRA’s support teams.
Revenue-First Procurement Transformation in Action
SOVRA’s Fee Optimization Program drives tangible results in just a few months because we tailor it to meet each state’s unique needs and processes.
One state followed this approach and generated a 57% revenue increase from supplier fees in just a few quarters after implementation. By optimizing contracts, engaging with key stakeholders, and taking a compliance-driven approach, this state became self-funded and was able to invest further in its team.
In another state, SOVRA’s Fee Optimization Program led to a $94 million increase in local spend on statewide contracts per quarter. While the revenue increase was a significant achievement for the team, taking a transparent and data-driven approach also deepened trust and engagement with suppliers and local governments.
Start Building Your Foundation With SOVRA’s Fee Optimization Program
Today’s procurement teams need solutions that allow them to become more self-reliant and respond quickly to meet their constituents’ needs. Taking SOVRA’s revenue-first approach to procurement transformation empowers teams to modernize in a more flexible and efficient way.
SOVRA’s unique Fee Optimization Program is free upfront; we only charge a percentage of the revenue driven by the program. Learn more about our revenue-first approach today.