Wednesday, 27 August 2014

Procurement policy, hubris and the cloak of invisibility.

I suspect this week is not the best time to discuss the Christmas Party at CCS given the press attention to IT procurement. Saturday had an excellent feature in Times2 on why government IT projects go wrong, then today's Times had four separate pieces on the Aspire Debacle, for example: here.

To me the big issue isn't yet another IT procurement debacle, it's the issues of procurement policy, hubris and invisibility . 

The political leader of UK government procurement, also famous for his Jerrycan approach to 'bottleneck purchases', is Francis Maude, the Cabinet Office minister. Earlier this year he decreed that IT procurement policy was that there would be no contracts over £100m - small was considered beautiful regardless of the risks!

Now in spite of a long history of not implementing procurement policy, it seems this 'small is good policy' is going to break the mold and actually be implemented by splitting the major HMRC Aspire project into smaller contracts. I need not join the chorus of those who argue this is high risk, but included in that chorus are some notable voices from the CBI, Public Accounts Committee and Public Administration Select Committee.

A Cabinet Office spokesperson is reported to have said though "HMRC intends to break this contract into packages which is entirely in line with our new approach and will ensure competition from the widest possible  range of suppliers". There is no admission that this may be a demonstration of procurement hubris or even stupid sourcing, just that it is in line with policy. Nor was there any confirmation that discussions with the market have provided confirmation that SMEs will indeed be willing and able to bid! 

Nevertheless, since it's in line with policy, it must be okay? What we have not heard is the voice of the Government's CPO providing an endorsement for the procurement approach. Does he agree with it in this particular case? Does he disagree with it but can't publicly say that? Does he believe that in spite of the accepted positioning of such an IT procurement as 'strategic' within a Krajic model, he has a better recommended strategy which the rest of the 'procurement pack' have yet to see? Then again, what about the Major Projects Authority - haven't they a role in disaster avoidance or do disaggregated contracts of less than £100m avoid their radar?

There's another interesting quote from an HMRC spokesman: "We will renew our IT contract within Cabinet Office guidelines and on time."  Is that a buck passing statement to the effect that if it all goes wrong the HMRC only followed Cabinet Office guidelines? The pedants among you will of course have noticed that the only commitment is to delivery of the 'IT contract ... on time' which does not necessarily mean the actual functional delivery of the service being procured. Isn't it wonderful that the project is called Aspire! 

Wednesday, 20 August 2014

'The Value Chain Shift: Seven future challenges facing top executives' - Book review

The sub-title of this book is really the important point to consider with this book - it is targeted at 'top executives'. An impressive list of contributors set out to answer the 'seven challenges' against a timeline of 2020.

So what are the seven 'future' challenges identified?

  1. Measuring corporations' cost and contribution to society; 
  2. Managing resource scarcities; Scale and speed; 
  3. Traditional multinationals versus emerging market firms; 
  4. Optimising IT-enabled process and systems in the value chain: 
  5. The role of governance; The organisation design shift; 
  6. How speed affects risks, opportunities and new business models in the value chain; 
  7. Corporate social responsibility: Moving from compliance to value creation in value chain relationships. 

Are these really future challenges, and if they are, are they the biggest challenges? Actually I recall some of them being included in Farmer and Taylor's 'Corporate Planning and Procurement' published in 1975, yes, 39 years ago! More recently we could compare New and Westbrook's (2004) 'Understanding Supply Chains', and Brindley's (2004) 'Supply Chain Risk'. So I would have liked to have heard the authors views on what they would put as a compelling argument, to the sceptical top executive on: "if these challenges have been around so long, and a laissez-faire approach has worked so far, what's so different?"

Setting that aside, let's consider some of the chapters. Say the chapter on IT. While I recognise the problems of geographic standardisation of processes and systems, and am currently working on a similar problem, I am really surprised that the whole digital agenda with the imbalance between marketing's adoption and that of the supply chain isn't viewed as a challenge.

