The Australian Tax Office (ATO) turned to SAP Fieldglass when it decided to implement a Vendor Management System (VMS) to improve visibility into its external resources and costs while creating more efficient processes to manage its labour and services procurement processes. Key benefits have included significant cost-savings and process efficiencies along with access to important data for more strategic decision-making.
The ATO is required to meet strict compliance guidelines:
These guidelines include how it manages its workforce, which includes employees, temporary staff, external workers and service providers located in all Australian states and territories. This diverse workforce is managed internally by four resources, with stakeholders in compliance, finance, procurement, and various project and program offices.
“By standardising and automating our contractor engagement processes, we can achieve visibility into costs and supplier performance and more quickly mobilise our workforce in an environment that requires strict on-boarding activities,” said Craig Fox, first assistant commissioner, Service Operations Division, ATO.
The SAP Fieldglass VMS launched with an initial 300 IT workers across Australia:
The rollout of SAP FIeldglass VMS occurred in a record 15 weeks. Implementation of the VMS and new IT Contractors Panel arrangements have resulted in cost savings of about AUD $210K per month, while avoiding costs of approximately AUD $5M by implementing tighter management fee controls and a tenure-based reduction for supplier management fees.
The ATO has also experienced enhanced contractor engagement, retention and performance. With an increase in demand immediately following implementation, the ATO increased its IT contractor headcount from 180 to 370 – an increase in spend from AUD $32M to approximately AUD $70M. At the same time, despite significant increases in recruitment activity, on-boarding and payments, the IT Panel Management Team increased its headcount by only two temporary staff.
The ATO has improved both accountability and transparency through the procurement process:
On the supplier side, improvements made by the ATO occurred while also increasing supplier relationships and industry engagement. Suppliers are now paid automatically on a weekly basis through a recipient created tax invoice (RCTI) process that is automatically reconciled with suppliers’ payment systems, eliminating the need for suppliers to invoice the ATO and reducing the number of staff required to process invoices by two.
Based on successes to date, in 2019 the ATO plans to expand its use of SAP Fieldglass to include its non-IT external labour as well as to implement the services module of the solution.