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11 May 2012 | Paul Snell in Doha, Qatar
Telecoms company Qtel is taking a ‘build right, buy right’ approach to procurement to respond to the challenges facing the sector.
The issues facing the telecoms industry, including a slowdown of growth, increasing competition, declining prices and growing complexity in sourcing and pricing, has meant the firm has had to come up with a strategy to cope.
“It’s not just about [reducing] cost. We use the terminology ‘build right, buy right’. Get the design right, get the efficiencies built in up front, and then go out and get the best deal you can,” Basil Byrne, senior director – group strategic sourcing, told delegates at the CIPS Middle East Conference. “And it is also driving performance. If we buy the right architecture and the right solutions, we can massively differentiate our performance to competitors, so that’s what we work on.”
He added the procurement function - which spends around $2 billion (£1.2 billion) on capital expenditure, and a similar amount on operational expenditure – cannot operate in isolation in this environment.
“Procurement has fundamentally and forever changed. It is no longer an us-and-them-type environment,” he said. “So our response is we can’t possibly do this in the old-fashioned way, we have to be a single team, work with the technology team, understand the software, understand the pricing principles and the technology efficiencies we can get and then work together.”
Among the challenges facing the group are inflated legacy pricing from vendors in the Middle East, which the company aims to break down. “For the same item, from the same supplier, from the same factory, to the same customer – it just has a different geographic base – there can be anywhere up to a 50 per cent differential in price, so of all the challenges we face it is probably our biggest,” said Byrne.
He also highlighted the complexity for a global company, with operations across the Middle East, Africa and Asia. “Qtel group has some scale. But it is a challenge to secure alignment across a group as diverse as the Qtel portfolio. We face all sorts of regulatory issues, all sort of legacy install issues, cultural challenges and trying to get process alignment across 17 different operations is a work in progress,” he said.