As we discussed here, our Blog has merged with Spend Matters, probably the world’s greatest procurement blog / web resource, to form Spend Matters UK / Europe.

Please visit us here and don’t forget to bookmark the new site -

http://spendmatters.co.uk

for Procurement and Supply Chain news, views, opinion, and analysis: as well as the odd post on music, politics and Wayne Rooney’s BATNA!

Things will only get better; I am the Lead Editor for the new site and will be writing extensively, but we will have more from Jason Busch and exciting guest writers.

Please come and visit our new residence – take you shoes off please, new carpets you know!

If you are interested in our consulting business, Procurement Excellence, which continues as usual,  our website is here or contact me on psmith@procurementexcellence.com

I was about to write a post which was referring to a piece on the Procurement Intelligence Unit (PIU) website, when I realised I haven’t ever mentioned the PIU previously.  So I’ll put that right now and come back later to the other issue.

The PIU was formed around 18 months ago by Mark Perera, one of the founders of the Procurement Leaders magazine and organisation.  Mark is now non-exec chair of Procurement Leaders (PL) and is putting most of his time into building the PIU.  I’ve got a lot of admiration for Mark, who has built from scratch (with his team) a very credible organisation in PL, with a mainly private sector, very international and blue-chip customer base.  He’s looking to replicate that with the PIU, which is offering “independent strategic research, market intelligence and benchmarking services”.

It is a corporate subscription model, similar to PL, and the research is both generated from what PIU believes are topics and markets of interest; and by members’ identifying areas they wish to see covered. As they say:

Firstly, our quarterly executive research studies provide a detailed, cross-sector and case study-led examination of high-priority CPO topics, such as 2010’s Organisational Alignment, Talent Management, Demand Management and Procurement Strategy reports.

In addition to this, our weekly operational reports analyse a variety of key spend categories, sub-categories, supplier markets, commodities, new technologies and country risk profiles.

While it bears some comparison to organisations such as the Procurement Strategy Council, it’s focus on ‘hard’ procurement research is pretty unique and it will be interesting to see if Mark can create another useful and successful procurement support organisation here.  I’m sure we’ll come back and feature what they’re up to in the future.

(* I would stress that no money or beer changed hands in the writing of this post… but in the interest of full disclosure, I seem to remember Mark did buy me a cup of tea a while ago.. just the one though…)

Today’s newspapers (Sunday) are confirming what we reported on Friday - the report from Sir Philip Green on Government spend is due tomorrow.

But I noticed an incredible comment in the Telegraph -

“The coalition would now impose “Stalinist” controls on public sector spending, Mr Maude was reported as saying”.

If he really said that, and note that it is only a ‘reported as saying’, he may live to regret it!  As well as the strange use of a communist dictator and mass-murderer as a role model by a Conservative Minister, and although history isn’t my strong point, I don’t think Stalin’s economic policy was a huge success..

And there is a serious point here.  In a procurement context, what makes Mr Maude think he can dictate from the centre what needs to be bought in every Department, Agency or other government body, across every part of the country? I’m all for some greater control on spend and aggregation  of demand across Government, but we need to have a sense of proportion here and what will actually work.  If he really does impose ‘Stalinist’ controls, then there is a real possibility we will end up with Stalinist outcomes.

(PS A Conservative party member of my acquaintance just said to me, “isn’t this the opposite of Conservatism – and of what Cameron is going on about – that the centre doesn’t always know best”?)

In a move that surprised many, Ariba have sold their sourcing services group business to Accenture. That makes Ariba pretty much a pure software firm, and strengthens Accenture’s position in the sourcing consulting and outsourcing market.  It looks like Accenture got a good deal in terms of the price, and the capability they are buying; while Ariba get to focus on core business, as the old cliche goes.

Spend Matters has done a superb job on commenting on this, so do take a look here. Jason’s last post in particular gives some great advice if you are an Ariba client; the potential for cost increase was my immediate thought, as Accenture have never been noted for their – how shall I put it – ‘bargain’ consulting fees!

