I was delighted to support the Housing Technology research team in advising on its recent ‘IT Finance and Procurement in Housing 2020’ market intelligence report, sponsored by Aareon (see housing-technology.com/research). I’ve read the report with keen interest and wonder whether it tells the story of a decade of progress or not.
I joined the housing sector in 2011 from the Civil Service and the agency which today is known as Crown Commercial Service (CCS) where I’d been part of the team that interpreted the EU Procurement Directive ahead of the Public Contracts Regulations 2006, rewriting the rule book on framework agreements. We’d also introduced Category Management and I’d lead the procurement of a £6 billion national IT hardware and software framework, including successful defence of a legal challenge, before being tempted by Circle Housing Group to be part of a greenfield, step-change procurement function, initially as Circle’s IT and telecoms category manager.
Back then Circle, like many housing providers today, had a small procurement team of three people, with responsibility, at least on paper, for all third-party spending (around £300 million) whereas in reality the team was, at best, providing a sporadic advice and guidance service and managing the occasional OJEU process. The new CFO recognised this really wasn’t best practice and Circle spent £1 million on a new team of 20 procurement professionals.
I implemented category management and led a central team of category managers working with the locally-deployed regional procurement managers based at each member of the group. Over a three-year period, we introduced proper procurement policies, processes and procedures.
We provided dedicated resources to work directly with Circle’s business stakeholders and the maturity of supplier relationships, contract management and development of longer-term category plans bore real fruit. Prior to the merger with Affinity Sutton to form Clarion, the Circle procurement team had delivered savings of around £50 million, all independently verified by finance colleagues, and had in many respects reset the sector benchmark for procurement, except we’d kept it a secret!
I’ve remained loyal to the sector since those Circle days because I, like many others, am really motivated by the impact the sector can have on people’s lives. Now as an independent consultant, I’ve supported others including Southern Housing, Orbit and Midland Heart, as well as supporting Housing Technology with procurement-specific articles and with the IT Finance & Procurement 2020 report, and several of the sector’s IT suppliers in navigating through housing providers’ procurement processes.
It really bothers me that in 2020, 30 per cent of the sector’s IT teams report having no access to either internal or external procurement support. On average, 12 per cent of a housing provider’s budget is now focused on IT and technology, a figure which I reflect is gradually increasing, and yet only 20 per cent of housing providers support this through an internal IT procurement specialist and fewer than 40 per cent provide access to an internal generalist! This is compounded by the reported fact that IT teams are frequently initiating projects requiring procurement action.
There are several points I wish I could make to all social housing professionals:
- As far as procurement is concerned in social housing, the Public Contracts Regulations apply and public procurement is complex and nuanced and requires skill and you’re obliged to take it seriously;
- Resourcing internal generalists is a good start, but can only really achieve tick box compliance and sporadic support;
- Each market, or spend category has its own characteristics and different tactics need to be applied (marketing versus IT, for example) to achieve value for money;
- Good procurement delivers good contracts which have to be managed end-to-end to ensure value is delivered;
- Best-practice procurement teams typically deliver seven times more value than their cost on a sustainable basis.
IT teams across the sector are delivering significant transformation programmes. Larger associations are making significant leaps into new technologies and ERP platforms. Mid-sized associations are wrestling with a constrained vendor market and need support with supplier relationship management. Technology is a key area of strategy and spending, so market research, appropriate procurement tactics, contract management and supplier relationship management are all important differentiators.
I would encourage all IT directors, CIOs, finance directors and chief executives to educate themselves about modern professional procurement and ensure that they can genuinely look the regulator in the eye and confirm they are ensuring “that optimal benefit is derived from resources and assets and optimise economy, efficiency and effectiveness in the delivery of their strategic objectives” and invest in their procurement capabilities; after all, you owe it to your teams, your residents and the communities you serve. This report shows me there has been some progress in the last decade, but significantly more progress is needed.
Chris Cliffe is a director of CJC Procurement.
The Housing Technology IT Finance & Procurement 2020 report is available now for download from housing-technology.com/research.
