A move to Strategic Sourcing of financial systems specialists paid off for Serco.
15th October 2007 Whilst many global organisations appreciate a choice of suppliers, many companies find themselves with too many commercial relationships to sensibly manage. Furthermore, in an environment of increasing regulation and compliance, having too many suppliers can present challenges when seeking to streamline business activities, standardise processes and maintain high quality standards.
It's a situation very familiar to Tony Farrant, Strategic Sourcing Programme Director of the Serco Group, an international service company. Serco improve services by managing people, processes, technology and assets more effectively. They advise policy makers, design innovative solutions, integrate systems and - deliver to the public. They offer operational, management and consulting expertise in the aerospace, defence, education, health, home affairs, local government, science, technology, transport and the commercial sectors.
Back in 2004/5 Serco undertook a complete review of its strategic resourcing needs for both goods and services. One category of supply to come under the microscope was recruitment services where the Group had around 300 different suppliers. A successfully concluded review eventually narrowed the choice of strategic partners across Serco to just 24 suppliers.
The new arrangement was quickly put to the test when Serco embarked on its “Formula 100” programme. The programme implemented a new way of working across the business systems and processes. This included the roll out of a SAP Enterprise Resource Planning system across the entire business, concentrating on standardising activities in a shared services centre and simultaneously off-shoring the whole undertaking to India . The project, even by Serco standards was a very sizeable endeavour.
“Every business was on a different business system. The market at the time was buoyant for sub-contractors and we were aware of the critical shortage of qualified and experienced resource,” says Farrant. “We needed a recruitment supplier that we could work with to find SAP finance specialists and all the other varied skills we needed in the programme.”
“We appointed Systems Accountants a specialist recruiter in the field of financial systems and decided to work with them to meet all of our needs. Relying on a single supplier in this way was an unusual step for Serco at the time, but with the benefit of hindsight it proved to be a very successful decision” comments Farrant.
“We needed a recruitment supplier that we could work with to find SAP finance specialists and all the other varied skills we needed in the programme. Relying on a single supplier in this way was an unusual step for the Group at the time, but with the benefit of hindsight it proved to be a very successful decision” comments Farrant.
Systems Accountants appointed a dedicated project manager with whom Serco shared its projected resource requirements. The arrangement worked well as the two organisations leveraged their growing knowledge of each other's businesses to deliver the most appropriate solutions. But in addition, the project manager met with all of the contractors seconded to the Formula 100 programme and ensured that their needs were also met.
“The ongoing support and continuity of supply was critical to the success of the project. Systems Accountants were extremely proactive in finding and providing candidates of the right calibre and managing them throughout the process,” remarks Farrant.
The relationship between Serco and Systems Accountants also benefited from formal programme meetings. There were quarterly reviews, where issues could be raised on both sides and courses of action agreed by the operational team. This worked extremely successfully and in common with most successful negotiations, commercial terms were good for both businesses, with Serco rewarded with a rebate when business volume and revenue placed with Systems Accountants reached a certain threshold.
“The ongoing support and continuity of supply was critical to the success of the project. Systems Accountants were extremely proactive in finding and providing candidates of the right calibre and managing them throughout the process,” remarks Farrant.
Farrant describes the relationship as a “true partnership” with both organisations working as a team to ensure that Formula 100 resourcing objectives were met in a timely fashion. The programme started in May 2006 and is scheduled for completion in September 2007. “It's been a massive change to the way that people work and at peak we have had about 70 contractors on the programme. Systems Accountants have helped to manage the peaks and troughs in resourcing as well as managing the performance of all of the contractors.”
The programme is the largest single change project that Serco has ever undertaken but the decision to partner with Systems Accountants has proved very astute. “Serco is definitely not a specialist in recruitment and we did not want to take on the contractors ourselves. But we did not want to go down the Big 4 or large systems integrator route either. I do not believe we would have got such good service from the large consultancies. Systems Accountants were big enough to take on the role yet small enough to care about maintaining service levels,” says Farrant.
“There have been challenges at times to find the right resources. We needed a pro-active supplier with similar values to ourselves. Perhaps we could have got lower rates elsewhere but I doubt whether we would have got the same level of service. The value to the business in using Systems Accountants was ensuring service delivery,” adds Farrant.
The Strategic Sourcing model used for resourcing the Formula 100 programme has proved the value of working with a more limited number of suppliers. “By getting closer to a supplier you can share more information about the requirements and they are more comfortable about delivering appropriate solutions. In the past, commercial relationships have tended to be short term and switched on or off rather quickly. Strategic relationships are about continuity for both parties. We have used the same model in other situations and the approach is definitely paying off,” concludes Farrant.
