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How improvements in corporate procurement became a catalyst to divisional business transformation The British Columbia Lottery Corporation undertook a whole host of proficiency improvements, starting back in 2005. However, even Keith Bolen, Director of Corporate Procurement, could not have foreseen the impact the improvements would have across the Finance division Written by Stuart Hodge Produced by Sharicka Braley
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he British Columbia Lottery Corporation must be doing something right. The company was named Gaming Intelligence’s on-line Lottery Operator of the Year last year and has recently receives an HR “People First” award.
It seems that both internal and external customers of the provincial government corporation are very happy and BCLC must be pleased with revenue of over 2
$3 billion (CAN) last year. So, what has been at the root of BCLC’s continued success? Well, Keith Bolen believes he has the answer. Keith looks after procurement for the company, and says firstly his department and secondly the company as a whole have undergone a significant transformation. The initial sweep of changes began in procurement
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specifically, back in 2005. Bolen describes the procurement focus at that time as being “purely transactional”, essentially placing orders and taking orders. There was no vendor performance or contract management, the systems were antiquated, and there were only a handful or strategic sourcing events each year. But that had to change for the business to move forward, as Bolen explains. He says: “There was a real need to centralise procurement and then, looking at how the company as a whole was really entrepreneurial and innovative, we needed to apply that approach to how we procure as well. “We really changed up our strategic sourcing methodologies and we adopted a new public procurement standard, allowing for better decision making through indepth engagements with vendors. “That obviously involved addressing some of the demands of our internals customers, which in turn, allowed us to make better business decisions with sourcing.” Leading up to that initial transformation phase, starting in 2005, BCLC had adopted a new Enterprise Resource Planning system, which allowed transactions to be processed more efficiently. The Corporation then employed purchasing cards for the first time as part of a move to modernise all operations. That resulted
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in 50 percent of all transactions “Then, during phase two, there being removed from the ERP was a divisional-wide transformation system, reducing the administrative effort where another company burden of these high-volume, was deployed to help with the low-value transactions. transformation of the finance The increased efficiencies division. Given that, procurement yielded by collaborating with reports into finance it is a much PricewaterhouseCoopers and broader effort for transformation. using its expertise to bring the “Part of what drove that transformation decision was looking to fruition had an at the success that undoubtedly positive procurement had effect on corporate experienced during our procurement for phase one, where we BCLC, and that’s why basically applied the the company chose same methodology of Number of Employees at The British to carry through bringing in an outside Columbia Lottery similar changes company to look at our Corporation across the Finance & business processes Corporate Services and organizational division as a whole. structure and make Bolen says: “Phase one of the recommendations to help guide transformation was specific to us in applying improvements. procurement. We had engaged a “We were being held up as company to create our very first the poster child of success, to roadmap of business process say ‘if we apply this approach improvements and we followed that to our business then we’ll see through with significant benefits results, look at procurement to our department, and improved and look what they’ve done’. services to the whole organisation. “We were actually a catalyst in
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Keith Bolen
Director, Corporate Procurement Keith Bolen is a public procurement specialist who has held the position as Director of Corporate Procurement with BCLC since 2009. Prior to that he worked in purchasing with the company, after joining from Fraser Health Authority where he worked initially as a buyer. Keith is proud of what he’s achieved with the company, but says nothing would’ve been possible without the staff. He said: “I have to give a nod to the workforce management efforts because we’ve managed to get the right people in the right positions. That’s a big part of what we were trying to achieve. “The staff do a lot of the heavy lifting; they implement all of the new methodologies and new software and managed to make everything work, so acknowledgement that our success and transformation is very well deserved. Without the staff, we would not be successful. Even with the best methodologies and the best systems to automate business process, you cannot make it work without the right people behind you.”
WE REALLY CHANGED UP OUR STRATEGIC SOURCING METHODOLOGIES and we adopted a new public procurement standard, allowing for BETTER DECISION MAKING AND DEEPER ENGAGEMENT WITH VENDORS
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helping to drive transformation through our finance division.� Efforts were initially focused on centralising contract management by physically taking custody of all the organisation’s contracts in a central location, then using software to create a library of contacts and key information. It was a significant change from the previous system, which saw management of contracts spread across the entire organisation, with dozens or more of different managers involved.
The centralised-focus allowed us to engage in drafting of contracts, renewing contracts and negotiating contracts. With that, we were able to provide a significantly greater level of service than ever before, and I think that is a key point The company recognized the benefits of this approach, and further invested in what it saw as the necessary resources in terms of software and staff, as well as policy and procedure, to solidify the changes.
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Bolen says: “We contracted with a Software as a Service (SaaS) company named iValua who brought in a suite of procurement-centric business modules. The first one of these that we deployed was the contract management tool.” “Prior to phase two, managers were expected to be “contract specialists” in addition to their primary roles. Consequently, the contracting effort managed at the business unit level did not meet the rigorous standards of a public entity.
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We brought focused expertise in contract management, and filled a gap where there was limited access to specialized resources.” “The other significant undertaking as a result of being able to manage information in a central manner, was the triggering of an initiative we call strategic contract renegotiation. We took the information that we gained through the centralised reporting database and identified the top-spend vendors and contracts which were long-term.”
It took the organisation around 12 months to renegotiate all of its strategic contracts and BCLC eventually managed to save about $15 million by improving the contract management procedure. Phase two of the company restructure involved a massive overhaul of vendor performance management, and once more, PwC and iValua were brought in to assist with the process. Bolen says: “We had engaged PwC to perform a procurement diagnostic to benchmark the current level of maturity of all of our procurement functions against best
practices in other like-agencies. “One of the gaps that we identified was vendor performance management, so PwC brought their methodology to our organisation to build an effective framework that would serve us well in our need to identify and effectively manage those vendors and related contracts that would result in best value to the organization. They’ve brought the expertise, trained our staff and to a degree, some of our business units how to do that according to best practices.” “At the same time, we partnered again with iValua to
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utilise the software that would support the vendor performance management transactions. This has been undertaken just in the last 12 months and has been one of the best-received programs we’ve ever rolled out.” “I mean that in the sense that engagement by the business units, staff and managers has been exceptional in terms of embracing
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the methodology that PwC brought to the table. The tool supporting the methodology has also been widely accepted and is providing us with the reporting that we need to really be successful.” But although BCLC’s new, more streamlined means of operating saw the company take away a net profit, after prizes, of $2.4 billion last year, Bolen is adamant it is
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not going to rest on its laurels. He says that the company is now looking at sustaining a “continuous improvement cycle” in terms of business practices and he wants to see the its success continue. Bolen adds: “Around 2010 there was a divergence between centralising all of the business functions and from then, moving forward there
has been a continued focus on deploying new methodologies and bringing software business systems automation to the table to gain efficiencies. “Phase two is still actively going, I don’t think it ever ends. I think that’s how we position it because we’re in this cycle of continuous improvement and quest for innovation. To add to what’s happening now, there is a significant focus on re-defining business process and developing new approaches to sourcing and contracting with small start-up type companies that would not typically engage in a governmenttype procurement process.” “Across the business there is a focus on the six sigma methodology and we’re constantly looking at all business processes for efficiencies. “That’s how we stay at the top of our game.”
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74 West Seymour Street Kamloops, BC, V2C1E2 Tel. 250 828 5628 www.bclc.com