CPO Rising 2015: The Agility Agenda Webinar Slides

CPO Rising 2015: The Agility Agenda
Andrew Bartolini, Ardent Partners
Emily Rakowski, Ariba / SAP
March 31st, 2015

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WORLD PREMIERE – CPO RISING 2015
 Introduction
 The State of the CPO
 The State of Procurement
 Procurement Performance
 Strategies for Success
Copyright © 2015 - Ardent Partners Ltd.

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 Chief Research Officer, Ardent Partners
 Publisher, CPO Rising & Payables Place
Summary
 Recognized expert in sourcing, procurement, AP, and supply management
 Advisor to solution providers & CPOs alike around the world
 Presented more than 200 times in seven countries
 Benchmarked 10,000+ enterprises across all facets of their supply management operations
 Published 1000+ research reports, analyst insights, articles, and other briefs
 Named a “Pro to Know” by Supply and Demand Chain Executive three times
Experience
Decade plus as Industry analyst. Leadership roles in sales, marketing, and services at Ariba and
Commerce One. Rich experience in strategic sourcing, business process transformation, and
software implementation. Background also includes consulting and investment banking.
Education
 MBA – Indiana University
 BA – College of the Holy Cross
ANDREW BARTOLINI

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Ardent Partners is a research and advisory firm
focused on defining and advancing the supply
management strategies, processes, and
technologies that drive business value and
accelerate organizational transformation within
the enterprise.
ARDENT PARTNERS

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www.cporising.com
CPO RISING: GLOBAL RESEARCH & ANALYSIS FOR CPOS

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Research Report
 Goal (I): Capture the strategies, performance, and intentions of Chief
Procurement Officers in 2015 (and beyond)
 Goal (II): Present a clear and comprehensive view of the “State of Procurement”
 Goal (III): Identify the strategies and levers that drive Best-in-Class results
Approach
 Utilize a web-based survey to capture responses from 318 CPOs and other
procurement executives
 Interview 26 leading CPOs (and ex-CPOs) to add context and understand
critical and emerging trends
 Leverage experience and orientation of a leading analyst team
RESEARCH PROCESS
Copyright © 20145- Ardent Partners Ltd.

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TODAY’S PRESENTATION
Report Demographics
318 Respondents
o 72% VP or Director-level
o 82% work in procurement
o 63% from large enterprises
o 61% North America; 26% EMEA
o 28 industries
o Interviewed 26 CPOs

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“Procurement is an incredibly
important part of the business. You
need to get that right.”
~ Sam Walsh, CEO, Rio Tinto
THE CEO’S VIEW OF PROCUREMENT

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PROCUREMENT: PAST, PRESENT, & FUTURE
© Ardent Partners - 2015

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CPO REPORTING
CFO, 32%
CEO, 22%
COO, 19%
Supply
Chain, 7%
Shared
Services , 6%
Line of
Business , 4%
President, 2%
Other,
7%

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THE CPO’S TOP TWO PRESSURES IN 2015
51%
27%
25%
21%
18%
Find more savings Increase overall
effectiveness and
influence
Better communicate
value and
performance
Increase the
percentage of spend
under management
Better align
procurement with
business goals and
needs

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TOP CPO STRATEGIES
(SAVINGS PRESSURE OR NO SAVINGS PRESSURE)
44%
36%
26%
22%
36%
21%
17%
29%
Improve use of
technology (buy
new and/or
improve current)
Improve staff
capabilities
Optimize current
systems and
processes
Improve
collaboration with
suppliers
No Savings Pressure
Savings Pressure

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THE CPO’S TOP PRIORITIES (NEXT 3 YEARS)
42%
39%
33%
28%
27%
Savings Processes Compliance Innovation People

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“It is a great time to be in procurement.”
~ Robert Gleason, Director, Div. Purchases & Supply
(“CPO”), Commonwealth of Virginia
THE CPO’S VIEW OF PROCUREMENT

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BUT, SHOULD YOUR PROCUREMENT DEPT. BE DOING BETTER?
90%
3%
7%
Yes
No
Not Sure

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WHAT’S HOLDING PROCUREMENT BACK?
57%
31%
29%
26%
37%
35% 35%
38%
Staff/Talent constraints Budget constraints Lack of technology
infrastructure (i.e.
gaps)
Challenges aligning
processes and
systems
2014 2015

