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Procurement has a vital role to play in every business. Unfortunately, most employees don’t appreciate the value they bring because what they do is often hidden away from sight.

The secret is that procurement has more influence and creates more value-add than any other department in your organization - if it is at the heart of your operation. When procurement is front and central, an average performing company is turned into an Olympic medallist.

Does it sound too good to be true?

To convince you, here are four ways procurement can and should influence, support and drive your organization forward.

1. Risk management

Issue: Every business is concerned about risk, and how to minimize its risk profile. This includes predicting where risks may lie in the supply chain and beyond, and ensuring that the right strategies are in place to successfully address them using contingency plans.

Procurement can help risk teams develop contingency plans by sharing business critical insight using tools already in place such as spend analytics which will help you identify and mitigate a range of supply chain issues.

In partnership with procurement, risk teams have the visibility to continuously evaluate and make proactive risk decisions, such as switching suppliers if one shows signs of bankruptcy or choosing a back-up supplier if a manufacturing site is affected by a natural disaster.

2. Cash management

Issue: Given the view of procurement as transaction-masters, it shouldn’t be too much of a shock that they play an important role in helping finance control costs by getting spending under management.

Procurement can help finance find cash savings by tapping unexamined spending categories. Using the information that procurement already utilizes to manage suppliers, finance can also look at payment terms to assess the cost of paying suppliers early.

Finance teams, with support from procurement, is able to quickly implement company-wide cost containment programs which won’t jeopardize key supplier relationships.

3. Knowledge management

Issue: Perhaps the least-known string to procurement’s bow is the level of insight they bring to an entire organization. No longer is procurement tactical – it has gone strategic.

Procurement can help senior executives make smarter decisions by accessing new levels of information locked in other parts of the organization. By pushing and pulling this information up and down and across, business leaders are breaking down silos between department resulting in better communications and more efficient running of day-to-day operations.

As a result, the entire organization has the insight and knowledge to bring better products to market (developed together with suppliers and customers), outmanoeuvre competitors, and deliver greater internal efficiencies.

4. Technology

Issue: Procurement professionals are excellent shoppers – their job is to find deals; and the only way to do this successfully is by knowing what is on offer in the market.

Procurement is well positioned to advise IT teams of the best, future-proofed solutions to help their organizations achieve strategic goals. What is required is for IT to exploit the knowledge centers procurement teams have built up over the years about suppliers and the goods and services they sell.

Together, procurement and IT will shortlist examine and buy the best technologies using tried and tested methods including benchmarks to determine the best value.

Next steps

In the best-run organizations, procurement has been elevated from the basement to the boardroom – helping the entire business become aligned through the constant flow and exchange of information and knowledge historically kept in departmental silos.

To put procurement at the heart of your organization, there are two questions you should ask yourself:

• If you’re not sure how procurement can help you in your role, it’s a sign to engage procurement so you’re working together – not against each other – toward shared business goals.

• If you’re procurement, and you don’t have strategy review meetings scheduled this week with the heads of departments, it’s time to reengage your organization to show your value.

Recession-weary companies look to the Cloud for their silver lining

Without a doubt, the economic challenges of recent years have brought with them an increased focus on operational efficiency. Indeed, ever since the early 2000′s, businesses have been looking for new and innovative ways to reduce costs across the board and many of these have been successful, at least in terms of meeting their short-term objectives.

Naturally, following these efficiency programmes came significant budgetary restrictions on IT departments. Costs were, and still are, being squeezed, and fewer resources and less experienced personnel must now cope with increasing demands from business users, both in terms of IT expertise and computing requirements. Plus, even before the current economic crisis, many organisations had already begun to slow their technology spend, which has meant that from a refresh cycle perspective, many businesses are “sweating” their technology assets.

Over this period, many firms turned to outsourcing as a solution to this problem. However, even though this approach arguably helped to make some significant savings on IT budgets, it often did little to reduce user concerns around delivery and service. As a result of these pressures, businesses have recently started to look deeper at the management of their IT systems – and consequently the cloud – in a whole new light.

The increasing maturity of cloud computing has coincided inversely with the weakening of the UK economy. This has meant that customers looking for efficiency and new ways to remove costs have been able to use the cloud to move to a more on-demand and commoditised technology delivery model.

