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Microsoft Power Point   060310 Transformation Latest
 

Microsoft Power Point 060310 Transformation Latest

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Purchasing Organisation Transformation

Purchasing Organisation Transformation

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    Microsoft Power Point   060310 Transformation Latest Microsoft Power Point 060310 Transformation Latest Document Transcript

    • Suppliers Spend & Savings Organisational People Change Management & Adoption Structure Design and Transformation Process Systems George Joseph Managing Director. A R I B A® C O N F I D E N T I A L 2009 Table of Contents Ariba Experience with Transformation SMS – Ariba Spend Management Services Transformation Ariba Approach A R I B A® C O N F I D E N T I A L 2009 2 1
    • There are a variety of organizational transformation initiatives that Ariba has and continues to deliver to our clients Typical Engagement Type Customer Situation Case Examples • Decentralized organisation where Indirect Customer Profile: NA Retail Company 1 Create/Enhance an goods and services have predominantly Indirect Spend ~ $750m Purchasing Function been bought by stakeholders. • Determine Scope of organisation. • Desire to set up a more formalized Indirect purchasing function – typically brought on • Develop processes by change in leadership or economic • Evaluate, hire and train personnel circumstance. • Provide sourcing execution support for current year. • Significant Technology initiative • Establish technology roadmap Improve Organizational • Large multi location corporation. Customer Profile: Global Automotive OEM 2 • Formal sourcing organisation at every Indirect Spend ~ $20b Capabilities & Effectiveness location buying independently. • Developed category based sourcing hubs. • Desire to implement common processes, • Focused on strategic buying and outsourced transactional. systems and purchased SLA’s. • Reduced Structural costs by 35% • Desire to leverage volumes and increase sourcing effectiveness. • Increased savings performance by 200% • Significant economic pressures • Established common global processes and approval thresholds. • Decentralized organization with spend Customer Profile: Global Packaging Company 3 Centralize Purchasing managed at plant or business unit level Indirect Spend ~$2.9B • C-Level initiative/directive to make a • Consolidated 23 site purchasing functions across 3 divisions and significant decrease in costs 10 countries in Europe • Interest expands beyond sourcing savings • Effective change management execution lead to positive through increased leverage to include reception of new centralized team & clear understanding of roles organizational optimization and/or /rationalization. • Created customer-specific, pan-European category strategies • Significant percentage of supply base Customer Profile: Global Consumer Goods Company 4 Establish an International and/or operations are located in region(s) Indirect Spend ~$2.5B Purchasing Office (IPO) of interest • IPO fully operational within 8 months • Concerned with ability to minimize supply risk and control supplier quality from • All sourcing & quality processes & templates defined, created, “across the ocean” and adopted by home office • Moderate to significant experience sourcing • Technology integrated to enable knowledge retention and 24- in region(s) of interest hour on demand access to information by home office A R I B A® C O N F I D E N T I A L 2009 3 Purchasing is continuing to gain recognition as a strategic function, and expectations are higher than ever before Expectations of today’s purchasing organizations Visibility – Transparency of actual spend, visibility into sourcing pipeline and resourcing requirements Process Effectiveness – Effective common process applied to all sourcing activity, with appropriate approvals Speed – Faster turnaround times and rapid transitions to new supply bases. Low value transactions moved out and focus on strategic spend Structural Cost Management – Automation and consolidation into strategic sourcing hubs leveraging low cost locations Supplier Management – leveraging supplier expertise and building sustainable long-term relationships A R I B A® C O N F I D E N T I A L 2009 4 2
