Here's how a high-performing new Procurement function signed off £5.8m in annualized savings in just six months.
Informa is one of the world’s leading knowledge, events, academic publishing and business intelligence companies.
Listed on the London Stock Exchange and a member of the FTSE100, it has more than 7,500 colleagues around the world, a presence in every major region and recorded revenues of £1.3bn in 2016. It is comprised of four operating divisions and has a separate support services function.
As part of the company’s three-year Growth Acceleration Plan, each of the operating divisions was challenged to identify and deliver opportunities to improve its operational performance. One of the four, known as KNect365, identified professional procurement as the means to generating savings and improving operating margin that could help fund future growth.
The KNect365 business is itself sizeable. The division runs conferences and knowledge-sharing events for 150,000 delegates in more than 70 countries worldwide, making it the globe’s leading events organiser. It stages a diverse range of events from Biotech Week to Container World, the planet’s largest Internet of Things event to a Hedge Fund Forum. KNect365 has rapidly grown organically and through acquisitions, and has lacked both a formal Procurement function and a unified approach to sourcing.
The business has significant external spend but had little strategic control over it. Each area within KNect365 was responsible for its own purchasing. For example, conference teams organised and procured their own venue space, audio-visual equipment, travel and other services independently and for each event. And while a structured process was followed, each area operated in isolation with little communication between them, which meant it was failing to leverage scale and strategic sourcing opportunities.
KNect365’s senior management team recognized the potential for considerable improvements and Efficio was asked to assist. It needed to find significant tangible and sustainable savings, develop strategies to make sure they were delivered, and design and build an effective Procurement function with the tools, processes, technology and training to operate effectively - all as quickly as possible.
Efficio started work in September 2015. The first step was to conduct a detailed analysis of spend and supplier data to build a single, categorized baseline to review with business stakeholders, in order to see where money was being spent and provide the data to identify, track and validate potential savings.
As part of this process, Efficio held more than 600 stakeholder meetings to understand the business requirements in great detail. And as members of the new Procurement team joined, they worked alongside the consultants to help them quickly get to grips with the business and start building the relationships that are key to procurement being recognized as a value creator.
It was quickly evident that while there were areas of specialization across the different conference teams, there was commonality in large swathes of spend including venues, travel and printed material. The process helped identify the best opportunities, but it also convinced the business that procurement could deliver value without adverse impact on their operational needs or product quality. In fact, as well as saving money, in many cases the new solutions delivered better service and quality.
At the same time as identifying opportunities, Efficio began building the internal Procurement team. The first step was to design an appropriate structure based on current and future spend, category complexity and industry benchmarks. Once the structure was agreed with KNect365, detailed job specifications were built for each role, after which Efficio played a key part in interviewing the candidates. Efficio developed questions and case study scenarios to help assess candidates’ skills and procurement knowledge.
In February 2016, new Global Procurement Director Hetal Dassani was appointed and Efficio worked with her to recruit her new team. By May, senior members had been appointed and by July the full team was in place.
Next, Efficio put in the necessary infrastructure and support the team needed to engage professionally and efficiently with the business.
A key element was establishing robust, systematic and fact-based processes and ways of working that drew extensively on Efficio’s own methodology and intellectual property. We also implemented a range of systems, including a spend analytics tool, a sourcing and savings tracker, a supplier rate and contract database and a project management progress reporting process.
Efficio then delivered more than 300 hours of formal training as well as on-the-job instruction to the new procurement team by modelling best-practice and providing support where needed.
Just six months after the Global Procurement Director was appointed, the new team was completely self-sufficient, on track to exceed the savings targets and well on the way to becoming a best-practice Procurement function.
Hetal Dassani, who previously worked as an events director in another part of KNect365, said: “What impressed me most was Efficio’s willingness to roll up its sleeves and get involved in our day-to-day business. We were in it together, we shared the problems and successes. There were no gaps between our team and Efficio’s. We were to all intents and purposes, a single team.”
What impressed me most was Efficio’s willingness to roll up its sleeves and get involved in our day-to-day business. We were in it together, we shared the problems and successes. There were no gaps between our team and Efficio’s. We were to all intents and purposes, a single team
Challenges and outcomes
Apart from the challenge of rapidly building an entirely new function, the biggest obstacle to overcome was the perception of procurement. There was previously little understanding of the value or even need for professional procurement. To address this, Efficio worked with the new team to hold hundreds of meetings with stakeholders to understand business needs. We also developed a process to ensure this engagement continues.
The team now meets monthly with all business stakeholders to understand upcoming activity and requirements. Once it is clear on the requirement it works with suppliers to identify solutions. This includes negotiating volume discounts by consolidating services through one supplier. The process has demonstrated the value of procurement by presenting new options to stakeholders while meeting their operational needs and freeing up time for them to focus on their core business.
The project also succeeded in changing perceptions beyond KNect365 across the wider Informa Group business. For example, Efficio identified an opportunity for significant savings by consolidating all group travel with a single travel management company while still permitting travellers the flexibility to exercise their own local travel policy. One senior executive described the whole group agreeing on the same provider as a “miracle” and the new approach has delivered more than £2m in group-wide annualized savings.
Success was significantly enhanced by the support of KNect365’s senior management team. The result was a project that delivered rapid and substantial value. The new team has delivered on the procurement strategies put in place by Efficio with £5.8m in annualized savings signed off – almost 50% ahead of forecast. The project has achieved a return of nearly 4 times the value of Efficio's fees in the first year (more than double the original forecast) and the new team has continued to apply the skills, tools and processes transferred from Efficio to identify new opportunities.
Informa’s Group CEO Stephen Carter said in his annual trading update that next year would be a year of “disciplined delivery”, and that’s just the approach that was embodied by this project.