| Date | Category |
|---|---|
| 16th June 2022 | Member Update |
There is no shortage of reasons for university procurement teams to move to a more commercial approach. The challenges facing our sector – and society at large – are significant: the Procurement Bill, varying student recruitment figures, unprecedented energy costs and increasing food costs, to name a few. But how can Higher Education procurement leaders lead lasting strategic change with commerciality at its core? Here, SUPC Member and University College London’s Commercial Director Ian Galloway shares his top five pieces of advice to deliver impactful and sustainable strategic change.
While not as many universities as predicted came out of Covid in a deficit, the last two years have widened the gap between the ‘have’ and ‘have not’ institutions. Even those universities that did well out of the last student recruitment cycle are facing increasing challenges when it comes to delivering value for money. The sector as a whole is facing pension deficits, increasing demands for pay parity and challenges with international student recruitment.
In 2020 right before I started, in addition to the challenges above, UCL – an institution that now has 14,000 staff and 55,000 students studying over 1000 programmes – hadn’t had a permanent procurement director in two years. The wider organisation was undertaking a cost-cutting programme that, at the time, had only delivered £2m in annual financial benefits. However, the financial headwinds associated with COVID required UCL to become significantly more cost-efficient, and the target number grew exponentially as the pandemic hit. With the time to deliver being short, it was an interesting time to join the institution.
Now two years into my role at UCL (having started just before Covid!), here is what has helped us to innovate within our commercial function to deliver measurable and meaningful change that will last.
1. Get the Past Out of the Way
My first piece of advice is to stop living in the past. Be honest about what has happened previously and why under-performance has occurred. Reset the parameters about what you will deliver and how that success will be measured. Identify your key stakeholders and refresh those relationships with new team members and new approaches.
What’s that saying? The definition of crazy is doing the same thing over and over again and expecting different results. To move beyond past failures, you must do something different.
From a UCL perspective, this meant we needed to improve the understanding of the savings targets among our team, wider stakeholders and senior leadership team. Historically, our Commercial & Procurement Services Team was largely reactive and driven by the public contract regulations (even though we operate outside of the regulations). We needed to develop the team to embrace a more commercial approach to steer UCL through our ambitious savings programme.
It also meant that we needed to establish clear ownership and accountability for the savings targets set. The buck stopped with me. One of my priorities was to make an explicit statement: I am going to move these savings programmes forward and be accountable for any success or failure. It meant I needed to recruit and build the right team to help me deliver this and to adopt a very outcomes-driven approach. This stance wasn’t always comfortable for colleagues who were not up for an element of cultural change, but it was important – I have more thoughts to share on this below.
2. Be Clear in Success Criteria and How to Measure Them
A key enabler to our success was investing in analytics resource to improve our data sets. Beyond the accountancy budget, we did not have a clear view of our non-pay spend. As an example, after undertaking our transactional spend analysis, we identified 30,000 different suppliers on our system and weekly outgoings of £300/week on cronuts! I share the cronuts example as a small illustration of the insight we unveiled by investing in our analytics. That one example started a discussion on what more we should be eliminating or changing in our supply chain to achieve our organisational goals. With the right investment in data insight, which is often at the more affordable end of the salary scale, there’s no need to imagine – you can easily access that information and it’s unequivocal – it’s money that was spent, and reflects organisational behaviours, and supply chain opportunities.
The biggest gains, in financial, operational or reputational performance are usually from stopping activity or changing how activity is done – not in the tendering. We had to make some big decisions about what to stop, what to start and what to change. Most of our categories have been significantly changed in the last two years and we’ve collaborated closely with budget holders through a series of “you said we’ll do” and “you said we’ve done” campaigns, both of which have defined our measurement of success.
3. Set Yourself Up for Success
Changing our culture to emphasise values-based decision-making was also a key part of success. An authoritarian, top-down approach, does not work in an organisation like UCL, it’s important that we bring our academic and professional services community with us on a journey and that means collaboration, and a healthy dose of challenge. By tapping into the values of UCL such as leadership, global outlook and community engagement, I was able to have important – and often difficult – discussions with colleagues and suppliers. These discussions ultimately kept us on course to deliver our shared goal.
Our Commercial & Procurement Services Team has changed quite considerably since I joined. For starters, it has nearly doubled in size – no mean feat to deliver during Covid and amid financial challenges. Nearly all our team members have been recruited remotely, and that has made for a more diverse and inclusive team. It also meant a significant change in the skills we are looking for. Procurement-specific experience, such as tendering, has been significantly less important. What matters is finding colleagues strong in three key traits: Data Analysis, Critical Thinking, and Consultative Engagement. While the balance of those traits is different based on an individual’s role, they are required by analysts, category managers and commercial directors!
4. Realise Mistakes Happen
It is important to acknowledge that mistakes happen and are going to be part of any commercial operation. Supply chains are not simple, and organisational change is not easy. The key is to develop and maintain a culture of continuous improvement with staff that are resilient enough to deal with any issues that crop up. In organisations like UCL everyone has a voice and debate and challenge is a core academic skill. That can create conflict and challenge. Personally, I welcome that when it is done the right way, and I encourage my team to lean more into those situations as it often creates new opportunities or highlights problems to fix.
I also recommend using mistakes as an opportunity to measure and adjust your approach. What is the mistake telling you? Is there something fundamentally flawed with the process? We also need to accept that change takes time. Meaningful change can take months and years to deliver, but the foundations of clear communications and a well-thought-out narrative for why you’re doing what you’re doing can help you move successfully forward when mistakes do occur.
5. Leverage Your Wins
Finally, leveraging your wins is a must. Early and continued wins support your rationale for change and remove excuses for others not to get on board with your vision. At UCL we started with Communication and Marketing expenditure, and took about 2000 suppliers out of the supply chain. That scaled into other corporate services categories (e.g. temp recruitment) and then into IT and Estates. As we’ve gone through each activity, we’ve been asked to get involved in more and doors are open across UCL. Success breeds success. By celebrating and leveraging your wins you build team morale and support a culture of continuous improvement.
Those who know me will know that I’m not a big fan of the ‘p’ word – procurement. I see procurement as an important process of a commercial function and I think we need, as a sector, to focus more of our energy on a commercial approach to deliver true value to our institutions. Last week I discussed these ideas and many more as part of the opening keynote at this year’s LUPC & SUPC Conference on the 8th of June.
Ian Galloway, Commercial Director at SUPC member institution UCL, is a senior commercial and procurement professional, specialising in delivering strategic, complex and high-value change initiatives. He has generated tens of millions of pounds in cost savings within large, complex and often politically-charged organisations.