Brainware and Oracle Modernize Procurement for Her Majesty’s Prison Service
by Marta Bright, October 2011
An August 2011 report issued by the United Kingdom’s Cabinet Office, the internal regulator for the UK government and civil service, stated a strategic vision for the simplification and standardizaton of back-office functions involved in human resources, finance, payroll, and procurement. A key recommendation of that report was the creation of shared services programs and the benefits that centralized, cross-organization business support has delivered to the government over the past five years. Cost savings is the obvious driver behind shared services in the public sector—particularly in the UK, where deficit reduction has been an economic and political hot button.
The use of shared services by Her Majesty’s Prison Service (HMPS) illustrates the cost benefits of IT-driven shared services. Part of the National Offender Management Service of the Government of the United Kingdom, HMPS is responsible for operating most of the prisons within England and Wales. Comprised of 132 facilities, HMPS tends to the needs of 80,000 inmates, providing everything from the basics such as food, water, and shelter to electricity, clothing, medical care, and the materials necessary for light industry. “It really is like running 132 separate large towns or small cities,” says Jacqui Ingelson, head of service, finance & purchase to pay for HMPS. “If you can think of it, we probably provide it as part of our care services.”
HMPS’s move to a shared services model, which began in 2006, was undertaken largely as a response to the widely-popular Gershwin Report, an in-depth research report produced for the UK government regarding shared service operations. Based upon the report’s findings and recommendations, HMPS opted for an internal shared services model, which was well-suited for addressing the relative complexity of procurement and accounts payable functions that make up the prison system model.
One of those service centers processed inbound mail for the prison system. In the past, that meant HMPS employees hand-processed every piece of mail for the 80,000 inmates and, under certain circumstances, the 49,000 personnel who keep prison operations running 24 hours per day, 365 days per year. This meant that everything had to be opened, sorted and prepared for distribution throughout the 132 prison facilities—no insignificant task.
But it was the HMPS procurement process that combined the benefits of the shared services model with the power of enterprise IT. The recent introduction of the iProcurement module of the Oracle E-Business Suite has allowed HMPS to include electronic catalogs for the organization’s more than 350 main suppliers, and provide enterprise support for thousands more.
In addition to Oracle E-Business Suite, HMPS also runs Brainware Distiller to help staff sort and process thousands of weekly invoices. A Certified Oracle Gold Partner, Brainware specializes in intelligent data capture solutions that integrate with ERP systems like the Oracle E-Business Suite, to streamline the handling of large volumes of invoices, remittance documents, customer orders and other documents.
In the aggregate, HMPS has over 10,000 active suppliers and processes more than 500,000 invoices annually. The organization must adhere to strict guidelines surrounding use and management of the thousands of vendors to ensure that they have remained active and paid within the last 13 months. “We have contracted and frame-worked suppliers,” says Ingelson, “and they typically stay active for up to a year or more at a time.”
HMPS also routinely performs what Ingelson refers to as housekeeping and maintenance routines that enable the agency to maintain a stable supply base. Ingelson says, “We run a wide variety of Oracle reports that enable us to look at exactly when a supplier was last paid, whether or not there was any recent activity on their account.”
Despite such a large supplier ecosystem and high volume of requests, processing invoices with speed and accuracy is critical for HMPS. According to Ingelson, the days of a standard 30-day payment cycle have long since past. “Given the credit crunch everybody is feeling at the moment, we initially moved to a 10-day prompt payment target, and now we're down to a five-day prompt payment target, both of which were mandated by the British government,” Ingelson says. To hit the five-day target, HMPS has just two days to process and move an invoice into the payment run cycle, which takes place at the end of day two.
On day one of the five-day cycle, the process begins with an agent scanning an invoice. It then goes through Brainware Distiller and by the end of day one, if the invoice has been completely verified, it reaches what Ingelson refers to as ‘Brainware status.’ “If we reach Brainware status, we’ve got two perfectly matching invoices, and they will then be selected for the next available pay run. Because Distiller integrates seamlessly with Oracle, we can easily meet this aggressive five-day cycle,” notes Ingelson.
