Controlling costs is a core objective for any organisation, not least housing associations. As the costs of community needs rise faster than the pace of revenue generation, housing associations need to improve their operational efficiency, with the procurement process offering significant opportunities for gains.
Most housing associations have expended little resources on managing the money spent on products and services consumed through office management. This can include consumables such as office desks or computers, computer peripherals, stationery and so on, or even the processes through which these products and services are acquired.
Translating the cost of these inefficiencies into lost revenue can be quite a shock. According to a report by the Aberdeen Group (2006), only 23 per cent of organisations have spend visibility programmes, and the consequent failure to do so is costing more than £130.5 billion each year in missed savings opportunities. Such an approach to purchasing, while endemic, is short-sighted. The need for rigorous assessment of potential technology investments has become a key issue in the public sector, especially following the Gershon Review.
For many housing associations, the above-mentioned consumables represent a significant portion of the cost base. If savings, which can be easily made, are realised quickly, they go straight to the bottom line, giving housing associations the opportunity to pass those savings on, achieving immediate and highly-visible improvements in costs, service and administration.
By adopting appropriate spend-control systems to streamline processes and dealing with fewer suppliers to get better discounts, housing associations can reduce their purchasing costs. These automated techniques are equally applicable to day-to-day business, whether ordering IT equipment or managing expenses and contracts for capital works, maintenance and commodity procurement. Housing organisations need to be able to make more sophisticated purchasing decisions from the information they have to hand, controlling costs better to service clients more effectively while staff need to collaborate more efficiently.
New spend-control systems, based on the latest Microsoft technologies and standards, are now available. They all integrate with familiar Office tools such as Word and Excel, for which most housing associations already have the in-house skills, thereby reducing implementation and training costs.
For housing associations, this translates into an ability to deliver and demonstrate best value to a diverse group of stakeholders, including, of course, the housing tenants themselves.
John O’Brien is a director of procurement specialists Four.