2007 3 29 127 BrousseauPresentation

High Performance Procurement throughProcurement Outsourcing : High Performance Procurement through Procurement Outsourcing Accenture Procurement Solutions Christopher Brousseau


Agenda : Agenda Introduction Today’s Procurement Challenge The Route to High Performance Procurement Procurement BPO and High Performance Procurement: The Deutsche Bank Story What next for your journey to High Performance Procurement?


Slide3 : Today’s Procurement Challenge: Why Care About Procurement?


Today’s Procurement Challenge : Today’s Procurement Challenge Transparency: Lack of consistent, timely and accurate information Skills: Inadequate category-specific sourcing and buying expertise Resources: Lack of investment or executive sponsorship for corporate procurement Technology Enablement: Inadequate procurement tools Control: Autonomous buying across the enterprise There is still much opportunity left in Procurement, and many organizations are yet to realize its full potential


Procurement Opportunity Still to be Realized : Procurement Opportunity Still to be Realized Procurement Opportunities Spend Savings Improved Compliance Operational Efficiency Business Insight The challenge in a fast changing procurement world is prioritizing, reorganizing and realizing bottom line value. 'The opportunity for a second wave of savings is present.' 'Invoice Reconciliation and Payment can strategically provide the offensive push required to secure future procurement-related cost savings.' Source: Aberdeen Group 'Harnessing Payables to Capture a Second Wave of Procurement Savings'


Procurement Savings Opportunity:By More Effective Sourcing : Procurement Savings Opportunity: By More Effective Sourcing * Source: Accenture Procurement Survey of 100 companies 'If Purchasing were involved in ALL indirect-spend categories, how much would you save?' * Avg. Savings Potential: 11.2% andgt;15 % Savings At Least 10-15% Savings At Least 5-10% Savings 25% 50% 75% 100% Proportion of Respondents Effective Sourcing Strategic sourcing can typically reduce supplier spend by 7-12% cost. ( ~$110m sustainable bottom line savings for each $1billion of non strategic spend) Increase spend visibility to identify additional savings, and fuel innovation and continuous improvement programs


Procurement Savings Opportunity:By Contract Compliance & Operational Efficiency : Source: Accenture Procurement Survey of 100 companies 'Today, how involved is your purchasing department in managing non strategic spend?' Procurement not involved; Contracts not complied with Procurement involved; Contracts complied with Distribution 49% 51% Site related 47% 53% Personnel 41% 59% Production/ Development 38% 62% Travel 36% 64% IT/Telecom 34% 66% Marketing 24% 76% Professional Services 9% 91% Procurement Savings Opportunity: By Contract Compliance andamp; Operational Efficiency Contract Compliance 95% category spend compliance can result in internal cost savings of 3-5% Reduce risk and increased management control and visibility over spend Operational efficiency Improved user service levels and satisfaction, enhanced process control and reporting.


Slide8 : The Route To High Performance Procurement


High Performance Procurement:Characteristics of High Performance Performers : High Performance Procurement: Characteristics of High Performance Performers Fully aligned with corporate strategy Clear, accessible, uniformly complied policies Category-focused approach Maximized 'under management' spend Supplier relationships viewed as supply chain extension Global procurement and supplier metrics tracking Standard procurement process High Performance Procurement carries a lot of meaning to clients, but there are specific elements that are most important.


The Best Route to High Performance Procurement: Outsourcing : The Best Route to High Performance Procurement: Outsourcing Scale Capability Speed Performance 'When considering outsourcing procurement, the question should not be whether your company can perform the activity in-house, but whether you can be the top performing, lowest-cost provider for that particular capability.' Aberdeen Group, 2005 Outsourcing is not just a vehicle to achieve HPP it’s also a way of getting there faster and accessing a level of performance not available to organizations on their own


Procurement BPO: On The Upswing : Procurement BPO: On The Upswing 'The inherent links between the procurement and finance functions are leading to what is likely to be a growing trend in deals involving the procure-to-pay process. . . . . IDC expects to see more of such multifunction deals going forward in 2005.' From IDC, Source: Procurement BPO Contracts Analysis: A Study of Evolving Deal Activity; Shruti Yadav; September 2005 You only have to look at the market to know that BPO is on the upswing and is a clear route to High Performance Procurement The procurement outsourcing market is expected to grow 22.3% annually (CAGR) through 2010 to almost $1.7 billion. IDC projection It is worth $9 billion with full service procurement outsourcing being the fastest growing segment (with revenues of $25 million in 2005). Everest Research Full service procurement outsourcing is likely to grow to at least 10% of the total market in the next three-to-five years. Everest Research


Procurement Shared Services: The New Procurement BPO Playing Field : Procurement Shared Services: The New Procurement BPO Playing Field Category Category Category Category Category Category Category Category Category Category Category Accenture Procurement Solutions Global Sourcing Category Focused Specialists Scale of Operation Speed to High Performance Procurement Stronger Buying Power: Negotiation Leverage Enhanced Market andamp; Supplier Understanding one to many A fundamental shift has happened in Procurement BPO - no longer centered on one-to-one client support models, but rather through through shared services/one to many delivery model.