I did, however, find the chapter on 'optimal speed' thought provoking and something I hadn't previously considered.

Sadly, I found many of the chapters more like an introduction and lacking in depth - I wanted more.  
You could classify them into three categories: 'A statement of the blindingly obvious', 'We wanted to create a model, so we created a need', and the really valuable, 'Have you thought about this?'.

In fairness, let's remember the book is targeted at top executives. If the book is read by top executives and they progress to addressing the challenges, then it will be really beneficial, but for me, and the average procurement specialist, I doubt it is worth £22.15?

Saturday, 16 August 2014

CIPS warning of a pending supply chain crisis points to a bigger concern

I nearly fell of my seat when I read in the latest issue of Supply Management that CIPS CEO warned of a potential supply chain crisis based on a CIPS survey which "found around 80% of supply chain professionals in the UK cannot guarantee there is no malpractice in their supply chain".

Was this a typographical error, a badly constructed survey or misreporting?

Just pause for a moment, does this mean that CIPS, and the 20% of the 'senior business decision makers and supply chain professionals' who responded to the survey actually believe they can guarantee there is no malpractice in their supply chains?  If that's what they are saying then their understanding of risk in supply chains appears to be flawed - they are either delusional, lying or fooling themselves.

CIPS' concern shouldn't be with the 80% who acknowledge the risk but the 20% who don't!

If someone came to me and said they could provide such a guarantee I think I may pose the following questions:
  1. How do you define malpractice in supply chains?
  2. How could anyone possibly know there is no malpractice in their supply chain?
  3. How can you give such a guarantee?
  4. Would you stake your job on that?
  5. Are you responsible for supply chain risk management?
  6. Could I see the risk register as I think there may be a need for concern?
When CIPS' CEO warned "that British businesses could be "sleepwalking into another supply chain crisis"", I think he linked that with those who couldn't guarantee no malpractice - conversely, I would caution that the crisis is more likely in the organisations which think they can guarantee there is no malpractice.

Friday, 15 August 2014

CIPS Global Standard for Procurement & Supply gets the thumbs up.

CIPS have firmly positioned themselves in the world of 'Procurement' as opposed to 'Purchasing' with the release of the Global Standard for Procurement & Supply.

Some may argue that it is a bit revisionist to describe this as "the first of its kind" -  I could cite other antecedents, even endorsed by CIPS. Yet, setting that aside, this is a useful resource and credit is due to those who have created, what appears to be a very thorough piece of work.

Sadly though it does little to support the claim that commissioning is synonumous with procurement. Regular readers will know I disagree with that argument anyway. But how do public sector procurers, with social care being a critical spend item relate to the Standard?

I was also surprised, given the rise in Vendor Management Offices in the private sector, that the associated roles, and even the term Vendor Management, weren't included or specifically named within the framework - I think CIPS missed an opportunity there. Yes, I recognise the similarities with Contract Managers but aren't Vendor Relationship Managers slightly different?

Setting those issues aside, one of the great virtues of the Standard is that it can be viewed as objective. So if you first gain acceptance of the Standard, then you can have a more reasoned depersonalised discussion on matching the standards.

I recently had to complete an evaluation of some staff and their competencies, and then develop role descriptions for new posts - the Standard would have helped a lot and I recognise that I will draw on this in the future.  I can also see its role in completion of Training Needs Analysis.

On balance, the Standard gets a 'thumbs up' from me and a thanks to all those involved in its development.

Tuesday, 12 August 2014

Can the Major Projects Authority deliver?

The Financial Times reported this week that John Manzoni, head of the UK Major Projects Authority,  has now lost critical expertise due to outsourcing and now lags "five to eight years behind business". He also implies an absence of execution and delivery skills - that's not a big surprise as I have frequently discussed the gap between policy and implementation. A related article then talks about the scarcity of skills in Whitehall to deliver big programmes.

Let's be honest, the average man or woman in the street could have said that.