    • Table of Contents Ariba Experience with Transformation SMS – Ariba Spend Management Services Transformation Ariba Approach A R I B A® C O N F I D E N T I A L 2009 5 Ariba Spend Management Services (SMS) provide a complete range of solutions that drive both bottom-line results and enduring enablement for our customers •Spend •Market •Knowledge •Savings Visibility Intelligence Transfer Results Enablement •Spend •Compliance •Organizational under Mgmt. Improvement capability This is done through three distinct service areas that address all aspects of spend management Execution Transformation Knowledge - Sourcing Services - Structure - Category Assessment - Low-Cost Country - Process - Category Playbooks and Sourcing - Systems Knowledge programs - Demand Management - People - Supply Market - Supplier Implementation -Change Management intelligence and Performance Mgmt -Adoption Services - Strategy and Best - Sub-Tier Sourcing Practice Benchmarking -Policy and Compliance A R I B A® C O N F I D E N T I A L 2009 6 3
    • Ariba provides these services through a global delivery model unique in the spend management industry Services Overview Global services organization to support customers (and their suppliers) in the right time zone and the right language Broad and deep category experience and market intelligence Results driven, focused on continuously improving the customer experience Consultants and Program Managers focused on customers and sectors Spend Management professionals organized by supply market and functional specialty Globally located in key supply regions around the world Brussels Chicago Detroit Boston London Prague One of the world’s largest spend Paris Pittsburgh DC NYC Frankfurt Seoul Tokyo management organizations Sunnyvale Atlanta Houston Shanghai Monterrey Mexico City Delhi Shenzhen $600 billion sourced to date Hong Kong Singapore Over 100,000 total projects Sao Paulo Centralized Shared Service Office More than 500 categories Melbourne Program Management Office Category Management Office >$60B in identified savings LCC Center of Excellence A R I B A® C O N F I D E N T I A L 2009 7 Execution Services Ariba SMS provides a range of flexible “execution services” where our consultants and professionals actively drive projects focused on everything from sourcing to demand management across hundreds goods and services categories Indirect Category # Projects Direct Category # Projects Services 945 Logistics 540 Metals 1450 Capex & Construction 708 Electronics / Electrical 723 Paper & Packaging 514 Raw Materials 479 IT 220 Plastics & Rubber 429 • Make vs Buy Analysis • Custom component • Supply base localization to sourcing new facility • Raw material hedging IT Pla Ra strategy sti w ls cs • Alternative packaging cost Ma a et t’ls reduction studies M • Demand policy Paper & management Pkg • Competitive RFP & Auction Se • Rate card negotiation cs rvi • Benchmarking with index pricing isti ce Log s Ele X PE ct • Least cost regression • LCC Sourcing ron CA optimization • Advanced Sourcing ic s • Demand management • Should cost modeling • Sub-tier sourcing Benefit: Resources and expertise to help drive more value for your organization, faster A R I B A® C O N F I D E N T I A L 2009 8 4
    • Ariba’s Transformational Framework Spend & Savings Suppliers Change Structure Due Diligence Implementation Management & Adoption People Spend Management Life Cycle Contract Monitor Process Identify Opportunit Develop Strategy Source and and Invoice and Pay and Systems y Negotiat Procure Manage e Spend Savings Structure Week Week Week Week Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 1 2 3 4 Process Purchasing Charter & Plan Systems Develop reporting, compliance mechanism, & savings tracking PMO PMO Ongoing program oversight, resource coordination & effort prioritization People Change Mgmnt: Vision Workshop, Stakeholder Analysis, Change Planning, Ongoing Execution Suppliers Transformation Org. Assessment Transformation Program Program Design Transform: Standard Process Creation, Training, Adoption Plan (Tech & Process) Execution* Category Assessment Sourcing Benchmarking / “Quick Hit” Savings Projects Execution* Sourcing Execution: Strategy, Demand Mgmnt, RFx, Negotiation, Supplier Management, Compliance A R I B A® C O N F I D E N T I A L 2009 9 Knowledge Services Global Market Overviews Opportunity Assessments Demand Trends Industry Best Practices Supply Trends Supply Strategy Sourcing Strategy Engineering Data Management Strategy Benefit: Current, proven market intelligence to inform your team and improve the results from your initiatives A R I B A® C O N F I D E N T I A L 2009 10 5
    • This combination of services allows our customers to pursue both rapid results and enablement as their organization’s capabilities evolve over time at a compelling ROI Stage Value 3 Value Delivered to Organization Stage Ariba Support 2 Stage 1 Organizational Capabilities Time Launch and Leverage Expand and Enable Specialize and Sustain assess needs increase throughput capture more complex areas define program standardize process build internal capability get early savings build momentum focus on core competencies A R I B A® C O N F I D E N T I A L 2009 11 Table of Contents Ariba Experience with Transformation SMS – Ariba Spend Management Services Transformation Ariba Approach A R I B A® C O N F I D E N T I A L 2009 12 6
