Observatory Case Study: City of Naperville, IL

The City of Naperville, IL implemented the Spikes Cavell Observatory to deliver improved spend and contract visibility. We talked to Mike Bevis, Chief Procurement Officer, about his experience to date.

"So far we estimate that we've delivered around $120,000 and, with the initiatives that the Observatory has helped us to identify, our forecast is that we'll multiply our initial savings by a factor of four by year end."

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Tell me a little bit about your agency?

The City of Naperville has a total population in the region of 140,000 and is the fifth largest city in the state, behind Chicago, neighboring Aurora, Rockford, and Joliet. Naperville has been very successful in attracting a number of corporate headquarters to the city and has made Money Magazine's top 10 places to live for the past decade.

Can you describe your procurement function and where and how it fits into the organization?

Procurement at the City of Naperville is centralized and the five people in the team spend around $140m a year purchasing everything needed to run the city including construction and professional services.

Would you describe the procurement function's role as mainly tactical or mainly strategic?

Inevitably it's both – we function on a tactical level because we have to in order to get the job done. We're constantly looking for ways to improve our efficiency and effectiveness and that means stepping back and looking at what we're doing and asking 'Is there a better way?'. Tools like the Spikes Cavell Observatory help us to do that.

What do you see as the top three challenges for procurement at City of Naperville over the next 12 months?

Our number one priority is managing our spend to deliver savings for the city. We're a small team and have to be very careful to ensure that we spend our time working on what matters most; an effective way of ranking and prioritizing projects is up there on our needs list. We want to keep as much of what we spend in the City for the benefit of our local businesses and citizens, as a result better understanding our local spend is a priority.

You've been working with Spikes Cavell to deliver improved spend visibility. What were you hoping to achieve when you undertook the data transformation and spend analysis project?

Initially I saw the Spikes Cavell Observatory as a tool that would help me audit where our money was being spent and whether it was being spent wisely. Once we'd uploaded our contracts and we became able to analyze them alongside our spend data I discovered very quickly that we had less maverick buying than I had initially anticipated. As a result our focus shifted to identifying savings opportunities and in particular helping us to establish which of those opportunities delivered the biggest 'bang for our buck'.

What has better spend visibility enabled you to achieve to date?

It's helped me to prove that our people are honest and doing the right thing as far as the vendors they select and the contracts they use - this is very good and a powerful discovery. It has also highlighted the opportunity to collaborate with our local park and school districts. They have also implemented the Spikes Cavell Observatory and so we've been able to identify common suppliers. That has already enabled the park and school districts to save money by benefiting from contracts that the city has negotiated.

What are you anticipating better spend visibility will help you achieve in the future?

The most important contribution will be continuing to deliver cash savings for the city. Beyond that we've been amazed at how sophisticated the Observatory is and how that is helping us to deliver improvements in areas we hadn't originally anticipated: Cash management by department managers, spend audits and pCard program optimization to name but three. The biggest opportunity we see going forward is the opportunity to cooperate with adjacent cities like Aurora, Rockford, and Joliet. Our combined spend is significant and our negotiating position is much improved if we work together. I've already started to show them what we have been able to achieve in order that they are encouraged to adopt the Observatory.

Very approximately, how much ($) has better spend visibility enabled you to save City of Naperville to date?

So far we estimate that we've delivered around $120,000 and, with the initiatives that the Observatory has helped us to identify, our forecast is that we'll multiply our initial savings by a factor of four by year end.

Do you think you could have undertaken the data transformation and spend analysis project without external help?

We've been struggling with it for almost eight years and kept running into challenges that has prohibited us from doing so: Poor or inappropriate classification, data important for procurement not being captured in our finance systems and challenges integrating multiple disparate systems like accounts payable and pCard have all stopped us getting to what we felt we needed. The Spikes Cavell Observatory was up and running within weeks, addressed all of the challenges we'd encountered and didn't cost us a lot to implement. I can say for a fact we couldn't have done it without the Observatory.

How did you find working with Spikes Cavell?

It's been more like working with a very sophisticated, thoughtful coworker or partner rather than a company. They have quickly become a trusted ally and invaluable resource.

You have one word to describe Spikes Cavell to a colleague or peer. What would that one word be?

Partner.

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About City of Naperville, IL

Naperville is a city in DuPage and Will Counties in Illinois in the United States. As of the 2010 census, the city had a total population of 141,853 and is the fifth largest city in the state, behind Chicago, neighboring Aurora, Rockford, and Joliet. Once a quaint farming town, Naperville has evolved into an affluent city with numerous corporate headquarters located in the city. In a 2010 study, Naperville was named as the wealthiest city in the Midwest and eleventh in the nation with a population over 75,000..

http://www.naperville.il.us/

Published: 9/29/2011

TAGS: spend visibility, observatory, city of naperville, procurement, case study