Buyingforce - summitconnects.com

1 ACOMMON PROMISE BYpoliticians isto make government run more likea business. It sounds like a smartidea profit and loss make every privateenterprise accountable. But, not every solu-tion that works for a private sector com-pany can succeed when you replace rev-enues with taxes and shareholders are not driven by a profitmotive, since the services they provideare determined by legislative mandate,not market desires. However, a number ofprivate sector strategies can be successfullydeployed to make government operate, ifnot like a business, more of them is shared services astrategy initially adopted by large multi-national corporations to reduce costs andincrease the efficiency and effectivenessofinternal back-office service have been so successfulthat a number of governments includ-ing the provincial governments of BritishColumbia and Alberta have alreadyadopted many of its services is about consolidatingcritical but non-core services such asfinance, human resources.

2 Informationtechnology and procurement into stand-alone business units whose sole mandateis to provide these services back to otherministries or governments, procurement sharedservices which includes processes suchas sourcing, purchasing, warehousing andlogistics are receiving significant atten-tion. These services are consolidated frommultiple government departments andministries into a single, stand-alone are procurement shared-servicesfunctions growing more popular? Becausethese programs have a track record ofdelivering: reduced procurement service cost, increased organizational efficiency, improved contractual relationships,including better contract terms withvendors, enhanced procurement services andclient satisfaction with those services,and empowered ministry and departmentmanagement, freed from managingprocurement staff and services andbetter able to focus on their large businesses have relied onshared services for over several decades,their use in government is still at an and British Columbia havebeenpioneers of procurement sharedservices and their experiences tell a greatdeal about the opportunities and pitfallsofthese.

3 The scope of a shared servicesmodel is oneof the first decisions thatmust be made. Shared services can encom-pass a wide variety of agencies over alarge geographic area but could also befocused on a few functions. While it mightbe wise to assume lower expectations foraless ambitious venture, an ambitiousscope should be tempered with realisticexpectations for a staged deployment. Al-berta and British Columbia took differentapproaches to a similar Don t avoidproblems; fix themIn Alberta, the procurement functionwas not included in the initial shared serv-ices strategy and the establishment of theAlberta Corporate Services Centre (ACSC).Eventually, the government transferredthe procurement function into the ACSCand established a services unit, consist-ing of 100 procurement services experts,focused on corporate purchasing, govern-ment contracts, over-threshold spending,standing offers, surplus goods dispositionand strategic where did Alberta run into earlyproblems?

4 government officials say thatwhile it was not difficult to identify thekey buyers who needed to be brought intothe shared services structure, a key chal-lenge was to identify the hundreds of peo-ple who do casual buying, then informand assist these people in using the newshared services model. Many of these casu-al buyers were not identified and continuedto conduct purchasing in the challenge was drawing atten-tion to the real value of the shared serv-ices to expedite buyingand avoid what are perceived to be time-costly processes, ministries developed anumber ofcreative solutions, which maycompromise compliance. These kinds ofclever budgeting techniques skew the wayasharedservices organization operatesand, therefore, tends to discourage agen-cies from becoming more surprisingly, there was also resist-ance from some employees due to a per-ceived loss of local flexibility and , the senior executive recognizedthe value of cost savings and the staff even-tually recognized the value of types of implementation issuesare common to both governments andbusinesses.

5 What s impressive about Al-berta is the way they overcame them withinthe shared services model. Alberta reactedrapidly to initial shortcomings and movedaggressively to expand the scope of theproject, as needed, to make it work. Theend result is a unique and evolving sharedservices procurement model that includes: common templates for RFPs andRFQs for use by ministries,12 March 2006 Buyingby Rob CookeProcurement shared services model worksforceforceMarch 200613 management of ERP procurementmodule and p-cards, services performed by the ministries(generally, if under a cost threshold)as well as contractors, and established rules and a clear gover-nance s advice to other governmentsconsidering this route is to bring all cor-porate or specialized procurement into theorganization at the outset.

6 In addition, itbelieves agencies must look beyond near-term cost savings via consolidation to thelonger-term value of strategic sourcingand improved Columbia Findingvalue in an ambitious approachThe British Columbia government con-solidated procurement services includingsupply, printing, distribution centre, strate-gic acquisitions and intellectual propertymanagement, into a broader governmentshared services features of the British Columbiaapproach included: creating a procurement council withmulti-level membership, providingoverall advice to the shared servicesgroup, building a procurement reform process to encourage continuousimprovement, and providing procurement curriculum to all levels of government to educateon procurement of taking a go-slow approach,British Columbia dove head first into pro-curement shared services and found thatthe key to overcoming initial resistanceand institutional inertia is to provide goodservices that ministries want.

7 The moreefficient and customer-focused the sharedservices model became, the more rare off-contract buying these results required BritishColumbia to keep in front of clients andvendors on a continual basis to identifyissues, trends and changing procurement officials say thatthe key to their success was being proactivein addressing Columbia officials articulatedtwo other lessons from their shared serv-ices experience: 1) Don t be disappointedif your clients don t do cartwheels overtheir excitement for the new model it s apretty ho-hum process; and 2) Identifyhigh-impact areas for immediate and visi-ble success, as this will build commitmentfor subsequent improvements and British Columbia has seen a greatmany successes in its shared service model,it faced its share of challenges as many businesses, British Columbiahas a history of using charge-backs formany of their services charging a fee forthe delivery of services such as printingand mail services through what is reportedto be a very efficient electronic charge-backprocess.

8 In both the government and cor-poratearenas,charge-back fees can be-come bureaucratic nightmares that don tdeliver the culture change can also be a great deal of resist-ance to paying fees. In British Columbia,it has been difficult for ministries to acceptpaying for advisory services that were pre-viously considered free as they were hiddenin area where British Columbia hasfound greater success is in differentiatingthe governance of the service from the deli-very of services. The people who developpolicies and ensure compliance should notbe the same people responsible for carryingthem out. In British Columbia, the procure-ment governance function is in the Con-troller General s office in the Ministry ofFinance, completely independent of theshared services , while it might sound like a goodidea to make use of the shared servicesorganization optional, this cannot be al-lowed.

9 To make shared services work, min-istries and departments must be mandatedto take full advantage of the shared serv-ices organization. While Alberta started offexempting some key departments from theshared services model to negative effects British Columbia moved aggressivelyand completely down the shared servicesroad not just in procurement, but in awide range of services and, therefore,found results more it workFor a shared services model to havesuccess in the public sector, it is vital toovercome initial resistance through consis-tent and complete communications withall affected personnel. In Alberta, there wasagreat deal of initial resistance localofficials wanted to retain flexibility andcontrol.

10 Unfortunately, this objective rancounter to the overall aim of shared serv-ices. For shared services to work, it is im-portant that the organization in place canmeet all procurement needs through moreeffective and improved there is not easy. There mustbe visible leadership and support for theshared services unit from top it can work. While governments andcompanies are not alike, successful sharedservices models share common traits. Theyhave: developed a shared services culture one that understands and meets theneedsof its many customers, demonstrated service quality and acommitment to gaining acceptance. moved beyond centralization, takingon the best characteristics of decen-tralized units by serving the needsofclients, and ensured visible and credible leadershipin the end, what makes governmentand business alike is people.