How to get more money for those it’s really all about?

1. Seminar jointly arranged by the Ministry of Finance of Turkey and OECD/SigmaThe new public procurement procedures and instrumentsThe Danish system on framework agreements, centralised and coordinated purchasingPresentation by Mr. Søren Jakobsen, CEO, SKI A/SAnkara, Turkey, 5-6 February 2008 How to get more money for those it’s really all about?

2. The Danish system on framework agreements, centralised and coordinated purchasingAgenda • A few facts about the company SKI • The company’s new strategy • The future strategy of SKI • SKI – the interactive company … • Our vision for a “Centre for Public Procurement” • Thoughts on competence development

3. A few facts about the company SKI • Limited company established in 1994 • Business model • A percentage (typically 1%) of turnover on contracts from vendors • Field of activity • Contributing to greater efficiency in the area of public purchasing by establishing and maintaining attractive framework agreements • Number of employees: app. 60 • Number of framework agreements: app. 50 • Owners • Ministry of Finance (55%) • KL, the National Association of Local Authorities (45%) The company is situated at the harbour front in Copenhagen

4. A few facts about the company SKI Present activities Framework contracts (on large ’standardized’ procurement areas) Advise on public procurement (tools for estimating procurement volume, data collection and handling, choice of supplier and solutions, procurement policy and strategy, green procurement, etc.) Building of qualifications (user and networking groups, courses, seminars and conferences, training programs for vendors sales staff) Publications and communication (guides, best practices, articles, PR, advice and aid regarding internal communication) Tools (electronic tendering system, mini-tenders, e-auctions) E-commerce initiatives (customer-related price lists, advice on implementation of e-commerce) Assistance from external consultants (advise on what and how to buy, spend analysis, etc.)

5. A few facts about the company. SKI’s turnover broken down by customer segments. +20% 9.400 m.DKK (=1.250 m.Euro) (mill. DKK.) +18% +26% +17% +19% -9% MA 50% 28% 11% 11% Central government Semi-public companies Municipalities Regions

6. A few facts about the company. SKI’s turnover broken down by main product categories IT Energy Tele & data communication Travel Food Furniture Office stationary and books Vehicles Equip. for research & science Misc. electronics & hand tools Kitchen equipment Misc.

7. A few facts about the company SKI’s focus on products and services 132 billion DKK Building and construction Roadwork Special software Clothing Medicine Hospital equipment Window-cleaning Cleaning Temporary workers Special hardware Business process services Low Craftsman services Eldercare Engineering services Hospital articles Ambulance-service & patient transport IT- and management consultancy services Lawyer- and accountant-service • IT-outsourcing: • Mainframe & Midrange • Distributed environment & application handling Level of Standardization IT-outsourcing SKI’s focus in 2009 Open Source Handicap aid Advertising SKI’s focus in 2006 Scanning of construction drawings Mail and parcels Cleaning articles Newspapers/magazines SKI’s focus in 2003 Catering services Gas High Electricity Printed matters Food Financial services Travel services 4 billion DKK Hearing aid Tele and data communication Office stationary 8 billion DKK IT-standard software Courses & conferences Furniture IT for education IT-standard hardware White goods Vehicles Guard services Fuel Office machines Large Potential turnover Small

8. SKI’s new strategy Background The goals of the current strategy from 2002 are accomplished. The Danish State has established their own procurement programme. A major restructuring of the Danish public sector – fewer but larger local governments – took effect on January 1, 2007 Local procurement networks have been established.

9. SKI’s new strategyOverview What is new in SKI’s strategy? Creating a foundation for further gains from procurement by pooling and co-ordinating procurement volume and a closer involvement in the customer's procurement. Strengthened focus on local government. Improved documentation of savings both by product group and by customer. More dynamic financing of SKI’s activities Partnerships with the leading and interested customers Easier use of SKI’s framework contracts through further development of the contracts’ content, connection and accessibility. Strengthened activation of suppliers. Local as well as international. ”Packaging” of framework contracts, services and communication so that SKI is able to offer coherent solutions and meet the customers’ political agenda, and thereby secure managerial impact and support. Securing a more qualified procurement debate through documentation and presentation of facts. Investment in renewal.

10. SKI’s new strategyMission SKI creates documented increased returns of scale in public procurement by pooling volume, qualifications and system development for the benefit of SKI’s customers. Through close cooperation with customers and suppliers SKI secures attractive framework contracts. SKI’s framework contracts make it easy for the public sector to purchase the needed solutions, products and services in the cheapest possible way while showing environmental, energy and social responsibility. SKI’s earnings must make investments in new procurement initiatives possible. Initiatives that must be prioritised in a commercial way.

11. SKI’s new strategy Vision SKI strives to be a central player, that makes public procurement more effective and develops it. SKI strives to inspire and supportpublic organizations and their purchasing agents in achieving gains through efficient procurementandhelp promote an effective public administration. Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement. SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees.

12. SKI’s new strategyGoals • Growth • SKI’s turnover must increase to 13 billion DKK by 2012 • The turnover from the municipalities must increase to 50% by 2012. • Growth and new initiatives must be self financed. The average return before tax in the years 2008 to 2012 must be 1 million DKK per year. • Trust • For each tender the coordinated turnover must be at least 25%. • For each tender a documentation of savings that is accepted by customers must be made. • During 2008 a minimum of 5 partnerships between customers and SKI must be established, and the number must grow by 2 each of the following years. • Qualifications • There must exist a plan for competence development for each employee. • Change of staff (employee initiated) must not exceed 10% per year.