    • Organisation Transformation Methodology Spend & Savings Suppliers Change Management Structure Due Diligence Implementation People Process Systems Activity Description Application of ARIBA‘s „Transformation Financial Reporting Development and implementation of a financial reporting mechanism to report on Framework“ (Spend & Savings, Structure, sourcing activity and savings. Creation of standard definitions of savings measurement in conjunction with Finance. Process, Systems, People & Suppliers) Organisation Structure Development and implementation of a structure that supports strategic sourcing activity in Kick-off Workshop with ALL participants the most effective and efficient manner. The key is to create a globally co-ordinated category based organisation. to set expectations, provide the Spend Visibility Implement a Spend Visibility solution to obtain clarity over spend. framework & timeline MOB Development of a Make or Buy analysis for the outsourcing of the transaction centre and Data collection & analysis (PO data) to support negotiations with Works Councils and other labour related entities. get visibility into the spend Transaction centre Development of a model for a centralised transaction centre to handle low volume transaction, selection of a outsourced vendor and implementation of the transfer and Survey of all Purchasing staff members ongoing management of these transactions. Process Development and implementation of processes which will simplify operations including Interviews of Managers and Specialists approval flows, approval authorities, tendering processes etc which will support an effective and efficient strategic sourcing organisation. Best Practice Industry Benchmarking Skills Evaluation Develop roles and competencies required in the new organisation structure and conduct against CLIENT metrics an evaluation of all employees within the organisation in order to select those to be retained and those to be redeployed. Analysis & Best Practice Workshops with SPM Develop and implement a structured Supplier Performance Management process. CLIENT & ARIBA Specialists Technology Platform Lead the implementation of an end to end Spend management platform. Core team Workshops to derive to Strategic Sourcing Develop and implement a Strategic Sourcing program to achieve aggressive business savings targets. recommendations & implemenation plan. Stakeholder Management Develop and implement a structured Stakeholder Management process A R I B A® C O N F I D E N T I A L 2009 13 Spend & Savings Spend – Identification of annual spend and the activities Suppliers Change Structure Management associated with managing the spend People Process Systems Key Questions and Output How do we spend? Spend distribution by value Spend distribution by type Repetitive Spend by value 71.5% 15% 10% 2% 1.5% 85000 Consolidation 78 262 288 523 Frame Contracts 28 1,060 80000 2,373 $M $M $M $M 560 399 433 203 $M $M 6,987 Strategic Aggregation 184 75000 186 $M y 187 4,405 # of spot bu 70000 Project $M 4,443 Total Spend Spot Contracts 65000 171 Unique $M 13471 43 60000 80161 $M 27 Low Value Transactional 55000 $M 43 50000 Release Orders 46243 Fulfilment 45000 $M Nominal Value 34 40000 y k k k k bu io k k io k io io k Rush Orders 5 0 0 50 .5 M 7.5 M 2 M M 2 50 25 12 ot 12 1 k- 0 1-3 10 k- $ sp 3-1 5- k- k- k- k- 5 k- >$ < .5 0. of $ 0 5 50 5 $ 12 7.5 $ 25 12 $ $ # $ $ $ $ $ l ta To “Spend Analysis provides the necessary foundation for organizations seeking to make better, more informed sourcing decisions” Aberdeen, 2009 A R I B A® C O N F I D E N T I A L 2009 14 7
    • Spend & Savings Spend (cont’d) – Identification of annual spend and the Suppliers Change Structure Management activities associated with managing the spend People Process Systems Key Questions and Output How much spend do we manage? On what goods and services do we spend money? Where do we spend money? Are there opportunities to consolidate contracts across locations? When do we need to source? Ariba’s analysis takes a holistic view of the activities involved in the "source-to-settle" process, including procurement, receiving, payment settlement and management of AP A R I B A® C O N F I D E N T I A L 2009 15 Spend & Savings Savings – Identification of savings opportunities through Suppliers Suppliers Change Structure Management sourcing or procure-to-pay