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WHAT WILL DRIVE PROCUREMENT FORWARD?
Strong Collaboration
47%
60%
62%
71%
With budget-holders
With suppliers
With accounts payable
Between the CPO & CFO

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Strong Collaboration Visibility
49%
50%
50%
55%
56%
59%
Procurement department's
financial impact
Enterprise spend
Booked savings
% of spend under
management
Enterprise goals and
objectives
Identified or negotiated
savings
47%
60%
62%
71%
With budget-holders
With suppliers
With accounts payable
Between the CPO & CFO

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Technology Usage and Intentions
37%
48%
42%
16%
50%
40%
28%
39%
29%
38%
42%
33%
30%
37%
Automated
Spend
Analysis
eSourcing Automated
Contract
Management
(Repository)
Automated
Contract
Management
(Authoring)
eProcurement ePayables (AP
Automation)
Business
Network
Currently Use
Plan to Use

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THE CPO’S TOP DRIVERS FOR FUTURE SUCCESS
44%
48%
53%
53%
66%
Better team execution
Better communication plan
Larger and/or more talented staff
New (or improved) technology
Earlier engagement on sourcing
opportunities

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PROCUREMENT PERFORMANCE BENCHMARKS

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2015 PROCUREMENT BENCHMARKS
Metrics
Market
Average
Spend under management 61.4%
Savings 2014 (Actual) 6.0%
Savings 2015 (Target) 6.6%
Addressable spend that is sourced 47.9%
Spend that is contract compliant 55.2%
Transactions that are contract compliant 63.0%
Contracts stored in a central, searchable repository 57.4%
Percentage of catalog-based spend 14.3%
PO-Based Spend 63.0%
Suppliers representing 80% of total spend 21.9%
Enabled suppliers 29.2%
High-risk Suppliers 6.5%

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Metrics
Market
Average

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Metrics
Market
Average

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BEST-IN-CLASS PROCUREMENT DEFINITION

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PROCUREMENT METRICS (BEST-IN-CLASS V. ALL OTHERS)
Metrics
Best-in-
Class All Others
Spend under management 90.0% 53.1%
Savings 2014 (Actual) 6.7% 5.8%
Savings 2015 (Target) 6.6% 6.6%
Addressable spend that is sourced 61.8% 43.9%
Spend that is contract compliant 66.3% 51.7%
Transactions that are contract compliant 73.8% 59.7%
Contracts stored in a central, searchable repository 68.9% 53.9%
Percentage of catalog-based spend 14.5% 14.2%
PO-Based Spend 79.2% 58.6%
Suppliers representing 80% of total spend 18.8% 22.6%
Enabled suppliers 36.7% 27.3%
High-risk Suppliers 8.4% 5.6%

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BEST-IN-CLASS TECHNOLOGY ADVANTAGE
25%
38%
52%
14%
38%
46%
33%
40%
47%
64%
24%
55%
55%
48%
Business Network
ePayables (AP Automation)
eProcurement
Automated Contract Management
(Authoring)
Automated Contract Management
(Repository)
eSourcing
Automated Spend Analysis
Best-in-Class
All Others

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BEST-IN-CLASS CHARACTERISTICS

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RECOMMENDATIONS
 Develop and promote an Agility Agenda
 Prioritize the urgency to get engaged earlier on
sourcing opportunities
 Deploy new and improved technology
 Use technology to make collaboration a habit within the
enterprise
 Use business networks to make collaboration a habit
across the supply chain

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RECOMMENDATIONS
 Develop a procurement-led initiative to foster supplier
innovation
 Develop a spend under management “pipeline”
 Engage Finance and Treasury to connect the last mile
of the Source-to-Settle process
 Work to redefine procurement performance for the
enterprise

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Q & A
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© 2015 SAP SE or an SAP affiliate company. All rights reserved.
Thank you
Andrew Bartolini
Managing Partner & Chief Research Officer
Ardent Partners
abartolini@ardentpartners.com / @andrewbartolini
Emily Rakowski
Vice President, Ariba / SAP Procurement Marketing
emily.rakowski@sap.com

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