In addition, in cases where upfront costs that hit the bottom line are difficult to justify, businesses have also used cloud to move to an Operating Expenditure (Opex) model, rather than a Capital Expenditure (Capex) model. Increased competition amongst cloud providers has also paved the way for competitive pricing for many different services, including 24/7 support, data back-up, disaster recovery and virus and malware protection, as well as an agreed amount of bandwidth – all for a set cost

Today, the biggest selling point of cloud computing is that, in many cases, firms gain access to enterprise-class systems with fewer upfront capital costs, easier implementation requirements, and lower on-going maintenance costs compared with similar in-house solutions. Plus, as this market continues to mature, businesses are benefitting from a much more agile, on-demand delivery of applications and infrastructure that is not only better aligned functionally, but also more focused on delivering business value.

As a result, cloud has paved the way for a much leaner technology organisation that can focus on delivering real business value in a more efficient way. The widespread adoption of Software as a service (SaaS), for example, has enabled certain functions to roll out simple but functionally rich solutions to a team or department relatively easily, and without much/any IT involvement.

Salesforce.com is a good example of how this works in practice, as the company has done amazingly well by delivering an easy to use, globally available, infrastructure-free product that does everything that a sales team needs, and which can be purchased on a credit card and expensed. As a result, this cloud model has been able to empower users, whilst at the same time allowing for the strict governance that is needed to maintain service levels without increasing costs and risks for the company.

For all of these reasons, many IT service providers are now touting cloud services as a silver bullet that can solve every business challenge, but that’s not always the case. Although cloud can do many things, it definitely isn't a one size fits all solution. As such, businesses will ultimately need to weigh up the pros and cons of all their infrastructure options in order to determine which will deliver the cost savings that they hope to achieve.

Interview with Stuart Johnston, Deputy MD, Sky IQ and Paul Corrall, editor of sourcingfocus.com

Sky IQ is a leading marketing solutions provider, delivering customer intelligence and unique data services to maximise spend across advertising and marketing. Our capabilities span the entire media mix, bringing insight to above and below the line activities.

Big data and ways of analysing data is a trend at the moment in the outsourcing industry, could you describe some of the tools you use to look at data and solve customer marketing challenges?

Sky IQ has been involved in big data and insight for some time. However, the recent growth of technology and, in turn, collection of larger amounts of data per individual has meant that the term Big Data is considered to be a relatively new development in the marketplace.

Consumer interactions are becoming much more fragmented and devices are much more sophisticated. As a result, we now see customers leaving data footprints wherever they go, both unknowingly and deliberately. Through a combination of hardware and software tools, data, and incredibly experienced analysts, Sky IQ helps organisations to join up and analyse this multi-channel data to create truly accurate insight in to customer behaviour and journeys to then aid future marketing and decision-making. Sky IQ’s capabilities range from database hosting, to campaign management tools, to creation of data models to drive the insight required to support wider business objectives. From an analytics perspective, it’s our people and experience that are key and we take a real consultative approach to ensure that the insight we deliver is truly effective in driving better decisions to aid improved business results.

How do you go about analysing that behaviour and what kind of tools do you use to get the unique insight which you offer?

It, of course depends on many factors such as the client’s specific requirements, database size, and their in-house team and technology. Some of the technologies we use are proprietary and some we have built in house.

In terms of analysing behaviour, we always start by creating a single customer view to ensure that a client’s data is joined up and accurate, and therefore the insight we’re driving is both true and valuable. We then have a large team of analysts who have great experience in understanding and reading data, and therefore knowing how to get the right information from it in order to predict future behaviour and drive effective communication strategies and decision-making. This includes such skills as creating bespoke behaviour-based models to predict future consumer activity or understand real business issues such as what’s driving customer churn.

How do you see consumer power evolving?

The challenge is not understanding how, but knowing how to embrace and react to change as it happens. Brands have to respond quickly and remember that the consumer is always right. The organisations which embrace this and respond effectively will succeed. Those that try to control it or deny consumer opinion will fail. Consumers like transparency and honesty.

