ontario education collaborative marketplace ·...

Business Proposal: Analysis and Recommendations Ontario Education Collaborative Marketplace Group 1

OCTOBER 29, 2013

By: Nicholas Cahill Jillian Doll Chrissy James Amanda Mifsud Antoinette Sarpong Jasmina Vranesevic

Ontario Education Collaborative Marketplace 1

TABLE OF CONTENTS

Executive Summary ................................................................................................................... 3

Introduction ............................................................................................................................... 4 About ..................................................................................................................................................................................................... 4 Business Model ................................................................................................................................................................................ 4

Introduction ............................................................................................................................... 5 Management Structure ............................................................................................................................................................... 5

Introduction ............................................................................................................................... 6 Organization Chart ........................................................................................................................................................................ 6 Management ........................................................................................................................................................................................ 6 Board of Directors .............................................................................................................................................................................. 6

Analysis ...................................................................................................................................... 7 Identity ................................................................................................................................................................................................. 7 Mission ................................................................................................................................................................................................... 7 Vision ...................................................................................................................................................................................................... 7 Values ..................................................................................................................................................................................................... 7 Target Customer .............................................................................................................................................................................. 7 Competitors ......................................................................................................................................................................................... 7

Analysis ...................................................................................................................................... 8 Business Goals ...................................................................................................................................................................................... 8

Commitments ................................................................................................................................................................................... 8 Ethics and Social Responsibility .................................................................................................................................................... 8

Analysis ...................................................................................................................................... 9 Corporate Culture ............................................................................................................................................................................... 9 Leadership Philosophy ...................................................................................................................................................................... 9

Analysis .................................................................................................................................... 10 Customer Service .............................................................................................................................................................................. 10

Analysis .................................................................................................................................... 11 Operational Resources ............................................................................................................................................................ 11

Analysis .................................................................................................................................... 12 Marketing Strategy .................................................................................................................................................................... 12 Target Market ................................................................................................................................................................................... 12 Features, Benefits and differentiation ................................................................................................................................... 12

Analysis .................................................................................................................................... 13 Pricing or fees .................................................................................................................................................................................... 13 Advertising .......................................................................................................................................................................................... 13

2 Business Proposal: Analysis and Recommendations

Promotion ........................................................................................................................................................................................... 13

Analysis .................................................................................................................................... 14 Financials ........................................................................................................................................................................................ 14 SWOT Analysis .............................................................................................................................................................................. 14 Strengths ........................................................................................................................................................................................... 14

Analysis .................................................................................................................................... 15 Weaknesses ...................................................................................................................................................................................... 15

Analysis .................................................................................................................................... 16 Opportunities .................................................................................................................................................................................. 16 Threats ................................................................................................................................................................................................ 16

Recommendations ................................................................................................................... 17 Introduction ................................................................................................................................................................................... 17 Proposal ........................................................................................................................................................................................... 17

Recommendations ................................................................................................................... 18 Marketing ........................................................................................................................................................................................ 18 Marketing Bundles ....................................................................................................................................................................... 18 Service Packages ........................................................................................................................................................................... 18

Recommendations ................................................................................................................... 19 Rebranding and Re-‐launch .................................................................................................................................................... 19 Logo ...................................................................................................................................................................................................... 19

Recommendations ................................................................................................................... 20 Website and transition .............................................................................................................................................................. 20

Conclusions .............................................................................................................................. 20


Executive Summary

The Ontario Education Collaborative Marketplace is a not-‐for-‐profit corporation launched in 2007 to provide collaborative procurement strategies to publicly funded institutions in Ontario.

OECM coordinates with school boards, colleges, universities and other Broader Public Sector organizations to bundle goods these organizations would ordinarily procure individually. By purchasing goods on a large scale, OECM is able to secure savings for individual contract-‐holding organizations while streamlining and simplifying order processing and logistics for suppliers.

OECM’s mission is to generate savings to support excellence in education by unlocking the potential of collaborative strategic sourcing.

OECM presently employs a combination of public funds and cost-‐recovery fees to support its existence. Built into its business model is the promise of financial self-‐sufficiency by 2015.

OECM falls under the jurisdiction of the Broader Public Sector Accountability Act, which sets strict guidelines for organizations using public funds.

The organization is on track. It appears that OECM will more than reach its goal of independence from government grants by 2015. Our recommendations will address the challenges of an organization in transition.

OECM’s strengths include strong human capital and an excellent reputation. Its weaknesses lie in marketing, size and scope, and the necessary limitations of its business model as a not-‐for-‐profit.

