Procurement Org structure question

Excerpt from a client procurement review conducted in 2007:

What types of organizational structures are used in publicly funded organizational contract management practices?
Publicly funded organizations are implementing a type of hybrid purchasing structure by the name of ‘Shared Services’. This includes the Purchasing Services Branch of the BC Provincial Government; the Management Secretariat of the Ontario Provincial Government; the BC Provincial Health Services Authority; the Vancouver Coastal Health Authority and with the Fraser Health Authority currently investigating its options for its supply chain future. According to ‘Wikipedia’ “The Public Sector has taken note of the benefits derived in the Private Sector and continues to strive for Best Practice. The United States and Australia among others have had Shared Services in government since the late 1990’s. The UK government under a central drive to efficiency following from the Gershon Review are working to an overall plan for realizing the benefits of Shared Services.”

Shared Services essentially is the grouping of functions that provide a support service to other areas within an organization and running them together as a ‘business’. Examples include Finance, Human Resources, Information Technology where the services of each are provided to internal clients. Governance, i.e. policy ‘adherence’ is separated from the services and is held elsewhere. For example with the BC Government, policy is with the Procurement Governance Office, whereas purchasing advice and consulting services comes from the Purchasing Services Branch. Adherence to policy lies with the individual ‘clients’ not with the service provider.

What industries have successfully centralized contract management?
From the literature review, the preference of service firms, and those in insurance and banking industries, is to centralizing the procurement functions if not using a hybrid method. As these industries have minimal procurement, but similar commodity purchases as Client X (i.e. print and publishing, IT, consultant services, stationery & facilities services), it would be deemed an appropriate comparison.

The caveat is that it is more difficult to find contacts in decentralized industries, so the research can only be seen as a ‘snapshot’ of what is currently in place in various service industries.

What steps or processes are critical for successful centralization?
The success factors depend upon how the overall corporation is structured; time and availability of resources; and in-house project management expertise to lead an implementation of this scope.

Another success factor appears to be in ‘phasing’ the move towards centralization via a hybrid method and then evolving the structure over time in response to any external pressures.
As Client X has no easy method for establishing baseline measurements of the functions (due to manual processing of invoices and little or no vendor reporting on purchase history), it would be difficult to establish a target to meet without knowing from where Client X started. A project team developed for implementing a change may be able to determine other performance measurements in terms of invoice processing times, client satisfaction ratings, and vendor performance ratings.