The 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 been commended for its employee retention numbers, with JL’s HR award and Chief Financial Offer Amanda Hobson’s recognition as an emerging leader at the Business in Vancouver BC CFO Awards.
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 $3 billion (CAN) last year.
Director of Corporate Procurement Keith Bolen 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 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 in-depth 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 in 50% of all transactions being removed from the ERP system, reducing the administrative burden of these high-volume, low-value transactions.
The increased efficiencies yielded by collaborating with PricewaterhouseCoopers and using its expertise to bring the transformation to fruition had an undoubtedly positive effect on corporate procurement for BCLC, and that’s why the company chose to carry through similar changes across the Finance & Corporate Services Division as a whole.
Bolen says: “Phase one of the transformation was specific to procurement. We had engaged a company to create our very first roadmap of business process improvements and we followed that through with significant benefits to our department, and improved services to the whole organisation.
"Then, during phase two, there was a divisional-wide transformation effort where another company was deployed to help with the transformation of the finance division. Given that, procurement reports into finance it is a much broader effort for transformation.
"Part of what drove that decision was looking at the success that procurement had experienced during our phase one, where we basically applied the same methodology of bringing in an outside company to look at our business processes and organizational structure and make recommendations to help guide us in applying improvements.
“We were being held up as the poster child of success, to say 'if we apply this approach to our business then we’ll see results, look at procurement and look what they’ve done'.
"We were actually a catalyst in 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.
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. 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 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 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 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 government-type 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.