OECM can embrace opportunities for total market dominance and extensive growth. The organization is threatened by large institutions and a lack of public trust.

Our proposal for OECM will include two tools for more effectively marketing existing products, which will be included in a total rebranding and re-‐launch of the organization. This re-‐launch will coincide with the development of a new website and the first year of OECM’s financial self-‐sufficiency.


Introduction

ABOUT

The Ontario Education Collaborative Marketplace is a not-‐for-‐profit corporation launched in 2007 to provide collaborative procurement strategies to publicly funded institutions in Ontario. OECM services school boards, colleges, universities and a host of other Broader Public Sector institutions.

BUSINESS MODEL

OECM was founded on the assumption that large-‐scale procurement strategies ordinarily employed by private sector organizations could be leveraged toward taxpayer savings in the public sector. The absence of direct competition among public sector institutions means that the lure of collaborative procurement has, over time, proven predictably strong. In the last few years OECM has achieved near-‐total participation from school boards, universities and colleges, while more than doubling the number of participating institutions from the BPS.

OECM coordinates with school boards, colleges, universities and other Broader Public Sector organizations to bundle goods that these organizations would ordinarily procure individually. By purchasing goods on a large scale, OECM is able to secure savings for individual contract-‐holding organizations while streamlining and simplifying order processing and logistics for suppliers. As a result, publicly-‐funded organizations in Ontario increase efficiency while lowering costs, and OECM receives cost-‐recovery fees from suppliers.

OECM presently employs a combination of public funds and cost-‐recovery fees to support its existence. Built into its business model is the promise of financial self-‐sufficiency by the beginning of 2014.NT

ODUCTION


Introduction

MANAGEMENT STRUCTURE There are two levels of management. The first level of management is the Chief Executive Officer. The second level includes three different directors as follows:

• Director, HR, Marketing and Communications • Director, Sourcing and Business Relationship Management • Director, Finance and Administration

The Board of Directors is responsible for providing oversight in setting goals, objectives and strategic direction. It consists of five different groups of members, as follows:

• Independent Members • Members representing Colleges • Members representing Universities • Members representing School Boards • Ex-‐Officio Members


Introduction

ORGANIZATION CHART

Two organizational charts are needed for OECM. The board of directors is a complex governing body that is a part of and influences OECM’s organizational structure. The management structure is more straightforward.

MANAGEMENT

BOARD OF DIRECTORS

Independent Members

Georgina Steinsky-‐Schwartz Chair, Board of Directors

Arnie Strub Audit and Resource Committee

Members Representing Colleges

Eugene Harrigan Governance & HR Committee(Chair)

David Graham Audit & Resource Committee

Members Representing Universities

Jim Butler Governance & HR Committee

Caroline Davis Audit & Resource Committee

Members Representing School Boards

Kathy Soule Governance & HR Committee Appointment

Carla Kisko Audit & Resource Committee

Terry Kyritsis

President and CEO

Heather Barnett

Director, HR, Marketing & Communications

Karen Owen

Director, Sourcing & Business Relationship Management

Len Scavuzzo

Director, Finance & Administration


Analysis

IDENTITY

MISSION

• Generate savings to support excellence in education by unlocking the potential of collaborative strategic sourcing

VISION

• To be the premier strategic sourcing partner for Ontario’s education sectors by 2015

VALUES

• Instill public confidence through: Collaboration, Innovation, Integrity, Respect, Responsiveness

TARGET CUSTOMER

• OECM’s initial customer base was restricted largely to schools, colleges, and universities

• There has been a steep increase in the number of BPS institutions looking to make use of OECM’s services

COMPETITORS

• OECM is the only organization in Ontario offering these services • Early in the organization’s history, OECM’s biggest threat was large

institutions that were able to secure their own discounts with suppliers by purchasing on a large scale

• With U of T signing a contract recently, it appears that OECM is growing large and influential enough to attract larger institutions ANALYSIS


Analysis

BUSINESS GOALS Intermediate Goals

• To be financially independent by 2015 • To increase the number of institutions signed to multiple contracts • To attract more suppliers and BPS clients

Long Term Goals • To develop a future model for the business after self-‐sufficiency is achieved

COMMITMENTS

ETHICS AND SOCIAL RESPONSIBILITY OECM’s ethical obligations are built into its foundations. OECM falls under the jurisdiction of the Broader Public Sector Accountability Act, which sets strict guidelines for organizations using public funds. The organization’s ethical limitations with respect to their largest stakeholder, the tax-‐paying public, are predetermined by pre-‐existing legislature. One of the challenges OECM will face as it continues to grow is determining how to use revenue that exceeds expenses. Because OECM was established under the BPSAA and therefore must remain a not-‐for-‐profit enterprise, it cannot ethically or legally turn a profit. While competitive employee compensation and pension funds are sensible ways of making use of increased revenue, the organization must be observant of any ethical issues that may result from the misuse of funds. In addition, it is apparent that the board of directors and the management team are profoundly committed to acting in the best interest of the public they serve.


