Nao Report Into eSourcing

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Delivering successful IT-enabled business change: Case studies of success REPORT BY THE COMPTROLLER AND AUDITOR GENERAL | HC 33-II Session 2006-2007 | 17 November 2006 Ogcbuying.solutions eSourcing Service OGCbuying.solutions is an executive agency of the Office of Government Commerce. Its role is to deliver value for money savings for central civil government and the wider public sector through a dedicated procurement service. Its eSourcing platform provides web-based collaborative tools for
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  REPORT BY THE COMPTROLLER AND AUDITOR GENERAL | HC 33-II Session 2006-2007 | 17 Noember 2006 Delivering successful IT-enabledbusiness change: Case studies of success  DELIvERING SUCCESSfUL IT-ENABLED BUSINESS CHANGE: CASE STUDIES fOR SUCCESS 2 “eSourcing uses proen technology to proideorganisations with their own branded web presence. Ithas demonstrated signiicant eiciency improements orboth buyers and sellers engaging in public procurementactiities online in many sectors o the UK public sector.” Stephen Heard, Director of Customer Relations,OGCbuying.solutions Cost £2 million (set up, operating and support costs to 2005-06). Supplier BravoSolution – application and support. Timescale 2001 – 2005. Current status The eSourcing Managed Service went live in June 2005and is now used by 34 public sector organisations. Neworganisations continue to join the service. Key components o success n  The project manager and eCommerceDirector had extensive previous experience inimplementing eSourcing systems within othercomplex organisations. n  The project drew on the expertise of experiencedprocurement professionals from potential userbodies to specify the system requirements and testout key features to ensure it met users’ needs. n  The technology chosen was successfullydemonstrated at reference sites. n The buying organisation has its own branded webportal to interface with suppliers. n  The software is securely hosted by a ServiceProvider, so the customer organisation requiresno “client” technology investment and it can beimplemented within six weeks. n  OGCbuying.solutions provided changemanagement support for organisationstransforming their procurement functions to usethe new platform. n The service has an active user group whichcollaborates to develop its usage. Ogcbuyin.solutions eSourcing Service OGCbuying.solutions is an executive agency of the Office of Government Commerce. Its role is todeliver value for money savings for central civil government and the wider public sector througha dedicated procurement service. Its eSourcing platform provides web-based collaborative toolsfor public sector procurement professionals and suppliers to conduct the strategic activities of the procurement lifecycle online.  DELIvERING SUCCESSfUL IT-ENABLED BUSINESS CHANGE: CASE STUDIES fOR SUCCESS 26 Aim 1 The Office of Government Commerce and itsexecutive agency OGCbuying.solutions aim to increasevalue for money savings from public sector procurementby encouraging take up of eProcurement tools that canreduce processing costs and secure better deals. In 2001,the Office of Government Commerce launched the TenderTrust pilot of eSourcing, a web-based system that enablesbuyers and sellers to conduct their interactions andtransactions online. The project aimed to test commercialproviders’ claims that eSourcing reduced sourcing costs,improved the efficiency of the procurement function, andfreed up procurement staff for more added value activities. 2 The Tender Trust pilot demonstrated that eSourcingcould deliver benefits but the commercial softwarepackages available were not adequate to support theexacting requirements of public sector procurement. Theycould not generate, for example, the large number of notices issued as part of a public sector tender process. 3 Despite the difficulties, the potential efficiencygains from reducing the paperwork involved in publicsector tendering meant that interest from potential centralgovernment users was sufficiently strong for the Office of Government Commerce to initiate a project to develop aneSourcing System to meet UK public sector needs. 4 The Office of Government Commerce’seCommerce team, in conjunction with OGCbuying.solutions who would be managing the service goingforward, awarded the eSourcing framework contract toBravoSolution, an Italian company with experience of operating e-tendering successfully in France and Italy, tosupply the application and support the service. The teamwere particularly impressed with BravoSolution’s abilityto support the European Union’s directives on publictendering and procurement. Winning the support of users 5 To ensure that the system met users’ needs, theOffice of Government Commerce invited public sectororganisations with an interest in using an eSourcingplatform to contribute to its development. To strengthencommitment, the Office of Government Commerceformed special interest groups of potential users toexamine different aspects of the sourcing cycle and toproduce requirements that would enable BravoSolution toadapt its service to the UK public sector. For example, onespecial interest group evaluated the various commercialsoftware packages that would work with the BravoSolutionsystem. Another group contributed to the potentiallyeighty or more different email messages that thesystem might need to communicate to sellers during asourcing cycle. 