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ArcBlue Consulting Group www.arcblue.com.au @arcblueconsulting
Data Analytics – Transforming our Understanding of Procurement in Local GovernmentChris Newman MBADirector ArcBlue Consulting21 November 2014
ArcBlue Government Procurement Development Activity across Australia/NZ
VIC State Government• CIPSA Certification• Training and Development
VIC Local Government• Procurement Roadmap
development• Contract Management
Guidelines and Training
NSW State Government• Accreditation Program – preparation
and assessment• Procurement Project support
NSW Local Government• Roadmap Program with LGP• Procurement Leadership Program• Social Procurement Development• Metro and Regional Collaborative
Procurement development
State Government
Local Government
SA Local Government• Roadmap Program• Regional Opportunity
Analysis
Procurement Capability Assessment / Development
Federal Government• Contract Management
Development• Regional Procurement
Development Programs
Federal Government
Gold Coast Council –Capability Development and Contract Management Training
WA Local Government• Procurement Training
Program• Spend Analysis
NZ Government • Departmental reviews
Qld State Government• Translink Contract Management
Capability Assessment
SA State Government• Procurement Transformation
Why Procurement? • Procurement is moving from an administrative role to a strategic one• E.g. NSW $30bn/ year – State Gov’t $25bn/ Local Gov’t $5bn
– More than half of most councils’ overall expenditure– Has received little focus (administrative – not strategic)
Local Government Procurement Roadmap and Spend Analysis Programs• Councils now recognising the importance of a structured approach to
procurement capability development• Supported by Regional Groups and other peak Local Government Procurement
Bodies around Australia• 180 Councils across 3 States have participated since 2010• 75 Councils now with Procurement Dashboards in place• 2013/ 2014 NSW Regional Programs – NOROC, Riverina, WSROC, Centroc• 2015 Programs in planning
Procurement Development
Centroc Regional Procurement Roadmap Program - Objectives and Process
Program Objectives: Make sustainable savings & create efficiencies Stimulate local and regional economic and social development Improve probity and reduce risk Build staff and organisational capability in procurement Strengthen regional collaboration
Joint Council Kick‐off
Data Collection
Individual Council
Workshops
Individual Council
Roadmaps
Detailed Joint Spend Analysis
Opportunity Analysis and Validation Workshops
Regional Roadmap Priority Project
Identification
Progress Reviews and Support
NOROC Regional Procurement Roadmap Program - Objectives and Process
Program Objectives:• Make savings and create efficiencies by sustainably reducing the cost of
goods, services and infrastructure sourced through external suppliers• Stimulate economic activity across the Region through providing broader
opportunities for local suppliers of the goods, services and infrastructure• Provide a structured model and Regional Roadmap to strengthen on-going
collaboration and regional cooperation
Organisational Assessment
Strategic Procurement
External Focus Internal Focus
Priorities – Wave 1 Wave 2Road Reseal Street SweepingBulk Cartage Waste Management – including leverage NORMA contractLine Marking EWMSBuilding Maintenance & Cleaning ICTServices Panel ‐ Including Shared Portal Rubble Raising & Crushing
Heavy Plant & Equipment sharingMaterials supply
Regional Roadmap Example
• Sustainable savings in external expenditure through:– Strategic Council contracts– Expanded use of LGP contracts– Regional collaborative procurement– Demand management strategies
• Increased usage of local and regional suppliers, e.g.– Gold Coast spend through local suppliers increased from 49% to 63% over 2 years
• Improved performance, e.g.– Increased completion rates for Capital Works– Improved Contractor Performance
• Streamlined internal processes– Targeted productivity savings
• Improved probity and reduced risk• Social Procurement - Employment generation for local and disadvantaged
communities, e.g.– G21 GROW Project – cross sector development of job creation strategies through
procurement – GSW Social Procurement Taskforce
© ArcBlue Consulting 201429
Procurement Transformation and Collaboration Benefits
• National Contracts (National Procurement Network)
– Structured National Governance – single contracts negotiated nationally
• State Peak Body ‐ Local Government Procurement– Wide range of contracts in place
– Supporting procurement capability development/ excellence
• Regional Bodies– Collaborative Governance
– Regional Development Focus
– Resources to ‘herd cats’ and support regional arrangements and bring organisations on to State/ National contracts
• Individual Organisations– Well structured Procurement organisations
– ‘Centre‐led Models’ to support contract take‐up and capability building
Procurement Model in Local Government
National
State
Regional
Local
Procurement Opportunities through Reform
• Structures– New economies of scale and maturity leading to new Centre‐led structures
• Collaboration– Opportunities for stronger collaborative models and approaches
• Across Councils
• Local, Regional, State‐wide
• Resourcing– Organisational restructuring ‐ new opportunities
for strengthened procurement commitment
• Contracts– Reset of contracts creates an opportunity to move
beyond ‘business as usual’
Data Analytics
• Data analytics is transforming our understanding of local government procurement.
