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Philip Green’s Efficiency Review: “Is it just the Government failing to leverage both its credit rating and its scale?” – by Paul Fegan

British PoundPhilip Green’s controversial appointment as adviser on government spending has been headline news for the past few months, even making the pages of Vogue in October. But since the publication of his report the general consensus is that Mr Green and his team have delivered some good advice that will benefit the government and ultimately the tax payer.

Clearly as the owner of some of the UK’s largest retailers, Mr Green is well placed to understand the importance of business efficiency and his multi-organisational, multiple-site empire is not dissimilar to the make-up of government with its many departments.

With the review focused on commodity procurement, property and major contract; fixed line and mobile telecoms spend and IT contracts featured heavily in the results and recommendations, and all three areas were highlighted as needing a fundamental change of approach.

Managing IT and telecoms spend is a complex and time consuming activity for any organisation and shareholder or tax payer accountability means any option that could improve cost management and increase efficiencies must be embraced.

Take for example spend on mobiles in Central Government. Currently standing at £21m per annum, there are 105,000 devices in use with 98% of the total spend delivered through one supplier. But even with almost single supplier management there are still 68 contracts, negotiated individually by departments and without a central group to oversee and identify potential savings and efficiency measures.

Furthermore research has found that up to 20% of mobiles remain with former employees after they leave; you don’t need me to do the maths on that one but the potential impact is staggering. The opportunity to cut costs in this situation can come from a number of possibilities: through the central management of budgets, the allocation of cost by department and user, an audit of the total estate to determine whether all services are still required and in use, alongside a renegotiation of contracts to ensure that the best rates and terms are achieved.

The same precedent also applies to the Government’s fixed line spending and IT contracts where further areas of inefficiency were identified.

So, telecoms and billing cost management in general is complex and time consuming.

This is not a new issue and given the rapid developments and innovations across the ITT industry, neither is it likely to be a problem that recedes; if anything it will become more prevalent. The spending review may have placed the spotlight clearly on the public sector but let’s not forget the pressures that the private sector has been under for the past few years. If telecoms and IT spending is not subjected to regular and regimented auditing it will inevitably be difficult to track what is currently in use across the estate and therefore difficult to ensure that all products and services are in use and necessary.

With more than 75% of telecoms bills containing an error and with many organisations still operating without a fully itemised inventory of the total telecoms estate, it seems the government is not alone in its inefficiency. Lack of data and to an extent time means that many companies will be paying for lines and services that are not needed and may even have been included in renegotiated rates.

If you have 20 minutes to spare, read the review. It makes for interesting reading. Then reflect on your own business. If Philip Green’s team conducted the same analysis of your business, how different would the results be? With the year end approaching and budgets still under pressure, what better time to consider a change of approach.

Further Reading:

Paul Fegan

Paul Fegan of Mala Communications

Paul Fegan is Managing Director of Mala Communications and has been a member of The Academy for Chief Executives (ACE) for 3 years. The benefit of shared experience and self development are Paul’s main reasons for membership of industry programmes such as ACE and in addition Paul is the chair for the Telecoms Cost Management forum within the CMA (Communications Management Association).
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