category enablement People Process Systems Systems Key Questions and Output How do we measure savings? Do stakeholders agree with our Repeat Buy - Any item is deemed to be a repetitive buy if the same item has been bought by the same or any other entity. In this case there is a numbers? clearly identifiable historic unit price and savings can be measured Does Finance agree with our directly with this historic price as reference. numbers? How do we translate savings to the Benchmark Items - Any product service which has an standard internal Company’s bottom line? benchmark unit rate. Eg; Flooring/Roofing/Road surfacing contracts in Construction. Budget Items - Any product service which has does not have a historic price or a benchmark, but has a cost estimate in a project budget or purchase approval. In some cases we might even use initial quote from a supplier as the reference price. “The average savings of leading sourcing organizations is 17%, compared to an average savings rate of 4% amongst laggards” AMR 2009 A R I B A® C O N F I D E N T I A L 2009 16 8
    • Spend & Savings Savings (cont’d) – Identification of savings opportunities Suppliers Suppliers Change Structure through sourcing or procure-to-pay category enablement Management People Process Systems Key Questions and Output How much should we be saving every year in absolute terms? What percentage of savings is achievable Year on Year? 250 Unit Price Reduction 47.19 230.82 Contract Compliance 200 44.94 Spot Market Arbitrage 150 Reducing Spend Demand Management 7.16 12.13 39.17 Continuous Improvement 100 Working Capital Mgmt 10.47 69.75 50 Sourcing & Contract Mgmt Reducing SM Process Costs Transaction Processing & Routing 0 GSS Ind Ind ISS Logistics M&E VSSM Grand Product Services Total Reducing Technology Ops Costs “A 7.5% reduction in purchase cost can result in an increase in net income of over 100%” PWC Advisory, 2008 A R I B A® C O N F I D E N T I A L 2009 17 Spend & Savings Structure – Assessment of internal design, reporting Suppliers Suppliers Change Structure relationships, and placement in the overall organization Management People Process Systems Key Questions and Output Should there be a Category or Corporate Region/BU based structure? Cat 1 Cat 2 Cat 3 Should we distinguish Reg 1 Reg 2 Reg 1 Reg 2 Reg 1 Reg 2 “strategy setting” and “sourcing execution” activities? Will we differentiate between Strategic Corporate Time invested and Transactional Region 1 Region 2 spend… and what impact will this have Cat 1 Cat 2 Cat 3 Cat 1 Cat 2 Cat 3 on the proposed structure? It is estimated that the average cost per transaction is $100, with a range between $75 and $250 depending on the level of automation A R I B A® C O N F I D E N T I A L 2009 18 9
    • Spend & Savings Structure (cont’d) – Assessment of internal design, reporting Suppliers Suppliers Change Structure relationships, and placement in the overall organization Management People Process Systems Key Questions and Output How many people do we need? Where should our people be located? Parameter Consideration Implication on What activities should be outsourced? Headcount Spend by Category and # of Supply Management # of FTE based on number of Supply Market Group groups and # of categories per contracts and length of time to group establish a contract. # of contracts per year and # of FTE per Supply Management time taken for establishing a Group based on spend and number contract of categories. Spend by Category and Spend by Transaction and # of # of FTE based on number of P2P Process Group process groups transactions and length of time to Low Cost execute a transaction. Corporate # of transactions per year and Location? time taken for executing a # of FTE per P2P process Group transaction based on spend and number of Cat 1 Cat 2 Cat 3 groups. # of FTE based on management structure effectiveness. Reg 1 Reg 2 Reg 1 Reg 2 Reg 1 Reg 2 Spend by Stakeholder Spend by Functional # of FTE based on stakeholder Group stakeholder management. Sourcing Execution Team # of FTE per location to be managed. Outsource? Spend by Supplier Supplier segmentation matrix # of FTE based on Supplier management role. Transaction Processing Team Process and Systems Optimal number of Processes # of FTE based on the number of processes and the Technology Platform and technology/manual execution capabilities paradigm. “Organizational structure and development...impacts overall sourcing, and therefore corporate performance” ChainLink Research, Aug 25 2007 A R I B A® C O N F I D E N T I A L 2009 19 Spend & Savings Processes - Process improvement opportunities based on Suppliers Suppliers Change Structure best practices across the