Solution

Executive Summary

In modern-day commercial organizations, the procurement department and the supply management department are both essential components. Procurement entails purchasing of goods and services required for the daily operations of an organization. It involves sourcing goods and services from external suppliers. Strategic procurement is vital for a firm’s success because it helps firms to obtain the required goods and services in the required at the right time and amount hence preventing surpluses that may result in waste. This paper provides an assessment of the Royal Commission for AIUla (RCU) procurement of Information Technology software as an area of spend. Similarly, this paper offers an assessment of the role of RCU partners in the procurement process. Different models  that are relevant to procurement and supply management have been analyzed in the context of procuring IT software as the area of spend. This paper has recommended that RCU should establish relevant processes for the execution of procurement processes to effectively manage the resource and hence get value for money

Table of Contents

1.0 Introduction. 3

1.1 RCU Organisation Background. 3

1.2 RCU Organisation Structure, Procurement Teams. 3

1.2 Selected Spend Category. 4

1.3 Scope of the Assessment 6

2.0 RCU Stakeholders Summary and Importance. 7

3.0 Market Analysis. 9

3.1 Market Analysis using Techniques/Tools. 9

3.1.1 SWOT Analysis. 9

3.1.2 PESTLE Analysis. 9

3.1.3 Porter’s 5 Forces Analysis. 10

3.2 Market and Trend Analysis. 11

3.3 Competition Level in the Market Place. 12

4.0 Procurement Function for Developing Value for Money Outcomes. 12

4.1 Supplier Preferencing Matrix. 14

5.0 Prices/Costs Management for IT category of Spend in RCU. 16

6.0 Conclusions and Recommendations. 19

6.1 Conclusion. 19

6.2 Recommendations. 20

References. 21

Figure 1:RCU PS&M Organisation Structure. 5

Figure 2:Category Management Approach. 6

Figure 3:IT Category of Spend Subcategories. 7

Figure 4:Types of Stakeholders 8

Figure 5:RCU Mendelow Matrix Analysis. 9

Figure 6:Porter’s 5 Forces Analysis 12

Figure 7:RCU Company Competitors. 13

Figure 8:IT Categories of Spend Illustration. 14

Figure 9:RCU 3P’s Bottomline Model 15

Figure 10:Suppliers Preferencing Matrix. 16

Figure 11:4P’s and 4C’s analysis 17

Figure 12:Improving and reducing the value for money outcomes achieved in RCU.. 18

Figure 13:RCU Kraljic Matrix Analysis Summary. 19

Figure 14:RCU Success in terms of value for money outcomes. 20

Table 1:SWOT Analysis Summary. 10

Table 2:PESTLE Analysis. 11

Table 3:Value for Money Outcomes in IT RCU category of spend. 14

1.0 Introduction

1.1 Royal Commission of AlUla Organisation Background

In 2007, the Royal Commission for AIUla (RCU) was set up through a kingly order. The main objective of this commission was to conserve and grow AIUla, a territory with unique natural and cultural importance in north-western Saudi Arabia. According to Alatawi (2022), RCU’s long-term strategy focuses on an accountable, tenable, and thoughtful approach to urban and economic growth, which conserves the region’s natural and famous culture, as well as making AIUla the most preferred place to work, live and tour. The master plan entailed several enterprises cutting across archeology, tourism, heritage, education, and the arts, which reflects the desire to meet the economic diversification, empowerment of the local community, and the conservation of culture in Saudi Arabia. The Royal Commission for AIUla’s vision is to conserve natural resources, such as wildlife, by establishing and stimulating nature reserves to preserve ecosystems, weak habitats, and biodiversity, reinstating diminishing ecosystems and reintroducing native species. This paper will provide an in-depth analysis of how RCU for AIUla can achieve effective procurement & supply as well as manage supplier expenditures.

1.2 RCU Organisation Structure, Procurement Teams

In RCU, Procurement and Supply Management (PS&M) work as a stand-alone department with a hierarchical organisation structure (see figure 1). Hence, all the departments operates as functions where they are assigned with different roles.

Figure 1:RCU PS&M Organisation Structure

By the PS&M working in sync with other organisation functions, improved value for money outcomes are attained. The rationale of this is the existence of capacity to engage suppliers locally and internationally. Their operations are guided by what CIPS 2022 guidelines identify as terms and conditions essential to reduce contractual risks and mitigating challenges encountered in contracts implementation.

1.2 Selected Spend Category

According to Handfield et al. (2019), a spend category identify the logical categorisation of spend areas. Further, in CIPS, by use of category management, the potential risks and improvement of supply of a spend category is achieved (see figure 2);

Figure 2:Category Management Approach

Considering RCU procurement process, their spend categories are grouped into operations (onshore and offshore), systems and services. This assessment has selected Information Technology (IT) as the spend category. A summary of the sub-categories of spend in IT is as illustrated in figure 3;

Figure 3:IT Category of Spend Subcategories

The rationale of IT in RCU is multi-faceted. For instance, RCU (2022a) report indicate that RCU has been using AI-enabled technologies for their value chain optimisation, predictive maintenance and blockchain-based hydrocarbon accounting. Further, RCU employees working through the remote work arrangement require application of technology for virtue meetings and also other operations.