An example of this is when a software bug was picked up by Sky IQ through social media postings rather than in beta trials. Sky IQ identified this by using insight combined with the analysis of key words through language recognition software in order to build trends. This then gave Sky the capability to react immediately to consumer reactions and deal with it appropriately.

In terms of consumer power and Intelligence what are the upcoming trends?

The big things are social and mobile. Consumers are now on the go, consuming content in ways we never thought about with a good experience from sophisticated devices.

Through such sophistication, consumers have increasing power to influence the outcome of brands. The challenge for brands is that it is untenable to collect all this data, and therefore a careful strategy is needed to know what to keep and how the data should be used in order to gain actual insight and response mechanisms. From Sky IQ’s perspective, the key is in understanding what is worth collecting and what isn’t. We pull out insight from Big Data and package the results for clients so they can take meaningful actions.

What does the future hold for SKY IQ?

We’re growing at a rapid rate now, from the acquisition of the business and the brands we’re working with. Our clients include such companies as Molson Coors, who we help to understand what their consumers are doing and what venues they are consuming their products in.

With another client, News International, we provide both an outsourced and an insourced service. People are now consuming news through different devices. NI therefore has a growing subscription business so people can consume their business online However, they have very fragmented data sources since this is the first time they are collecting customer information and prospect information themselves rather than through distributors . We are creating a single view from their data, helping them to understand how many customers they actually have, what is affecting customer behaviour, why they may be subscribing and unsubscribing etc. We also provide them with the necessary tools for campaign management and execution.

For Sky IQ it’s a truly exciting time. As data footprints continue to grow in an experiential manner, so does the desire from businesses to understand and execute on this data.

We are currently seeing in the news some very high-profile cases of when outsourcing goes wrong. If you’re embarking on your first outsourcing contract, this could be a major concern, or perhaps not? In spite of the negative publicity it seems organisations like our Government, are keen to take the outsourcing route. According to analysts, Britain is about to see the biggest wave of outsourcing since the 1980s. Earlier this year think tank IT Sourcing Europe conducted their third annual UK IT Outsourcing (ITO) vs. In-House Software Development Research. One finding of particular note is the rise in the UK of nearshore ITO destination outsourcing.

When analysing the behaviour of companies that do not currently outsource their solutions the research found that the top three drivers behind any ITO decision for that UK business community this summer were likely to be:

1. A slow time to market for new products and services

2. The high cost of domestic IT talent who can ask for higher pay then foreign talent

3. A shortage of domestic IT resources as less and less people study and therefore enter the IT industry in the UK.

And these are difficult problems to solve in-house. In fact fifty percent of the companies developing their IT solutions in-house reported plans to start outsourcing their IT and development this year. And when asked where they would outsource their development, nearshoring was by far the most popular option (60 per cent) as opposed to offshoring (less than 15 per cent).

Companies looking at the pros and cons of nearshore and offshore IT solutions would do well to read this recent outsourcingfocus.com guest blog. We agree with the sentiment that nearshoring is a great way to reduce risks and get more value out of your outsourcing relationship. And for those stuck at the earlier stage of deciding whether to outsource a project at all, I hope the following advice is helpful.

Start small and reduce risks.

Would you go down a black run on your first skiing trip? Of course not. Choose a project that eases you into how to manage an outsourcing relationship. And to reduce risk consider that time difference introduces a higher risk so pick a nearshore partner to reduce this.

Pick your outsource partner like you pick your best staff.

Be very and think about the project you want to outsource so you can find a partner that has the skills and set-up to help you best.

Also, is there chemistry? A misconception of outsourcing today is the old ‘your mess for less’. You will be managing the process and working closely with your outsourcing supplier if you want it to deliver a successful project. A good working relationship will be critical.

And though costs may be a key driver for your first outsourcing project, this shouldn’t be the only thing that drives your decision on an outsourcing partner. You want the right one not simply the one with the lowest fee.

Start off on the right foot.

Weak governance – few people, without sufficient clout, accustomed to managing operations, rather than relationships – remains the most common, avoidable barrier to outsourcing success.