One additional thought – I can’t speak for the US, but my perception is that Accenture have dropped down the league table for ‘intellectual property’ in Europe in the procurement space over the last few years.  Purely my opinion, but if I go back 10 years I would have put them well ahead of KPMG, Deloittes etc in terms of their procurement and supply chain thought leadership.  Since then, their focus on outsourcing and large delivery type work seems to have dulled the IP edge a little.  So maybe this acquisition helps them get some of that back?  Or is it all about winning more large BPO projects?

Interesting – and do take a look at Spend Matters for more in depth analysis.

I spent a morning with Luke Spikes and Hayley Wienszczak at Spikes Cavell recently getting to understand better their products and thinking.  As I’ve mentioned before, Luke is a very stimulating guy to spend time with and I came away with copious notes which I’ll try and distill here!

Spikes are particularly strong in the local authority and emergency services markets.  They are pretty much totally public sector focused, with a rapidly expanding prescence in the US, largely through their innovative link-up with the National Institute of Governmental Purchasing (which we will come back to at a later date).

What do they do?  “We present information in a format that customers can use to make decisions and ultimately transform procurement” is Luke’s take on it.  They perceive themselves as in the business of “data management, not spend management”; they may start with spend data but look to enhance it and add value to make it more useful for clients.

Their four key product / service areas are:

• Spend and contract analytics
• Measurement and benchmarking
• Sourcing
• Transparency

They take a pragmatic and flexible view of life generally; so will take spend data for example, then look to cleanse, amplify and improve it and use different sources (e.g. incorporating purchase card spend into their spend reporting).  Tools can be combined; so having got a spend map, a user can carry out further analysis to see how much of their spend is going against ‘corporate’ contracts and how much is maverick; then compare that against how other councils or police forces perform in that area.  That combination of spend analysis inside the organisation with external benchmarking across a sector is probably their most unique point from what I’ve seen.  And their coverage in some sectors (such as local authorities)  is now strong enough to make that benchmark data powerful and credible.

Another example of their anticipation of client needs is work around the ‘transparency’ agenda in local government.  Spikes were probably the first commercial firm to recognise this need and come up with ways to help Authorities; hence they are now market leaders in this area with “Spotlight on Spend“.  For instance, Windsor and Eton, who have been seen as a leader amongst local authorities in terms of transparency, use Spikes’ product.

Similarly, they have been fast to respond to the growing need for buyers to be able to report on the proportion of their spend with smaller suppliers (SMEs).  They are also incorporating the ability to search for local firms who are not currently suppliers to that customer; again, getting on the front foot in terms of meeting public sector needs.

I can’t really tell if their technical ability and capability is market leading, although they clearly have some clever developers.  But the common theme across their offering is real strength in understanding their public sector clients, thinking ahead in many cases to anticipate future needs, and then looking to meet those needs through business solutions.

I guess my only note of caution would be that Luke Spikes is such a smart, visionary and motivating guy, it is easy to spend time with him and feel that anything is possible!   So as a client, I would want to check that the practical capability to deliver anything non-standard is up there with his vision …   But all in all, a very interesting operation and one that has established a pretty unique position in the UK public sector.

It’s coming up to a year since I started the Blog, and we will also be announcing some exciting news later this week.  So I thought it was a good time just to say a sincere “thank you” to everyone who has read the blog, made comments and suggestions, and said nice things (or not so nice, but constructive, things)  when we’ve met.

I’ve enjoyed writing it but it wouldn’t be the same if no-one read it! Readership has grown steadily, but it would be great if everyone who is a regular could spread the word – tell your friends, send a link to your favourite post to your mailing lists, force your staff to read it under pain of demotion, that sort of thing…

Anyway, our news will follow in the next couple of days and thank you again!