Analysis

CORPORATE CULTURE An employee survey found that 95 per cent of OECM employees are proud to work for the organization, and 91 per cent feel OECM is a positive place to work. From 2011 to 2013, employee job satisfaction and employee engagement increased in all areas surveyed. OECM’s culture is about collaboration, helping institutions, and generating savings for the public in keeping with its mission. The organization has a public policy mandate, which operates in a public context and is an agent in ensuring that the Broader Public Sector Agreement Act is followed. Commitment to the BPSAA is a crucial element of OECM’s corporate culture. From an employee’s standpoint, OECM has a culture of retention, transparency, and accountability. The organization encourages employee engagement with OECM and OECM clients. It values ideas and participation from all stakeholders. OECM fosters an environment of trust and mutual recognition, and believes strongly that investment in its human capital is critical to organizational success.

LEADERSHIP PHILOSOPHY OECM aims to be highly responsive to customer needs and ideas. The organization’s board is made up of unpaid volunteers, who provide strategic direction and act as a sounding board for the progress and concerns of management. The members of the board have a variety of different backgrounds. They are drawn from both public and private sectors. They include representatives working in universities, colleges, and school boards. The varied backgrounds create an environment that allows OECM to effectively tackle any situation that arises, while hearing and meeting all the needs of its stakeholders.


Analysis

CUSTOMER SERVICE OECM’s value proposition is part of its customer service. The organization is committed to winning prospective stakeholders over to a new model of procurement in Ontario. OECM’s customer service commitments include:

• Choice: OECM wants to make sure its clients know its product menu and the savings opportunities available to them

• Relevance: There are hundreds of products that OECM offers through its contracts, relevant to the particular needs of a given institution

• Ease of access: Products/services menu available online, via www.oecm.ca • Competitive pricing: Demonstrate competitive pricing from suppliers • Validated savings: Show the institutions that they are generating savings • Compliance: Provide certainty of compliance with BPSAA and give clients

quality assurance


Analysis

OPERATIONAL RESOURCES

For$the$year$ended$December$31,$2012

RevenueGovernment)grants 1,430,856$)))))))Strategic)sourcing 1,267,929$)))))))Interest)income 19,052$)))))))))))))Amortization)of)deferred)capital)contributions 126,108$)))))))))))

2,843,945$)))))))

ExpensesAdvertising 10,227$)))))))))))))Amortization)of)capital)assets 126,108$)))))))))))Licensing)fees 6,803$)))))))))))))))Office)and)general 35,373$)))))))))))))Office)services 100,539$)))))))))))Professional)fees 83,994$)))))))))))))Rent 363,608$)))))))))))Repairs)and)maintenance 60,354$)))))))))))))Salaries)and)benefits 1,941,133$)))))))Technical)consultant)fees 98,110$)))))))))))))Termination K$))))))))))))))))))))))Travel 17,696$)))))))))))))

2,843,945$)))))))

Excess$of$revenue$over$expenses$for$the$year =$$$$$$$$$$$$$$$$$$$$$$$Net$assets$=$beginning$of$year =$$$$$$$$$$$$$$$$$$$$$$$Net$assets$=$end$of$year =$$$$$$$$$$$$$$$$$$$$$$$


Analysis

MARKETING STRATEGY

TARGET MARKET OECM’s clients are primarily from the education sector, though it is rapidly developing other clients in the BPS. OECM is interested in targeted marketing for colleges, universities, and municipalities. However, it needs to increase its exposure to the BPS, the only remaining available growth market. The larger organizations that OECM works with are hierarchical. OECM makes an effort to interact with all levels of organizational hierarchies. On the other hand, these larger institutions are also OECM’s competitors. Large institutions are often part of geographic groupings of purchasing, and these buying groups can include colleges, universities, and municipalities in an area. Some institutions have not yet been won over by the concept of OECM, because they can sometimes get better savings on their own. OECM wants to collaborate with geographic purchasing groups, and continue changing the perception its target markets have from skepticism to accountability.

