Wednesday, 27 February 2013

Lessons in centralising spend: NAO Report 'Improving government procurement''

The NAO has now published their report on 'Improving government procurement' - perhaps the title is a bit misleading as it is really about the effectiveness of the latest iteration of 'ye olde Buying Agency', the GPS. In many respects it is a recycling of old messages. Nevertheless, 'what goes around, comes around' and I am sure it is no coincidence we have also have the PASC Inquiry into procurement.

Some paraphrased thoughts before you knuckle down for a riveting read of the report though:

  1. In our world it's always good to understand who is the buyer and who is the supplier. The buyers, in this example, are decentralised budget holding departments and one of the potential suppliers is GPS;
  2. Buyers expect to set the terms for suppliers - they like caveat emptor;
  3. If the supplier's Chairman of the Board (Cabinet Office Minister) and Head of Marketing (CPO) say "I'm going to be your monopoly supplier which you must use", that doesn't mean the buyers will necessarily see that as a good thing. Nor does it mean that the alternative suppliers see it as a good thing; 
  4. There's a clear incentive for the buyers and the former suppliers to see the new monopoly as a threat to their freedom, bringing with it the additional risk (barrier to change) of perceived poor quality service, worse prices and complacency. So expect resistance to change, if for no other reason, buyers like buying - visualise images of old ladies fending of those trying to steal their purse; 
  5. Equally, if the buyers see this as just the latest iteration of what has gone before (say, ye olde Buying Agency, PSA, BuyingSolutions, etc.) and they were able to stick to their old ways successfully in the past, don't be surprised if they use that strategy again;
  6. Assuming you are going to encounter resistance to change, it is a good idea to 'sell' rather than 'tell' - 'telling' just encourages resistance to change to your monopoly. 'Selling' involves listening to the customer and setting out compelling, irresistible and realisable benefits which win the buyer hearts and minds over their perceived costs;
  7. You sell buy 'winning hearts and minds' - if you don't win their hearts they will hanker after what suits them best and try to brazen it out. If enough brazen it out, then they will retain the old way;
  8. There are practicalities involved in migrating from buyers old contracts to the sellers new contracts - think about contract end dates;
  9. If you say "you must use my monopoly or else", you better be sure what "or else" means because if you have no 'stick' they can just say "sticks and stones may break my bones but words will never hurt me, ...";
  10. It's also clever to have your ducks all lined up if you want to bring success. I'm sure you recall the old PASA framework when PCTs were told "we're putting in place a central framework for you to use" and then at the 11th hour said, "sorry, you're on your own". I certainly convinced organisations to use GPS contracts only to have egg on my face through GPS saying "sorry, you're on your own";
  11. Be clear about a governance and performance management system that is fit for purpose in dealing with mavericks - implement it;
  12. When you're thinking about a new way of working - think about the new skills sets involved, not just with the supplier but with the buyers, then put in place a development plan (which may also be part of your marketing strategy).
I'm sure you'll recognise that's not word for word what the NAO reports says, but they're not writing a blog!

I'm sure you'll also recognise the above are just as applicable to any strategy towards centralised shopping too.

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