Daily Archives: 18/07/2013

Procurement appears “more cost than risk-focused” states BSIA chairman

Speaking at the Trade Association’s Annual Luncheon on Tuesday at the Hilton Hotel, Park Lane, the BSIA’s chairman Geoff Zeidler highlighted the potential for a negative reputational impact on the security sector if procurement practices don’t start to change.

“Every year, procurement seems more cost rather than risk-focused,” said Zeidler in his welcome speech to a select gathering of security professionals, “but the erosion in authority of customers’ internal security management combined with this period of economic ‘austerity’ has ensured that this trend continues in many sectors. As a result, margins have been squeezed and forced cost reductions that may well have implications for quality. There’s the potential for a long-term reputational impact on the security industry that should concern us all.”

Zeidler continued this vitally important theme in his Chairman’s Address immediately after luncheon, setting the scene with a couple of ‘austerity’ situations that have made the national news headlines.

“When tendering for 111 services, the procurement process accepted a bid from NHS Direct at a price that proved undeliverable, and then blamed the supplier for bidding too low,” urged Zeidler. “And then when the food industry tried to drive prices too hard it ended up with horsemeat in value products. These cases ended up damaging all parties without it being clear who was to blame.”

BSIA chairman Geoff Zeidler addresses the audience at the Trade Association's Annual Luncheon 2013

BSIA chairman Geoff Zeidler addresses the audience at the Trade Association’s Annual Luncheon 2013

Last year, the latest Security Research Initiative (SRI) Survey conducted by Professor Martin Gill and his team highlighted the fact that the authority of customers’ security managers relative to the procurement process appears to be in decline.

“This year’s SRI survey investigates the impact of ‘bundling’ and implies that the way in which security’s procured is both varied and unclear,” commented Zeidler. “This means we have a less knowledgeable customer, a more confused procurement picture, a market where success means ‘nothing happens’ and an ‘austerity’ drive which wants to see more for less. This is a very dangerous mixture.”

What to do when asked to deliver ‘more for less’

What should security companies do when asked to deliver more for less by the customer, then?

“The answer is not to blame procurement,” urged the BSIA’s chairman. “Although they push hard, they do need to know their suppliers are profitable, and sustainably so.”

Zeidler feels that if the security sector is to preserve quality delivery and its reputation, the only safe road ahead is to do things differently.

“As a regulated service where people and technology are working together to manage risk,” he said, “security is a separate service and ought to be procured as such. Customers must design their budgets and procurement strategies in such a way that they allow the supplier groups to provide all the tools necessary for managing risk as the best route towards reducing costs rather than trying to commoditise the elements. Many of the BSIA’s member companies have been trying to convince the market of this philosophy for some time now. I hope the Trade Association can promote Case Studies along these lines that ensure more customers listen.”

Suppliers faced by a commoditised tender

Zeidler also believes that suppliers absolutely need to be clear about what represents sustainable profitability, the changes that they’ll have to make to deliver on lower cost, what operational and reputational risks this may create and – as BSIA members – ensure that they don’t create a situation wherein they have to reduce the quality of their staff or management focus to the point at which they’re forced to ‘deliver horsemeat’ or declare that the tender was, in fact, unsustainable.

“In the private security sector you only know the quality of the service when it’s tested,” suggested Zeidler, “and failures hit reputations. In the face of ‘austerity’ we’re pressed to reduce cost without always detailing the ‘how’. The legacy of these decisions may not be seen tomorrow, but rather over the next three years. If we – as BSIA members who are the benchmark for quality in the industry – do not resist competition based on a reduction in the quality of staff and management then we will never build the reputation and trust we need to grow our industry. We must be proud of what we do and not undervalue it.”

From conversations that Zeidler has had with BSIA members across both the manpower and systems worlds, it’s clear to him that everyone needs to improve on their abilities to express the true costs and value of good security to procurement teams – and make sure that Procurement Departments understand what sustainable profitability looks like.

“This is where individual BSIA members talking to their customers can play their part. We must all be honest.”

Zeidler’s hope is that, by next year, the industry will be celebrating an environment where sustainable profitability is better understood, competition is more focused on innovation and the long-term reputation and trust of the security sector has been preserved to allow further partnership working with the police as well as other public service bodies.

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