10 April 2003
In the past year, the Scottish land records agency has made purchasing much more efficient. Jane Simms explains
An anonymous grey bunker sandwiched between the main north-south rail and road routes about a mile from the centre of Edinburgh is home to the Registers of Scotland Executive Agency, the public-sector body responsible for keeping records of all property transactions north of the border.
But within the forbidding walls of Meadowbank House, a mini-revolution is afoot. A clutch of new private-sector people and practices has brought a dynamism and commercialism to bear on a traditional civil-service culture. By the middle of next year, Registers of Scotland will have engaged in an innovative partnership that will be the envy of public and private-sector organisations alike.
The catalyst for the sea change at the agency was IT. As recently as 12 years ago, its property registers were paper tomes and staff used to record changes in ownership by cutting and pasting with glue and a scalpel. Today they can do the same exercise at the click of a computer mouse.
But the agency, a late convert to technology, had some catching up to do, and it spent several years adding systems that allowed its 1,000 production staff to respond more quickly to customers - the general public, solicitors, local councils, banks, the police and anyone wanting to check ownership of a property.
However, the agency's computerisation drive was proscribed by public-sector procurement rules, which force organisations to put every contract subject to the Public Services Contracts Regulations 1993 - mainly those worth £100,000 or more - out to open tender. The agency's IT supply base grew increasingly fragmented and four years ago, it found itself with 16 platforms and 14 suppliers, including Unisys, IBM and Siemens.
It was notching up around £5 million of IT (including telecoms) costs every year - a third of its total £15 million purchasing spend and eclipsed only by its accommodation bill. Utilities - another major purchase - and a great number of small-ticket items, including catering, accounted for the balance.
The agency was acting as its own systems integrator and manager and knew it was paying well over the odds for its IT. One particular problem was how some suppliers were exploiting its commercial naiveté and forging relationships at different levels in the organisation, playing fiefdoms against each other and generating additional and lucrative work for themselves. When supporting and developing legacy systems had become prohibitively expensive, the agency realised that drastic action was called for.
It dismissed the idea of a straightforward IT refreshment on the grounds of cost and a lack of in-house resources. It opted to enter a partnership with a private-sector company. This would bring much-needed technology and relationship management expertise, while enabling Registers of Scotland to effectively roll its future IT purchasing requirements into one contract: the private-sector partner would not be bound by the perceived constraints of purchasing under European Union procurement rules.
It hopes to have a partner by mid-2004, but the Partnership Project has required a considerable acceleration of commercialism. Although Registers of Scotland has been self-financing for 150 years and was awarded trading fund status (which gives a public-sector body greater freedom to manage its own financial and business activities) in 1996, staff were accustomed to being relaxed about how they spent it, says managing director Frank Manson, a former BP and Unisys executive.
"Best value is a relatively new concept here," he explains. "But no private-sector organisation would enter into partnership with us unless we could provide detailed information about our cost and income structure, and that means everyone in the agency is having to be more accountable."
Alan Ramage, the chief executive who has been with the agency for 39 years, sums up the challenge: "The Partnership Project means we have to make entire business cases for things that, in the past, would have amounted to one line in the corporate plan."
Procurement clearly had a critical role to play in this new accountability. But when Chris White, a procurement specialist with 25 years of private-sector customer service and supply chain experience under his belt, joined the agency in November 2001, he found a demotivated department that enjoyed little respect or influence within the organisation. Procurement was a back-end function involved with transactional activities and spending 80 per cent of its time on administration.
White says: "Departments would do the deals and then ask purchasing if it could negotiate a discount. So, at best, purchasing was reactive, firefighting, and at worst, it was seen as a hindrance because it 'enforced' EU procurement directives and was perceived as being concerned with cost above all else."
What's more, White's initial analysis revealed that the agency had 621 suppliers, and was spending 80 per cent of its budget with only 46 - or 7 per cent - of them.
His objective was to reduce the amount of time the procurement team spent on administration to 20 per cent, allowing the staff to focus on strategic value-adding activities that would help the agency to improve both value for money and service for its customers.
He restructured the 10-strong department from a bunch of generalists into a team of commodity managers, each charged with managing and developing a portfolio of supplier and customer relationships and building expertise and knowledge in their particular markets. And he rekindled the team's enthusiasm and self-confidence by focusing on skills and abilities as opposed to public-sector gradings, reallocating responsibilities and training them (five of them now have CIPS qualifications and another two are well on the way).
At the same time, White was busy changing perceptions of procurement. He quickly established key internal relationships - not least with Manson, who has been an invaluable sponsor from the outset - and helped to establish procurement's credibility with some quick wins. For example, hard negotiation reduced the cost of a software support contract from IBM by 15 per cent and slashed the cost of other projects by between 25 per cent and 50 per cent.
But White's wider agenda was getting procurement involved earlier in the process. It now applies its market knowledge and negotiating expertise when internal customers are identifying their needs and specifying their requirements. It is also more heavily involved throughout the life of the contract, ensuring, for example, that appropriate service-level agreements and improvements are built in and assessing suppliers' performance against specifications. And it handles all negotiations with suppliers.
The number of suppliers has been culled from over 600 at the start of the exercise to 200. And whereas procurement used to process hundreds of transactions every month, it now handles a single monthly invoice and purchase line from key suppliers - with suppliers, not the agency, responsible for reconciliation. Administration has been reduced by the introduction of a helpdesk.
White aligned the department's targets with the agency's objectives, and over the past year it has saved £750,000 in purchasing costs and accounted for most of its 3 per cent improvement in efficiency.
White hands over procurement strategy and an 18-month operating plan to his successor this year. Despite the Partnership Programme, the need for a strong procurement team will be greater than ever. As well as continuing to purchase non-IT services and products, the department will play a key role in managing the private-sector partner.
White has shown that EU rules don't need to hinder best-practice procurement in the public sector. As such, Manson's vision of a world-class procurement operation at Registers of Scotland looks achievable: "Partnership gives us an opportunity to drive through an innovative attempt to deliver IT in a way that will look and feel different from anything else in the public or private sectors."
Jane Simms is former editor of Marketing Business magazineSMapr2003
