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Estimating Investment for Eprocurement - TCO


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  • 1. Panel DiscussionAvalon Healthcare, Dell, Paystream AdvisorsHow Good Is Your Math?Estimating Investment For eProcurement
  • 2. Direct$2824bPayroll$1797b✓✓The Spending Tree – Fortune 1000FacilitiesConsulting IT SpendingLegal Services Temp LaborMarketingMROTravel and Expenses Office Supplies
  • 3. Business CaseTCOROI
  • 4. Our PanelistsMark ColwellVice PresidentPaystream AdvisorsKevin TurnerGlobal eCommerce DirectorDellHyrum KirtonVice President – ProcurementAvalon Healthcare
  • 5. Avalon Healthcare
  • 6. PayStream Advisorsis a provider of independent research and automationassessments for financial automation technology to businessleaders in finance and procurement.Advisory ServicesPayStream Research
  • 7. The ‘New’ Dell
  • 8. Scoping The Task Business models Key stakeholders
  • 9. Which Of The Following Business Models HaveBeen Adopted By eProcurement Vendors ?1. Only buyer pays2. Only supplier pays3. Both buyer and supplier pay4. No one pays5. 1, 2 and 3
  • 10. eProcurement Business ModelsBuyer Funded(example Coupa)Supplier Funded(example GHX)Network(example Ariba)Buyer Pays Buyer Pays Cost Plus Buyer PaysNo Supplier Fees Supplier Fees Supplier Fees (typically)
  • 11. No Supplier Transaction Fees =Increased Adoption When implementing a successful eProcurement orE-invoicing initiative it is recommenced that suppliershave No Supplier Transaction Fees A no charge supplier policy will help to increaseyour Supplier Adoption Rate Success initiative (regardless of the technologypartner) requires supplier adoption
  • 12. Avalon’s eProcurement Journey Go ahead approval took 2 years from start to finishled and pushed by procurement Built committee of department heads to create newprocesses and vendors for company fit Vetted 6 E-procurement vendors over process Estimating investment:• Cost at or below current vendor pay model• Value adds to support platform robust while keepingsupplier pay model
  • 13. Doing The Math Hard vs. soft costs Hidden costs, gotchas Opportunity costs PayStream tool
  • 14. Hard vs. Soft Costs Focus on hard dollar• Success of companies is measured in hard dollars• Upper management wants to see hard dollar saving Don’t ignore soft costs• Focus on the soft dollar costs that can be turned intohard dollar saving– Example: Reallocation of personnel. Retaining those people, reusingthem, freeing up their capacity, can allow a company to grow “outward”rather than inward
  • 15. What is Perceived as the # 1 Barrier toeProcurement?1. IT Resources2. No budget3. Lack of executive support4. Hard to justify5. All of the above
  • 16. Top Barriers – Paystream Survey
  • 17. Hidden Costs, Gotchas IT required changes… reliance on ERP vendor andoutside firms Process Exceptions… ePO without catalog;eInvoice without ePO Many procurement solutions… adaptability to varioustechnologies and solutions Vendor Fees… Pay to Play Integration Knowledge & Support
  • 18. The PayStream TCO Tool Vendor and technology agnostic Simple, straightforward yet comprehensive Helps asking right questions
  • 19. Steps to Calculate Your TCO.Evaluate the features andfunctionality of competitiveproducts – Cloudversus On-Premise/Networkbusiness application solutions.Initial Costs1. Evaluation and Selection
  • 20. Recurring Costs2.Evaluation and Selection:
  • 21. Prior to making thedecision to go with aCloud or On-Premise/Networksolution, a buyer mustfirst identify all thenecessary costcomponents associatedwith each option.
  • 22. Keys to Control Costs Agreed-upon goals, objectives… and schedule An executive commitment Dedicated appropriate contacts for project duration A commitment to utilization to achieve fullreturn on investment
  • 23. Presenting The TCO Avoiding sticker shock Getting buy-in
  • 24. Where To Get The TCO Calculator? Your Coupa Contact