But the average man and woman in the street wouldn't be in a position to understand that there have already been many, many, many years investment in MSP and PRINCE2 training over the years. There have been no shortage of methodologies and training opportunities, either - reflect on the former Civil Service College prospectus.

While I support the notion of the Major Projects Authority, my prediction is that it will just join the plethora of other good but failed ideas.  Sadly, it too, will in all probability, fail in delivering the desired outcome. Why? Well quite simply, we don't need school lessons on why projects fail. We need  a breed of managers who are brave enough to say to politicians: "No - this isn't the best approach", "We're not ready yet",  "We haven't sufficient resources", etc..

The problem is that those good writing and negotiating policy are politicans echoing what Politicians want to hear - they are diplomats as opposed to change managers. Perhaps they see implementation as 'lower down the food chain". Rewards, in the form of promotions aren't for delivery, they are for political nous not the bravery to speak truth.

Can the Major Projects Authority itself deliver? I don't think you can change the DNA of those who have been groomed in risk aversion. Nevertheless, let's revisit this blog in five years time and see if I am wrong.

Tuesday, 5 August 2014

Ecclestone issues for procurement bribery

"Broadly, the [Uk's Bribery] Act defines bribery as giving or receiving a financial or other advantage in connection with the "improper performance" of a position of trust, or a function that is expected to be performed impartially or in good faith."

Given that definition it seems somewhat ironic that the German courts have accepted a payment of $100m to end the Bernie Ecclestone bribery trail!  That means no decision was reached on the allegations and Ecclestone is considered neither guilty nor innocent.  It is the ultimate 'Get out of jail' card with a potential ten years imprisonment wiped off the slate. Of course, in the eyes of UK law he is obviously innocent as not proven guilty.

While $100m seems like a gigantic amount of money, when that is set against Eccleston's estimated wealth of  $4.2bn, it is a mere drop in the ocean, but a gross waste of money if he would have been proved innocent. 

What interests me though is whether this creates a precedent for future bribery trials? Would a proportionate amount be acceptable to 'close' the case in a procurement bribery case? Would it be worth corrupt firms setting aside such monies rather than going through the courts and being 'blacklisted' from future contracts? Would the precedent apply to individuals facing allegations of bribery? 

Friday, 1 August 2014

Strategic procurement programmes: Before and after

We're all familiar with the 'before and after' images which so often paint a picture that suggests 'after' is more attractive than 'before'. If only that were the case with strategic procurements.

After years of 'before' trumpeting the anticiapted aspirational success of the NHS National Programme for IT, a programme which appeared to be the offspring of political egotism, the first signs of faltering, and the cosmetics of a name change, now politicians want answers:

"There has to be a reckoning. We have to know how much money has been squandered and what could have been done instead."
"If the people letting the contract have made a catastrophic, gargantuan mistake then there is an opportunity cost. It is the taxpayer who has to fork out money for what should have been spent n services they need."
To me the NPfIT was clear who was leading and the governance structure to be used. But back in 2011 I asked what happened to the application of Gateway Reviews on the Programme. Of course MPs received NAO reports on the Programme's progress too - they were not ignorant of the risks.

So when the Public Accounts Committee and the Public Administration Select Committee sit down looking for answers, I hope they start by considering their own role in oversight - didn't they have a responsibility to the electorate? They could ask about political pressure that that was exerted and if civil servants 'pushed back'? They could then ask about who was getting paid for Programme leadership, where, when and why it went wrong? Then they could get the detailed findings of the Gateway Reviews? Then look at the risk register, how it was reviewed and when and what actions were taken? Then they could look at similar debacles, of which there are many, forget the political rhetoric and posturing? Finally they must ensure an environment exists which ensures there are very real penalties in place for those who should have blown the whistle on this and similar programmes yet didn't - did they lack the knowledge or the spine?

Unfortunately the 'after' looks fairly ugly for this Programme but perhaps the Beast could spawn some Beauty's for the future.