As corporations rely more and more on their supply chains to support product innovation and work efficiency and productivity, the role of procurement organizations has evolved from simply delivering cost savings to improving supplier performance, monitoring contracts, and proactively managing supply chain risk.

1. © 2015 IBM Corporation
IBM Smarter Asset Management
Procurement End-to-End
Solution as a Service
Paul Nash
Domenico Merlino
Elizabeth Koumpan

2. Agenda
• Introductions and Purpose
• Existing Challenges
• IBM Value Proposition
• Conceptual Architecture
• Additional References
1

3. Existing Challenges

4. Key drivers of asset management
Increase asset service levels at a lower cost
Improve financial results
Improve budget forecasting
Transfer knowledge of an aging workforce
Meet regulatory requirements
3
Source: Reliabilityweb.com Research Report on Asset Management Practices, Investments and Challenges 2014-2019. www.reliabilityweb.com
Increase system reliability

5. Suppliers are vital to your organization’s
success, regardless of industry
On average, 50 percent
of revenue is now spent
with suppliers
Constructionand
engineering
Telecommunications
servicesproviders
Automotive
manufacturing
Beverage
Semiconductor
manufacturing
Chemical
Consumerpackaged
goods(CPG)
Metalsandmining
Transportation
services
Electronic
manufacturing
Pharmaceutical
Industrial
manufacturing
Aerospaceand
defense
Healthcareservice
providers
Oilandgas
Banking
Utilities
Financialservices
Uncontrolled
Controlled
Percentageofrevenue
0%
70%
SOURCE: CAPS Research, Cross-Industry Report of Standard Benchmarks, June 2012.
4
On average, 25 percent
of revenue is spent on
Asset Based spend

6. A Real World Example

7. Current Process
Analysis/
Request
(PR)
Bid
Package
Contract
Maximo
Work
Order /
Purchasing
Job
Inspection
Completion

8. Supplier Management
Challenges
• Limited information collected from the supplier
• No approval workflow or means to collect assessment data
• Inability to check outside information like D&B
• Disruptions caused by unreliable suppliers
• Poor visibility into supplier spend and performance
• Costs incurred as a result of inaccurate or conflicting supplier information
• Risk to company and brand because of supplier actions or policies
7
Grow qualified supplier base
• Capture & evaluate qualification data to ensure suppliers meet
statutory company & category requirements
Obtain complete view of supplier performance across
organizations and categories
• Classify suppliers across multiple categories and company
organizations
• Capture survey and transaction data to evaluate performance
• Have a standard process for onboarding and qualifying new
suppliers
• Define and manage supplier development programs
Remediate suppliers that pose supply chain risk
• Identify supplier risks across numerous company criteria
• Define programs with goals and track progress

9. Bids and Solicitations
Challenges
• Managing virtually all categories—simple to complex— using the same process and system
• Optimizing supplier bids to obtain the best value, not just the best price
• Running large events, complex events or both
• Providing an interface for suppliers to access the bids
• Managing virtually all categories—simple to complex— using the same process and system
• Optimizing supplier bids to obtain the best value, not just the best price
• Running large events, complex events or both
8
Efficiency in the sourcing process with need for
• Central repository and access
• RFx Wizards and Templates
• Complete configurability
Accelerate the decision process with
• Optimized analysis
• Gain control without manual tasks
Manage pipeline of sourcing events
• Create & execute sourcing events for
complex and basic categories
• Monitor & manage event pipeline across
categories

10. Contract Management
Contract Management helps companies structure more
profitable contracts, streamline the contracting process
and improve compliance.
Execute on negotiated time and materials against
demand from requisitions or work. Track warranty details
against assets for improved recovery.
Provide Enhanced Process Automation, Document
Controls Capability, Enhance Terms and Conditions
Management, Enhanced External Communications,
Expanded Process Transparency, Enhanced Overall
Contracts Language Management, Storage and
Retrieval.
Challenges
• Inability to produce an actual contract document to be signed by both parties
• No control over the process or approval workflow
• Limiting exposure to risk and understanding the impact of marketplace
events
• Missing savings opportunities and ensuring delivery of obligations
• Enforcing compliance with standards and government regulations

