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Secrets of Services Spend Management Leaders Secrets of Services Spend Management Leaders Presentation Transcript

  • B Secrets of Services Spend Management Leaders Speakers from: National Bank of Canada The McGraw-Hill Companies Sourcing Interest Group - SIG© 2012 Ariba, Inc. All rights reserved.
  • Session Abstract While services spend is often overlooked or undermanaged due to the complexity and unique challenges, it is one of the areas of greatest potential savings. This must-see session investigates the battle-tested strategies todays spend management leaders are using to optimize source-to-settle performance of critical spend categories -- ranging from temp labor and consulting to marketing and facilities spending. If youre trying to get more complex spend under management, then this session is for you!2 © 2012 Ariba, Inc. All rights reserved.
  • Speaker - National Bank of Canada Jacques Lavoie Senior Manager Sourcing – Center of Excellence, National Bank of Canada • Responsible for the Center of Excellence since its creation in 2008 reporting to the Sourcing Vice President with the following services: RFx support, spend analytics, market research. Best practices research, process redesign and improvement, methodology expertise Technology enablement, category exploration and expansion A career spanning over 30 years in different fields with a long track record in performance improvement including the management of the Process and Performance Improvement team servicing the entire National Bank for 7 years. Before joining the Bank he worked in the Performance Management Consulting field across North America in various industries such as Banking, Telecom, Manufacturing, Transportation and Forestry. Prior work experience in the manufacturing industry holding various Management position.3 © 2012 Ariba, Inc. All rights reserved.
  • Speaker - The McGraw-Hill CompaniesAlice Hillary Alice Hillary, Manager, Procure to Pay Operations, The McGraw-Hill Companies Alice Hillary is the Manager of P2P Operations at The McGraw-Hill Companies. Her team was instrumental in the implementation of the Ariba On Demand P2P solution. Her team is also responsible for end user support and training and supplier enablement on the P2P application. McGraw-Hill went live in October of 2009 with $300 million in spend on the P2P tool. Since going live her team has enabled an additional $400 million in spend.4 © 2012 Ariba, Inc. All rights reserved.
  • Speaker - Sourcing Interest Group Alice Hillary Dawn Tiura Evans, SIG‘s President and Chief Executive Officer, has over 20 years of leadership experience, with the past 14 years focused on the sourcing and outsourcing industry • In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999 • Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm • Dawn is actively involved on a number of boards promoting civic, health and children‘s issues in the Jacksonville, Florida area. Dawn is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University5 © 2012 Ariba, Inc. All rights reserved.
  • B Secrets of Services Spend Management Leaders Jacques Lavoie Senior Manager Sourcing – Center of Excellence National Bank of Canada© 2012 Ariba, Inc. All rights reserved.
  • National Bank of Canada • National Bank of Canada is an integrated group that provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services elsewhere in the world. National Bank offers a full array of banking services, including corporate and investment banking. It is an Active player on international markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management, as well as mutual fund and retirement plan management. As the sixth largest bank in Canada and the leading bank in Quebec, it has branches in almost every province in Canada as well as numerous representative offices, subsidiaries and partnerships, through which it can serve clients in the United States, Europe and other parts of the world. • Total revenues 2011 = $4.6 Billion • Number of branches = 448 • Number of Employees = 19,431 • Sourcing info : Over 10,500 suppliers 95% of the spend concentrated with 600 suppliers 25 –30% of spend services-related7 © 2012 Ariba, Inc. All rights reserved.
  • Business Background Sourcing at National Bank…a short timeline!! 2008 – Sourcing VP hired and centralization of all Sourcing teams (3) 2008 – Identification and formal agreement with 14 preferred consulting firms (59) 2009 – Centralization of IT contractors request using a manual process 2009 – Implementation of two Ariba modules: Spend Viz and Sourcing Pro 2010 – What should be our next steps??8 © 2012 Ariba, Inc. All rights reserved.
  • Business Background The P2P complex services…IT Contractors Why did we focus on this category of spend? • Largest percentage of the spend within the temporary labor category • Manual centralized process already in place • Impact and change management curbed to IT personnel • Piloting within our own business line • Executive will and visible support9 © 2012 Ariba, Inc. All rights reserved.
  • Business Background The P2P complex services…IT Contractors What were the challenges faced with this category of spend? Business lines viewpoint: • Manual / E-mail-based process cumbersome (requests, approvals, etc.) • Process taking to long to get resource on site • Process difficult to follow Sourcing viewpoint: • High degree of confidence to capture more savings • Lack of visibility on overall spend and on process • Low compliance ( rate, preferred vendors, process) • Analysis and reporting difficult to impossible Supplier point of view • Little feedback on submitted candidates • Process cumbersome10 © 2012 Ariba, Inc. All rights reserved.