FEATURES, BENEFITS AND DIFFERENTIATION OECM provides services and products in agreement with the Broader Public Sector Accountability Act. This is a component of its service differentiation. Often geographic purchasing groups do not track or document data and savings, and OECM offers this service as part of its commitment to the taxpayer. Data and savings tracking is a complicated and rigorous process. While OECM acknowledges that it could improve its analytical infrastructure, it differentiates itself from prospective competitors – or from the absence of any kind of collaborative procurement strategy at all – by recording the net savings passed on to participating organizations.


Analysis

PRICING OR FEES

OECM’s cost-‐recovery fees are a percentage of the total value of a contract based on the goods sold within that contract. Because certain commodities are worth more than others, OECM may make more on one set of contracts at a certain value than on another of the same value. Their fee collection is tied to the margins suppliers anticipate on certain products.

ADVERTISING Advertising represents a problem of optics for OECM. Unfortunately, no amount of savings would make up for the use of public funds for paid advertising. This would come across as inefficient, and would not appear to be aligned with the organization’s mission to save taxpayer dollars.

PROMOTION

While there is a great deal of information available on OECM’s website about their services, its marketing and promotions leave much to be desired.

OECM makes its greatest promotional impact through face-‐to-‐face engagement with prospective and current customers, but it will need to do more to improve and expand its services to draw the attention of additional BPS organizations.

Our recommendations will address the issue of promotion at length.


Analysis

FINANCIALS

OECM has performed well recently and is projecting outstanding performance this year.

• OECM saw a 66 per cent increase in spend from 2011 to 2012 • OECM is projecting a 24 per cent increase in spend from 2012 to 2013 • OECM has budgeted for $1.145 million in government grants for 2013, down

from $1.8 million in 2011. This represents a decrease in grant burn of 37 per cent in just two years

The organization is on track. It appears that OECM will more than reach its goal of independence from government grants by 2015. Our recommendations will address the challenges of an organization in transition.

SWOT ANALYSIS

STRENGTHS Strong Human Capital

• CEO, Terry Kyritsis is an excellent leader and experienced procurement officer who listens to OECM’s stakeholders

• Board Chair Georgina Steinsky-‐Schwartz has experience in both the private and public sectors. She was formerly the deputy minister responsible for assisting the government of Canada with its procurement

• Each board and management member has the knowledge and expertise needed for OECM to expand its role as the strategic sourcing partner for Ontario’s educational sector


Analysis Excellent Reputation

• OECM has shown that personal interactions with prospective and current clients help to change attitudes and perceptions of collaborative procurement in the public sector

• Terry and Karen have repeatedly attended cooperative and college meetings to personally pitch the value of OECM’s services and allay potential client anxieties

• Secured contracts from 112 BPS institutions • Sources goods from more than 50 suppliers, demonstrating the reliability and

longevity of the OECM collaborative procurement project

WEAKNESSES Marketing

• Outdated, poorly structured website • No social media strategy • Logo and organization name no longer accurately represent OECM’s target

market or services

Size and Scope • Somewhat limited by inability to compete with larger organizations that are

able to secure their own procurement discounts on the basis of volume

Limitations of a not-‐for-‐profit • OECM is in some ways confined by its limitations as a not-‐for-‐profit entity • OECM has to ensure that any margin of increase of revenue over expenses is

ethically redistributed through the company or among stakeholders • This places major restrictions on organizational development


Analysis

OPPORTUNITIES Market Dominance

• Because OECM was founded and sustained by public funds and will remain a not-‐for-‐profit, there are no legal restrictions on its share of the collaborative procurement market in Ontario for public sector institutions

• OECM has already secured near total domination of SCUs, and is only beginning to explore other opportunities in the BPS, which will prove lucrative

Growth • OECM is a young organization providing a reliable and measurable service • OECM’s growth is significant in the last few years, and it is on the verge of

financial self-‐sufficiency • OECM can take advantage of its growing, transitional period to remodel itself

to address different markets and increase business among current contract holders

THREATS Large Institutions

• Certain larger institutions are able to secure savings for themselves through large-‐scale procurement

• Until OECM reaches a certain size, it will have difficulty competing with these institutions

Lack of Public Trust • Rendering public-‐sector procurement in Ontario more efficient creates

concern among the public that greater efficiency means fewer employees • OECM needs to work to adjust the optics around this concern


Recommendations

INTRODUCTION

While OECM has been successful in the last few years, it is nearing a stage where it will have to readjust its approach to its target market in line with the shifting nature of its business model.

