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Procurement nation-procurecon-west-2011 - long version

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Procurement nation-procurecon-west-2011 - how to optimize spend in your company.

Procurement nation-procurecon-west-2011 - how to optimize spend in your company.

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  • So, of course this is a relativelynon-commercial environment.I’ve got a small dilemma.I am the CEO of a software company.My incentives are aligned toward growing a software company.My job is dependent on this target audience in the room continuing to buy my software.My kids college tuition is riding on your willingness to continue buying Coupa.How am I going to pull this off? Now look, I don’t know if that will be possible, but I do know one thing – As procurement professionals, we have the opportunity of a lifetime in front of us.A number of forces are converging:Revenue growth is harder to come by, and so the spend side of the equation is of greater priorityMost of the spend related to employee payroll has been optimized so the only place to go is non-payroll spendCloud based technology innovation has made it possible to quickly get ones arms around the last mile of spendThe question is, will procurement be brave enough to step up and seize the opportunity?
  • Spent: We have the ability to directly impact how money is spent, centrally, departmentally, and individually – from the most strategic purchase to the infamous paper clipEmpower: We can empower them to spend smarter and save money on behalf of the company for which they work.Bureaucracy: Rather than being viewed as a part of the corporate bureaucracy, we can tap into the cost conscious psyche of every employee in our organization.Quantify: And we can show our executives the direct quantifiable value we are driving for them, in the process.Learn: We can learn from each other across the globe to keep getting better and better
  • We have an opportunity to empower our employees to spend smarter and save money for their companies thru:Easy to use and quick to implement cloud based applications.A new space of Cloud Spend Management is formulating.
  • These folks are picky. They want:To easily search, browse or write requests.They want full visibility to all ordersThey want to be promoted to do something, just like their mobile facebook alertsThey want real-time budget visiblitiyThey want to see if the are helping the company saveThey want to see now they are doing against competitorsAnd they all want it on the iPhone, iPad, Android, or whatever device they have in their pocket. And we have to deliver for them – and we can and we are doing just that together.
  • So, let me take you on a short trip through the San Francisco Bay Area where we can visit with some of the companies I have the privilege of working with in driving this revolution.Supply chain is tough, the buyer does not care. We are made in californiaConsume info how we want not all fine as long as its blackDisagree-not everything is an extrapolation of history. Control is in our hands. We are not victims. We are in control. We have to spend less. No debate. How?  Reject. SfdcDoes technology matter?  Of course. Car. Tv. Projector. Wireless phone. Constrainted rules is simply unAmerican. Next gen is uninterestedAsk yourself, how can i?  How can we have 2x the folks here next year?  How can I cut through the politics? Focus on your core competency. Tech?  No. Hp. Innovator's solution
  • Now, I don’t know about all of you but I don’t like ‘Healthy alternatives’ for breakfast at 7am.On the way to work at 7am, I eat here.
  • And this is an organization that has embraced cloud based technology for empowering its people to spend smarter and save money.Everything from local landscaping, to the mural on the window,
  • To the light bulbs, menus, cleaning supplies, floor squeegees purchased via the same environment used to purchase items with existing significant corporate discounts from preferred suppliers, such as the LCD screens for example.
  • CSM stats:Total spend to date: $2.6M / $1.5MTotal POs processed: 1,058 / 6,378Estimated savings per PO: $30-$40Each PO processed = 10 happy meals for childrenTo date, they have saved ~$255,120 or happy meals for children
  • What happens centrally? HQ has never before seen visibility to what is happening at the store level, allowing them to continue optimizing spend, day in and day out.
  • On the way to the office, I stop by the Moscone center to participate in the Salesforce.com User Conference.
  • Before I even pull up, I can see the Signage that was purchased from a Procurement approved local vendor.
  • I can see the banners and the audio visual setup that was provided by local approved labor.
  • I know that all the pre-approved travel, dinners, pins, and setup has been directly requested by employees but controlled by procurement.I can also see that the money which would have been spent at any other company (spend first, ask forgiveness later) was not spent because it was dynamically rejected by a department head in the system.
  • Total spend through system: $830 million / 1.2BSupplier savings: $600,617 / 5.1M Process savings: $392,000 / 443,00Avoidance savings: ~$16M Additional Salesforce success points:95% spend under management 80% of orders content-driven (catalogs, punchout)P2P transaction cost ~$15 per order (on par with p-card transaction costs)
  • Quote from testimonial video.
  • If you want to spend smarter and save money, you need to get all your spend under management – not 50, 60, 70%, but 100%The only way to do that is to get adoption.The only way to get adoption is to offer something that is so darn easy to use, it is better than the alternativeIf there is one company in enterprise software technology that understand that, its Salesforce.com.There is simply no way that a new generation of young aggressive professionals is going to go through long bureacratic process the get the things they need to do their job!Just look at the iPad – not much additional FUNCTIONALITY – just insane USABILITY!!!!!!!!
  • But this is not just about technology companies, its about any company.
