The University of Sydney - Free Essay Example

The University of Sydney (UoS) is a research- intensive university in the top tier tertiary education sector and is the oldest University in Australia, being founded in 1850. Strategic Plan aspirations are 1,5,40, which is to be recognised as number one in Australia, ranked in the top five in the Asia-Pacific and ranked in the top 40 universities in the world. Student enrolments are over 47,000 and the UoS employees over 6,700 staff [i]. Procurement Services (PS) was established as a Greenfield unit within the UoS in 2006 and works in partnership with the University and external suppliers to achieve efficiencies, cost reductions and value added services, as well as fair value for money in procurement. The range of goods and services UoS procures includes but is not limited to: Infrastructure, Services, Technology and Commodities and the total UoS spend in 2008 was $1.1 Billion. It is the PS vision to â€Å"create value through best practise procurement solutions dedicated to supporting the Universitys research and teaching, and enhancing the student experience† (i-doc 1), which is centred on supporting the overall University. In actuality, the main objective that the COO now CFO require PS to deliver is a cost savings of $24M +, every year. PS offers products and services to customers including: self help tools and templates, procurement advice, end to end tendering services, category management and contract implementation[ii]. Procurement is a relatively new profession in Australia. Indeed, the professional body for Procurement professionals, CIPSA, has only been in existence for the last 5 years within Australia [iii]. Prior to the PS groups existence at the UoS, purchasing needs were managed by the department requiring the good or service in a completely decentralised system. As there is a lack of awareness about the profession even the word â€Å"procurement† in Australia, the PS group has had a selling orientation to marketing for the majority of customers, as evidenced by a â€Å"road show† where PS promoted what they felt was valuable- early involvement of PS staff in customers projects, whereas the majority of customers just wanted someone to rush in at the end and help them get the job done (i-doc 2). However, PS has used more of a marketing orientation with some customers, including the COO, by delivering what he valued which was $23M in savings in 2009 (i-doc 3 ). PS also has a societal orientation to marketing for all internal and external customers as evidenced by PSs delivery of a transparent procurement process for the overall good of the University, government and society. The PS brand is not well known internally and therefore has not been used in the marketing strategy to –date. Feedback from some 30 target customers has indicated that most dont know what Procurement is. 14 out of 22 customers over the age of 55 also indicated that Procurement used to have a meaning to do with prostitution (i- survey), therefore these customers are in the non-recognition state or brand rejection, respectively. The PS marketing strategy for external customers capitalises on the University reputation by using the quadrangle as a symbol in our promotional materials (i-doc 1) and by having the COO attend key procurement events. Issue 2- Below is a comprehensive SWOT for PS: Strengths (generally internal) Weaknesses (generally internal) (www.xe.com) Issue 3- PS collects mainly internal information through a number of sources. To learn about the University direction and internal customers wants and needs, the green paper has been utilised as this includes high level staff feedback including on the Universitys professional services. Regarding which competitors pose a threat and how the context is changing, PS is largely reliant informal internal feedback from the CFO or other Business Unit Directors (i-knowledge). Further information on context and collaborators is considered in the wider environment through Higher Education Services (HES) which collects benchmarking information on all Universities in Australia. A limitation is that formal HES information is only published annually (www.hes.edu.au). In addition, PS captures staff knowledge and experience through â€Å"lessons learned† register and presentation at the weekly staff meeting which covers the 5Cs (i-knowledge). However, this could be formalised more as some staff never participate in this current voluntary process and there is no conscious decision to ensure all 5Cs are discussed. PS collects Customer information to try and answer the question, â€Å"what do customers want?† Client satisfaction surveys have 5 key questions using a Likert scale ranging from 1-5, with 5 being outstanding and 0 being dissatisfactory (i-doc 5). In addition in 2009 2010, PS issued a procurement maturity survey to answer â€Å"Where are we now, where do we want to be?† with a Likert scale of 1-5 in 8 key areas (i-doc 6). Moreover, PS has measured â€Å"timely delivery of services†(i-doc 7), although I would argue that this is not necessarily value that the customer sees or wants and it another example of PS â€Å"selling orientation† to marketing. Furthermore, the spend analysis of the entire University shows PS which customers spend the most money and although it hasnt yet, it could be used to focus the marketing strategy (i-doc 3). Intern al CRM plans have been filled out jointly between PS the internal customers (i-doc 8), as well as tracking of enquiries complaints on an excel register (i-doc 9). Operational Information: PS tracks Return on Investment for group as a whole and has the breakdown on a project basis but rarely use it. Other operational data PS captures include a register of current contracts, savings of all past projects and a staff non-compliance register. Market Intelligence is collected through Dunn Bradstreet for reports for external competitors and suppliers. In addition, CIPSA and HES provide industry trend information and Aberdeen and Gartner journals are used for more specific projects. PS has not fully utilised market research, in fact the only specific questions asked to help develop the marketing strategy was a University wide Dean and Director level communication to ask â€Å"What are your forward tender requirements?