<click for animation>Paper-basedInefficient, time-consuming, laboriousRelies on manual processing, teams of people just to rekey informationWastes resources – think of all the trees that went into paper forms, paper catalogs, etc. or how much time is spend chasing approvals instead of <click for animation>On-PremiseMoved parts of the paper based process online, automated some approval workflowsHosted on your own servers – requiring additional IT resources to maintainBut came at a large, multi-million dollar price tag that required a ton of time and “consulting” resources to implement<click for animation>On-DemandNow instead of hosting “your” servers, you have a login to access your software on “their” serversFundamental technology stays the sameAnd it still takes a lot of time to implement and requires consulting when you want to make a change or upgrade your solution<click for animation>The CloudComplete freedom! Easy to use and configure, access from anywhere, completely “mobile”All for one subscription fee – and better yet, it’s risk free, if isn’t not working, you can easily move off the platform
When everything was paper-based, it made sense that one person was in charge of all the buying for an organization. All purchase requests would be filtered through this one person – who would then wade through the catalogs, order the items, receive the items and then get them to the appropriate people.<click for animation>As organizations started to invest in on-premise - and eventually on-demand solutions – it became more efficient to extent purchasing power. So instead of having one person responsible for purchases for every person and locations, now there was a dedicated person at each location to manage purchases. This not only saved time, but also money by removing the need to ship all across the country, maintain high levels of inventory and allowed locations to take advantage of local vendors for better pricing.<click for animation>Today – thanks in large part to the internet – everyone is a “bargain shopper” and knows where the good deals are for the things they need personally, as well as professionally. The cloud platform has evolved to make the procure-to-pay process as easy as shopping on Amazon.com or searching on Google, making it possible for everyone to help source the things they need to get their jobs done and deliver savings to the organization.
Procurement has come together to become the backbone of our nation
Look around you. Everywhere you go, everything you touch, all the experiences that make up your day are all impacted by procurement. I know this, because I get to personally see what many of these companies and people go through to deliver an experience to you. To get you the things you need to do your job, to raise our kids, to be a part of the community. There is no better way for me to demonstrate procurement’s impact than to take you through a typical day – one that I certainly can relate to, as I am sure many of you will be able to as well. Along the way we will take a look at what procurement has been able to accomplish at each of these organizations and what that ultimately means to you. <click for animation>So let’s take a walk.Walkthrough outline:7:00am: Breakfast at McDonalds7:30am: Drive by Moscone Center, see Dreamforce / Salesforce.comsignage8:00am: Stop by Rent-A-Center to look at new lobby furniture9:00am: Arrive at work, check recruiting reports in Taleo12:00pm: Lunch errands, stop by Berkshire Bank12:30pm: Stop by The Container Store to pick up some shelving units for the kids room1:00pm: Back at work for afternoon webinar using ON245:30pm: Take junior to get new Reebok CCM hockey skates5:45pm: Stop by Michael’s to pick up supplies for junior’s science project6:15pm: Turn on favorite Pandora radio station while cooking dinner7:00pm: Dinner is served on the new dish from Williams-Sonoma11:00pm: Sleep easy with my down comforter from Ross
It’s 7am in the morning and my wife – bless her – sends me out the door with a banana, yogurt and a cup of tea – it’s good for me. A block away from my house I pull into my favorite fast food restaurant and order a tall hot coffee, light and sweet, and my favorite breakfast sandwich – remembering to throw away the evidence, and my “healthy alternative” breakfast in the trash on the way out of the drive through. Let’s look behind the scenes to see how procurement has impacted the experience I just had.
CSM stats:Total spend to date: $2.6MTotal POs processed: 1,058Estimated savings per PO: $30-$40Each PO processed = 10 happy meals for childrenTo date, they have saved ~$42,329 or 10,580 happy meals for children
Quote from services team implementation notes
<click for animation>On my way to the office, I drive by Moscone Center where Dreamforce has literally taken over. Everywhere you look you see the Salesforce brand, people adorned with cloud name badges, carrying dreamforce bags, running to make Marc Benioff’s keynote.Now you know procurement had a huge impact on this event.
Total spend through system: $830 millionSupplier savings: $600,617Process savings: $392,000Avoidance savings: ~$16MAdditional 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.
On the way to the office, I stop by our local Rent-A-Center to check out some reception area furniture. Since we are all about smarter spending, it made more sense for us to rent the couches and TV for reception than to purchase everything.
