Driving public sector efficiency savings using eProcurement Solutions

Driving public sector efficiency savings using eProcurement Solutions Sarah Cotgreave Director of eCommerce OGCbuying.solutions 5-6 April 2006 Efficiency & Procurement: What Do We Need To Achieve? £21.5 billion a year efficiency gains by 2008 £8 billion efficiency gains to come from procurement Hot eProcurement News 24 Nov 2005 EU Ministerial Declaration on “Transforming Public Services” By 2010: •all EU public administrations across Europe will have capability to carry out 100% of their procurement electronically, •at least 50% of public procurement above OJEU threshold will be electronic. Declaration is available at : http://www.egov2005conference.gov.uk/documents/proceeding s/pdf/051124declaration.pdf Hot Procurement News 31 Jan 2006 New UK Regulations came into effect 31 January 2006 Implementing EU directives – and outlining more legal certainty for eAuctions & Framework Agreements New OGC guidance outlining good practice under the new regulations is available on the OGC Website www.ogc.gov.uk under Policy Savings, Value & Efficiency On A Major Scale: eProcurement… In March 2004 the National eProcurement Project identified opportunities in local government alone: • Reduction in cost of goods and services • through good procurement • through ePurchasing • through eAuction • Overall average potential saving was estimated at 2.8% of total non-salary related expenditure. No public sector organisation should disregard eProcurement eProcurement Solutions Management Information /Aggregation Payment Invoice / GPC Collaboration / Communicate Zanzibar, GPC Visa Receive Order Approval Expression of Interest Feedback / MI Best Practice Invitation to tender Evaluate Negotiate / Reverse Auction Award Selection /Requisition Content Management Contract Management eSourcing, eAuctions, Specification / Notice Supplier Databases eProcurement Solution Toolkit benefits • Commercial Off The Shelf products • Easy to use technology • Hosted solutions scalable for large customer numbers requiring no technology investment • Security accreditation to support 90% of Public Sector • Tools and MI support collaboration between customers • Integration of GPC for payment • Standard protocols / open source software if possible • Enabling time savings in regulated processes • Effective Disaster Recovery and contingency plans eSourcing: Getting Into The Game eSourcing Managed Service The eSourcing managed service is provided by BravoSolution, under a four-year framework agreement. Four modules which are provided on a hosted basis including a range of core services with additional services available. Initiate Project Establish Business Need Develop Business Case Assess Market Produce Requirements Define Procurement Strategy Advertisement/Notice EOI/PQQ ITT/ITN Negotiate/Auction Award Contract Implement Contract Contract Management Close Project The eSourcing managed service means: • no procurement is necessary • modular deployment • compliancy with EU Procurement Directives • value for money • leading solutions with best practice templates • security accreditation • extensive support Impact of new regulations Contract Notice published in OJ Receipt of EOI/ PQQ responses Invitation to Tender Receipt of Tender responses Contract Award Open Restricted - 52 days or 36 days with Prior Information Notice (PIN) - Reduce to 45 days for electronic contract notice or 29 days with PIN - Further reduce to 40 days for electronic tendering - 37 days - Reduce to 30 days for electronic contract notice - 37 days - Reduce to 30 days for electronic contract notice - 37 days - Reduce to 30 days for electronic contract notice - 40 days or 36 days if PIN is issued - Further reduce to 35 days for electronic tendering Negotiated Competitive Dialogue - Not specified - Not specified -16% -23% 77 65 37 -19% 30 37 30 -19% 52 40 Open Restricted Negotiated* Competitive dialog* *Pre-ITT phase only Fully managed hosted service Customer A end-users Customer B end-users Customer C end-users … Customer A Customer B Customer C Shared HW/SW technology infrastructure Common security architecture SOP for maintenance/upgrade/backup Unified disaster recovery plan Aggregate bandwidth management BravoSolution hosting environment eSourcing: Delivering Savings, Efficiency & Value 25 Customer‟s combined spend eTenders run… suppliers involved… typical efficiency improvements… Case Study - WMCOE • Signed April 2006 OGCbuying.solutions eSourcing Managed Service provided by BravoSolution. • West Midlands Centre of Excellence Organisations participating: – Birmingham City Council, Walsall Metropolitan Borough Council, Malvern Hills District Council, Staffordshire County Council, Solihull Metropolitan Borough Council, Prime Focus Group Warwickshire County Council, Worcester City Council, Warwickshire Police Stoke-on-Trent City Council, Bromsgrove District Council, West Mercia Police and Dudley Metropolitan Borough Council • Objectives: – improve procurement efficiency as under increasing pressure to contribute efficiency gains – minimise implementation costs – create opportunities for collaborative procurement in region eAUCTIONS: Getting Into The Game… eAuctions: Delivering Savings, Efficiency & Value Pre-auction value of Goods/Services procured using OGCbuying.solutions eAuction framework