16 October 2003

Since 1999, Unisys has streamlined its procurement and the department is keen to promote its abilities to colleagues. Mark Whitehead looks at how the IT company made purchasing a priority

Walk into the head office of Unisys in Uxbridge, a few miles up the M40 going west out of London, and you're confronted by a message. "Working with procurement is the intelligent choice," says a poster placed strategically near the entrance. "When you need clever ideas to increase margin, communicate with procurement," says another.

In a modern design involving dolphins (intelligent teamworkers who communicate effectively), the Unisys slogan (Imagine it. Done.) and a sign-off line saying "Be smart, talk to procurement", the posters are part of a campaign to persuade people in other departments that working with the buying professionals at the multinational IT services provider can offer real benefits.

It's a message many purchasing and procurement people promote, but at Unisys the words have been turned into action. Also available to pick up around the building are leaflets explaining the various ways procurement can help, ranging from how to manage partners to reducing costs through better negotiation.

Reaction to the campaign has been positive so far, according to Libby Caller, procurement contracts manager and part-time procurement marketing manager. "People think it's very professional. It's too early to say what effect it will have, but the feedback has been encouraging."

The campaign is the latest stage in a shake-up going back four years that has had a radical effect on procurement in a company spanning more than 100 countries and involved in all areas of IT services. Over that period, it has transformed itself from a technology-led company - mainly selling hardware and software - to a services-led operation, specialising in providing IT solutions. Latest figures show services now account for 76 per cent of global revenue.

As you would expect of a major multinational company, Unisys has an impressive list of clients, including a strong presence in the communications and finance markets, as well as the public sector. And like many IT operators, much of what it does is behind the scenes. Whenever you cash a cheque, it is likely Unisys technology is involved in clearing it at your bank. If you see a police car drive past, the local station probably knows where it is and what it is doing thanks to the Unisys system being used by forces throughout the country.

Like many organisations, procurement was disorganised and fragmented before the reorganisation began. The people doing the procurement were scattered throughout the organisation and were involved mainly in low-level administrative tasks.

"The first challenge was to find out who was doing procurement," says Sarah Cooper, director of contracting and commodity management. "All of these people came out of the woodwork and we had to try to assess and understand what they had been doing.

"A lot of clerical and administrative people came forward. They were good people for what they were doing, but the really important stuff - relationships with suppliers - were being handled by the sales team."

In a company like Unisys, operating in a complex environment of alliances and partnerships with a range of other organisations in multi-million pound IT projects, this was a serious problem. Contracts with suppliers and partners were being agreed by people with no real knowledge of best-practice procurement.

What did that mean in reality? One horror story involved the discovery that a contract with a client promised technical support within four hours, provided by one of the partners in a project being managed by Unisys. But the salesman who had signed off the partner contract had failed to include a termination provision, so Unisys was obliged to provide and pay for support even after the client contract was over.

This kind of muddle is common in IT, a relatively young sector where well-tried business practices are sometimes ignored.

"There was no company-wide system to tell us what we were buying and how much we were spending," says Cooper. "We weren't buying as a multinational company, but as groups. The main challenge was to drive some of the costs out of the company.

"But to do that, we needed to know where the costs were and we needed to bring in robust procurement processes. We had very important deals being written on the back of purchase orders. It was the kind of thing sleepless nights are made of!"

What followed, says Cooper, was nothing short of a cultural revolution. Experienced procurement professionals were drafted in from big-name companies such as Fujitsu, Centrica, NatWest, BAE Systems and Deutsche Telekom.

Latest figures show the dramatic effect it had: in 1999 there were three procurement teams, one for each business unit at Unisys. Now there's one. There were 78 people involved in procurement in five countries throughout the UK and Europe. That has gone down to 54 people in 14 countries. Most dramatic is the reduction in the supply base from 24,000 to below 5,500, with spending through the top 400 suppliers going up from 32 per cent to 83 per cent.

The change process has involved a complete analysis of the skills required by a procurement professional - a total of 34 skills under four headings, ranging from contract management to supply chain planning to risk analysis.

A similar list of "Unisys operating principles" sets out the competencies needed by a purchasing professional. These range from "leading and advocating for the customer" and "financial acumen" to "political savvy" and "decisiveness".

Now, out of the staff of 54 in the procurement department, about three-quarters are involved in high-level strategic activities. But Unisys is still looking for people to continue the professionalisation of the function.

"We're looking for more individuals with a solid commercial grounding," Cooper says. "We've taken people from sales, people from purchasing backgrounds and some with no purchasing experience at all but who have shown the ability to develop."

In one of its latest projects, Unisys ran the "e-voting" trials at the recent local government elections and is in place to lead any similar exercises in the future.

It was a good example, says Caller, who supported the project on behalf of procurement, of one of Unisys' operating principles in action - "team for speed". People from various departments were mobilised to organise a complex operation involving several partners, including the US-based e-voting specialists Election Systems and Software. It was a breakneck timetable of just a few weeks from the signing of the contract to the elections, and the stakes were high. Unisys undertook all the risks, agreeing that if the trials in five local authority areas failed, it would re-run the entire exercise at no extra cost. This did not prove to be necessary.

One key test of the success of putting procurement on a sound footing is the annual employee opinion survey, now in its third year. Overall, says Cooper, the results are encouraging.

"People feel we have quite an open culture, they feel that their skills and experience are leveraged appropriately and that we can respond to business demands.

"But people felt we were guilty of starting too many things and not finishing them. So while we've come a long way in the past four years, the department is under no illusions about the amount of work that still needs to be done."

SMoct2003