Spend Management Lifecycle Management People Process Systems Key Questions and Output What are the key steps in our sourcing process? What are the roles of purchasing and stakeholders in the entire process. Validation & Data Collection & KO RFI / RFP Negotiation Implementation & Spend Management Life Cycle Strategy Transition ~2 Weeks ~2 – 4 Weeks ~4 Weeks ~ 1 Week ~ 4 Weeks Source Contract Monitor • Review current data • Build and execute • Conduct Post-bid / Identify Develop Invoice • Provide data collection Sourcing Process Steps and and and • Conduct market and RFI / RFP • Build and execute an negotiation analysis Opportunity Strategy and Pay templates/guidelines Activities Procure Manage esourcing negotiation Negotiate competitive analysis • Gather technical and • Manage project OR • Manage contracting phase service requirements milestones • Match against Goals / • Support collaborative • Create from all stakeholders • Supplier Targets negotiation & facilitate implementation & • Gather and validate management and transition plan negotiation strategy communications Purchasing historic pricing and workshop volumes Data Deliverables RFP/Q • RFI/RFP • eSourcing negotiation • Project de-brief and Market/ • Internal spend analysis • Category Review Collection, Award, and projections • Go-Forward strategy • Proposed Suppliers and management final wrap up session Spend Supplier RFP/Q OR Stakeholder Negotiation Implement, and recommendation • Supplier Updates • Negotiation workshop Analysis & Supplier Outreach Mgmt. Analysis ID & Kick- & Transition • Post-bid analysis Strategy ( RFI ) Off • Support gathering of • Provide input into • Participate in • Support Contracting Activities • Provide initial data, technical & service RFI/RFP structure, collaborative negotiation phase category sourcing requirements questions, strategy process • Collaborate during history, establish goals • Support identification & • Approve suppliers • Determine Awardee Implementation Project Plan Milestones • Initial Project and expectations validation of historic for participation phase Assessment • Data & Spend Analysis Spend pricing and volumes • Regular project • Ongoing supplier Owner • Forecast future volumes meeting participation performance • Go-No/Go Decision • Finalize Data Collection Deliverables management • Execute RFI / RFP • Execute RFQ and/or • Milestone – Go/No-Go • Preferred Suppliers Direct Negotiation • Recommendation Decision • Validate supplier lists • Answers to business / • Transition technical questions • Contracting Once a sourcing process has been defined, we work closely with our clients in developing customized tools and templates to support the process A R I B A® C O N F I D E N T I A L 2009 20 10
    • Spend & Savings Processes (cont’d) - Process improvement opportunities based Suppliers Suppliers Change Structure on best practices across the Spend Management Lifecycle Management People Process Systems Key Questions and Output Where are the approval points in the process? What should be the approval thresholds in the sourcing process? Ariba considers the appropriate approval thresholds, as well as ensures the process includes the proper checks and balances A R I B A® C O N F I D E N T I A L 2009 21 Spend & Savings Systems – Review of spend management platform for Suppliers Suppliers Change Structure opportunities to support more categories/spend Management People Process Systems Key Questions and Output To what extent are Procure-to-Pay (P2P) purchasing activities Identify Implement Source & Invoice Monitor & (requisitioning, sourcing, Opportunity & Develop Strategy Negotiate Contract & Execute & Pay Manage procurement) supported by current system Ariba Contracts Contract Ariba Flip Invoice platforms? What systems do we Ariba Spot Audits Invoice need to support our sourcing program? MRP Systems Ariba SPM & How do we reconcile the Ariba Analysis Category Management Ariba PO Ariba Analysis requirements of & Sourcing A Buyer Flip Invoice purchasing and that of Ariba Category Finance and existing Procurement ERP? Ariba Category Management Spend Management software is the “…one area in technology that companies are spending money on because they can make a difference in their profitability” AMR A R I B A® C O N F I D E N T I A L 2009 22 11