contracts since 2003 Amount saved using OGCbuying.solutions eAuction framework contracts since 2003 (23%) Pre-Auction value of goods/services procured through OGC funded auctions since April 2005 Amount saved through OGC funded auctions since April 2005 (27.5%) eAuctions: Success Stories ..from bandages to bedding plants! Environment Agency Computer consumables DVLA Cleaning services Inland Revenue Flat screen monitors – £1.8m saving – £220k saving – 42% saving Department for Constitutional Affairs Court Reporting Services – £3.2m saving South East Police Consortium Stationery & paper – 31% saving NHS PaSA IT Hardware - £12.5m saving eAuctions: Future Potential… Average cost of running an eAuction…………. Average savings from an eAuction…… eAuctions are „business as usual‟ in public sector procurement – 4 providers available on OGCbuying.solutions framework agreement Case Study – Wheelie Good! A consortium of NW Councils led by Warrington Borough Council requirement - 2 Wheeled Plastic Refuse Bins in Nov 2005 BT Transact & e-Three managed process from OJEC Expression of Interest to the final pricing via an eAuction. Objective - improved pricing from a qualified pool of suppliers. - 43 Potential suppliers identified from the UK (11), Germany (4), Spain (4), and Italy (6). Results: 12 suppliers participated in ITT >25% savings from a large qualified supply base! Zanzibar Managed Service Purchase to Pay Payment Invoice / GPC The Zanzibar Managed Service allows government buyers to trade securely with suppliers over the internet Receive Order Workflow / Approval Selection /Requisition Content Management 3 main features: Data Warehouse • Hosted eMarketplace connecting buyers and suppliers, containing Supplier “content” allowing search and comparison of goods and services • Pan-Public Sector Data Warehouse • Optional P2P – Online Requisition, order and pay using GPC or e-invoicing The Vision • Availability of procurement management information across the Public Sector • Single point of access to the government market for buyers and suppliers • The integration of different IT systems enabling electronic documents to be passed between systems and understood. • First customers – • 22 organisations from CCG, Health and Education currently going through Scope and Readiness Assessments to subscribe to Zanzibar • Data about spend patterns/suppliers - enable better future contracts What is the Zanzibar solution? Traditional eProcurement environments, have some automated functionality, but still rely on manual processing at key points. Leading to a disjointed procurement process. . . TraditionaleProcurement Manual Manual Manual Manual sourcing Sourcing Sourcing Sourcing Paper Paper Paper Paper Purchase purchase Purchase Purchase Purchase Order order Order Order Order Electronic Electronic goods Goods receipt Receipt Paper Invoice Paper Invoice Paper Invoice Paper invoice Electronic Electronic requisition Requisition Electronic Electronic approval Approval Electronic Electronic Reconciliation reconciliation Zanzibar provides a fully integrated eProcurement solution where data persists throughout Zanzibar eProcureme nt Electronic Electronic supplier Supplier content Content Electronic Electronic requisition Requisition Electronic Electronic approval Approval Electronic Order order Electronic Electronic goods Goods receipt Receipt Electronic Electronic invoice / / Invoice PCard PCard Electronic Electronic Reconciliation reconciliation Zanzibar components The Zanzibar system is a hosted solution based upon COTS products combined and tailored to meet the needs of the UK Public sector. When you subscribe to Zanzibar you get all the components needed in a turnkey solution for the whole environment. Provides a fully paperless procurement process to both suppliers and buyers Provides a level playing field for all suppliers no matter what their size Enables genuine savings in back-office processes (reconciliation, payments etc) Provides ready information that allows the requisitioner to make value-for-money decisions Zanzibar subscriber benefits • Innovative procurement automation tools open to all public sector organisations • Single point of access for buyers and suppliers • Lower cost P2P solution for smaller customers • Centrally managed supplier adoption, suppliers manage their catalogues • Negotiated prices on collaborative contracts drives value for money • Web based ordering and pay using GPC or e-invoices • Reduced buyer and supplier time and cost of process • Ability to enforce processes and contracts • Access to data about spending patterns, suppliers and demand • A catalyst for collaborative opportunities and benchmarking • Link to marketplace leverages existing investments in eProcurement Zanzibar supplier benefits • No charge to suppliers for marketing content, goods and/or services to buyers • Ability to integrate with supplier’s back office • Ability to “flip” orders into shipping and invoice documentation, reducing re-keying and errors • Lowers barrier to entry – Puts all suppliers on an equal footing with potential customers • Single entry, multiple use – Enter catalogue information only once, content managed and easy on-line interaction with customers • Rich set of supplier enabling tools – regardless of e-commerce capability • Lowering the costs of electronically transacting with multiple