Strategic Sourcing

Goal 

• Reduce ICT operating expenditure by 10%
• Implement Customer-Centric “Digital Business Strategy”
• Improve reporting for better forecasting

The Challenge
InvoCare Limited owns and operates close to 300 funeral homes, cemeteries and crematoria throughout Australia, New Zealand and Singapore and employs 1,600 staff. The company operates funeral homes under household names such as White Lady Funerals and Simplicity Funerals, among others. In an age of social media and online interaction, the funeral industry faces the challenge of being innovative whilst retaining the personal touch and a high level of dignified interaction with its clients during their most vulnerable time.

As the APAC market-leading funeral services provider, InvoCare has taken the lead in introducing a new way of interacting with its customers and the friends and family of the deceased by implementing a customer-centric
‘Digital Business’ strategy and capabilities. This includes digital channels to market, customer-centric digital tools, social media and the digital enablement of funeral home, cemeteries and crematoria.

Traditionally, for an organisation such as InvoCare, technology expenditure is not a core business function and is generally viewed as a business cost. With digital moving more to the centre of doing business, technology spend is now thrust to the forefront as part of growing both the top and the bottom-line. In this context, InvoCare pursued a Strategic Sourcing initiative aimed at realising tangible cost savings to support the implementation of its Digital Business strategy.

“We appointed CDRU as our Strategic Sourcing partner across our telecommunications, infrastructure maintenance and printing supply arrangements as CDRU have a track record of aligning their fees against tangible savings delivered.” “Our business as a whole wanted a great result delivered, and the outstanding results speak for themselves.” – And Luiskandi, Chief Information Officer

The Solution
Cost Down Revenue Up Pty Limited ‘CDRU’ was selected as the Strategic Sourcing partner to support this initiative in ICT. The CDRU people, sourcing process and technology bill analysis tools have been collectively brought together to implement strategic sourcing assignments. The CDRU process known as the USP (Understanding, Solutioning, Proposing) process is very clearly mapped, and in practical steps on what had to be done.
Phase 1: The Understanding process took a forensic view of the entire technology budget and produced an annual expenditure baseline, including all hidden costs. This was further validated and audited internally by InvoCare.
Phase 2: The Solutioning process identified 3 main areas of focus. IT infrastructure, Telecommunications and Print/Copy were highlighted to InvoCare as key areas to reduce costs, improve capability to support future projects and deliver better value ICT services.
Phase 3: The Proposing process took a number of service contracts to market using the proven USP process across 10 down selected suppliers, across 3 categories in ICT infrastructure, Telecommunications and managed Print/Copy.

The Results

The first step was CDRU working with InvoCare to baseline all ICT costs. One of the main benefits of the CDRU process was the intimate understanding InvoCare gained around its existing supplier contracts and related opportunities based on the forensic analysis of all costs.

We facilitated a 6 month Strategic Sourcing process, comprising a full tender for all in-scope services, which resulted in:

  • Renewed supplier arrangement that deliver an overall reduction in ICT operating expenditure of over 20+% with the bulk of the cost savings
    (and supplier loyalty credits) flowing straight through to line of business P&L. In other words, the result is making a real difference to the overall profitability of individual funeral homes, cemeteries and crematoria, and to the InvoCare business as a whole, rather than being confined to ICT
  • The CDRU and InvoCare team achieved 152% of the saving target set at the initiation of the engagement
  • Delivered cost savings that are not contingent on transitioning to new products and services

 

Costs Down Revenue Up, as the name suggests, specialise in quickly identifying where cost benefits can be realised and where opportunities for increased revenue can be targeted, all within the bounds of a shared risk model. “From our initial meeting, both parties approached the engagement as an integrate team, with CDRU effectively becoming an extensions of the InvoCare group. Our risks engagement model means that a win for our clients, is a win for CDRU.” – Ian Woollett, Managing Director