Start by building a strong organisational consensus behind outsourcing, long before any contract is signed. It is challenging and complicated enough even when everyone agrees in principle. When business units and headquarters have different agendas, failure is likely and in the end no one will agree, except that it was a bad idea.

Clear objectives and measures of success need to be included in the contract. Failure and dissatisfaction with contracts comes when companies are unable to assess whether a relationship is delivering against original goals.

Be prepared to actively manage the relationship.

You can outsource a project but not the responsibility, so you’ll need to put in place processing for reporting and communication, arguably the most important actor in a successful outsourcing relationship. You should have a meaningful communication plan, follow it and adapt it as you learn more. And whether you want to work in an Agile development way or not, one thing you should borrow from it is daily status calls.

Equally you’ll need to set meaningful targets against which you and your partner can measure success. Think about what success would look like to you; how can your outsourcing partner deliver for you? And then agree these with your partner so you’re both working towards the same targets.

Don’t ignore problems.

Don’t panic and cancel everything at the first sign of any performance issues but put systems in place to manage these. If ignored minor issues will become large problems. For instance service levels matter, but do not equal or assure quality.

All of these things should give first-time outsourcing buyers the confidence to get real value out of their outsourcing relationship.

Mark Bardoe is the Managing Director of UK & Southern Europe at Stefanini EMEA, the global IT services and outsourcing experts

Lenovo Group Ltd, based in China, is on track to become the world’s largest PC manufacturer, pushing Hewlett-Packard Co off the top spot.

Analysts expect that the company will see sales rise to take the top spot within the year, through a combined strategy of expansion into overseas market and dominance in home markets by sacrificing profit margins.

Other IT giants have moved away from a focus on sales to concentrate on increasing profit margins in a highly competitive marketplace.

Dickie Chang, an analyst at IDC in Hong Kong, commented: "HP, Dell and Acer have switched lanes in the PC race and passed the baton to Lenovo in terms of focusing on sales rather than margins".

Microsoft has created an investment and support service for online and mobile start-up businesses.

The service will provide companies with access to Microsoft’s resources and expertise including access to technology developed by the computer giant and to Microsoft’s partners.

The service would be provided in exchange for the opportunity to build a strong relationships with start-ups, with Microsoft focusing on gaining contacts and opportunities with other businesses.

Virgin and FirstGroup have emerged as the two most preferred operators for tending the multibillion-pound contract for providing services over west coast rail.

The train service carried 30 million passengers last year and the contract has seen the two favourites carry out strong cost-cutting measures with reports of the removal of catering and shop services in carriages.

A successful bid by FirstGroup would make the company the dominant rail operator in the UK, operating Scotrail, First TransPennine, and First Capital Connect as well as shortlisted for other rail services.

This news comes as the Government sets to carry out the largest investment in UK rail infrastructure since the Victorian era with £9billion laid out for projects from 2014 to 2019.

The US cloud strategy named Cloud First has enjoyed success in many US departments despite initial misgivings.

A report by the Government Accountability Office (GAO) has revealed that departments including Homeland Security, State and Treasury and Agriculture, Health and Human Services have all met Cloud First requirements.

The Cloud First policy required that departments moved three of their technology services onto a Cloud platform by June 2012 despite widespread misgivings surrounding the project. The success of the policy allows for the creation of best practices surrounding common challenges identified during migration.

Bristol City Council have employed open source software in order to reduce annual costs by £70 million.

The council is employing Alfresco to develop document and record management, with the service allowing document access on the move through mobile devices and includes the ability for uses to collaborate and share information over the software.

Gavin Beckett, chief enterprise architect at Bristol City Council, said: “Alfresco offers a rich set of features in a user-friendly package with the additional bonus of being an open source platform, which means we can use it right across the board without having to spend large sums on licences.”

Scottish and Irish governments have renewed contracts with procurement service provide Millstream to provide national e-procurement databases to the two governments.

The extended contracts are worth around £250,000 and come just weeks after the Aberdeen-based company won a £4.8million deal to run a similar portal in Norway for the next seven years.

A number of European governments and public authorities now handle procurement electronically in order to save money and time and to comply with the latest EU legislation. John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth, has praised the portal as “one of the finest innovations that Government has brought forward, making it easier for SMEs to access Government contracts”.