“In addition to processing far more quickly, the cost of processing each invoice has been reduced by about 75 percent, and we have moved seven of our full-time data entry personnel to other roles in the organization,” she adds. Brainware Distiller connects with Oracle E-Business Suite modules, including iProcurement, to keep the margins of error extremely low and speed of invoice processing are very high. “If I were to show somebody a sample set of invoices, assuming that they’d never seen that particular style of invoice before, and then asked them to grab the invoice data based upon the date stamp, invoice number and a customer ID, they would probably look at the invoice and intuitively pick out the things they needed to find,” explains Charles Kaplan, vice president of marketing at Brainware.
Brainware Distiller works in much the same way the human brain does, says Kaplan; a small sample set of invoices allows the technology to recognize the patterns of similarity on a broader diversity of documents. “For a customer like HMPS, they don't have to explicitly go through and build the anchors and templates,” he says. “Distiller is much more intuitive and it therefore accommodates for variations in any given invoice. It also allows HMPS to quickly add new suppliers.”
“By providing near-complete field data extraction right out of the box, this technology translates into a powerful ROI for shared services,” Kaplan added. “Compounding the efficiency of shared services with capable, scalable intelligent data capture has translated into an extraordinary decrease in invoice processing costs, surpassing recognized best-in-class rates, translating to nearly £750,000 in annual savings and freeing several data entry personnel to perform process improvements and other value-added tasks. Furthermore, capturing data at the front end enables overall process visibility, which means greater accuracy in reporting, more accountability and a greater capability for strategic cash management.”
A Clear View
The ability to make rapid changes is hugely important for HMPS, especially when dealing with daily requirements for their massive food supply. Ranging from large global suppliers to small, single-person operations that are local to the various facilities, Ingelson says it is the food supply that remains the most critical aspect of their supply chain.
“If, for example, one of our suppliers hasn’t got any sausages, they’ll send bacon,” she says. “This introduces layers of complexity into the supply chain management process because the order would've been placed stating one item [sausage], and instead it would receive a substitute item.” Added into the mix of complex logistics are the legal requirements surrounding human welfare, including considerations for religious beliefs. “We must provide meals for every single religion represented in our prison population, which runs the gamut from vegan and Halal to kosher and vegetarian.”
According to Ingleson, there are a variety of independent monitoring boards that review management of the health and safety of inmates housed within the public prison system annually. There is also a National Audit Office, which performs a series of internal audits, each of which, adds Ingelson, are extremely rigorous. “We also have rules set out by the British government regarding managing public money, she says. “So for instance, we'll only pay for goods and services received; we do not pay in advance for anything, with the exception of rent for buildings and local taxes.”
To maintain transparency for Great Britain’s National Audit Office, HMPS must maintain all invoice records. “We can’t perform any sort of deletion of invoices on the system,” says Ingelson, “so we never truly close a purchase order. We archive it, so that it is always available to be re-activated at some point in the future, and also so we can obtain all of that vendor’s information at a moment’s notice.”
The HMPS shared services model has been so successful, the agency has become a showcase for government shared services throughout North Wales. HMPS has also inspired an outgrowth of industrial tourism, where both government agencies and commercial entities will participate in field trips to the HMPS shared services center to learn about the steps the agency took to incorporate both process efficiency and automation.
In 2008, Her Majesty’s Prison Service was recognized as “Best New Shared Service Center” by the International Quality & Productivity Center (IQPC), on the basis of their efficiency.
“We’ve become much more collaborative, given the current financial constraints that we're all under, and I really believe it's the best way to be,” says Ingelson. “I also think we’re leading the way of saying, ‘Yes, if you're having problems with managing shared services, contact us and we'll see what we can do to help you out. We want to make sure that the public is getting the best services that they can, so we're happy to share our knowledge and offer advice.’”