  • Some items bought through the system from preferred suppliers, while others bought directly online.
  • Temp labor from preferred suppliers requisitioned.Business cards from local vendorsRejections for non-needed items like new T-Shirts completed and tracked.
  • Total POs processed: 40,000 / 138,678 Total Invoices processed: 78,000 / 284,002 (9 months)Assumption: $40 / document processed would mean about a half million in savings over 2 monthsSavings: $16,907,200In December 2010, Rent-A-Center announced the acquisition of TRS."We are very excited about adding TRS to our RAC Acceptance business which we believe significantly accelerates the expansion of this growth initiative and increases our opportunities for further growth in this area," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "In addition, given our track record of successfully integrating acquisitions, we believe this transaction will create additional value for our stockholders, adding approximately $100 million in revenue and $15 million in operating income next year," continued Mr. Speese.
  • Quote from press release.
  • And this is being done at record speeds – thanks to Heros like this CPO and the partnership with Coupa and Emptoris.No more 1-3 year projects. The world has fundamentally changed. We need to move fast, and heros like Mike are doing just that.
  • So, I get to the office.
  • Our own internal use of theTaleo cloud tool gets approved though our own product.All of Taleo’s compensation data gets approved through Coupa’s product.
  • The office lease, the tax preparation services, the headhunters feel. Everything being requested and tracked by the employees themselves.Someone wants Taleo to pay for their membership to a local organization – REJECTED! Want to have a professional photographer take a picture like this? – REJECTED – go buy an HD camera instead.Who is doing the rejecting? The newly cost-conteous employee that has been empowered with the technology to do so!!
  • Total spend through system: $116M / 179MTotal savings per dashboard: $500,000 Assumption: Save 7-10% on total spendPer Taleo, fills more jobs every quarter than the population of Minneapolis (population in 2000 Census: 382,618)Per Rob: Every $1M in savings = 10 more people can access to the job they want
  • Quote from testimonial video.
  • Why is this important? Because a penny saved is a penny earned! Procurement is in the driver’s seat to actually REDUCE SPEND. Not just mitigate supplier risk,Not just manage contracts,Not just run sourcing events,But actually rapidly and quantifiably reduce overall discretionary spend by enabling the employees to have some level or technically supervised autonomy and control.
  • So, here at lunchtime I’m off to run an errand.
  • I stop by a local bank.
  • The lights, the signage, the chairs, the computers, the pamphlets all being requisitioned by employees.
  • Total spend through system: $10M / 24.39MAnnual revenue: $100MSavings assumption 7-10% of total spend = $1MAccording the Joint Economic Committee of Congress, the average foreclosure costs $77,935 while preventing a foreclosure runs $3,300.
  • Quote from press release.
  • Only technology can enable this type of visibility and opportunity.
  • Lunchtime, my wife sends me on errands – this time to the Container Store
  • Total spend through system: $4.6M over 2 years / 6.5MPOs 21,585More savings points…Significantly reducing invoice processing time - 5 minutes for limitless number of invoices vs. 1 to 2 minutes per invoiceSaving 36 hours a week by eliminating manual rekeyingWriting over 50% fewer Purchase Orders per weekManaging inventory levels for 62% fewer supply skus
  • Quote from Chain Store Age magazine article.
  • Back for a webinar in the office.
  • We use On24.
  • The labor to build this virtual environmentThe sponsorships in it
  • All the millions of dollars in servers bought and negotiated via Procurement support.
  • Total spend through system: $21M / 21.12MSavings assumption 7-10% of total spendNotes on carbon emissions:Estimated carbon emissions for a round trip flight: .21 metric tonsEstimated cost per trip: $2,000Estimated # of trips saved: 1,000
  • Quote from customer testimonial video.
  • The strain on the CFO – minimal because all the effort was outsourced to the cloud provider, using the best tools on the market.
  • OK, time to go home.
  • Music is completely FREE because of Pandora’s incredible new innovative model.
  • But the site design was not free. The CDs that employees had to buy and then burn were not free. Procurement played a key role.
  • Total spend through system: $4-6M / 142MProcess 181,000Avoidance savings: $156M Savings assumption: 7-10% of spendiTunes cost per song: $1.29
  • You want to talk about a tough job - going public when you are experiencing hyper growth. But what has procurement done to help. Allowed for complete spend control from soup to nuts.
  • Get home for dinner where my wife uses only the best tools in creating it. Mostly from Williams Sonoma where…
  • Virtually every item is bought via Coupa.
  • From the screwdriver used to fix a shelf, to the light bulbs, and baskets, and floor wax.
  • Spend through system: $7M in one month / $26.23MSavings estimate: $500,000 / month Savings assumption: 7-10% of total spend through systemHungry kids assumption: $10 per meal
  • Spend through system: $7M in one monthSavings estimate: $500,000 / monthHungry kids assumption: $10 per meal
  • And finally, time to go to bed.