Transforming Procurement For Real Results: The Next Generation Procurement Organization : Transforming Procurement For Real Results: The Next Generation Procurement Organization Client Suppliers Account Management Client Sourcing Lead Unit Lead Client Service Lead External Services External Category Partners BSS-Helpdesk BSS-Document Mgmt External Service Partners Technology Category Specific Tools Sourcing Reporting/Analytics P2P Process Specific Tools Business Insights Actionable Information Reporting/Analytics Pre-emptive and executive insights Global Category Directors Category Managers Service Line Experts Service Managers COE Services Spot Buys Helpdesk Invoice Processing Sourcing Support Contract Services Requisition andamp; Fulfillment Auction/Event Services Content Services Supplier Master Data Services Tandamp;E User Management Process Metrics Contracted Labor HR Services Information Technology Telecoms andamp; Networks Travel Services Facilities andamp; Real Estate Professional Services Marketing Services MRO Specialty Categories Customer Service Sourcing Buying Transactions Supplier Enablement Reporting


Slide14 : Procurement BPO and High Performance Procurement: The Deutsche Bank Story


Deutsche Bank: Journey Towards The Ideal Operating Model : Deutsche Bank: Journey Towards The Ideal Operating Model Work To Date Multi-year agreement for outsourced, end-to-end, P2P services 'Soft partnership' which recognizes symbiotic business interests of both partners Global scope € X B in addressable spend Impacts millions of annual transactions across hundreds of different legal entities Transformation of systems and processes Services delivered via a combination of on-site resources and multi-client service centers: Bratislava, Slovakia (for Continental European operations); Bangalore, India (for US and UK operations); Dalian, China (for Asia Pacific operations)


Deutsche Bank: Results So Far : Deutsche Bank: Results So Far The Challenge: Gain control over expenditure, streamline and leverage vendors more effectively, establish useable management information for better decision making and put in place end-to-end purchasing process management. Realized significant sourcing andamp; category management savings Operations centralized in Bratislava, Bangalore, and Dalian for sourcing and purchasing support, accounts payable, and Tandamp;E processing Transitioned US, UK, Germany, Spain, Singapore, Australia, Japan, and Hong Kong, to global procurement and AP systems New helpdesk functionality created and new toolkits introduced Developed category specific strategies for spend base to transform procurement operations High Performance Delivered


Change Challenges: Inherent in Shaking up the Operations Model : Change Challenges: Inherent in Shaking up the Operations Model Language and learning curves Regional specialties Managing cost inflation Offshore Operations Transitioning Significant effort and coordination Client re-organization for aligned accountability Minimization of 'Regional Nuances' Global Multi-Location Implementation In-sufficient initial focus of senior executives Delays between change process and value creation Maintianing a collaborative partnership – provide flexibility Management Focus


Change Challenges: Outsourcing Contract Success Factors : Change Challenges: Outsourcing Contract Success Factors Leveraging operations across multiple Accenture clients Success Transformation to global standard platforms and processes; avoiding scope creep Focus on total value, not only state operational cost reduction of current procurement and accounts payable operations through moving to lower cost delivery centers Leveraging 'best in class' processes around sourcing and procurement, e.g., eAuctions, Supplier Information Mgmt, andamp; PLM


Change Challenges: Anticipating The Next Phase : Change Challenges: Anticipating The Next Phase Spend consolidated with preferred vendors Decision based partner vendors selection  ‘Purchase-through-payment’ transactions managed through preferred channels Systems and processes enabled vendor performance management Accurate on time Invoice payment System-monitored compliance for Tandamp;E user entry Ready available information to support sourcing activities and procurement operations Tandamp;E claims paid per agreed timing


Slide20 : What next on your journey to High Performance Procurement?


Next Steps : Lessons Learnt Which Make A Difference : Next Steps : Lessons Learnt Which Make A Difference Procurement Outsourcing success requires a committed CPO / CXO and a shared belief that High Performance Procurement brings strategic and shareholder benefits Commit senior management sponsorship andamp; active leadership Examine Select Target Manage Commit Examine broadly the sources of value Select a partner not a provider if more than a tactical initiative Target equitable risk exposure and benefit sharing Manage and resource as a strategic decision process


Realizing The Value From Procurement BPO : Realizing The Value From Procurement BPO Accenture Procurement Solutions chris.brousseau@accenture.com