    • Spend & Savings People – Broad evaluation of the organization’s potential, Suppliers Suppliers Change Structure assessing people, training plans, people development, etc Management People Process Systems Key Questions and Output What are the roles and responsibilities of our people? Do they have the training and expertise to perform their jobs? Do we have the right incentives to maximize the potential of our people? Role Clarity & Job Rotation Training Resource Capability & Planning Culture Job Roles & Descriptions Training Programs Required Skill Sets Supplier Competition Roles & Responsibilities across the Require training that supports job Assess current resource capabilities to Manage by exception and push Purchasing organization need to be objectives and growth areas ensure appropriate alignment into job relevant information to resources clearly outlined, defined and classifications – redeploy as appropriate communicated Foster an environment of continuous Create a sense of ownership for improvement and individual growth Enhance capabilities to support roles Purchasing outcomes across the Define a clear line between tactical and responsibilities within each team organisation. buyer/planners and strategic Job Rotation Training Support Structure Resource Planning Importance of Purchasing Function Implement a Job Rotation system Craft training plans to develop Implement a Resource Planning Cultural change to support strategic Support progressive thinking and resource skill gaps and augment program sourcing and purchasing willingness to try new things to expand internal knowledge and capabilities Staff procurement organization with Identify shared measures between employee capabilities resources that can take a strategic view Develop training programs and Purchasing and business functions to “mentors” for newly hired and realigned of their categories drive collaboration and communication resources (systems, processes, etc.) Ariba will identify the appropriate metrics and measures that firmly connect the organizational performance to purchasing strategies / goals A R I B A® C O N F I D E N T I A L 2009 23 Spend & Savings Suppliers - Analysis and recommendations around supplier Suppliers Suppliers Change Structure identification, management, and development Management People Process Systems Key Questions and Output How do we identify suppliers? How many suppliers should we have? Is there a minimum spend threshold for a supplier? Is there a process for tracking suppliers by spend levels? It has been estimated that the average cost of an additional supplier to the organisation is $1,000 A R I B A® C O N F I D E N T I A L 2009 24 12
    • Spend & Savings Suppliers - Analysis and recommendations around supplier Suppliers Suppliers Change Structure identification, management, and development Management People Process Systems Key Questions and Output How do we manage our relationships with High suppliers? Tactical: Strategic: Opportunity to effectively The most valuable and How do our suppliers leverage spend with complex relationships are rate us as a tactical suppliers. SPMP most suitable for full could be used to highlight Tactical Strategic SPMP. counterparty to do supplier performance (effectiveness) (value creation) The process should help business with? issues and drive sourcing drive extraordinary value. decisions. How do we leverage Spend the expertise of our Transactional: $ Managed: suppliers in our Little value in SPMP can either be used implementing an SPMP to develop suppliers who business? process. have the potential to Transactional Managed Should be seeking the (efficiency) (supervisory) become Strategic, or it most efficient means of can be used to supervise managing these suppliers high risk or business critical suppliers. Low Low Business Criticality High Risk is a key consideration in supplier management. “71 % of CPOs believe supply risk is increasing, yet 30% have a program to manage it” Aberdeen's CPO Report, 2009 A R I B A® C O N F I D E N T I A L 2009 25 Spend & Savings Change Management - Stakeholder impact Analysis and Suppliers Suppliers recommendations around implementation phasing, governance People Change Management Structure and communication and awareness creation. Systems Process Key Questions and Output What is the impact of Perceived Complexity of Actual Impact of Criticality of the proposed change Advertising / Sales Promo Change H Change H Support H on the different Store Planning and Construction H H H H H Transportation and Distribution M stakeholder groups? Maintenance, Service, and Ops H M H Information Services M H M What is the governance Selling and Support M M M Year 1 Year 2 Human Resources M M M model and Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NMG Executive Team Strategic Spend Management Kickoff Restaurants L M L Annual Executive Briefings and Strategy Sessions Accounting / Finance L M L communication Development of Exec Dashboard Functional Leaders (Tier I - Adv, Capital, I/S) Strategic Spend Management Kickoff Loss Prevention L M M program