†(www.usyd.edu.au). PS was hoping to find out how likely custome rs will be to use PS in order to better manage demand. In addition, UoS asked other universities what their savings and contract register data was in order to benchmark against other universities, however only a limited response was received (i-doc 10). Issue 4- The main product service of focus for this section is Category Management as this will achieve the objective of $24M + in savings for the UoS each year, which is the most â€Å"profitable† product ( i-doc 3) Category management is defined as implementing a sourcing strategy and subsequent contract for the whole of categories of spend across the University such as lab or office consumables (i-doc 11). The main aim of the PS marketing strategy is to convince internal customers to be involved in the sourcing process and subsequently use and buy from the category management contracts. However, the other products and services that PS offers are intertwined with the focus on category management. As a semi-public organisation, PS must serve all customers with procurement needs over $200K for total contract volume. Therefore, in order to be able to focus on the category management, clients who have a â€Å"one-off† procurement requirement of, for example, $220K must be convi nced to use self-help tools and templates. PS to- date has done a good job at informally identifying the total customer/stakeholder market but not the roles they play in the â€Å"buying process† (i- knowledge) . Using the roles in a B2B Decision Making Unit, I would argue the External and Executive Internal customers listed above are the key â€Å"influencers† in order to get other customers on board to utilise PS services. The Internal direct customers have the power and reach to encourage (or not) their staff to utilise PS, therefore they act as â€Å"influencers, deciders and buyers† on whether to use PS category management contracts. The â€Å"gatekeepers† are often the decentralised local finance group as they should be ensuring that the University staff comply and use the category management service and products. At the moment PS customers are everyone, and PS has been trying to be all things to all customers. However, PS has segmented customers ac cording to total yearly spend analysis which could be a form of behaviour segmentation, based on usage status. However, it is important to note that this segmentation is based on overall annual spend at the University not just the spend that went through the PS group, therefore this overcomes the limitation that Kotler identified that â€Å" Usage is a result not a cause† ( MM 5-18) and is therefore a more accurate segmentation dimension. Through this analysis PS has found that 80% of the total spend is from 2.76% of the customers (i-doc 12). Although this segmentation has been identified, it has not been widely used, as PS cannot â€Å"fire† lower value customers as due an inherent obligation to help all University staff with compliance to procurement policy. An example is that our of the 99 projects that were worked on by PS in the last 1.5 years, only 8 projects were for category management (i-doc 13), due to lower value one-off projects taking up too much PS time. Within this behavioural segmentation identified, there are further heterogeneous dimensions that could occur as evidenced by the differences in PS perception in age, as discussed in the introduction to brand above. PS also has not formally profiled each segment nor formally assessed the segment attractiveness or selected target markets. However in order to achieve $24M in savings with a team of 13 staff, this must be done. PS wants the category management product service to be viewed by Executive Internal customers as necessary to achieve the main objective of $24M in savings to ensure they continue in the role of â€Å"influencers† in the first instance. In addition the perceptual map below is a current indication of how customers view PS based on internal surveys, which demonstrates that PS fulfils the compliance aspect. However, PS isnt always perceived to obtain the best solution for the University. A limitation to this application of the map is that it is based on an in formal, internal survey and has not been subject to statistical techniques. An important element of a change to category management approach is marketing and convincing the stakeholders of the value it offers them (www.psc.executiveboard.com), therefore in order to move to the top right hand corner of this diagram further work needs to be done. Issue 5- Recommendations The direct outcomes of the current marketing approach is that nearly all of the PS staff time gets spent on the relatively more unprofitable products such as â€Å"One-off†, non-category projects and customer satisfaction is low at approximately 55% being satisfied or more (i-doc 14). PS has access to a wealth of useful internal information, however this on excel spreadsheets and is not organised properly as evidenced by the need to create a â€Å"register of registers†( i-doc 15) to keep track of what information is available and in what excel sheet. As such, some of this information such as the Procurement Maturity survey has fed into PS Business plan document ( i-doc 1), however other information such as the CRM plans (i-doc 8) have been largely ignored or used by 1 or 2 individuals on the team (i- knowledge). Because there is so much information in various locations, staff stated that they sometimes miss key information or have â€Å"analysi s paralysis†. Initial discussions took place with companies such as Salesforce.com regarding a basic CRM system for PS, which would be worth further investigating. In any case, a more formal and