11. Supplier Performance and Risk
Challenges
• Disruptions and cost overruns caused by unreliable suppliers
• Poor visibility into supplier spend and performance
• Costs incurred as a result of inaccurate or conflicting supplier information
• Risk to company and brand because of supplier actions or policies
10
• Identify Risk Earlier
• Analyze Risks in real time
• Mitigate Risks via Advanced Decision support where
KPI’s are integrated as an
• early warning system
• Facilitate suppliers’ compliance with relevant
regulations and social norms
• Evaluate supplier performance and support
compliance with contractual terms
• Identify and measure likelihood and impact of
supplier risk
• Manage supplier development programs to improve
compliance and performance or to mitigate risk

12. Spend Data Analysis
Challenges
• Lack of visibility into spend across the enterprise
• Spend data housed in different systems and differing formats
• Lack of control over savings programs
11
Enrichment (aggregation and cleansing) of spend from
different categories and systems
Accurate spend classification, down to the line-item level
with automated feedback
Real-time dashboards and analysis

13. IBM Value
Proposition

14. The Smarter Way…
Analysis/
Request
(PR)
Bid
Package
Contract
Maximo
Work
Order /
Purchasing
Job
Inspection
Completion

15. Delivering strategic supply and
contract management solutions that
enable your company to maximize
financial performance and reduce
commercial risk
IBM Solution delivers value to the supply chain
14
Gain contract
lifecycle
visibility
Define
and manage
risk
Accelerate
time to
closure
Ensure
compliance

16. Plan & Analyze
Improve
Productivity
Increase Savings Mitigate Risk
• Standardization of
procurement processes
• Increase source to
contract cycle times
• Improve resource
utilization by automating
processes
Contract
Manage &
Execute
How does our solution deliver value?
• Create multi-year
savings programs
• Identify more savings
opportunities
• Negotiate higher savings
for events and contract
negotiations
• Track spend and SLAs
against the contract
• Increase use of
preferred, top
performing suppliers
• Minimize activity with
high risk suppliers
Centralized Data Management
360 Dashboard Reporting and Visibility
15

17. Program & Request Management
16
Supplier Qualification
Supplier Discovery
Web based, logic driven supplier registration
Detailed category assessments
Automated approval workflow
Value
Maintain one portal for all suppliers
Quickly identify and onboard new suppliers
Enforce compliance with corporate standards
Conduct market analysis to find the best suppliers
Strategic Supply Management
Supplier Qualification
Source
Classify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
Analyze
Spend
Plan & Analyze
Qualify
Suppliers

18. Program & Request Management
17
Sourcing Capabilities
Buyer Survey, RFI, RFQ, RFP, Auctions
Best Practice Category Templates
Automated scoring & ranking
Easy to use online and offline bidding interface
What-if bid comparison & savings analysis reporting
Value
Streamline RFx creation – run more events
Analyze RFx results faster and more efficiently
Track savings by category, business unit and
RFx type across organization
Strategic Supply Management
Sourcing
Source
Classify
Suppliers
Qualify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
Analyze
Spend
Contract

19. Strategic Supply Management
Contract Management
Program & Request Management
18
Contract Management
Logic driven ―Interview Wizards‖
Standard Template library & Pre-Approved clauses
MS Word Integration with real-time data sync
Conditional and clause level workflows
Proactive alerts and automatic task creation
Value
Reduce contract cycle times
Identify and eliminate process bottlenecks
Realize negotiated benefits to capture more
savings
Source
Classify
Suppliers
Qualify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
Analyze
Spend
Contract

20. Strategic Supply Management
Supplier Evaluation & Risk
Program & Request Management
19
Supplier Evaluation & Risk
User defined scorecards and surveys with ability to link to
contracts
Risk modeling with sophisticated calculations
Integrated KPIs, traffic light system graphics, and
proactive alerting
Value
Supplier risk data is centralized and easily
accessed
Manage more suppliers with automated
evaluation processes
Proactive alerting to identify risks earlier
Source
Classify
Suppliers
Qualify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
Analyze
Spend
Manage &
Execute

21. Strategic Supply Management
Spend Analysis
Program & Request Management
Source
Classify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
20
Spend Analysis
Superior data enrichment with guaranteed accuracy
Cognos powered dashboard views and reporting
Analytics to source and rationalize supply case
Compliance Management to track contracted vs. actual
Value
Increase global spend visibility
Drive more business to preferred suppliers
Improve compliance & reduce leakage spend
Identify more opportunities for savings and
rationalization
Plan & Analyze
Analyze
Spend
Qualify
Suppliers