as the change Credits and Accounts Receivable L M L Annual Strategy Session / Pipeline Development Functional Leader Briefings Functional Leader Briefing and Pipeline Review Intro of SSM to Stakeholders is implemented? Peer Discussions Functional Leaders (Tier II) Strategic Spend Management Kickoff NMG Executive Team Strategic guidance and goals of SSM team Communication of strategic messages Annual Strategy Session / Pipeline Development Vision and purpose of the SSM team How do we create Indicators of success and timeline to realize Functional Leader Briefing and Pipeline Review Intro of SSM to Stakeholders Functional Users Communication SSM team role and expectations (“quarterback” function) broader appreciation Strategic Spend Management Kickoff Training Lunch n Learns SSM Reports Alignment of functional area objectives and goals to SSM team objectives and goals Functional Leaders Benefits of SSM alignment to functional area and support for the Newsletter (SVPs) Changes to processes, technology and people objectives Communication Plan Management Support of Exec Dashboard Development Functional area support levels / buy-in initiatives underway Key supply relationships / spend areas to be managed Strategy Session Preparation and Execution Briefings and Pipeline Review Support Training Development and Execution Communication Survey and its impact on the SSM team role and expectations (“quarterback” function) Alignment of individual’s objectives and goals to SSM team objectives and goals Functional Users Corporation? (Directors, Managers) Project-specific roles, responsibilities, expectations, timing Spend Management training needs Tactical details - “who’s who”, accessing shared materials, etc The success of the entire program hinges on effective change management. A R I B A® C O N F I D E N T I A L 2009 26 13
    • Table of Contents Ariba Experience with Transformation SMS – Ariba Spend Management Services Transformation Ariba Approach A R I B A® C O N F I D E N T I A L 2009 27 Our Organisational Design & Transformation framework provides the foundation upon which engagements are executed • Spend & Savings – Identification of yearly spend and the activity distribution to manage the spend. Furthermore, identification of savings opportunities through sourcing or procure-to-pay category enablement. • Structure – Evaluation of the spend management organization’s internal design, reporting relationships, place in the overall customer organization, and the identification of opportunities for greater efficiency or effectiveness. Spend & Savings • Processes – Identification of process improvement opportunities based on best practices across the phases of the Spend Management Lifecycle. Suppliers Change • Systems – Review of current spend management platform (applications, infrastructure Structure and support) for opportunities to support more categories / spend under management and to Management People improve internal customer service. Process • People & Culture – Evaluation of the organization’s performance and potential Systems through the assessment of roles / responsibilities, training, professional development, communication and change management. Identification of the appropriate metrics and measures that firmly connect the organizational performance to strategies / goals. • Suppliers - How do we manage our relationship with suppliers, How do our suppliers rate us as a counterparty to do business with, how do we leverage the expertise of our suppliers in our business. • Change Management – Assess the extent of Change required across above dimensions and all functional groups, stakeholders and internally within the Purchasing team. Generate awareness, understanding and positive perceptions of the Strategic Spend Management Team. Address necessary actions to improve state of readiness for change. Engage and gain commitment from all sponsors, users & stakeholders to lead the change process. Develop a Change management plan. A R I B A® C O N F I D E N T I A L 2009 28 14