  • Business Background The P2P complex services story…IT Contractors What were the Goals / Objectives? • 10% savings on spend • Ensure compliance of entire process until payment • Ensure proper visibility on spend for analysis and reporting • Reduce elapsed time to acquire talent • Go live within 10 weeks!!11 © 2012 Ariba, Inc. All rights reserved.
  • Business Background The P2P complex services . . . IT Contractors Who were the Champions? • IT and HR SVP • Sourcing VP Who was involved? • Sourcing • Technology • Manage Service Provider • Finance / Accounts Payable • Human resources • Suppliers • Ariba implementation team12 © 2012 Ariba, Inc. All rights reserved.
  • P2P Complex Services…The Story 2010 Sept /Nov – Business case, market research demo and tool selection 2010 Dec23 – Signed agreement with Ariba • Benchmarking to competition in complex services did not show major hurdles • Flexibility versus long-term plan to expand to other categories with one solution 2011 Jan to April – Deployment within 10 weeks. An Ariba record!! • Out-of-the-box configuration • No system links 2011 from May - Phase 2 of deployment : adjustment and links to payment system13 © 2012 Ariba, Inc. All rights reserved.
  • P2P Complex Services…Numbers Since implementation Total PO created = 1087 active = 544 Active vendors = 30 ( prefered and non ) Contractors created = 632 active = 486 Requesters = 88 Job descriptions = 207 used = 98 Invoices paid = 1454 = 27M $14 © 2012 Ariba, Inc. All rights reserved.
  • P2P Complex Services…Benefits 1 ) Savings • 2010-11 (6 months) $600K hard savings* or 3.3%. (year over year same period). • 2011-12 (3 months) $600K or 5.1% (year over year same period). • 2011-12 full year projection $1,54 M and $711K cost avoidance * Verified by the finance dept. 2) Benefits: • Faster and easier requisition and approval. High satisfaction level from business • Greater visibility & traceability, Positionned to influence executive on non-compliance • Competitive bid 3) Operational KPIs Headcount, Cycle time, Request, Rate, Tenure, Vendor performance Request received, Submissions, Quality evaluation15 © 2012 Ariba, Inc. All rights reserved.
  • P2P Complex Services…Takeaway Positive points • High level of operational support . . . To keep positive spin with users and suppliers • Executive buy in and ongoing support . . . • Availability for management to make decisions quickly . . . Keep the team moving • Quick implementation did acquire visibility . . . Highlight non compliant personnel • Partnership with Accounts Payable . . . to catch rogue spend Biggest challenges • Linkage to payment and time reporting systems ( manual or mechanized) • Change and communication ++++ to all stakeholders • Get the different team members to be on the same page at the start of the project • Keep the team focused after 1st phase16 © 2012 Ariba, Inc. All rights reserved.
  • Conclusions • If you can, Get someone who has been there and done that!! Try to focus on a spend category you already have a good knowledge of. • Technology is an enabler, the success of your program will depend on its management!!17 © 2012 Ariba, Inc. All rights reserved.
  • B Secrets of Services Spend Management Leaders Alice Hillary Manager, Procure to Pay Operations The McGraw Hill Companies© 2012 Ariba, Inc. All rights reserved.
  • Company Overview • Founded in 1888, The McGraw-Hill Companies is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poors, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2011 were $6.25 billion.19 © 2012 Ariba, Inc. All rights reserved.
  • P2P Background • Went live in 2009 with limited categories of spend totaling $300 Mil ♦ IT Hardware & Software & Product Development ♦ 300 Users trained • Enabled an additional $400Mil in the tool by 2011 ♦ Consulting, Temporary Labor, Cell Phones, Marketing Research ♦ ‗Lite‘ version in UK ♦ In 2011 processed 37k POs totaling over $570Mil ♦ Approximately 5k requisitioners • Self-Service Invoicing enabled in 2012 ♦ Available to all domestic employees ♦ YTD 1.3k invoices processed totaling $3.6Mil20 © 2012 Ariba, Inc. All rights reserved.
  • Implementation of Services Procurement • 85% of overall spend is services-related • Catalogs built to support specific service items with rates and generic categories • Implemented the following modules ♦ Generic Driver – attribute driven rate cards/generic categories ♦ Temp Labor Driver – attribute-driven rate cards/generic categories ♦ Consulting Driver – generic categories • Use contract compliance to support supplier specific rates21 © 2012 Ariba, Inc. All rights reserved.
  • Prioritization and Categories • How We Prioritized ♦ Amount of spend ♦ Ability to implement the category ♦ Availability of existing rate cards • Categories Implemented ♦ Product Development ♦ Consulting/SOW ♦ Temp Labor ♦ HR Recruiting22 © 2012 Ariba, Inc. All rights reserved.
  • Benefits Realized • Better spend management • Decentralized buying while enforcing preferred suppliers • Streamlined, consistent process across the organization • Compliance to rate cards • Improved accrual process • Controls • Reporting23 © 2012 Ariba, Inc. All rights reserved.
