Change Management During an E-Sourcing Implementation

With annual procurement spend significantly in excess of £2 billion, Royal Mail - the UK's national postal service - is an organisation to which the phrase "economies of scale" clearly has particular significance. In 2006, in an effort to cut costs and increase efficiencies and effectiveness throughout and beyond its procurement team, Royal Mail embarked on a three-year transformation programme involving the implementation of the SAP E-sourcing platform, moving the organisation away from the previous paper-based sourcing process and unifying all Royal Mail procurement processes and stakeholders in a single system.

The implications of such a large transformation project were, of course, profound; on top of the significant financial and human resources dedicated to the transformation, the project involved a serious change in mindset for those involved in procurement for Royal Mail - both within and outside the organisation.

As Stephen North, Senior Procurement Manager, Technology, explains: "Some of the change-management challenges there were considerable, in terms of multiple stakeholders, a large volume of category managers we needed to engage with. And it wasn't just delivering in training terms; there was a whole foundation of change management activities that we used."

These activities displayed a willingness among the change leadership team to think outside the box - sometimes a long way outside. At briefings held to explain the drivers behind the new implementation and, more importantly, the way the new system would operate and affect the staff, the team gave free rein to some of their more creative impulses.

"We invented a number of cartoon characters which helped us bring, if you like, a lighter feel to the project," North explains. "We produced a whole series of videos* for different parts of the system, and that worked really well. And we had a piece of music - on a dance-music theme - which was all about e-sourcing, and people could download that as a ringtone! That was quite a neat thing to do.

"By far and away the most important aspect of the implementation is the change-management aspect. Run it as a change programme. The technology is not difficult to use; you can sit down and learn about that in, say, an hour - it really doesn't take that long to pick it up. It's the change-management and the engaging with category managers and the sustainability that takes time. And that's why we did things like invent the cartoon characters and run the videos. We had a lot of themed presentations: we did one around the Wacky Races; one based around Spooks; another based around 24, which was 24 hours in the life of a category manager. We did quite imaginative things around that to get people's attention, because the technology can be quite boring, I guess, so if you can spice it up a little in some way and make it more interesting, then great."

Engagement wasn't just driven through this kind of lighter-hearted activity, however: North and his team didn't ignore the opportunities posed by an appeal to their staff's harder-bitten commercial instincts.

"Some of the things we did to get people registered on the training courses and get them engaged early on included offering people an iPod if they registered and attended training before a certain date. We had almost 100% take-up, and then at the cut-off we then held a draw and somebody won an iPod. Simple things like that work; obviously people like winning things.

"Another thing which we've done in the past - more in regard to SRM when we implemented an upgrade last year - was an SRM lottery ticket in our e-procurement catalogue, so when somebody was trained the last thing they did was they shopped in the e-procurement catalogue, shopping for this lottery ticket; in doing so they were kind of training themselves as well, fulfilling the last part of their training. They shopped for the ticket, and that printed off as an order in our office, and then upon implementation we did a draw and the winner took away £100-worth of vouchers. Sometimes you have to put in a bit of an incentive in terms of money, because people like winning things and it's often a good and simple way to get them engaged."

Of course, change management isn't just about engaging a team initially: it's about maintaining that engagement throughout the lifespan of the project - and with an implementation such as E-sourcing, that lifespan is an indefinite one - and making the very most of the system's benefits by optimising the abilities of its operators. North and his team recognised that as a relatively small unit, the Technology group needed a degree of ownership of the technology within category teams.

"We created a PALs network - procurement area leads," explains North. "There's a person within each category team - a kind of e-champion if you like - and they're on point as the first line of support for their colleagues. So if one of the category managers is using e-sourcing to run a PQQ [Pre-Qualification Questionnaire] or an ITT and they're not quite sure about certain things - maybe, how to apply weightings, or what happens if you click on a certain text box - they can go to their PAL, or the e-champion within the category team, and they can give them a bit of light-touch support, maybe sit with them for half an hour to walk them through the process, and then move on.

"It's quite light touch, but it works really well, and I would advise anyone who is implementing a system like E-sourcing to look at how they can embed support within the category teams rather than just providing that service themselves - because it can be quite onerous. Also we have one person on support continuously for event support, so we've always got one person in our team who can walk people through, if we get any new users into the function, and she takes responsibility for training them and walking them through the functionality - it is quite important that you have somebody on point for that also."

North's colleague Kathy Giles, Procurement Manager, Technology, points out that the change management programme required a focus on those responsible for implementing the system as well as on those who would be using it.

"A key thing we did within the technology group," she says, "was early engagement: identifying who the different groups of stakeholders were, particularly group procurement colleagues, and identifying key people out in the business units - and then involving them from the outset. I guess a lot of decisions had already been made around the specific tool and what we were looking to do with it, but in developing the tool and tweaking it to fit processes we actually got a lot of people involved at the outset so that they felt they were part of it. It wasn't just a technology team delivering a tool: people actually had a say in it.

