Friday, 25 September 2015

Is it good enough to rely on mistakes to detect a fraud?

There was a remarkable story in yesterday's Times about a "Don [who] faked academic projects to steal £223,000"

I don't find it that strange that someone, even a Cambridge Don, tried to fraudulently obtain £223k forging paperwork and invoices, but I do find it interesting that at least three mistakes were involved: one which led to the exposing of the fraud, one which enabled him to carry out the fraud, and the other meant a convicted criminal was able to avoid declaring his convictions and thereby obtain an opportunity to commit the fraud.

Firstly, the fraud only came to light as a result of a letter being sent to the wrong address - in other words the systems were not in place to protect against the fraud and to a certain extent it was a fluke he was caught.

The second mistake was that the Heritage Lottery Fund didn't actually check the references provided - had they done that they would have identified the references were bogus.

But the fraud was only able to be perpetrated as a result of an earlier mistake, namely, not sticking to a robust protocol for recruitment. That meant, Dr Barrowclough didn't complete the standard application form which would have required a declaration of his previous conviction for stealing clients fees which led to four years in jail and being struck off as a solicitor, but instead had his application considered on the strength of a CV and covering letter!

There is are clear message here for procurement. It isn't good enough to rely on mistakes to detect fraud but don't be surprised when you discover those who use 'workarounds' turn out to be up to no good, so design a robust process and stick to it.

Feel free to read my white paper on Procurement Fraud.

Thursday, 24 September 2015

Bovaird on 30 yrs of outsourcing & free access to this important paper.

It was with enthusiasm I approached this paper: Tony Bovaird has been someone I've know for quite a few years; the introduction of CCT was one of the key milestones in shaping my career as it elevated procurement to a strategic role, albeit with the objective of retaining contracts 'in-house'; and, the make/buy decision remains a big question I am faced with when discussing Target Operating Models.

Bovaird's paper can be expected to become a core reference paper but it should also be of interest to practitioners, public and private sector - particularly those in the NHS concerned with the debate on Agencies 'Ripping-Off' the NHS - who have to complete an options appraisal on which procurement approach is most appropriate.  Remember, an options appraisal, as Bovaird points out, is not a once and for all event but something which has to be regularly reviewed. 

Bovaird provides a review of the various strategic procurement options from the introduction of CCT (Compulsory Competitive Tendering) through partnership working, strategic commissioning, prime contracting, and then insourcing.  He clearly articulates the comparative benefits of the purchaser/provider split - the make/buy decision. He also highlights questions over the effectiveness of joint-commissioning although he does not expand that to discuss the role of consortia buying. 

One line which Bovaird uses is particularly worth wider reflection: " the age- old lesson that the search for certainty and tidiness in policy is likely to come at the expense of inappropriate decisions". At a time when there is frequent discussion on the role of procurement in innovation, we have to be prepared for managed risk which will in turn sometimes mean, with the benefit of hindsight, that wrong choices have been embarked upon - that's not a word of caution but instead a call for recognising that the appetite for innovation must be matched with a similar appetite to risk.

In concluding the paper we are presented with 10 lessons learnt from 30 years of outsourcing - if you feel you haven't time to read the paper why not take the time to read the lessons learnt.
Public Money & Mangement, in view of its potential impact have taken the unusual step of providing advance free access to Tony's paper which can be accessed here.

Tuesday, 22 September 2015

eWorld30 Procurement & Supply: Celebration or a cause for concern?

Today it was Happy Birthday to eWorld Procurement & Supply - the free to attend conference. Always worth attending in these days when so little is allocated to training budgets.  Anyway, here's my selected view of the day which overall represents a good day.

Way back in 2006 I delivered a presentation on 'Selling Procurement Internally'.  I was amazed to hear the Keynote address from the Hackett Group's, Chris Sawchuk, still found it appropriate to deliver similar messages - okay, my presentation was to a public sector group but is it really okay for the profession to still struggle gaining internal ownership? That should be a cause for concern!

I then attended an excellent presentation from Simon Dadswell of Proactis. Now some headline statistics were revealed which are also a cause for concern:

  • Only 28% of organisations are using Contract Management eProcurement solutions;
  • 13% of organisations are using supplier management procurement solutions;
  • 51% have P2P;
  • 61% feel constrained by Policy!
Do you not find that startling? How long have we known about the business justification for eProcurement solutions - is it less than 15 years? What's the obstacle?

You can make our own judgement on Sawchuk talking about the need to adopt internal marketing approaches and Dadswell's eProcurement implementation statistics. Some may find it a wake-up call, others may find it reassuring that they're in amongst the laggards, while others may just let it all pass them by.  I think we really need to say that by this 30th eWorld Procurement & Supply should be a line in the sand and that by this time next year there has to be a transformational improvement. If not what are the real benefits delivered through attending eWorld?

Don't consider me to have a negative view of eWorld. I did actually attend other more encouraging presentations. For example, Conor Mullaney from exceleratedS2P shared some excellent lessons learnt on the need for an integrated approach to S2P - I think his credentials shone and he presented a compelling case. In a nutshell, lot's of interfacing of solutions within Source-to-Contract and Purchase-to-Pay but the future requires more integration.

Sam De Silva seemed to have had too many quadruple espressos as he raced through Legal Matters. His content is always first class but perhaps he would benefit from trying to say less and making the audience feel as if they are in the Dock. I noticed many using mobile phones to take pics of his slides. This is a man who certainly knows his subject and his enthusasim shines like the Pharos of Alexandria.