  • Challenges We Faced • Quantity-Based Invoicing on Services • Compliance/Training • Manual Migration of Data • AN Compliance/Manual Orders • End-user Adoption/Change Management • Business Segments Changing their Process • Supplier Enablement (data cleanup effort)24 © 2012 Ariba, Inc. All rights reserved.
  • Top “Lessons Learned” • The Business Units must drive the initiative from an ROI and Change Management perspective. • Compliance checks need to come early. • Communication is key, both internally and with suppliers. • Establish partnerships with Suppliers; this process is new for many of them.25 © 2012 Ariba, Inc. All rights reserved.
  • B Secrets of Services Spend Management Leaders Dawn Evans CEO Sourcing Interests Group – SIG© 2012 Ariba, Inc. All rights reserved.
  • Agenda • About Sourcing Interests Group • Trends in Sourcing Services • Best Practices in Sourcing Services27 © 2012 Ariba, Inc. All rights reserved.
  • Company Overview • Sourcing Interests Group (SIG) is in its 21st year as a membership organization comprised of sourcing and outsourcing professionals. • SIG is unique in that it blends service providers, law firms, advisory firms, consultants and practitioners in a non-commercial environment to share industry knowledge, gain trusted insight and make powerful connections. • SIG is acknowledged by many as a leader in providing an ongoing forum for sharing best practices and thought leadership in procurement, outsourcing, offshoring, insourcing and shared services. • SIG offers venues for the active sharing of non-competitive information and practices among members, and provides environments conducive to learning and relationship building.28 © 2012 Ariba, Inc. All rights reserved.
  • Challenges in Sourcing Services • Changing marketplace as a result of the economic recovery Supply market often not as ―well-defined‖ as for physical goods • Limited visibility into human capital-related services expenditures (e.g., consulting, marketing, F&A, temp labor) Difficult to predict total spend, much less project or verify savings • Managing large number of suppliers with maverick buying and in the absence of adequate: Category management expertise Common systems, processes, interfaces • Indirect spend often considered non-strategic, therefore it has taken a back seat, yet indirect spend is often equivalent to 20% of company revenues—too high to ignore • Lack of expertise and knowledge of relocation, tax, compliance and other related issues • Requirements are often more complex and difficult to standardize compared to physical goods Source: HCMWorks, Thought Leadership in Indirect Procurement Services, 2010; NelsonHall Research; Ariba and Agco Presentation at the SIG Global Leadership Summit, October 2010’ SpendMatters, ―Relocation Services Sourcing – Best Practices for 2011 and Beyond Part 2), 9/26/11; SpendMatters, ―Seven Reasons Complex Services Spend is Difficult—and Unique! (Part 1 and 2), 12/21/11 and 12/22/1129 © 2012 Ariba, Inc. All rights reserved.
  • Best Practices in Sourcing Services • Over the past 10 years, many companies have implemented systems and programs to gain more visibility into their services supply chain • More transparency has resulted in improved savings, but to gain more efficiencies, drive costs down further, reduce cycle times and gain control, other things must happen ♦ Recognize that technology has enabled an on-demand, online, flexible workforce ♦ Don’t make it personal, even though services procurement often is to the budget holder ♦ Make sure you engage key executive stakeholders from the onset Source: Elance and Johnson & Johnson Presentation at the SIG Global Sourcing Summit 2012; SpendMatters, ―Seven Reasons Complex Services Spend is Difficult—and Unique! (Part 1 and 2), 12/21/11 and 12/22/1130 © 2012 Ariba, Inc. All rights reserved.
  • Best Practices in Sourcing Services • As with any sourcing program, success depends on great change management ♦ Understand your stakeholders and their drivers ♦ Work from the top-down to understand which stakeholder has ―veto‖ power ♦ Ensure that you have strong executive sponsorship • Engage the Legal department early in the process to better understand risk • Communication is a key component to program adoption ♦ Create training materials that are simple and available ♦ Program success depends on program adoption—people won‘t use what they don‘t understand • A robust program governance structure is critical, with regularly scheduled steering committee meetings in place • Sourcing ―Review Board‖ put in place to vet critical sourcing strategy and award decisions as required • Be customer-service oriented—both internally and externally Source: Capital One Presentation at the SIG Global Sourcing Summit, March 2012; Ariba and Agco Presentation at the SIG Global Leadership Summit, October 2010.31 © 2012 Ariba, Inc. All rights reserved.
  • 32 © 2012 Ariba, Inc. All rights reserved.
  • Q&A Contact info: John Lark jlark@ariba.com33 © 2012 Ariba, Inc. All rights reserved.
  • Share This Session…NOW…from your mobile! • All presentations are posted: Guidebook mobile app – Search Apple or Android app store for Guidebook – Enter code ―collabor8‖ Or at Slideshare.net/Ariba • Share via email or social media **Come back soon – we are syncing #AribaLIVE audio and video interviews to the presentations**34 © 2012 Ariba, Inc. All rights reserved.