organisations in the public sector – Single point of catalogue provision – Single point of transacting – Streamline back-office processes Supplier e-enablement – Zanzibar will have many e-enabled suppliers available: • OGCbuying.solutions frameworks – available from day one • Existing suppliers already enabled by the consortium: – Large suppliers – SMEs 100+ 12,000+ – Other collaborative / consortia contracts will be loaded – As more buying organisations join, more suppliers will become available for all customers to access if desired – The consortium has pioneered methods of organising, running training and bringing suppliers online: • Nationwide team to provide hands-on support • Regular open meetings and “webinars” The costs of Zanzibar The costs are split into three components : 1  Set-up which includes: 2  Annual subscriptions which include: 3  Value-AddedServices – Connection and configuration of the technical components – Training Departmental staff – train the trainer – Department specific supplier adoption – Access to the Zanzibar environment and components (marketplace, P2P, MI data warehouse, supplier portal) – Ongoing supplier adoption – Comprehensive support and maintenance including buyer and supplier helpdesks – Comprehensive service and account management – Project management/ stakeholder management – Scope and readiness assessment How to Join • • • • • • Simple engagement – OGC framework contract, pre-approved costs and use of central OGC rates Scope and Readiness Assessment Simple pricing based on annual procurement spend on goods and services' Purchase-to-pay system and the e-marketplace, or only the e-marketplace. Once these two factors have been agreed, this then determines the two cost elements, a set up fee and an annual subscription. Discount structure for groups of organisations • Average 2 – 3 months implementation P2P and Marketplace - Savings Benchmarks • An overall saving of £41 per fully automated transaction (from requisition to payment). • A saving of £6 per transaction is available to Buying Organisations not currently using eInvoicing. • Savings available from effective use of Procurement Management Information 3-8% (of Total Spend) - Source: Dun & Bradstreet. • Savings achieved by Essex County Council using the IDeA Marketplace 9% (of Total Spend) - Source: IDeA. • Savings achieved by the Scottish Executive 2-3% (of Total Spend) Source: Scottish Executive User Group. • Savings forecast by the Norwegian Government eProcurement Programme – 4-7% direct savings on Total Spend. • Aberdeen Group Report: Spend Data Management – Unlocking Value Across the Extended Enterprise, November 2003 – Effective management and spend data can deliver savings of 2% - 12% (of Total Spend). Visa Government Purchasing Card • • • • • • • • • GPC Visa combined with e-procurement leads to higher process savings Clear audit trail to individual for one off or emergency purchases Reduces and identifies maverick spend Limits can be set at transaction and monthly levels Only 0.000007% of Visa Commercial transactions are claimed as fraud > 825,000 suppliers in UK alone, over 14,000 providing line item data Some suppliers are offering discounts for payment by GPC Visa Visa banks can provide integration software for legacy systems Average £28 per transaction saving available using GPC Visa …and its free for buyers Case Study – Kent County Council Royal Bank of Scotland’s TDM system automated payment and data matching solution has been implemented to manage invoices from, and payments via GPC Visa to, providers of domiciliary care. Objectives • to enhance the quality of life for individuals in the KCC area • to streamline processes and managed in the most cost-effective manner to redeploy resources into frontline services Results a 99% acceptance rate against orders - outstripped expectations in terms of matching estimated to process around £30 million worth of care payments p.a. Change Management eProcurement tools cannot just be parachuted in….. • Best Practice available from OGCbuying.solutions • Assessing readiness (and capacity) for change • Making Policy decisions for implementation • Programme Management • Managing Stakeholders, e.g. finance, audit • Re-engineering processes and procedures • Training • Motivating affected staff • Monitoring performance and compliance eProcurement Solutions Dependable web based Managed Services to e-enable the Procurement workflow for the Wider Public Sector: eSourcing, eAuctions, Zanzibar, GPC, Supplier Databases, Change Management • • • • • • • Available to all Public Sector organisations Services updated so you can concentrate on core activities Access to expertise within OGCbuying.solutions eCommerce team Managed service model releases time for other operational activities eProcurement Best Practice available from eCommerce team and User Groups Aggregated buying power and facilitation of collaborative activities Ensures security of supply and service level achievement Useful weblinks • • • • • • • • • • www.ogcbuyingsolutions.gov.uk www.nepp.org.uk www.purchasingcard.info www.idea.gov.uk/knowledge/eProcurement www.ogc.gov.uk www.buyitnet.org/Best_Practice_Guidelines/eProcurement/index.jsp www.capsresearch.org www.idea-knowledge.gov.uk/idk/aio/70780 www.eprocurementscotland.com/ www.zanzibaronline.gov.uk Questions? sarah.cotgreave@ogcbs.gsi.gov.uk