Launched in 2004 in response to recommendations in the
government'sNational Procurement Strategyand
theGershon Efficiency Review, the North
East Centre of Excellence was designed to improve a £1.5bn local
government procurement process. It aims to encourage buying
consortia and trading partnerships, highlighting best practice and
supporting collaborative working between 25 local
authorities.
But spending within local government has been devolved, so
keeping track of procurement - past, present and future - when many
people are involved at different levels within an organisation, was
a barrier to improving procurement, says Duncan Olive, programme
manager at the NECE.
"Although many local authorities have financial management and
enterprise resource planning systems in place, disparate data
sources, poor quality information and a lack of reporting tools
lead to one thing - poor visibility of spend. Without this
knowledge, local authorities can find it difficult to identify how
revised procurement practices can help to generate savings and
internal efficiencies and benefit the local community and the wider
region," says Olive.
In the initial phases of the project, NECE developed a series of
analytical and reporting models, using business intelligence
software from Cognos.
The centre invested in £30,000 on 30 desktop licences of Cognos
Powerplay software to consolidate buyer, supplier, spend and
contract data, from multiple sources such as financial management
systems and spreadsheets. These include SAP, Oracle Financials,
Agresso and small suppliers such as Cedar Software. A handful of
systems were developed in-house.
In better established business intelligence systems, the system
draws from the source data direct from the application programming
interface or uses open database connectivity standards.
However, because many of the councils were new to business
intelligence and had only isolated implementations, Olive says
there was an initial desire to win goodwill and make the council's
commitment less onerous. Therefore data was passed to the centre
using
SQL scripts e-mailed in zipped files designed to meet a generic
file specification.
"There are some deviations from that, but we can manage. We can
accept
Excel spreadsheets or spooled reports," says Olive.
The centre for excellence helps by formatting data, sometimes
using an Access database to get data into the right structure. It
would then augment the procurement data with information from other
sources, such as geographic data from the
Office of National Statistics, because councils were now being
asked by central government to balance efficiency savings with the
impact on the environment and local economy, Olive says.
End-users of the Cognos desktop system sit within the councils.
Following two half-day training sessions they receive data back
from the centre of excellence through zipped and e-mailed files.
Depending on the size of the data "cube" some are burnt to disc and
either collected or handed over as part of a site visit to review
the cube, Olive says. From here the centre will help users, mainly
made up of purchasing managers, look for opportunities to improve
the effectiveness of their spending.
"Cognos technology is helping change the approach to procurement
right across the region. Taking a strategic rather than a tactical
approach is enabling our local authorities to generate significant
operating efficiencies, which can only benefit the citizen," says
Olive.
Local authorities are now able to see what is being bought, from
whom and in what volumes and values. This is enabling them to
develop contract programmes hand-in-hand with NECE to deliver
direct savings and also to identify collaborative opportunities
with neighbouring local authorities.
Although NECE is cagey about the overall savings targets using
business intelligence tools, Olive say they should be in the tens
of millions of pounds.
Newcastle City Council is one of the local authorities
benefiting from the approach. Tasked with making savings of £1m in
2007/08, the Cognos technology has helped.
For example, the council has reviewed low cost, high volume
items including travel, stationery, postage and printing to assess
where savings could be made. By analysing who was buying what, from
whom, how often and on what procurement terms, the council has
identified non-contractual spend, made a reduction in maverick
spend and has used the information to develop new contract,
e-procurement and collaborative procurement opportunities.
Elsewhere, the system has also helped cut costly rogue spending.
Cliff Appleby, strategic development manager at North Tyneside
Council, says, "Cognos has enabled the Council to identify its
unknown and non-contract spend. When Cognos was first used, only
25% of the spend was identified as contracted. To date, this figure
now stands at 60%."
Olive hopes this will inspire further investment in more
integrated business intelligences systems between authorities. "We
had to win hearts and minds and show there is some value in this,
now we want to move on to investment in enterprise solutions that
have automated upload using extract, transform and load tools."
NECE is looking to develop a regional procurement observatory
with a wider group of regional stakeholders at both a public and a
private level and the Cognos analysis system is due to play a key
part in this.