Drive Compliance, Mitigate Risk and Prevent Savings Leakage through Collaborative Contract Management
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Collaborative Business Commerce considers how you buy, how you sell, and how you manage cash not just within the four walls of your business but with your trading partners. At the heart of business commerce is the contract, representing the relationship between those trading partners. In this session, learn from thought leaders on how automation has helped them make contract management a key imperative and strategic differentiator for their company in not only containing costs, but in adding bottom-line business value.
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Drive Compliance, Mitigate Risk and Prevent Savings Leakage through Collaborative Contract Management
- 1. Drive Compliance, Mitigate Risk and Prevent Savings Leakage through Collaborative Contract Management May 2013 © 2013 Ariba, Inc. All rights reserved.
- 2. Agenda • Introduction • Panel Discussion • Key Takeaways • Q & A © 2013 Ariba, Inc. All rights reserved.2
- 3. 60% of corporate litigations are related to contract disputes Source: Fulbright & Jarowski 2010 Annual Litigation Survey© 2013 Ariba, Inc. All rights reserved.
- 4. Contract Management © 2013 Ariba, Inc. All rights reserved.4 eCONTRACTS – THE GLUE to Drive Compliance! Contract terms and Consumption Catalog items
- 5. Aberdeen Report: The 2010 Guide to Driving Savings and Procurement Performance Contract compliance – key to minimizing savings leakage
- 6. The Benefits of Collaboration Source: McKinsey & Company, “The rise of the networked enterprise, Web 2.0 finds it’s payday.” Survey of 4,394 executives. Spring 2011 “ Networked enterprises are 50% more likely to have increased sales, higher profit margins, gain market share, and be a market leader. ” 41% improved collaboration across silos 55% better information sharing 24% increased revenue 77% increased access to knowledge 63% increased marketing effectiveness 43% greater market share 8% higher margins “Increasingly companies are embracing collaboration as part of their strategy to grow.” © 2013 Ariba, Inc. All rights reserved.6
- 7. Agenda • Introduction • Panel Discussion • Key Takeaways • Q & A © 2013 Ariba, Inc. All rights reserved.7
- 8. The Panel Team Speakers: Kevin Giblin - McGraw-Hill Financial Hugh A. Pelz – RBS Cititzens. © 2013 Ariba, Inc. All rights reserved.8 Moderator : Sundar Kamakshisundaram, Sr. Director – Solutions Marketing, Ariba, Inc
- 9. Kevin Giblin - Senior Director, Global Sourcing
- 10. About McGraw Hill Financial • Founded in 1888 • Powerhouse in credit ratings, benchmarks and analytics for the global capital and commodity markets. • Leading brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and Associates, McGraw-Hill Construction and Aviation Week. • McGraw-Hill aligns with three enduring global needs: • the need for Capital • the need for Knowledge • the need for Transparency These are the foundations necessary to foster economic growth and to allow individuals, markets and societies to reach their full potential.
- 11. Ariba Solutions Deployed • Sourcing • Conversion/migration from legacy Procuri tool • Multi-million $ savings through auction services • Improved communication and event management capabilities • Procurement • Improved control and visibility - increased P2P spend from 38% to 53% • $500M+ spend filtered through tool • Added complex spend category solutions • Collaborated with suppliers and businesses to increase use of preferred suppliers - optimizing terms, rates and services. Compliance to preferred agreements = 91% • Contracts • Consolidated multiple contract databases to one enterprise solution • Enhanced document accessibility for M&A activity © 2013 Ariba, Inc. All rights reserved.
- 12. Drive Compliance, Mitigate Risk and Prevent Savings Leakage Through Collaborative Contract Management Is it really this easy?
- 13. Challenges, Efforts, and Value
- 15. Drive Compliance, Mitigate Risk and Prevent Savings Leakage through Collaborative Contract Management Hugh A. Peltz – RBS Citizens © 2013 Ariba, Inc. All rights reserved.