13. SKI’s new strategy.Relationship between vision, sub-strategies and specific actionplans Priority • Product and market insight • Coordinated volume • Intensification of competition between suppliers, including foreign • Improved documentation of prices and savings How? Why? 1. Attractive framework agreements • Prioritized and organised sales force • A concept for partnerships with key customers and local procurement networks • Development of SKI’s financial model 2. A new order of prioritybetween customers - SKI strives to be a central player, that makes public procurement more effective and develops it. - SKI strives to inspire and support public organizations and their purchasing agents in achieving gains through efficient procurement and help promote an effective public administration. - Based on openness, equality and qualifications SKI strives to be the natural and inspiring focus point for all players involved in public procurement. - SKI must therefore be an innovative, effective and challenging workplace, that is able to attract and develop the best employees. • Customer groups • Experience groups • Centre for public procurement • Owners and political support 3. Cooperation • Prioritising contracts • Focus on most saleable contracts • Focus on use of existing contracts instead of establishing new contracts • The health area • Further development of models for tendering • Standardisation like The Danish Ministry of Finance • Regional sub-contracts • Helping with customers’ individual and sector specific tenders 4. A new order of prioritybetween contract areas • Attracting and developing the employees • Internal knowledge sharing and exchange of qualifications • Tight project planning • Strengthened financial control 5. An attractive andprofessional workplace 6. A synergy with thesuppliers • Involvement of the suppliers’ sales organizations • Supplier follow-up • Coherent IT strategy • E-catalogues • E-auctions, mini tenders and dynamic purchasing systems • Easy access to relevant information • CRM-service 7. Electronic purchasing • Environment • Energy • Social clauses • SMEs 8. Main issues

14. SKI’s new strategyThe 8 dimensions of priority All initiatives must be evaluated on the following scales: Coherent solutions Dialogue Easy does it One to many Knowledge and documentation We Business Increased use of existing initiatives Isolated solutions Monologue Do it yourself One to one Feelings and beliefs I ”Window-dressing” Launching of new initiatives

15. +0,05% 0,10% +0,15% Sub-strategies and specific actionplansAttractive framework contractsCommitted and coordinated volume I. Commitment to using the contract • Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract when it is established. This is noted in the material presented in the tender process. II. Coordinated volume • The customers commit themselves to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount. IV. E-auction / Mini-tender • The customers obtain a price for a specific product/service with a specific volume and period of time. (Until now only used in connection to the Danish state’s procurement programme and SKI’s contract in regard to canteen service) Today III. Lowest daily price • A customer obtains the price for the day from a specific supplier on the framework contract for a specific product. • SKI obtains support from other customers. Tendering Buying Time The customer chooses one of the suppliers on the framework contract The customer offers full supplier independence amongst the suppliers on the framework contract Before the tender I. Commitment to using the contract • Customers, typically from the customer group, commit themselves to use one of the suppliers on the framework contract for all procure-ment within the contract’s coverage. III. Coordinated volume • The customers commit themselves to buy a specific amount from a specific supplier on the framework contract. The supplier gives an extra discount. V. E-auction / Mini-tender • The customers obtain a price for a specific product/service with a specific volume and period of time. • SKI coordinates and obtains support from other customers. • If the mini-tenders are complex external consultant services can be involved. In the future IV. Lowest daily price • A customer obtains the price for the day from a specific supplier on the framework contract for a specific product. • SKI obtains support from other customers. II. Commitment to using a standard assortment from one supplier • Customers commit themselves to use a pre-defined assortment of products/services from only one specific supplier. The supplier is chosen by the customer group, Yearly bonus to the customers when the agreed volume has been reached

16. The future strategy of SKI Primary focus points 3rd wave 1st wave 2nd wave 2005 2007 • A deepening and broadening of partnerships • Knowledge sharing & value-based leadership • Marketorientation • Revitalisation of the organisation • Processes and systems • Buildingup of competences

17. The future strategy of SKISKI – the interactive company. • Attractive work-place • Competence-building • Recruiting • Job appraisal interviews • Curiosity • Social competence • Partnerships • Structural frame • Building • Culture • Values • Knowledge-sharing Talented colleagues Unique organisation SKI the interactive company Externally Internally Value-adding Productivity • Growth • Simplification • Prioritising • Management training • CRM • ETHICS • ERP • Electronic archives Good management Supporting technologies

18. The future strategy of SKI SKI’s vision: ”Centre for Public Procurement” Aims: Openness Cooperation –internally and externally Flexibility Proximity to customers, suppliers and cooperating partners Vision: SKI wants to be the natural and inspiring focus point for all persons and organisations involved in public procurement – in an attractive building. The elements of the concept Other organisations are invited to become tenants Project facilities Seminar and conference facilities Showroom facilities Service for visitors

19. Sub-strategies and specific action-plansAn attractive and professional workplace Why is competence development so important to SKI? Demands oncompetencies • Customers’ expectations • Customers' professionalization • Customers ”deposit” their success at SKI • Own ambitions regarding market orientation, dialogue with top management and sale of solutions (instead of products/services) • Rising demands on competencies as a result of diminishing savings from procurement • The right customer-solutions can only be found through close collaboration between organisations Competence development Today • SKI has been through a fantastic turn-around… • The competencies of management and employees are fully utilized • More and more new projects and activities reveals the need for competence development Start of previous strategy in 2002 Time

20. Thank you for your attention! Comments and questions …