Industry news

Richard Leslie, e-sourcing solutions manager at Due North, discusses the current issues facing SMEs that are keen to collaborate.

Collaborative working, at any level, is a challenge. This is particularly true when it comes to SMEs and the government.

An air of mystique surrounds the government’s procurement processes and this is arguably acting as a barrier to SMEs. From reams of paperwork and short, untenable timescales through to their complex selection criteria - there are a few things to deter SMEs from the outset, not to mention the time invested in putting together a worthy bid.

SMEs I’ve dealt with share the perception that the government has an established, closed list of contractors that they use time and time again, so the sentiment is very much ‘why should I bother putting together a bid?’ And with figures being bandied around - such as 80% of central government spend going to about 10-11 suppliers - it’s easy to see why this view persists. The status quo is very much the order of the day when it comes to procurement practice; with some procurement officers sticking to what they know and remaining blinkered to other players in the marketplace and the benefits they could offer.

According to the Department for Business Innovation and Skills, SMEs account for 48.6% of private sector turnover. This emphasises the pivotal role of SMEs within our economy and the unplugged potential they could offer the public sector.

So what can an SME bring to the table? We all know that by opening up the market to SMEs, you can drive down costs and improve quality. SMEs also tend to have a greater affinity for change within the marketplace – they swiftly respond to technological advancements and innovate quickly. The management structure isn’t as convoluted as that found in larger organisations – you can expect to deal with key decision makers within the business who can offer a personable, tailored service. These are all strong plus points.

It has to be said that a void also exists when it comes to awareness of tendering opportunities. It’s clear that the government needs to engage with SMEs more effectively and strike up a meaningful dialogue with them. In the simplest of terms - the government needs to let SMEs know that they’re open for business.

Admittedly, the government has recognised that something needs to be done when it comes to its procurement processes. It launched its own Contracts Finder website in February to help SMEs locate suitable tendering opportunities. This facility, however, is still in its infancy and it would appear that not all of the government’s departments are making full use of the site. For a system like this to work, support has to come from everyone - otherwise it becomes another half-hearted attempt at initiating reform.

Departments are also now required to publish a set of specific targeted actions to increase their business with SMEs. Another measure laced with a veneer of positivity, but by no means quantifiable at this stage.

There was also the Lean review – a six week study of the government’s procurement process to identify and measure impact of waste in current processes. This led to the implementation of pilot projects where a ‘lean’ approach was mandated across all government departments. It will be interesting to see if this translates into additional tendering opportunities for local SMEs.

Francis Maude, Minister for the Cabinet Office, who leads on public sector efficiency and reform, stated that the government’s overall aspiration is to do 25% of its business with SMEs. Like so many issues facing the government at the moment, it’s clear that implementing new strategies and targets is one thing – seeing the results is another.

It’s not just about figures though - as I’ve seen from my dealings with SMEs, there needs to be a shift in mindset too. SMEs need to feel like welcomed bidders in the marketplace and that they’ve got something of value to offer. Current procurement practices tend not to foster this outlook.

Encouragingly, there has been a push for greater transparency in the sector which should hopefully prevent contracts from being awarded to a procurement officer’s ‘favourite’ supplier, and the new Bribery Act, which came into effect in July, reinforces this message.

There are examples of best practice out there when it comes to collaborative working. The London Tenders Portal is one such example. The portal is used by 15 of London’s councils, accounting for almost half of the capital’s boroughs. The system not only enables the boroughs to comply with the government’s directive on collaborative procurement - it helps them to engage more effectively with their SME base by consolidating opportunities in one place.

Representatives from the London boroughs also meet up every quarter to discuss the portal, its functionality as well as collaborative initiatives. To date, more than 17,500 suppliers have made use of the system, with over 1100 contracts being placed through the portal, totalling a value of £4.5 billion. This is a model for collaborative working and highlights how important it is for joined up thinking within the government – if enough people get on onboard a particular project, it transforms it into a success story for all the stakeholders involved.

SMEs want to collaborate – there are just too many bureaucratic hoops to jump through at the moment. Looking ahead, processes need to be streamlined and simplified. Crucially, the government needs to get the message out there to SMEs that tendering opportunities are available, only then will collaborative working across the private and public sectors become something of a success.

For more information about Due North, visit: www.due-north.com, twitter.com/DueNorthLtd or tel: 01670 597120.

Junior ISAs represent a great opportunity for banks and other product providers – but outsourcing is the way forward.

HM Treasury has recently announced that the limit for Junior ISAs (JISAs) will increase from £3,000 to £3,600 from 1st November. JISAS will work in the same way as an adult ISA, allowing children to shelter £3,600 a year from tax. Likewise, as with adult ISAs, money can be invested in cash or stock market investments.

Clearly, this is good news for UK consumers and for children in particular, as a JISA will not only streamline and simplify savings for younger people, but will also allow them to maximise their savings and teach them about financial responsibility from a very early age.

ISAs have proved to be a popular product with savers ever since they were first launched in April 1999, and savings and investment 'wrappers' like these continue to offer savings in terms of both income tax and capital gains tax. As such, JISAs could have an important role to play in helping younger people save for university or a deposit for their first home.

At the same time, JISAs also represent a very exciting opportunity for UK banks and other vendors. Firms that do not currently have a Junior ISAs proposition – or that will need to change their existing proposition to take advantage of this new increased limit – should consider outsourcing in order to bring these products to market very quickly. In fact, under an outsourced model, many firms could bring a Junior ISA product to market in less than six weeks.