22. 21
Virtual Supply Master - Centralized Data Management
360 Dashboard Reports & Analytics
360 view of cross suite supply chain activities from one
interactive dashboard report
Preassembled workspace content – drag and drop assembly
Accessible online or on mobile tablets / iPad
Value
Increase visibility to savings and rationalization
opportunities, demand aggregation, compliance
issues and supplier risk
Use supply chain intelligence to increase
corporate competitiveness
Strategic Supply Management
360 Dashboards Reporting & Analytics
Program & Request Management
Source
Qualify
Suppliers
Contract
Execute
Orders
Evaluate
Supplier
Risk & Perf.
Analyze
Spend
Classify
Suppliers
360 Dashboard Reporting & Analytics

23. Strategic Supply Management
Smarter Asset Purchaser
e
Integrated
Sourcing
Application
Integrated
Contract
Management
Supplier classification
defining supplier
strategies
Supplier evaluation
managing supplier
performance
Integrated
Spend
Analysis
Supplier onboarding
and discovery
processes
Integrated supplier
data sources
and self service
Supplier risk
online tracking and
monitoring
Supplier qualification
to assess and
approve suppliers
Supplier master data
management and
synchronization
Collaboration and
knowledge sharing
between purchasers
22

24. Mobile enablement
Mobile Capabilities Drive Adoption

25. Conceptual
Architecture

26. Logical Architecture
25

27. Cloud based Solution as a Service
Purchase
Order
Goods
Receipt
Invoice
Receipt
Payment
Requisition
Budget and GL Postings
Contract
Management
Spend Analysis
Sourcing and
Negotiations
Transactional:
Improve Usability,
Workflow,
Flexibility,
Employee and
Supplier self
service
Strategic:
Cost Savings,
Risk Mitigation,
Productivity
Improvements
E-invoicing
Program Management:
Develop Portfolio Strategy - Category Analysis (Internal-External) - Implementation - Performance Monitoring
Supplier Lifecycle Management – Qualification/Classification/Evaluation/Risk/Development
Master
Data
Supplier
Network
Catalogues
Purchase
Requisition
Goods
Receipt or
Time Entry
Invoice
Receipt
Requisition Approvals Approvals
26

28. Interaction with other systems
27
Smarter Asset Management
Procurement Solution
Vendors
ERP Systems
Email System
Active Directory/LDAP
Project Control Systems
Enterprise Service Bus
Commercial Reporting Tools
Financial Systems
Tax Services
Existing Applications
ECM Systems
3-d Party Data
Banking Systems
Engineering Systems
Suppliers
Vendor Management System
HR Systems
Internal Users
Buyer Users
System Administrators
Contract Users
Sub Contractors
Integration support, messaging
Engineering Design and Scheduling
Accounts Payable
Contract, Bid, Procurement,
Supply, Project, Risk Management
Bidding, contracts, purchase orders
Projects with child project/work orders/
with tasks that all have scheduled times
Scoring models; best bid compasrison
Update VSM Master Suppliers with data from the third party provider
Contracts, Orders, Invoices,
Configuration Tools for creating
and changing database objects
and attributes to perform other customizations
Supplier registration,
vetting and approval,
supplier management
( Purchase order, invoices),
bidding,risk and compliance
Provide alerts and notifications, such as alert users
to purchased items becoming due for
shipment or those that are overdue shipment or delivery.
Correspondence and email communication
Support Financial, including
Project accounting services
User authentication and authorization
Update purchase order shipment
weight, volume, and item details
Data Exchange with existing applications
Exchange Vendor Data
Search and retrieve documents stored
in external ECM repositories.
Exchange purchasing and financial data
View reports generated by external tools within the application
Suppler Validation;
Get Tax Identification Number
Retrieve 'Master' data for all information related to HR

