Sharing e-fficiencies

Mel Zuydam, Balfour Beatty's head of e-commerce, is working on four distinct B2B strands. These comprise e-collaboration, e-tendering, e-procurement and e-supply chain management.

Perceived as tools to underpin continual business process improvement strategies, the plan is that they will be sufficiently developed to roll out by the end of the year.

E-commerce offers huge potential to a group the size of Balfour, a major player with a £3bn-a-year turnover.

Savings from the combined e-commerce initiatives, including knowledge management, could contribute in the region of £20m to the profit line.

Zuydam calculates that when it comes to the procurement of goods and services, the company should benefit from significant savings in handling costs by moving away from processes involving paperwork.

Further benefits will come from better and more transparent collaboration throughout the supply chain. In particular, by managing project documentation in a fast and efficient manner and by using collaboration tools to increase its availability throughout project teams.

"At the end of July we had more than 37,000 project documents being managed this way. The take up in recent months has been encouraging," says Zuydam (fig 1).

Zuydam wants Balfour to be at the forward end of e-change, so that the group is one of the first to win commercial advantage from B2B trading.

Yet with so many initiatives already in place, it is somewhat surprising to hear him say: "It's not about the software - that's just the enabler and you need it to be robust and simple. To achieve the culture transformation with the minimum pain, you have to get people to buy into these new concepts, and see the benefits for themselves. That's the biggest lesson I've learnt."

Zuydam has every reason to feel like a man on a mission, because over the past few months he has made presentations to every single Balfour business as well as to a host of clients, suppliers and other third parties. In fact he's still doing the rounds, taking his message to even more business groups.

Balfour's partner in its current B2B transformation is BuildOnline, where users of its website have four main tools at their disposal - project management and collaboration, tendering, procurement and supply-chain management.



All four are being introduced at Balfour in a step-by-step fashion. The rollout got under way in March 2001 with the collaboration tool ProjectsOnline, selected to lead the way because it requires the minimum of process change.

"We needed an approach that minimised the pain initially and encouraged take up through early benefits. This approach seems to have been the right one so far," says Zuydam.

"ProjectsOnline is about document management. The aim was to set up eight pilots and we've achieved that (fig 2), which has given us critical mass. We have not mandated the B2B option. In fact, project managers have been left to choose for themselves, but every few weeks now I get a phone call saying: 'We're mobilising in two months and we'd like to have a ProjectsOnline workbase ready for use.'

"At the same time, before contracts are even awarded, we're now seeing greater collaboration in both pre-qualification work and putting the tender together thanks to the B2B tool."

One example is a large contract where Balfour is bidding as part of a project team that includes Atkins and others.

Shared information is allowing the team to tender together. And, again at the pre-tender stage, the software has allowed Balfour to reply positively to clients' questions when they ask: 'How will you be innovative?' and 'How will you manage your information?'

Balfour launched SupplyChainOnline, the second strand of its B2B strategy, four months ago. It is now in use in 14 Balfour Beatty operating companies. The software package allows Balfour to maintain a database of preferred supplier information and to manage it in a secure, private on-line environment.

"The tool is already enabling a greater degree of information sharing on our preferred suppliers between our operating companies, and the suppliers themselves are benefiting by being part of it," says Zuydam (fig 3).

Prior to the partnership with BuildOnline, Balfour had been gaining e-procurement experience on an internal basis.

"Balfour Plant was a good place to start with e-invoicing," says Zuydam, "as the business not only raises a lot of invoices, but most of them are internal with divisions such as construction, power networks and rail.

"We were using XML (extensible mark-up language) as the translator and the proportion of Balfour Plant invoices handed by e-invoicing rose from 29% in August 2001 to 49% in May 2002," says Zuydam (fig 4).



To enable this e-invoicing capability, Balfour has signed up to use Burns Business Exchange (beX e-invoicing transactions). The fact that Burns wasn't operating in the construction industry at that time was seen as an advantage - instead it had built an established position in the health and regional electricity sectors.

Balfour's two main back-office software systems are Coins and Mentor. Both of these have had to collaborate so that their invoicing software can interface with Burns.

Once Balfour feels comfortable with its B2B management of project collaboration, supply chain management and invoicing, it will start to fit the final piece of its e-jigsaw into place - TradeOnline. This is a move that will allow it to advertise for services, compile vendor lists' copy and collate work packages, distribute the bid documentation and all in a speedy B2B format.

"TradeOnline is an e-tool that will allow us to transmit the message 'please quote me' over the internet. After an evaluation we'll then be able to press one of six buttons, say, and buy, all in a much shorter period of time, with shared efficiencies across the supply chain," says Zuydam.

One of the many less tangible benefits of e-commerce should be the availability of historic drawings without the need for bulky archiving.

"This is important on big projects such as PFI bids," he says. "One large contract before e-commerce left us with two Portakabins-worth of paperwork to house."

And in case anyone was wondering, the Burns e-tool fits comfortably with TradeOnline, so there should be no interface conflict.

But is it safe to put all your eggs into one basket?

Should BuildOnline hit financial trouble, Zuydam is one step ahead. "I see the IT company's profit and loss figures," he explains. "We have a transparent relationship so there should be no nasty surprises. It is doing well, and consolidating its position as a major supplier to the European construction sector."

Balfour's decision has been to steer its own course through the ocean of B2B. But it had to decide which software provider to choose.

The UK's two major construction-specific software providers are Coins and Ramesys. They have been granted the opportunity to expand because the global ERP (enterprise resource planning) giants have barely looked into the UK's domestic construction market.

But this looks set to change and the two "locals" now face a growing challenge as the ERP boys start to muscle in.

Amec has taken the brave step of rolling out Oracle across its business streams. Jarvis and Amey have also taken the ERP route (Jarvis with Oracle and Amey with SAP), but find themselves not in control of the relationship, having failed to get their strategies properly laid down from the start.

Balfour is taking a more cautious approach.

"We want to walk before we start to run," says Zuydam. "I'll be more than happy if Balfour is viewed as a leader in e-commerce by the end of the year. It will not only mean all our e-business strands have come together, but that our staff have proved willing to embrace change - and that's the most crucial element of all."