Launched in 2004 in response to recommendations in the government's National Procurement Strategy and the Gershon 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.