When used in this way, not only will outsourcing avoid the need to review and alter your current internal systems, (which often struggle to adapt to the ‘new world’ of product lifecycles anyway), but it will also slash the time that it would take to modify existing product engines and policy administration systems in order to support these products.

With any kind of new financial services product, time-to-market is everything. So if outsourcing can provide a much-needed shortcut, then why not take it?

Shared services consortium overpaid contractors to the tune of £4.3 million following delays to an SAP-based automated payments system.

SouthWest One used a software program called SAP to pay the suppliers to Avon and Somerset Police, the county council and Taunton Deane Borough Council.

Delays in the automated system resulted in SouthWest One staff sending out cheques to prevent further delays.

The firm's spokesman said more than 95% of the money owed had been recovered.

Northern Ireland's Department for Social Development has awarded Atos Origin a contract to provide support services for benefits processing.

The deal will run for seven years with options to extend for a further three and is valued at £82.2m.

The business process outsourcing deal is for the delivery of medical services and supporting administration, but will also involve the implementation of IT systems to support the operation.

The London fire and Emergency Planning Authority (which runs the London Fire Brigade) is looking to modernise it's Control and Mobilising function through access to new innovative software solutions and by awarding a contract to undertake its control and mobilising services.

The requirements are broken into 2 lots as follows:

— lot 1 - Control and Mobilising Information Communications Technology (ICT) services (including support)

— lot 2 - Control and Mobilising Services including ICT Services (and support)

Contractors may apply for Lot 1 only, Lot 2 only, or both Lots. The Authority intends to award one or two contracts to one or more Contractors.

LV Asset Management said it expects to see some staff redundancies as it finalises its deal to outsource the management of its funds to Threadneedle.

All the LVAM funds will remain in their current structures and stay segregated when they transfer across to Threadneedle on 31 October, regardless of overlap with its own fund range, LV said.

Threadneedle will then decide how the final fund offering will look, including merging away products where there are similarities.

Romania can become the new regional leader in terms of IT industry in outsourcing regime, after Endava company, one of the main local services companies in the field, was nominated in Top100 Global Services /GS100 Top/, a reference annual ranking for the world's IT outsourcing industry.

According to the Romanian company, the nomination is included in the 'New regional leaders - Eastern Europe' category, along other five relevant companies, Endava being the only one unfolding activities also in Romania.

The contract to manage $800m of BAE Systems, Inc. annual indirect procurement spend is the first procurement outsourcing contract for Xchanging in the Americas region and represents an exciting and significant extension of Xchanging’s global procurement services

BAE Systems, Inc, a leading defense, security and aerospace company, has awarded a seven year procurement services contract to Xchanging, the business process and technology services provider.

As part of this innovative arrangement, Xchanging will provide sourcing and supply base management services for $800m of BAE Systems, Inc annual indirect procurement spend across most categories of indirect goods and services including Information Technology and Telecommunications, Transportation, Contract Labor, Industrial Supplies & Services, Utilities, some Professional Services and others. Xchanging will also provide procurement management activities related to reporting, supplier and contract management. The contract runs through July 2018 with an option to extend for an additional three years by mutual agreement.

Xchanging helps customers around the world drive sustainable improvement in supplier costs and process efficiencies associated with the procurement process. The contract reflects Xchanging’s position in the global procurement services market and firmly establishes its position in the Americas region.

“We consistently seek opportunities to reduce cost, improve efficiency and increase speed to market,” said Dennis Bent, Vice President Strategic Sourcing, BAE Systems, Inc. “Outsourcing indirect procurement to Xchanging enables us to access top procurement talent supported by a proven approach to sourcing that will provide value to our business.”

Scott Dever, Managing Director for Xchanging Procurement Services in the Americas, said, “We are excited to be adding BAE Systems, Inc. to our broad customer portfolio and we are proud to be associated with such a high-performance, professional organization. This agreement opens up tremendous opportunities for growth and establishes Xchanging as a strong provider of procurement services in the Americas.”

Ken Lever, Xchanging CEO commented, “We are delighted to extend our relationship with an existing customer of Xchanging. This contract not only enables us to deliver value to BAE Systems, Inc, it also acts as a springboard for Xchanging Procurement Services in the fastest growing procurement outsourcing market globally.”

Outsourcing firm Mitie is sitting on a record order book after securing most of its budgeted revenues in just the first three month of the financial year.

The company, which employs about 6,000 people in Scotland out of a 61,000-strong workforce, said it had made "significant progress in each of its key target markets" and had seen "good levels of organic growth" in the period since 1 April.

Wincanton plc, the leading provider of supply chain solutions, has announced that it has signed a conditional agreement for the disposal of its remaining operations in Mainland Europe to Rhenus AG & Co. KG via the disposal of Wincanton's Mainland Europe Holding Company.

The Disposal operations comprise Wincanton's German Intermodal and Contract Logistic activities, which operate from 38 locations, and Wincanton's businesses in France, which provide contract logistics and transport services and operate from 30 locations. Collectively, these businesses employ approximately 3,000 employees who will transfer to Rhenus upon completion of the Disposal.

Consideration from the Disposal will be approximately €44m (pre transaction costs). In addition, Rhenus will assume a net pension deficit of c.€30m resulting in an enterprise value of €74m. The consideration will be payable in cash upon completion of the Disposal. The Disposal will be implemented by way of a share sale.