- 16. RBS Citizens Corporate Profile • Key Numbers Assets $127 Billion Deposits $95 Billion Colleagues 19,000 + ATMs 3619 Branches 1399 • Two Major US Retail Brands • Part of the RBS Group © 2013 Ariba, Inc. All rights reserved.16
- 17. Current Environment • On Premise Ariba deployment Version 9r1 Contracts, Supplier, Spend Vis, Sourcing Global support team in 3 regions • Central Procurement function Business aligned teams Deep category expertise Standard contract templates © 2013 Ariba, Inc. All rights reserved.17
- 18. Challenges • Industry operating environment Regulatory focus on 3rd party vendors Regulatory and financial risk as a result • Data Naming conventions for vendors and contracts Lack of OCR for contracts No link between contracts and POs • Resources Cost challenges vs. increasing demand © 2013 Ariba, Inc. All rights reserved.18
- 19. How to build a deck or Manage your contracts with Ariba • Building a deck in your backyard bears remarkable similarity to good contract management with Ariba • Taking the right steps up front will make a huge difference down the road © 2013 Ariba, Inc. All rights reserved.19
- 20. Plan it/Frame it/Build it • Location South facing? • Materials Composite or Wood • Style Lineal or Horizontal deck • Communication Spouse/Partner/Roommate Neighbors • On Demand or CD What is right for you? • Thresholds What goes in? • Data Entry Data integrity Naming conventions • Communication Stakeholders © 2013 Ariba, Inc. All rights reserved.20
- 21. Furniture/Grill • Dining table Teak or Metal Arm chairs or side chairs • Chaise lounges Wheels or legs Cushions • Gas or Charcoal Cooking style Time to cook • Automatic alerts Stakeholder Time to send • Reporting How to use reporting Determining intervals • User access Who sees what? Who can edit? © 2013 Ariba, Inc. All rights reserved.21
- 22. Fireplace/Speakers/Mini-bar • Fireplace Gas or Wood Style • Speakers HiFi or hidden or both? Music source • Mini-bar Refrigerator Ice maker • Clause Library Good, better, best In or out Reporting • RFP to Contract pricing Price compliance Shift in thinking • Online negotiation Audit trail No surprises © 2013 Ariba, Inc. All rights reserved.22
- 23. Key Metrics © 2013 Ariba, Inc. All rights reserved.23 • # of Active internal users: • # of registered Suppliers: • # of Active Contracts:
- 24. © 2013 Ariba, Inc. All rights reserved. Define Goals Clear definition of Goals and Priorities Obtain Executive Sponsorship from senior leadership (e.g., CPO, Chief Counsel, CMO, Business unit GM) When implementing solution, balance system capabilities with trying to meet business need Executive Sponsorships Balance Need & Requirements Collaborate Be willing to collaborate with key stakeholders including legal and marketing on rollout and adoption Prepare clear documentation, design simple process and define strict compliance policies to drive adoption Drive Adoption Summary and Key Take-aways
- 25. Please Complete Session Survey Go to Surveys © 2013 Ariba, Inc. All rights reserved.25 Select Session Click Choose one Rate Session Thank you for joining us
- 26. Q&A Contact info: Sundar Kamakshisundaram: sundar@ariba.com © 2013 Ariba, Inc. All rights reserved.26
Editor's Notes
- According to Aberdeen estimates, around 2.2% of the average enterprise’s savings are lost due to savings leakage out of a possible 5.4% of negotiated savings from the surveyed strategic sourcing groups. That equates to almost 41% of lost negotiated savings! Why is this occurring? Contract utilization has long been the Achilles heel between negotiated savings and what budget owners and CFOs actually experience at the end of the year. The Hackett Group estimates an average of $9.4M for every $1B in spend of lost savings due to contract non-compliance, and that figure can be as high as $18.8M for some companies. This results in a sizeable opportunity for P2P managers to capitalize on enterprise value. From a competitive standpoint, there is a 26% gap in spend between organizations that drive the highest levels of contract compliance versus the bottom quartile. Aberdeen. (2010). Strategic Sourcing: The 2010 Guide to Driving Savings and Procurement Performance. Aberdeen.The Hackett Group. (2008). Purchase-to-Pay Alignment: The Missing Link to Delivering on Spend Cost Reduction. The Hackett Group.