29. Products that Enable this Solution
28
• IBM Emptoris - is used for strategic supply, category spend, and contract management. It helps procurement organizations
improve performance, capture sustainable cost savings, and mitigate risks.
• IBM Maximo supports processes for inventory management, invoice and work order generation, inspection assignments, and
accounts payable. It enables multiple assets to be managed on a single software platform, with automated interval-based,
meter-based, or event-driven purchasing that helps you order the right parts and services at exactly the right time.
• The IBM FileNet P8 is an enterprise content management platform for capturing, classifying, managing, and storing business-
related digital assets with centralized, secured access and control. It provides the ability to link procurement-related documents
(such as invoices, vendor data, and purchase orders, inspection instructions, contract attachments, and so on) to
corresponding business processes.
• IBM Sterling is a portfolio of commerce solutions and includes IBM Sterling B2B Integrator, a transaction engine and toolkit
that allows you to define, create, implement, and manage business processes involving trading partners, including suppliers. It
automates the complete buy-sell-ship-pay process, supporting communication with anyone, in any way, and regardless of
protocols, data formats, and preferred communication methods.
• IBM Cognos Business Intelligence is used to deliver business intelligence capabilities, such as reporting, dashboards, and
scorecards. You can analyze shipping and freight payment data, perform program monitoring using dashboards, and prepare
contract status reports to track key milestone activities.
• IBM Watson Explorer is a platform for developing and deploying enterprise information navigation and search applications.
Data Explorer’s 360-degree view pushes data, in-context, to the user based on their role in the organization, providing a
unified view of data from any customer or business entity. Data Explorer virtually integrate the data so insights can be made
that would otherwise not be possible looking at data from a single data silo. For example, Watson Explore supports custom
(federated) searches that return data regarding supplier activities, news, credit information, blog data, and chat insights that
can be useful in supplier negotiations. Data from multiple reports can be fused into single view to show relationship between
the different data points, such as viewing performance data alongside cost savings data.

30. Why IBM
• Industry analysts such as Forrester Research and Gartner, Inc., have
recognized IBM as a leader in enterprise asset management, supplier
management, sourcing and vendor management, business
intelligence and analytics, and enterprise content management.
Further, the SaaS-based Smarter Asset Management solution fits
perfectly into IBM’s clearly defined cloud, social, and big data strategy,
in which critical technology and business processes are increasingly
delivered to clients as digital services rather than physical assets.
• The Forrester Wave™: VMS, Q1 2014 (2014)
http://w3-03.ibm.com/software/analyst/articles/forrester/forvms.html
• Magic Quadrant for Energy and Utilities Enterprise Asset Management
Software (2014)
http://www.gartner.com/technology/reprints.do?id=1-
22DOTKA&ct=140929&st=sb
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31. Contract Management
Xcel Energy standardizes procurement across enterprise and realizes significant savings
Business Challenge: Xcel Energy, an investor-owned utility based in Minneapolis that
provides energy-related products and services, wanted to move to a sustainable
savings model to drive down costs and understand supplier economics through spend
analytics and repeatable sourcing and contracts processes. The company also wanted
to reduce contract risk, increase competitive bidding, manage key supplier
relationships, lessen the impact of turnover, improve controls and reduce maverick
spending.
The Smarter Commerce Solution: Xcel Energy centralized its sourcing function by
implementing common methods, best practices and tools. This expanded the
company’s sourcing bandwidth and reduced the impact of turnover. As a result, the
company’s supply chain costs remained flat for three years, it increased sourcing
savings by increasing the number of events competitively bid and it implemented a
supplier relationship management program with 32 tier I supplier/category relationships.
100%
of contracts were managed
in new process
100%
of spend was classified via
spend analytics
6,000+
suppliers were registered and
managed successfully
100%
of $3 billion spend was
managed by sourcing and
procurement

32. Sourcing
Telecommunications leader creates global procurement platform; achieves greater
transparency and substantial savings
Business Challenge: A leading telecommunications company that serves customers
in more than 50 countries experienced a dramatic decrease in profits because of
operational inefficiencies that included limited visibility and manual processes.
The Smarter Commerce Solution: replaced multiple legacy sourcing systems with
one end-to-end solution that provides global category management and transparency,
resulting in company-wide cooperation and best-practice sharing. Now the
telecommunications company manages supplier performance against contracted
service levels and targets. A greater percentage of its spend is under control, leading to
economies of scale.
$5 billion+
competitively awarded each
year
4,000+
sourcing projects per year

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