streamlined process for analysing the 5 Cs should be implemented so that data that can help in the marketing strategy can be utilised and staff time spend more efficiently. The business plan strategy document (i-doc 1) is good in the sense that it feeds directly into the overall University –wide business plan (www.usyd.edu.au), however it would be worth creating a marketing plan and one that aligns with the business plan. Indeed, a good place to start would be with the objective to implement a category management approach with the initial segmentation data of 2.76% of customers that spend 80% of the University money, as this would help focus the Universitys strategy on Quadrant 2 the important but not urgent (Covey, 1994, p.77) . This market can be further segmented by demog raphic factors, such as age over 55+, psychographic factors such as â€Å"change adverse†, buyer readiness factors and behavioural factors such as â€Å"high influencers†, as required. These segmentation dimensions are Homogenous within and Heterogeneous between, however PS would need to further asses if they are easily Measureable, Sustainable and Actionable. A profile of each segment created is required to ensure that more targeted messages are possible. PS has assumed that the forecast demand will be similar patterns year on year, as evidenced in the past 2 years of spend analysis (i-doc 12). As the entire segment that is driving 80% of spend, is only 2.76% of the University, the cost in targeting this segment will be much lower than targeting all markets. Using the driving choices model, the PS ability to compete and segment attractiveness make this 2.76% of spenders a prime target to select for the future. In addition, the Executive Internal customers are a prime target, as they must be an attractive market in order for PS to stay in business and the ability to compete is high as evidenced in getting the past COO support, presence and funding at external Procurement events. However especially with the recent restructure changes, PS needs focus in the future on the prime target customers, the majority of which PS has previously been ‘missing†. The communication activity plan (i-doc 3) is a good foundation to start with for the Executive Internal customers, however it would be worth adding more specific actions discussed above, as well as dates and owners to ensure implementation. Historically, PS has been operating primarily in the opportunistic pursuits section, as evidenced from lower value one-off project work, which is a relatively unattractive market, even though PS has a high ability to compete (i-doc12). However, in some cases PS also worked in the de-select section, as evidenced by some failed projects such as the mass spe ctrometer and zebra fish project (i-knowledge) where PS ability to complete was low and the attractiveness of the project was low. Moreover, PS failed to recognise that â€Å"some customers are not willing to engage in relationships† (MM 10-35). These bad choices resulting from a PS lack of selecting target markets have been at the opportunity cost of not engaging with a majority of ‘right† customers. Therefore, going forward, self- help tools and procurement advice should be offered to those markets classified as â€Å"opportunistic pursuits† and â€Å"de-select†. Regarding the â€Å"build competency† market, of which the high grant spenders could be in this category, this could be something that PS chooses to select as a market if and when they are able to build more capacity into the team. By implementing the above, the PS can still fulfil its societal obligation by migrating â€Å"unprofitable† markets to other â€Å"mediums† of utilising PS. Moreover, market research could be done on the relatively small number of customers in the target markets in order to position the category management product and service by benefit, once it is further understood what the prime target markets perceive to be of value and the â€Å"best solution†. This could be combined with a differentiated and concentrated marketing strategy at relatively lower cost due to low numbers in the target markets. PS should still combine this with an undifferentiated marketing strategy for the overall University market aimed at increasing PS awareness and utilisation as well as addressing the homogenous demand for compliance. These recommendations are based on the assumption that the market size and category management profitability information is correct as evidenced in the spend analysis ( i-doc 3). These assumptions will need to be monitored and the strategy may need to be adjusted if required, as adaptability is one of the k ey factors to a successful plan implementation. If these changes are implemented, it will improve the target markets perception that PS can provide the best solution. REFERENCES: Marketing Management-Intensive (MM), Session 1, 2010, Units 1-11, AGSM MBA Programs Graduate Diploma in Management, Sydney, Australian School of Business 2010, AGSM MBA (Executive Program) Covey, Stephen R., Merrill, A Roger and Merrill, Rebecca R., 1994, First Things First, Fireside, Simon Schuster, New York Chartered Institute of Purchasing Supply (CIPSA) website: https://www.cips.org (accessed 20 April 2010) Australasia Higher Education Services website: https://www.hes.edu.au (accessed 22 April 2010) Procurement Strategy Council website: https://www.psc.executiveboard.com (accessed 6 April 2010) PSC_ Category Management_ Playbook ( attached as Appendix A, because log-in details required to access this publication) University of Sydney website: https://www.sydney.edu.au (accessed 8 April 2010) Internal documents Internal Documents are cited as i-doc 1- 15 throughout the document and are attached when possible as appendices with assignment submission. Documents 3, 4, 5, 9, 13, 14, are available on request for limited borrowing. Internal Knowledge is cited as i-knowledge throughout the document. [i] www.usyd.edu.au [ii] www.usyd.edu.au/procurement_services [iii]www.cips.org