• Regional Procurement Roadmap Programs across NSW and SA in 2014 have incorporated new technology and data collection and analysis ‘Dashboards’ tailored specifically for local government.
• The ‘Dashboards’ create a new understanding and capacity for driving cost savings, compliance and regional economic development outcomes.
• There is much broader application of data analytics in transforming our capacity to understand and drive individual development and regional and sector collaboration across a wide range of council activities
© ArcBlue Consulting 201433
Data Analytics Transforming Local Government
Why analyse spend?
• LG Sector generally has a poor understanding of what we spend and who we spend it with
Reduces Councils ability to:– Analyse spend and transaction patterns, and strategically plan for better
procurement (opportunity analysis)– Easily track spend and performance by category, supplier or contract– Track compliance, cumulative/purchase card spend etc.– Quickly and effectively report on procurement and performance
Reduces Regional/ sector ability to:– Track spend patterns and identify opportunities to improve existing
contracts or identify new ones– Accurately monitor and measure contracts and suppliers– Benchmark performance
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Spend analysis challenges
• Reasons for lack of spend analysis in LG Sector:– Range of financial systems used: Civica, Tech One, Oracle
etc. makes it difficult to extract and then consolidate data– Systems are set up for finance processes, not procurement– Data in the systems is often poor quality (not ‘clean’ – not
categorised, inconsistent supplier names used, etc.)– Spend analytics done in-house is often time consuming
and expensive because skills are underdeveloped in the sector
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Procurement ‘Dashboards’ – Overview
Procurement ‘Dashboards’ – Categories
Procurement ‘Dashboards’ – Sub‐Categories
Procurement ‘Dashboards’ – Suppliers
Procurement ‘Dashboards’ – Geo‐spend
Procurement ‘Dashboards’ – Transactions
Procurement ‘Dashboards’ – Spend Patterns
Procurement ‘Dashboards’ – Contracts
Procurement ‘Dashboards’ – Purchase Card Tracking
Regional Demographics
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Procurement ‘Dashboards’ – Regional Overview
Procurement ‘Dashboards’ – Regional Geo‐spend
ArcBlue Dashboards overview
• Tailored application using modern Business Intelligence software → standardised set of interactive, user driven Dashboards designed specifically for Local Government
• Displays categorised areas of spend with the ability to drill down to enable detailed review
• Data can be both aggregated at national, state and Regional level or drilled down for use by individual Councils
• Intuitive and visually attractive• Easy to use and understand• Online interactive ‘Dashboards’ that allow flexible analysis
and reporting• Very Cost Effective Solution for Councils and Regions
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Spend and Opportunity Analysis Process
Cleanse data
Initial review
Define output requirements
Define coding structure
Check sufficient data granularity exists
Import additional data sets into database if necessary
Agree which fields are to be used for the analysis
Initial spend analysis
Develop graphs and analysis on spend
Highlight ‘influenceablespend’
Add in contract view to understand contracted spend
Develop hypotheses
Create hypothesis opportunities
Hypotheses cover areas of potential opportunity that has been highlighted through the spend analysis process
Validate
Validation to review priority potential opportunities
Detailed spend analysis per opportunity
Review of constraints (egcontracts)
Discussion with key stakeholders
Validation of opportunity
Implement
Development of implementation plan
Establish Governance and Implementation Team
Confirm resourcing
Provide implementation support where required
On‐going review and tracking of progress
3311 44 55 66Categorize
data
Review current coding structure
Remove irrelevant categories
Implement consistent coding structure
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Spend Analytics Opportunity delivery
Applying Dashboards
• Fit for the Future– Regional – Joint Organisations (JO) Dashboards– Strategic Alliance Development– Collaboration
• Procurement• Shared Services
– Benchmarking
• Managing and measuring on-going performance– Contract spend– Compliance– HR– Customer Service– Asset Management
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Next Steps - 2015
• Roadmaps– New Programs for individual and Regional Council Procurement
Roadmap development, including Spend Analysis and Dashboard provision
• Spend Analysis and Dashboards– Individual Spend Analysis– Regional/ Sub-Regional/ Spend Analysis and Dashboards
• Savings Programs– Procure-to-Pay Health Check and Productivity Program– Opportunity Analysis and Savings delivery– Targeted Demand and Process Management Programs
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Questions