Government Communications and Logistics Provider
Transformation of business across Procurement, Facilities management and Property
“The Elix-IRR team have consistently delivered more than I would get from the traditional strategic or outsourcing consultancies. Their price to value ratio is more competitive and I particularly like the personal commitment they make to our business outcomes. Their business model facilitates the use of their experience in short, sharp, high-value bursts that means our management do not suffer from ‘consultant fatigue’, something we value very highly.”
Group CPO
Scope, scale and deliverables
In 2010, Elix-IRR acted for a substantial Quasi-Government entity on behalf of the Group Procurement Director. The Procurement department is currently on a ‘Journey To World Class By 2013’, and engaged Elix- IRR to assist in two key areas:
- Design and establish a Group Procurement, Facilities and Property (PFP) Directorate
- Develop the Group Procurement Strategy for 2010 / 2011
Group Procurement, Facilities and Property (PFP) Directorate
The Board of this entity made a strategic decision to launch a new operating model and Directorate (the governance structure around the operating model) across three Service Lines (Procurement, Facilities Management and Property), in order to leverage these services and drive greater value into the business. At the client’s request, Elix-IRR took a very ‘hands-on’ approach in implementing the operating model and establishing the Directorate, and centred it on three key dimensions:
- Service and customer orientation
- Shared services and synergies
- Contribution to targets
The overall purpose of the PFP Directorate was to create and manage the delivery of the PFP strategy, ensuring close alignment with the business and other service functions within the Group. Setting the operating model and Directorate up quickly, efficiently and robustly were key to successfully delivering the identified objectives. These were to:
- Manage the three service lines (Procurement, Facilities and Property) in the most cost effective and value creating manner
- Provide transparency and governance across the three service lines
- Manage risk across all three service lines with regard to regulatory and legal compliance
- Manage and identify opportunities for the three service lines to combine capabilities, in order to deliver superior service and returns to its stakeholders
- Facilitate and identify innovation that enhances value to the whole Group
- Manage the overall budget and performance of the PFP directorate
- Leverage economies of scale across Procurement, Facilities and Property to provide best-in-class service at improved profit-levels
The three month project successfully guided the Group through the operating model transformation, and Elix- IRR’s final deliverables included:
- Background and context for internal buy-in
- Mission and strategy to state the vision of the transformation
- Governance principles and requirements
- New Directorate structure (organisation and talent identification), including interviewing and helping to select the most appropriate candidates
- Roles and responsibilities for each member within the Directorate
- Establishing reporting lines between the service lines, across the shared services and upwards to the Directorate
- Creation of reporting templates for each member along with instructions on what data to include and where to get it
- Key events calendar for the year
- Activities and decision-making processes within the Directorate and across the operating model
- Specifications on how to interface with the business and the creation of business SLAs
- Outline and dissemination of the benefits of the new operating model
- Identifying the culture and working practices required to make it a success
The Group Procurement Strategy
In parallel to being asked to set up the new PFP operating model and Directorate, Elix-IRR was engaged to produce an integrated Group Procurement strategy to empower Group Procurement (GP) to achieve World Class performance by 2013. The goal was to allow the Group to work with their internal business partners to deliver sustainable and measurable value improvement in strategic spend and supplier management, through innovation, collaboration and robust performance management.
Elix-IRR helped each Procurement Leadership Team (PLT) member build 2-3 year strategy plans for their respective categories to achieve their objectives and targets given to them by the business. More particularly the PLT was challenged to think more broadly about initiatives – to identify initiatives beyond pure Opex reductions, and to include cost avoidance/ demand management opportunities and revenue enhancement initiatives as well. Elix-IRR’s procurement expertise and experience of working with blue-chip procurement organisations enabled us to challenge the status quo and to stretch the client team to consider approaches that were ‘unfamiliar’ to them, and which added huge value in both the short and long term. Once the category strategies were complete, Elix-IRR facilitated a group workshop session over a 2-day offsite to:
- Obtain agreement and alignment around the overall GP strategy
- Delegate GP targets across the categories
- Align GP into the PFP Directorate
Working side-by-side with the Group, Elix-IRR helped produce an integrated GP Strategy that was designed to deliver:
- Clear category strategies, with ‘stretch’ targets
- An aggressive pipeline of opportunities & targets (15% YOY savings)
- Identification of Type 1 (Opex savings),Type 2 (cost avoidance/ demand management) and Type 3 (revenue generation) initiatives
- Relevant and accurate reporting, including the establishment and cascading of Balanced
- Scorecards throughout the department
- Transformation and innovation
- Seamless integration with the PFP Directorate
A clear strategy, roadmap and KPIs were produced that maximised the chances of the Group achieving its targets in cost performance, addressing people issues, establishing clear stakeholder management, measuring against departmental budget, addressing compliance, measurement against performance ratios and tracking the progress of transformation initiatives. Elix-IRR helped communicate this into the organisation, and remained available to the client in the first two months to assist with implementation. Once the strategy had been finalised and agreed, Elix-IRR supervised the first Monthly Operating Review thereafter to ensure that the meeting agenda was aligned around progress against the strategy.

Governance & relationship with the client
In both projects (PFP Directorate and GP Strategy) Elix-IRR was engaged by the Group Procurement Director. In order to drive change throughout the organisation quickly and in a way that optimised value, Elix- IRR provided the Group with a small, senior and focussed team. The Group asked Elix-IRR to be discreet due to the sensitivity involved in the change, but also to be ‘hands-on’ wherever and whenever needed. Working directly with the Group’s Procurement, Facilities Management and Property Leadership Teams, Elix-IRR drove both projects successfully to completion.
Commercial / contract arrangements
The GP Strategy itself aimed to reduce Procurement costs by 10-15% over the year, and 30% over three years. Three months into the execution of the strategy the savings achieved were on track versus target.
The PFP Directorate looked to build on the GP savings to account for 40% of the organisation’s total profitability targets for the year. Again, value created to the organisation was on target after three months.
Outcomes and learning
The key outcomes and lessons learned in this process were:
- The importance of creating and then delivering a robust solution for the Group underpinned Elix- IRR’s approach. Not only did Elix-IRR help produce the operating model, Directorate structure and strategies for the transformed organisation, but crucially Elix-IRR stayed on to ensure successful implementation.
- When creating strategies to achieve targets, challenging the status quo and stretching the Leadership Teams to think more broadly and over a longer period of time identifies initiatives not solely focussed on Opex reduction. This is healthy for the business and lays the foundation for future success, and ultimately makes the 2013 vision achievable.
- When embarking on transforming an operating model, it is essential to have firm roles, responsibilities, reporting lines and governance structures in place. Without these the transformation will not succeed.
- Integrating back-office functions into one Directorate requires top-down sponsorship transparency and very careful monitoring to be successful. It also requires a specific skill set to drive the change (either from advisors or from talent specifically brought into the organisation).
- Strategy setting and operating model change is not a part-time job – it needs a constant focus and hands-on approach otherwise the vision and goals will never be achieved.
- Stakeholder management is an obstacle that can be overcome with skilled, senior attention. Anything less will dilute programmes of this scale.