Total POs processed: 40,000Total Invoices processed: 78,000Assumption: $40 / document processed would mean about a half million in savings over 2 monthsSavings: $480,000 in 3 months (assume slightly higher since dashboard isn’t fully configured)In 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.
Arrive at the office, and before I head to the management team meeting, I want to check in on where we are on recruiting for some open positions we are trying to fill in development and sales.
Total spend through system: $116MTotal savings per dashboard: $500,000Assumption: 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.
It’s lunchtime – and like many of you – I typically use this time to run errands. I need to get some cash, so it’s off to the bank.
Total spend through system: $10MAnnual 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.
In addition to trying to get the family – meaning me – healthier this year, my wife has decided to re-organize all of our closets. So really, her walk-in closet and the kids closets since I really only need about 1 foot of space for my things. And even though I only use 1/10th, it’s up to me to go get everything needed for this project, so off to The Container Store.
Total spend through system: $4.6M over 2 yearsMore 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.
Total spend through system: $21MSavings 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.
5:30, time to pick up junior from hockey practice. And you know kids, they grow so fast – he’s only 5 but has size 7 feet. So it’s off to the sporting goods store to get him some new skates.
Total spend through system: $8.9MTotal POs processed: 2,800Total Invoices processed: 5,000Savings assumption 7-10% of total spendHockey gear assumption: $250 / childAdditional savings stats:10-15% cost reduction through SKU & supplier consolidation20% reduction in suppliers through consolidation30% reduction in invoice payment transactionsProcess savings estimated at $50/PO
Quote from Purchasing.com article.
Total spend through system: $4-6MAvoidance savings: $.5MSavings assumption: 7-10% of spendiTunes cost per song: $1.29
Quote from press release.
Spend through system: $7M in one monthSavings estimate: $500,000 / monthHungry kids assumption: $10 per meal
Total spend through system: $60,000 for 2 stores in 1 month (not yet on production)Assume: $690M in spend, 7-10% of savingsCost to open / run a retail outlet: $5.5M (based on TJX reports)
Hundreds of people making purchasesParts to make productsSupplies to package and deliverServices to maintain local outletsEmployees – temporary and full time – that service the customer
And all these purchases come together to deliver the experiences you have every day.
And it’s all in the cloud – one platform, one line of code, one solution for 100% of your indirect spend management needs.
Procurement nation-v procurecon
Procurement NationHow procurement has become the backbone of our savings conscious culture
Today’s Session• The Evolution of Procurement• Procurement is the Backbone• Let’s Take a Walk: Smarter Spending Success Stories• The Future of Procurement – 2011 and Beyond• Q&A
The Evolution of Spend ManagementPaper-based On-Premise On-Demand The Cloud (aka ASP, SaaS)
Procurement’s Impact is Everywhere• Look around you – everything has been touched in some way by procurement• In a typical day you might encounter procurement’s impact a dozen times or more Let’s take a walk
PROCUREMENT IMPACT SAVINGS $40 / PO processed enough for 10happy meals per PO for hungry children in the community
“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
MAP Drive by Moscone Center on the way to the office
PROCUREMENT IMPACT SAVINGS $18 million more than enough toCover Bill Clinton’s speaking fee, security detail and travel & entertainment expenses
“We scoured the industry looking at vendors in the e-Procurement space. Quickly we eliminated any of the on- premise or what you would call private cloud and that type of opportunity because the value of aGreg Tennyson multitenant environment, the cost toChief Procurement Officer implement, the maintenance of thesalesforce.com product is much better. [Moving to the cloud] was a no brainer.”
PROCUREMENT IMPACT SAVINGS $500,000 in 2 months enough tomake investments that will lead to greater market share and growth
“We had some adoption problems with prior tools, so we were incredibly pleased by the speed with which we were able to implement an integrated solution that is both easy to use, and incredibly robust. We were able to deploy a complete solution to over 3,000 locations in less than four months. Additionally, we have beenMike Wilding able to quickly address new featuresChief Procurement Officer like the ability to invoice againstRent-A-Center contract, and define receipt tolerances and invoice approval workflows, which we will roll out in the near future.”
