Estimating Investment for Eprocurement - TCO


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Estimating Investment for Eprocurement - TCO

  1. 1. Panel DiscussionAvalon Healthcare, Dell, Paystream AdvisorsHow Good Is Your Math?Estimating Investment For eProcurement
  2. 2. Direct$2824bPayroll$1797b✓✓The Spending Tree – Fortune 1000FacilitiesConsulting IT SpendingLegal Services Temp LaborMarketingMROTravel and Expenses Office Supplies
  3. 3. Business CaseTCOROI
  4. 4. Our PanelistsMark ColwellVice PresidentPaystream AdvisorsKevin TurnerGlobal eCommerce DirectorDellHyrum KirtonVice President – ProcurementAvalon Healthcare
  5. 5. Avalon Healthcare
  6. 6. PayStream Advisorsis a provider of independent research and automationassessments for financial automation technology to businessleaders in finance and procurement.Advisory ServicesPayStream Research
  7. 7. The ‘New’ Dell
  8. 8. Scoping The Task Business models Key stakeholders
  9. 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. 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. 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. 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. 13. Doing The Math Hard vs. soft costs Hidden costs, gotchas Opportunity costs PayStream tool
  14. 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. 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. 16. Top Barriers – Paystream Survey
  17. 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. 18. The PayStream TCO Tool Vendor and technology agnostic Simple, straightforward yet comprehensive Helps asking right questions
  19. 19. Steps to Calculate Your TCO.Evaluate the features andfunctionality of competitiveproducts – Cloudversus On-Premise/Networkbusiness application solutions.Initial Costs1. Evaluation and Selection
  20. 20. Recurring Costs2.Evaluation and Selection:
  21. 21. Prior to making thedecision to go with aCloud or On-Premise/Networksolution, a buyer mustfirst identify all thenecessary costcomponents associatedwith each option.
  22. 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. 23. Presenting The TCO Avoiding sticker shock Getting buy-in
  24. 24. Where To Get The TCO Calculator? Your Coupa Contact