  • On sheets bought at this company, where everything from the safety cones, to the …
  • Electric bill, to the hangers… to the
  • Temp labor to the cash register has Procurement’s fingerprints all over it.
  • Total spend through system: $60,000 for 2 stores in 1 month (not yet on production) / 3.1MAssume: $690M in spend, 7-10% of savingsCost to open / run a retail outlet: $5.5M (based on TJX reports)
  • The opportunity to make a massive impact begins with us in this room. These are just some of the stories, from the last 12 months of Coupa’s customer heros.So, you’ve seen the what, now lets talk about the HOW…
  • We no longer have to deal with back office paper processes,Old generation installed softwareRepackaged hosted softwareWe are now free to leverage the Cloud to enable our employees to spend smarter and save money.We are in the driver’s seat.
  • One platform – just like your Gmail accountHighly configurableHighly flexibleHighly fast time to value
  • The Cloud is empowering organizations like the ones I spoke about to achieve amazing results for their companies.
  • So, we have a choice will we seize this opportunity to leverage the current focus on:Spend ConsciousnessThe Leadership opportunity in front of usThe clear mandate of our executives to compete based on operation efficiency globally.Empower our people though the best technology options on the market.
  • So, once again the question is: Will we be brave enough to seize the opportunity? I think the answer lies with each and every one of us, and I trust the answer is ‘YES.’
  • Transcript

    • 1. Procurement Nation Are we brave enough to seize the opportunity?
    • 2. The Evolution of Procurement
    • 3. Cloud Spend Management
    • 4. Cloud Spend Management
    • 5. Cloud Spend Management
    • 6. Cloud Spend Management
    • 7. Cloud Spend Management
    • 8. Cloud Spend Management
    • 9. Procurement’s Impact is Everywhere
    • 10. MAPBreakfast on theway to the office
    • 11. PROCUREMENT IMPACT SAVINGS $40 / PO processed enough for 10happy meals per PO for hungry children in the community
    • 12. Visibility “We can actually see all the orders inprocess when they are in someone’s cartas well as when they submit. We can also see if the order was successfully transmitted immediately.” – SpendSmart Procurement Team
    • 13. MAP Drive by Moscone Center on the way to the office
    • 14. PROCUREMENT IMPACT SAVINGS $21 million more than enough toCover Bill Clinton’s speaking fee, security detail and travel & entertainment expenses
    • 15. Stop by to check outMAP new lobby furniture
    • 16. PROCUREMENT IMPACT SAVINGS $16.9 million enough tomake investments that will lead to greater market share and growth
    • 17. MAP Arrive at office, pull HR reports for staffing meeting
    • 18. PROCUREMENT IMPACT SAVINGS $12.5 million enough for 382,618 Jobs / QuarterFilled by giving access to 125 more users to help source jobs = 100,000 jobs
    • 19. MAP Lunchtime errands, stop by bank to withdraw cash
    • 20. PROCUREMENT IMPACT SAVINGS $2.5 million enough for 729 families to keep their homes= 100 homes
    • 21. MAPConLunchtimeerrands, stop to pickup closet shelves
    • 22. PROCUREMENT IMPACT SAVINGS 36 hours per week enough for 2part-time employees to spend more time servicing customers on the store floor
    • 23. Success “The dynamics of the retail business model demand highly cost-effectiveScott Jones operations. Cloud-basedPurchasing AgentThe Container Store. spend management fits that need perfectly. No training required.”
    • 24. Back at the office forMAPweb afternoon webinar
    • 25. PROCUREMENT IMPACT SAVINGS $1 – 2 million enough to eliminate 210 metric tonsBy investing in solutions that remove the need for travel and all of the environmental damage air travel causes = 10 metric tons
    • 26. MAPArrive home, crankup some music andstart dinner
    • 27. PROCUREMENT IMPACT SAVED $9 million enough for 4,340,611 songs on iTunes to review and add to the Pandora Genome Project= 1,000,000 songs
    • 28. Pre-IPO Spend Control “For ensure effective management of spend we’re pleased to use Cloud Spend Management as the primary capability in assisting us in our ongoing commitment to ourSteve Cakebread financial goals.”CFO, Pandora
    • 29. MAPDinner is served!
    • 30. PROCUREMENT IMPACT SAVINGS $1.8 million enough for 183,610Healthy, nutritious meals for hungry children= 10,000 meals
    • 31. MAPCurl up with a downcomforter and call ita day
    • 32. PROCUREMENT IMPACT SAVINGS $60 – 69 million enough for 30new retail outlets to remain more competitive with TJX in key geographic areas = 10 stores
    • 33. The Ability to Make an Impact Starts Here
    • 34. The Evolution of Spend Management TechnologyPaper-based On-Premise On-Demand The Cloud (aka ASP, SaaS)
    • 35. One Code Line in the Cloud
    • 36. Cloud Spend Management
    • 37. The Backbone of Savings Consciousness
    • 38. Procurement Nation Are we brave enough to seize the opportunity?