Finally I attended a double session workshop led by Lisa Malone of Procurious on '5 ways procurement should start to use social media'. I detected a lot of honesty among the attendees and an enthusiasm for moving forward - I even witnessed one delegate signing up to Twitter during the workshop. Digital Procurement Strategy, I think, will deliver a paradigm shift in procurement - hopefully eWorld will ensure that eWorld31 helps accelerate that shift and that Procurious continue their leadership.

Monday, 21 September 2015

Sourcing Portfolio Analysis: Book review

This is not bedside reading material though it is a book every procurement professional should read.

Set aside any preciousness you have for Krajlic, Porter's 5 Forces, and Category Management, be prepared to be challenged, and read this with an open mind. Here you have a hefty academic critique of existing ways of procurement thinking. It is a logical discussion which leads you to a better way.

I'm not sure how much rigour Kraljic put into setting out his model which is at the core of so many procurement strategies but Cox doesn't spare any punches in highlighting its weaknesses. To me, Kraljic works best as a simplistic approach to differential procurement management and is useful for engaging senior stakeholders. Procurement managers need to recognise that it is part of a toolkit as opposed to the only tool. I think Cox assumes that procurement professionals have actually taken the time to read and digest Kraljic's original paper - to me that is an unjustified assumption. So, for many, Cox's actual explanation of the Model may well be new. Disappointingly, at times Cox's critique looks very like 'cut and paste' and becomes a bit tedious - a little more focus on the narrative would have avoided what sometimes has the appearance of lazy writing.

Having said that, Cox appears 100% correct. He reiterates and expands on many of his previous discussions on Power and the need to recognise that an understanding of relative power is fundamental to effective procurement strategy - I agree with him. Sadly I rarely find practitioners demonstrating a thought process which considers power.  He sets out a matrix of strategies which flow from relative power positioning - this isn't the traditional 2x2 but 4x4 - that's a lot of positioning. I think I understand what Cox is saying but then ask myself how robust and objective the user's mapping can be anyway. Is it not true that although his method is robust and scientific, if the basic information which feeds it is lacking then there is no sound foundation.

I found the detailed setting out of his sourcing strategies exceptionally thorough and can't find any fault with what he says. Cox acknowledges the difficulties which practitioners face and sets out a good justification for pursuing his decision rules. Having said, that I would like to see some evidence that applying the approaches outlined deliver real tangible benefits beyond the existing rule of thumb approach used by many which is at the heart of his critique.

Where I really struggle is with the application of the detailed approach within a regulated public procurement environment. If I am correct, Cox is arguing that the relative power of all those the buying organisation considers to be 'the market' be established. Therefore multiple suppliers and the development of discrete strategies for each of them.  But within a regulated procurement, would that mean each of the potential bidders is subjected to relative power positioning, which then shapes the 'tender approach' within the competitive requirements of legislation? Perhaps, a way round that is better understanding of the relative power of the market per se, then developing an overall approach, then, for those who successfully navigate the competition, post-award discrete strategies tailored to the relative power? I could of course be wrong. Nevertheless, even if the detailed application isn't easily transferable to a public procurement environment, the need for understanding the relative power positioning is and managing suppliers conscious of that positioning and aspired to positioning is too.

Nevertheless, the book is a bit of a slog demanding a lot of thought but worthwhile. The book shouldn't sit on a shelf looking good but be used as a route map constantly referred to. I would like to see the paradigm shift which Cox calls for as the profession needs this sort of smart thinking.  Having said that, my experience is that many are still struggling with what to do after the completion of a spend analysis and Kraljic is only grasped at a high-level. We need the rigour of thinking which Cox applies and we need to apply his approach.  If power positioning and the associated strategies were applied I honestly believe better outcomes would be achieved and the profession would reach a new level.

While the book is remarkably cheap at £20 and certainly worth a buy, if you would prefer a taster have a look at Cox's white paper available at:

NB I am grateful for receiving a complimentary copy of the book on which this review is based. 

Tuesday, 8 September 2015

CYOD - an opportunity for procurement

It comes as little surprise to me that one of the key strands of Digital Procurement Strategy, BYOD (Bring Your Own Device), has seen a loss in popularity and a shift to CYOD (Choose Your Own Device).

At a personal level, I never quite understood why anyone would expect me to buy my own device for work, and along with the loss of storage amongst others drawbacks, also find myself open to intrusions while on holiday, etc..  Of course on the plus side it meant reduced hardware having to be carried with me and avoiding some of the clunking kit which cost-focused employers seem to prefer.

CYOD appears to offer a reasonable compromise as it means employers will offer a range of options and employees will choose their preference.

Tip #3 of Lee Naik's CYOD post on LinkedIn however does give me cause for concern though:
Assemble the right team. Mobile projects should include members from IT, legal, HR, security operations and the business. 
No prizes for guessing why Tip #3 raises a 'red light' for me. What's going on that Naik's Mobile Projects Team excludes Procurement?  

To me there needs to be a policy encompassing CYOD and that needs to include constraints on the range of options, who is eligible, and approach to exception and alternatives. There needs to be a sourcing strategy. There needs to be a clear definition of the need. There needs to be a framework arrangement linked to a robust procurement process including the thorough commercial evaluation of the various offers. There needs to be a compliance and contract management approach supported by appropriate T&Cs. There also needs to be an exit strategy.

So it is disappointing that Naik didn't immediately think Procurement should have a 'seat at the table'. My suggestion is that if your organisation is developing a Mobile or Digital strategy, make sure your potential to add value is recognised at Day 1 otherwise it could be another opportunity missed.