Peter

NPfIT DOESN’T FIT ANY LONGER…

It has gone with a whimper rather than a bang, but the Register reports that the NHS national IT programme is finally, officially, dead.  Will this sound the death knell for huge, national public sector IT programmes?  I’m not so sure. In some areas – tax and benefits for instance – it is hard to see how else new systems and programmes can be managed, despite the talk of breaking up Government IT contracts into smaller pieces.  But NPfIT does demonstrate the difficulty (impossibility) of imposing an IT solution on a disparate and huge bunch of stakeholders without any effort to get their buy in up front, which was what Labour Ministers (up to and including Blair) did, ably assisted by Richard Grainger and his team,  Grainger proved that you could let large public sector IT contracts very quickly.  You just couldn’t do it quickly AND get stakeholder buy-in / a firm definition of requirements in that compressed period.  Unfortunately those flaws haunted the programme to its dying day, although some of the applications developed have proved useful (less clear whether their procurement has offered VFM though).  Here’s the full Department of health announcement.

THE POLITICS OF PROCUREMENT

An interesting piece by Dominic Campbell in the Telegraph, which looks at public procurement in a very strategic sense in terms of how well it meets the policy goals of Ministers.He believes there should be more ‘bottom up’ involvement of the market in defining solutions.  Not sure I agree with everything he says but thought provoking certainly.

“Politicians and management alike need to let go, to accept they may not have all the answers but by working with colleagues, suppliers and citizens they may be able to develop and deliver solutions to problems better than ever before”.

CHINA PROMISES TO PLAY FAIR….

China intend to open up their public procurement to foreign companies, with greater protection for intellectual property, reports MarketWatch.

Commerce Minister Chen Deming said during an interview with the state-run Xinhua news agency late Tuesday that the government is addressing the issue. “In the future, areas where foreign companies are more concerned, in indigenous innovation, government procurement, the protection of intellectual property rights and so on, will be further improved,”

I guess the phrase “I’ll believe it when I see it” comes to mind.

Continuing our look at technology providers that aren’t as yet high profile, but are showing strong growth based on interesting products…today a bit about Science Warehouse. SW (as we’ll call them) were formed about 10 years ago in a ’spin off’ from Leeds University.  Their particular niche is in providing eProcurement technology to customers with specialist  scientific needs; largely universities, but also research bodies, pharma companies and similar.  “Providing an Amazon type buying experience to the user in the laboratory” was how Dr. Jonathan Betts, their Sales & Marketing Director described it to me.

Their strength lies in their ability to catalogue highly complex scientific products – for an example, click here to see a Spend Matters feature which has a great example (screen shot pictures ) showing the complexity of some of the products that SW are successfully cataloguing. As the Spend Matters piece says:

What you see above is an example of a k. lactis Expression Kit that offers “an easy method of expressing a gene of interest in the yeast kluyveromyces lactis.” A paperclip or stapler in an eProcurement catalog it is not! The SKU attributes, images and related materials and attachments are all important to the potential buyer, yet it’s unlikely that a standard catalog content management solution could easily manage all of the attributes and information, especially in an environment where suppliers self-manage at least some aspects of their own information.  Science Warehouse excels in the cataloging, search and presentation of this information to a technical buying audience.

As well as the catalogue capability, SW have developed an eProcurement suite of products that can sit alongside and interface with a customer’s ERP system (for instance, as a ‘punch -out’ from Oracle or other ERP), or can act as a standalone P2P procurement platform with RFQs for mini-competitions and other capability.  The last couple of years have been very successful with growth of around 50% per annum, and they’ve gained some blue chip clients particularly in the university world.

They’re based in Leeds and their senior team have serious scientific backgrounds.  Their focus is very clear; and they seem to have found an interesting niche here with some capability that is quite distinct.

Back to GP Commissioning  – and I will use the terminology GPCUs (commissioning units) as shorthand here.  Firstly it is worth quoting this interesting if slightly obtuse comment from ‘Rob’ on my previous post.