1.3 Scope of the Assessment

The scope of this assessment will narrow down to the procurement of Information Technology systems (software) from different vendors locally and internationally. In this context, the IT software will represent the group of spend. Furthermore, this paper will provide a detailed assessment of how RCU partners influence the procurement and supply processes. This analysis will dwell on the available course content approaches and procedures that are related to procurement and supply in various areas of spend. A section of the report will also provide an analysis of the master plan put in place by RCU for price control and cost-effectiveness of the procurement process. The analysis will include an evaluation of the nearness of the suppliers, the level of technology required, potential clients, and the global best practices, which are cost-effective.

2.0 RCU Stakeholders Summary and Importance

Adopting the definition in Bohari et al. (2020) the stakeholders represent individuals possessing detailed impact on an organisation and influence its success in different areas. In CIPS Notes, the stakeholders are categorised as show in figure 4;

Figure 4:Types of Stakeholders

Source: CIPS Module Notes

Hence, for RCU operations in IT sourcing, their different stakeholders are as shown in figure 4. To understand their relevance, Mendelow Matrix Analysis Tool can further be applied (see figure 5). According to CIPS (2022) this tool is relevant in evaluating the stakeholders power and interest.

Figure 5:RCU Mendelow Matrix Analysis

As illustrated in figure 5, the importance of the different stakeholders in ensuring value for money outcomes is achieved include;

High Interest; High Power- This category include users of IT (both onshore and offshore) in KSA. They have both power and interest on the value and money outcomes from the sourcing approach. Hence, they ought to be managed closely as lack of understanding would be costly to the organisation.

Low Interest; High Power- For legal teams, KSA administration, accounting teams are engaged in holistically reviewing the suppliers to be engaged. This is to promote sustainable relations. They must be satisfied for most appropriate process to be used for accruing value and money outcomes.

High Interest; Low Power- The admin and management teams and the PS&M play a critical role in ensuring that they are successful in procurement. This is despite of their influence on sourcing approaches used.

Low Interest; Low Power– For suppliers of the IT systems, RCU partners, they are important for being informed on the entire procurement process development and contracts. This is to ensure the organisations objectives are aligned with procurement roles.

3.0 Market Analysis

3.1 Market Analysis using Techniques/Tools

As illustrated in figure 1, part of procurement and supply cycle is the market analysis. The rationale of this is to inform on the best practice to be adopted in the procurement process specifically to achieve strategic procurement process.

3.1.1 SWOT Analysis

To identify internal (Strengths and Weaknesses) and external (Opportunities and Threats) market factors influencing the market, this tool is appropriate. As evidenced in Bidin et al. (2019), this entail the capacity of matching PS&M goals, initiatives and ability of operating in their environment. The SWOT analysis is as shown in table 1;

Table 1:SWOT Analysis Summary

In summary, as evidenced in table 1, there is a need for PS&M in RCU to put in place measures to achieve value for money outcomes. This can be attained by capitalising on their strengths which include collaborative practice with different departments and appropriate regulations in place. Also, the threats which include lack of expertise and conflicts would be controlled. Sustainable sourcing approaches for IT spend category would mean capitalising on appropriate economic activities and investing in good technology.

 3.1.2 PESTLE Analysis

This is defined in CIPS (2022a) as a strategic planning method which is applicable across entire business functions for discovering, evaluating, organising and tracking the external risks. Considering the identified spend category in RCU, a summary of PESTLE analysis is shown in table 2;

Table 2:PESTLE Analysis

Hence, as illustrated in table 2, it is essential to highlight that the PESTLE factors are majorly appropriate for RCU PS&M practices. Only the prices of tourism sector operations and the COVID-19 pandemic which impact the capacity of RCU to engage different suppliers in both their onshore and offshore operations. Hence, their sourcing of IT systems is relevant for the organisation to embrace the different aspects of their PESTLE analysis.

3.1.3 Porter’s 5 Forces Analysis

According to Bruijl and Gerard (2018) this tool is used to explain the competitive characteristic of the organisation. As the most appropriate practice, power of organisation competitors, newly entering organisations and other factors have an influence on the ability to acquire profitability and dominate markets. Considering the IT systems spend category, for RCU, this is important to achieve an increased performance and industrial dominance (see figure 6);

Figure 6:Porter’s 5 Forces Analysis

In line with figure 7 findings, it is important to evidence that their suppliers leverage on reduced bargaining power for RCU as they impact the negotiation costs for the IT system applied for their procurement. Also, considering the threats of new entrants, a lot of time are used for RCU for dominating tourism sector. This evidence their practices in the tourism sector. Competitive rivalry impact their ability of achieving immense value for money outcomes and accruing capital investments. There is a need to note the scope of buyer bargaining power despite of increased scope of costs incurred to switch buyers successfully available in KSA local and international markets.

3.2 Market and Trend Analysis….

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