Having secured contracts with most schools, universities and colleges in the province, OECM’s future growth as a self-‐sustaining not-‐for-‐profit will depend on expanding the number of contracts among existing contract-‐holding institutions. Growth will also depend on specifically targeting and reaching out to Broader Public Sector organizations that may not be aware of OECM’s product offerings.

PROPOSAL

Our proposal for OECM can be broken down into two major areas of emphasis that comprise a total re-‐launch of the OECM brand.

To cultivate increases in institutional spend from existing contract-‐holding institutions, and to improve existing customer service – a cornerstone of OECM’s business model – we are proposing two separate but related marketing initiatives.

These marketing initiatives are part of a larger proposal to rebrand OECM as an organization. We are recommending a logo change and a website revamp to coincide with the initiation of OECM’s first quarter of financial self-‐sufficiency.

Together, our recommendations will:

• Guarantee continued customer satisfaction • Increase institutional spend from existing contract-‐holders • Present OECM as an organization that serves both educational and other

Broader Public Sector institutions, which will increase attractiveness of OECM among the BPS

• Create a memorable symbol for OECM, which links it to its origins as an Ontario government project while also presenting it as an accessible service


Recommendations

• Produce a workable, comprehensive website to allow prospective and current customers to more effectively navigate the range of procurement options available to them

MARKETING

MARKETING BUNDLES

We propose bundling related services online for ease of access. Under our proposal, OECM customers would find janitorial, banking, and general supplies, for example, lumped together on the OECM website. This model would provide a one-‐stop-‐shop for organizations looking to fully supply certain departments or upgrade infrastructure, with the option to opt out of certain bundled services as needed.

Additionally, we recommend that OECM’s website include bundles of services related to types of BPS organizations. OECM could provide a package specifically tailored to hospitals, municipalities, or recreation centres. This service is designed to revamp outdated institutions or to fully supply newly built facilities.

SERVICE PACKAGES

We urge OECM to restructure their customer service offerings in accordance with institutional spend. Institutions participating in OECM agreements will receive scaled service packages based on institutional spend as a percentage of total procurement budget.

OECM’s website would offer silver, gold and platinum packages based on customers’ use of OECM’s services. Each service package would come with its own promise of tailored customer service.

A platinum-‐level company, for example, would be provided with their own dedicated procurement officer responsible for ensuring that all of their needs are met.

The objective is to reward increases in institutional spend from existing contract-‐holding institutions. Our proposal incentivizes increased spend by easing the procurement process for customers.


Recommendations

REBRANDING AND RE-‐LAUNCH

LOGO

OECM’s present brand name and logo do little to engage prospective customers. The company is called Ontario Education Collaborative Marketplace, but OECM’s continued expansion depends on non-‐educational institutions in the broader public sector. The current logo is rough and ready, but does not reveal any meaningful link to the company’s history or broader mandate.

Accordingly, we propose a new logo and brand name for OECM that will more effectively communicate its origins, goals, and future.

The name “Procurement Ontario” will indicate that the company’s services are available to all public institutions in Ontario. The stylized trillium is a reference to the company’s foundation as a government of Ontario-‐funded institution. While the provided mock-‐up is rough, it represents a more accessible alternative to the current OECM logo.

Procurement Ontario


Recommendations

WEBSITE AND TRANSITION

Along with the logo change and the new marketing tools, we propose a new website for OECM. Members of the board and management have all expressed short-‐term interest in restructuring a website that currently presents a dull and forbidding image to prospective clients.

Our overall recommendation is to time the launch of a new website to coincide with the implementation of the new marketing tools and the new brand. With the shift in OECM’s business model, there is a brief window of opportunity to wholly restructure the public image of the organization in line with its future, while preserving its past.

We have concluded that coordinating this launch with OECM’s first quarter of financial self-‐sufficiency will allow the organization to establish itself as a new entity with an evolving identity.

Conclusions

OECM faces limited external threats and enjoys ample opportunity for future growth. It suffers primarily from a lack of visibility among the BPS, which is increasingly a target market and that will have a significant role in OECM’s long-‐term success. With the right rebranding strategy, OECM can drastically increase its market share.

We believe our analysis accurately identifies the problems facing OECM as it moves into the future, and our recommendations effectively address specific areas of concern.

We thank you for the opportunity to work with OECM as it begins its transition into this new stage of its existence.

ontario education collaborative marketplace ·...

Documents