6 To realise the benefits of the change, it was essentialto gain sufficient commitment from public sector bodiesduring the development phase that they would useeSourcing once it was implemented. Commitment wasstrengthened by convincing some potential users tomake a financial contribution to the project. In return,committed users were able to have a key influence in thedesign of the system. Designing a well defined solution 7 The close working relationship between theeCommerce team and departments sponsoring thedevelopment ensured the solution met their requirements.eSourcing provides four services: n eTendering, which allows buyers and suppliers tomanage their interactions during the tender processsecurely and conduct electronic auctions; n eEvaluation, which enables teams to workcollaboratively in developing evaluation plans,evaluating tender documentation and carrying outbid comparisons; n eCollaboration, which enables teams to collaboratein the development and management of documentation; and, n eContract Management, which facilitatesthe contract management lifecycle from theestablishment of a contract through to its expiry.  DELIvERING SUCCESSfUL IT-ENABLED BUSINESS CHANGE: CASE STUDIES fOR SUCCESS 27 8 The service is designed for rapid deploymentthrough the hosted managed service model. BravoSolutionprovides setup, configuration, hosting, maintenance,security, disaster recovery and upgrade of the software forall customers through a single hosted instance. Neithercustomers nor suppliers require any internal IT investmentor implementation/maintenance effort, and can access theservice on-demand through a simple web browser. 9 An important consideration for potential users wasthat eSourcing was designed to be sufficiently flexible toallow them to use each of the four services individuallyor in any combination. Whereas commercially availableeSourcing products generally provide complete suitesof programs within an expensive integrated application,public sector users wanted to be able to customise thepackage to buy the specific eSourcing services theywished to use. By allowing users to buy licences forspecific services, eSourcing provided better value formoney by not duplicating other eProcurement tools usersalready owned. eSourcing also avoided users needing tomake additional technical investment by using the sametechnology needed to access the Internet. 10 To encourage take up of eSourcing, the ManagedService provides users with a help desk to support theirsourcing cycle. This has made eSourcing easier to useby providing training to suppliers responding to tendersor participating in electronic auctions and by dealingwith the volume of queries and questions a large publicprocurement generates. For example, in 2005-2006the National Health Service Purchasing and SupplyAgency received responses from approximately 3,000potential suppliers. Building capability 11 Once the requirements had been gathered,the Office of Government Commerce handed thedelivery of the project over to its executive agency,OGCbuying.solutions. OGCbuying.solutions appointeda programme director with extensive private sectorexperience of managing suppliers, the pitfalls in similarimplementations, and an understanding of customerorganisations’ expectations. Procurement professionalsfrom user organisations sat on the project board,which gave the delivery team access to considerableprocurement expertise; including experience of deployingreal time “live auction” software across Europe. 12 The requirement specification within the frameworkagreement made provision for customers to receive set-upand training services from the Service Provider as partof the licence fee, plus the ability to order additionalprofessional services. 13 For new users, OGCbuying.solutions providestools to enable them to make the transformation toeSourcing and facilitates access to consultants and interimmanagers who can carry out skills assessment, trainingand recruitment to ensure that users have the appropriateeSourcing capability and can assist customers with rollingout eSourcing across their organisations. Effective governance 14 The project was subject to the OGC GatewayReview process at all stages and had a Project Boardincluding potential customer representatives. The SeniorResponsible Owner delayed award of contract to ensurethe project addressed the findings of the Gateway team,even though some customers were anxious for earlierintroduction of the service.
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