Potentially, only one sector could possibly really do this at a pace – with the backing of significant (requisite) investment (£ms) and the attraction and promise (no doubt) of significant returns (£ms).

Step forward the global health maintenance and insurance industry…

…and all they(?) would need to do, is figure out how to establish this new layer in this potentially, highly litigious, EU Regulated procurement environment…

…but observers have also noted that if GPs themselves (who are private enterprises) ‘procure’ this layer, it may not fall within the reach of any such regulations, particularly if there are no such precedents (in the UK)…

Interesting points there about the potential involvement of the US type insurers; and also about how EU procurement regulations will apply to all this.  We may return to that another day.

Now, moving onto a purely analytical review of the costs of this change in procurement strategy (becasue that is in effect what we have here).  I can make no comment on the medical benefits or otherwise of this move and certainly none on the politics.  I’m just a simple procurement  person.

So…the PCTs role at present is commissioning – determining what services are required, procuring them and managing the contracts.  The GPCUs role will be exactly the same, minus  a few national services (some of which I beleive are already managed at national level).  There were 150 PCTs; there will be 500 GPCUs.  How much less work will there be for each single GPCU than there is for a PCT?

Well, I can’t see that the fundamental work is really changing – just who will do it.  And the fact that each GPCU will be about one third the size of a PCT in terms of spend / citizens served I don’t think actually makes that much difference to the workload.  Every GPCU will have to undertake the same number of procurement exercises as a PCT currently does for instance, and manage just as many (smaller) contracts.

So let’s say there is some small reduction based on the lower population served; but it is clearly not an order of magnitude change.  So let’s assume that the workload for a GPCU is going to be, say, 75% of that of a PCT.

So if we define the workload for a PCT as 1 unit, the total workload comparison is 150 plays 500 X 0.75 = 375.  Under these assumptions, the new strategy will mean a total volume of work that is two and a half times as much as presently.  Ah, but the GPCUs will be more efficient because the GPs are closer to the patient needs, I hear you say.  Fine.  But just bear in mind that given these numbers, they will have to be two and a half times more efficient than the PCTs just to get back to the same total  resource being needed to fulfil these tasks.

I believe Andrew Lansley has said he will allocate half the costs of the PCTs to the GPCUs to support them in their new commissioning tasks.  So they’re going to do two and a half times more procurement with half the money – that would assume they work at 5 times the efficiency level of PCTs.  OR…lots of GPs will be running procurement activities rather than being GPs.

As I say, I can’t comment on the quality aspects of this proposal.  But the procurement economics look very dodgy.  There is a however simple answer.  Go with GP commissioning but stick with 150 GPCUs or ‘buying organisations’.  Or if you want to save money, even fewer.

I don’t want to be a prophet of doom, but having featured this gloomy Spend Matters piece the other day, the latest Markit / CIPS PMI figures released today are not good news.

I do wonder as well whether the 40% cuts request from Treasury to government departments are a good tactic?  It is clearly the old softening up, shifting expectation negotiation strategy (”I won’t pay more than £100 per machine for a laptop”), and civil servants probably know that, but might it have a wider and negative effect on public and business confidence?  And if your redundancy pay is going to be less than you thought as well…not much temptation to go out and ’spend spend spend’ for public sector workers!

The recruitment section in the Sunday Times was virtually non-existent this week, although my friends in recruitment tell me that the private sector has picked up over the last few months  – so maybe that reflects a move to web-based advertising more than anything else.  But if you are a construction, consulting, or marketing firm, and the public sector is important for you, then I doubt that you’re feeling too optimistic.  Indeed, I hear that some of the big consulting firms have ‘loaned’ staff to Cabinet Office free of charge (we might come back and discuss the implications of that at more length at some stage), but even a McKinsey or Bain can only work for nothing for so long!

So this may all bode ill for the economy.  On the other hand…couldn’t get a booking at the West End restaurant I wanted tomorrow….