"We met regularly in focus groups, and we made sure we had different people in each group so it wasn't just the same people involved all the time. We did things we called "state of the nations" which were over lunch normally: we'd have a sandwich and get everyone together and have a demonstration of an e-auction or our three-minute ITT [Invitation to Tender], and introducing the cartoon characters again. We had little competitions which people seemed to enjoy - they're quite a competitive bunch. We've carried that along with us, actually; we now have meetings we call "town hall" events which are an opportunity to get everyone together and to share news and updates. The key thing is to involve people and make them think they're part of it; it sounds a bit corny, but they go on the journey with you."

Identifying the stakeholders wasn't just important for the technology team: it was crucial to ensure a smooth transition throughout Royal Mail procurement, as North explains.

"If you think about procurement having three key stakeholder groups - and this is the same for any procurement function - you'll have the procurement professionals, the category managers; you'll have also your business stakeholders, so it's quite important that we have a close relationship with them and they're looking to act almost as commercial problem-solvers; and then you have vendors. And the key thing for procurement is to enable a process and systems which make it easy for those vendors to work with us, so it doesn't become onerous for the vendor. And I guess in a way procurement are like the glue that makes all that stick together.

"If we look at that in the context of E-sourcing, it heavily involves all those three groups of stakeholders, so you've got probably 60 or 70 category managers accessing the system regularly, and running events. We've run an awful lot of events in the system and we've got a number of stakeholders who are accessing events through e-sourcing, so it brings us closer to the stakeholder and increases the level of collaboration. And for vendors, all vendors have the same experience using the system. There's a consistency in terms of how we behave with our vendors."

Giles adds: "There are about 100 users within group procurement, but then you chuck in all the vendors we've engaged with on all the events, which runs into the hundreds if not the low thousands now; and then dozens and dozens of stakeholders within Royal Mail who are key customers, so we may look for them to get involved, maybe collaborate on an event, maybe sign off a specification. The vendor base, the group procurement people and our internal stakeholders are our key users - and that's a great number."

Unsurprisingly, perhaps, such a large implementation hasn't been without its teething troubles.

"I think one area we did identify is that currently E-sourcing doesn't provide fantastic scope for bid-optimisation," North says. "E-sourcing allows you to be a lot more complex and sophisticated in terms of how you build your ITT - so you can have multiple lots, you can have sub-lots, you can weight those in very complex ways, you can weight your questions in quiet complex ways; and so you can be a lot more sophisticated than you can be with a paper process. But in implementing that sophistication, it becomes more difficult to do the analysis at the end of it, so you need a more sophisticated tool to help you analyse the bids coming in.

"Recently we ran an event for estates management, and that had numerous vendors, a number of lots and sub-lots - and it was estates management throughout the whole country, so there were hundreds of postcodes to be covered also - and in doing that, the actual process of evaluating those bids would have been quite complex: using lots of Excel spreadsheets, and doing some of it manually, and the category manager scratching his head quite a lot. What we did was to push it out to a specialist bid-optimisation tool and used a vendor called Iasta to help us with that: currently SAP don't have that level of sophistication with their E-sourcing tool. So that was a gap that we identified, and I guess you would call that a teething problem - and it's an ongoing issue that we have when we run any really big events.

"Other teething problems came when we were running high-volume events in terms of vendors, and perhaps in categories where vendors hadn't been exposed to technology that much before - and I'm thinking of an event that we ran in the e-conveyance area. We ran a PQQ and it was quite heavy on support, so vendors were ringing us quite frequently throughout that whole PQQ period asking questions about how to do certain things within the system. What we learned from that is that if you've got a really big event like that, quite a high-profile event, you perhaps need to do something a little bit more in terms of support. So what we did when it came through to the ITT stage was, we hosted an afternoon and an evening at a hotel in Heathrow where we invited in the region of 70 vendors and gave them a full demo of the system and a chance to do some Q&A with us, and we got the business stakeholders to talk also, and we found that that reduced the number of queries considerably.

"So I would advise people to have a really good, robust process in place in terms of support going forward for vendors. What we tend to do is run, say, a conference call, which is quite light-touch; but sometimes you need more than that, and it really depends on the maturity of the category in terms of technology. There are some industries that will probably not have been exposed to something like e-procurement, e-commerce, e-sourcing; most of the processes that they run are probably paper-based and I think conveyance was a particularly good example of that. We fell foul of that initially - but I think we recovered, and we ran quite a successful event."

Despite these challenges, however, North and Giles are delighted with the overall benefits that the programme has achieved - and have made sure that these benefits have been communicated successfully throughout the organisation.

North concludes happily: "In terms of communication, we did a lot of stakeholder analysis and identified all our key stakeholders - and also what type of stakeholder they were, so whether they were responsible or accountable, whether we needed to consult with them or inform them, all that kind of stuff. We targeted communications to key stakeholder groups, so everybody didn't receive the same communication; people received the communication that was relevant to them. And we also had an e-sourcing intranet page, so we had all our latest news and articles on there - which we still do now, and in fact we've just upgraded that. We also made sure that any good news stories were published immediately through our weekly newsletter. We ensured that there were good news stories in the run-up to go-live and post-go-live - even if it meant us flying them up somewhat, we always made sure there were good news stories for people to read.