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CLIENT CASE STUDY

City of London: Government transformation through centralized procurement

Overview

Learn how the City of London is realizing cost savings and delivering public service for the future through an end-to-end procure-to-pay process.

The City of London and Accenture collaborated to create a centralized service that unifies the procurement of 18 different departments. The new end-to-end procure-to-pay process is helping the City to fundamentally increase leadership’s control of external spend by capturing millions in cost savings to improve compliance and transparency for delivering public service for the future. Most importantly, through this project the City is projecting £35m [$58.1m USD] in sourcing savings over seven years that will help to meet mandated budget reductions and enable government transformation.

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Opportunity

Working with a procurement function that was decentralized across several service departments, the City of London desired to achieve government transformation by moving to a unified procurement function. This change would allow the organization to save a targeted £30m [$49.8m USD] through the adoption of modern procurement techniques that introduced process efficiencies and present a more professional image to their supplier base.

Centralized procurement would also help the City to create and manage an effective, accountable and transparent procurement governance structure; create procedures to deliver cashable procurement savings for the City; and review and enhance procurement information systems. In addition, the City’s communication with suppliers could be standardized, further improving their reputation and relationships with suppliers.

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Solution

Accenture proposed the City of London Procurement Service—a central service with three major teams comprising Sourcing, Accounts Payable and Reconciliation, and Procurement Policy and Compliance. Through a new co-source model Accenture’s experienced outsourcing staff implemented tried and tested methodologies and shared procurement best practices and procedures. Accenture also helped to up-skill the City’s staff, enabling them to make sustainable improvements to their procurement function and move toward government transformation.

Our approach included:

  • Early wins program

  • Sourcing methodology

  • Transactional buying team

  • eMarketplace

  • Buyer helpdesk

Underpinning these programs was a strong governance framework, with a Joint Review Board made up of senior stakeholders from both Accenture and throughout the business, to steer the project and resolve escalated issues. Change management was also critical to supporting the departmental transformational change while actively transferring skills to City staff. To measure the impact of change on the organization and identify actions that will help embed the change, Accenture worked with the City of London to roll out a change-tracking program.

LEARN ABOUT THE FORMULA FOR SUCCESS AT CITY OF LONDON

Results

The new unified procurement function has enabled the City to swiftly and compliantly implement new public service procurement regulations released at the end of 2013—keeping the organization compliant in all procurement areas and on the road to government transformation and delivering public service for the future. Other benefits include:

  • Savings. The City of London is projected to save £23.5m [$39m USD] over five years and £35m [$58.1m USD] over seven years. The team has been able to achieve an average savings on all projects of 8.2 percent against a target of 7.3 percent.

  • Efficiency. On average, 95 percent of all invoices are now paid on time with 30-day payment terms, and 80 percent of invoices are paid on time with 10-day payment terms.

  • Visibility of spend. As of March 2014, spend under management of procurement was raised from 20 percent to 85 percent. Seventy percent of invoices are now sent directly to the City of London Procurement Service, a major achievement given that 18 separate departments ran their own spending just 12 months before.

  • High performance. The City climbed an average of 20 percentage points on Accenture’s High Performance Procurement Mastery scale—a measure of the hallmarks of procurement mastery. In terms of savings as percentage of controlled spend, the City of London central service currently achieves an average of 8.2 percent, comparable to procurement “Masters.”

DISCOVER THE STEPS INVOLVED IN COMPLETING THE PROJECT SUCCESSFULLY