MAP Arrive at office, pull HR reports for staffing meeting
PROCUREMENT IMPACT SAVINGS $5 – 7M enough for 382,618 Jobs / QuarterFilled by giving access to 70 more users to help source jobs
“The budget is tied to the expenses going through the system. Budget managers have the ability to understand what they were spending, when theyKaty Murray were spending. And the timeChief Financial Officer spent on the phone, the timeTaleo spent talking to their finance partner was diminished.”
MAP Lunchtime errands, stop by bank to withdraw cash
PROCUREMENT IMPACT SAVINGS $1 million enough for 303 families to keep their homes
“Our procurement processes were highly manual.[ Cloud Spend Management] provides greater visibility into, and control over, our spending. Now we have full automation from requisition to invoicing, with tight integration into our back-end financial systems thatDee Harnish provides audit trails which track ourPurchasing Manager approvals to ensure that we complyBerkshire Bank with regulatory requirements. Additionally, we can identify savings opportunities by using the tool to effectively analyze our spend.”
MAPLunchtime errands,stop to pick upcloset shelves
PROCUREMENT IMPACT SAVINGS 36 hours per week enough for 2part-time employees to spend more time servicing customers on the store floor
“[The cloud]’s traction in our industry does not surprise me at all. The dynamics of the retail business model demand efficient and cost-effective operations.Scott Jones [Cloud-based e-procurement]Purchasing Agent fits that need perfectly. We’veThe Container Store. been very successful with the software.”
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
“The implementation of our [cloud spend management solution] was actually the first time ever an implementationEoinO’Connor went as planned. WeChief Financial OfficerON24 expected it would take two weeks. It took less than that.”
MAPTake junior to getnew hockey skatesafter practice
PROCUREMENT IMPACT SAVINGS $800,000 enough for 3,200Sets of hockey gear for inner city sports programs
“I like the ease-of-use. The screen looks like a web page and you only see what’s in your cue, which adds focus. And because the cloud isDave HowardDirector of Central Purchasing subscription based, it doesn’tReebok CCM Hockey take a lot of internal resources [to implement or maintain].”
MAPArrive home, crankup some music andstart dinner
PROCUREMENT IMPACT SAVED $600,000 enough for 465,116songs on iTunes to review and add to the Pandora Genome Project
“As we remain laser-focused on growing our business it is important to have the rightfinancial tools in place for to ensure effective management of spend within established budgets. We’re pleased to use cloud spend management as one of the primary tools toassist us in our ongoing commitment to that financial goal.” - Steve Cakebread, CFO at Pandora
What is the “cloud”?• Lots of definitions, lots of “false clouds”• The cloud should not be confused with – ASP – SaaS – On Demand• A true cloud solution – Is built on a single line of code – Can be up and running in a matter of days – Does not require extensive set-up, maintenance and upgrade fees
The Cloud is the Most Cost Effective •IT Support •Maintenance •Upgrade •Professional Services •Software Fees •IT Support •IT Support •Maintenance •Maintenance •Professional •Professional Services Services •Software Fees •Software Fees•Implementation •Implementation •Implementation • •Hardware •Hardware •Hardware •Database / •Database / •Database / Middleware Middleware • Middleware • •Software Fees •Software Fee •Software Fee • • • Year 1 Year 2 Year 3
Innovation in the Cloud Traditional Dev Model Cloud Dev Model1.Lengthy Independent Upgrades 1.Quick and Simple Upgrades2.Difficult Independent Implementations 2.Rapid Implementation3.Multiple Code Bases 3.One Optimized Code Base VS Cloud Platform1.Non-viable long-term business model 1.Sustainable Business Model
Cloud Spend Management• One platform to control 100% of indirect spend – e-Procurement – Expense Management – Dashboards & Reporting – Benchmarks• Easily integrate and extend the value of existing investments – Open APIs – Out of the box connectors
5.5% to 16% HARD Savings Driver Benefit Competitive Bidding 2-5% Hard Cost SavingsPreferred Supplier Enforcement 1.5-5% Hard Cost Savings Process Efficiency 1-2% Savings, 55%+ cycle time reductions Visibility & Control Risk Mitigation Accurate Invoicing 1-2% Hard Cost Savings Early Pay Discount 1-4% Hard Cost Savings 77
Summary• Procurement has evolved – so must your organization• Smarter spending is all around us – we all have opportunities to take advantage• Those who have made the move to smarter spending have reaped tangible results• Don’t be confused by marketing buzzwords – there is only ONE cloud