    • There are two key phases: Due Diligence and Implementation. Taken together, they average 24 months to deliver. Due Diligence – 3/6 months - 3 FTEs and 5 Sourcing events Implementation – 18/24 months – Subject to Output from Due Diligence. Due Diligence Implementation Spend & Spend Management Life Cycle Savings Identify Opportunit Develop Source Contract and Invoice Monitor and Strategy and and Pay y Procure Manage Suppliers Negotiat e Spend Change Structure Management Savings People Jan ‘10 Week 1 Jan ‘10 Jan ’10 Week 2 Week 3 Week 4 Jan ’10 Feb Mar Apr May Jun Q3 ‘10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Structure Purchasing Charter & Plan Process Process Develop reporting, compliance mechanism, & savings tracking PMO PMO Ongoing program oversight, resource coordination & effort prioritization Systems Change Mgmnt: Vision Workshop, Stakeholder Analysis, Change Planning, Ongoing Execution Systems AS IS Benchmark Plan People Transformation Transformation Program Data Analysis Data Analysis Best in Class Best in Class Program Spend Management Spend Management Transformation Transformation Roadmap Roadmap Qualitative Assessment Qualitative Assessment Gap Analysis Gap Analysis Suppliers Transform: Standard Process Creation, Training, Adoption Plan (Tech & Process) Category Assessment Execution* Sourcing Execution* Benchmarking / “Quick Hit” Savings Projects Sourcing Execution: Strategy, Demand Mgmnt, RFx, Negotiation, Supplier Management, Compliance A R I B A® C O N F I D E N T I A L 2009 29 Due Diligence Assessment Framework The Transformational Assessment is delivered using a three phased execution methodology: Establish ‘AS IS’ Data Analysis - collection / assessment of spend and operational data PO, Invoice, Contract data analysis. Survey of team, stakeholders and Suppliers. Qualitative Assessment - interviews with key spend and process owners and reviews of findings Benchmark Analysis - Comparison of the current state findings to other organizations and published best practices. Best in Class - Ariba proprietary data from its engagements and benchmark programme and published best practices. GAP analysis – – Identification of Gaps and prioritization of gaps to be closed. Plan Spend Management Transformation Roadmap - Development of a mutually agreed list of improvements and an action plan for Implementation. The 7 dimensions are mapped to this methodology to ensure the proper analysis of each dimension. Spend & Spend & AS IS Benchmark Plan Savings Savings Suppliers Suppliers Change Structure Structure Data Analysis Best in Class People People Management Spend Management Transformation Process Process Roadmap Systems Systems Qualitative Assessment Gap Analysis The projects are led by an onsite team, but utilize functional and technical experts from multiple organizations within Ariba including the Sourcing and Implementation Services teams. A R I B A® C O N F I D E N T I A L 2009 30 15
    • Customers can expect an in-depth set of deliverables from the due diligence. These set the groundwork for implementation Dimension Deliverables 1. Spend Analysis 2. Category Detail 3. Sourcing Pipeline Spend & 4. Supplier Consolidation Execution Plan Savings 5. Spend Visibility Recommendations 6. Recommended Savings Targets 7. Savings Process 8. 2 Year Plan Spend & 9. Charter and Rules of Engagement Savings 10. Scorecard and KPI’s Structure 11. Proposed Structure Suppliers 12. Proposed Resource Plan 13. RASCI Map Change Structure 14. Role Definitions Management People 15. Sourcing Process 16. Sourcing Templates Process 17. Process Maps (end to end) Process 18. Spend Threshold Recommendations Systems 19. Current Purchasing Technology and Usage Map 20. Gap Analysis Systems 21. Proposed Areas for Increased Technology Usage 22. Proposed Usage and Deployment Plan 23. Capability Profile and Matrix People 24. Gap Analysis 25. Talent Attraction, Talent Retention and Leadership Suggestions 26. Supplier Performance Management Development Plan Suppliers 27. Supplier Strategy Matrix 28. Stakeholder Impact Analysis Change 29. Communication Plan Management 30. Quarterly Internal Purchasing Newsletter A R I B A® C O N F I D E N T I A L 2009 31 Our program takes advantages of Ariba’s scalable delivery model to drive activity across multiple objectives simultaneously Jan ‘10 Jan ‘10 Jan ’10 Jan ’10 Feb Mar Apr May Jun Q3 ‘10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Week 1 Week 2 Week 3 Week 4 Purchasing Charter & Plan Develop reporting, compliance mechanism, & savings tracking PMO PMO Ongoing program oversight, resource coordination & effort prioritization Change Mgmnt: Vision Workshop, Stakeholder Analysis, Change Planning, Ongoing Execution AS IS Benchmark Plan Transformation Transformation Program Data Analysis Data Analysis Best in Class Best in Class Program Spend Management Spend Management Transformation Transformation Roadmap Roadmap Qualitative Assessment Qualitative Assessment Gap Analysis Gap Analysis Transform: Standard Process Creation, Training, Adoption Plan (Tech & Process) Category Assessment Execution* Sourcing Execution* Benchmarking / “Quick Hit” Savings Projects Sourcing Execution: Strategy, Demand Mgmnt, RFx, Negotiation, Supplier Management, Compliance A R I B A® C O N F I D E N T I A L 2009 32 16
    • A R I B A® C O N F I D E N T I A L 2009 33 17