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Spend Analysis: It’s What You Do With it That Matters
The document outlines a panel discussion on spend analysis featuring speakers from JM Family Enterprises, NetApp, and Harsco Corporation, focusing on the importance of spend visibility for informed decision-making. It covers their respective journeys in implementing spend analysis systems, addressing data challenges, and achieving enhanced visibility into procurement activities across multiple business units. Key insights include the need for consolidated data from various sources, successful implementation strategies, and lessons learned about data accuracy and user adoption.
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Spend Analysis: It’s What You Do With it That Matters
- 1. #AribaLIVE @ariba Spend Analysis: It’sWhat You Do with It That Matters © 2015 Ariba – an SAP company. All rights reserved. Speakers • Teddy Artemiou – JM Family Enterprises • Tunc Yilmaz – NetApp, Inc. • Dan Mattas – Harsco Corporation Moderator • Annie Vaseekaran – Ariba, an SAP Company
- 2. #AribaLIVE @ariba Agenda © 2015Ariba – an SAP company. All rights reserved.2 • Overview and Introductions • Panel Presentations Teddy Artemiou, Procurement Operations Manager, JM Family Enterprises Tunc Yilmaz, Senior Manager - Global Supplier Programs & Strategy, NetApp, Inc. Dan Mattas, Business Excellence Manager, Harsco Corporation • Q&A
- 3. #AribaLIVE @ariba Spend Analysis:It’s What You Do with It That Matters © 2015 Ariba – an SAP company. All rights reserved.3
- 4. #AribaLIVE @ariba Panelists © 2015Ariba – an SAP company. All rights reserved.4 Dan Mattas Business Excellence Manager Harsco Corporation Teddy Artemiou Procurement Operations Manager JM Family Enterprises Tunc Yilmaz Senior Manager - Global Supplier Programs & Strategy NetApp, Inc.
- 5. #AribaLIVE @ariba Agenda © 2015Ariba – an SAP company. All rights reserved.5 • Overview and Introductions • Panel Presentations Teddy Artemiou, Procurement Operations Manager, JM Family Enterprises Tunc Yilmaz, Senior Manager - Global Supplier Programs & Strategy, NetApp, Inc. Dan Mattas, Business Excellence Manager, Harsco Corporation • Q&A
- 6. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.6 JM Family A diversified automotive corporation, based in Deerfield Beach, FL World Omni Financial Corp. Automotive finance and services company JM&A Group National provider of automotive F&I products JM Lexus No. 1 volume Lexus dealership in the world for 23 consecutive years Southeast Toyota Distributor of Toyotas in Southeast US • Nearly 4,000 associates • $12.5 billion in revenues • Ranked by Forbes as23rd largest private company in the USA • 16 consecutive years as one of Fortune Magazine’s 100 best company to work for Company Overview
- 7. #AribaLIVE @ariba Company Overview ©2015 Ariba – an SAP company. All rights reserved.7
- 8. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.8 Why Start on the Journey of Spend Visibility? • Answer to the questions: • How much do we spend with a supplier across our business units? • How many suppliers do we have for a particular commodity? • Took us weeks to answer these questions • Data was downloaded from various AP systems and manipulated in Excel • Fields from source systems had to be matched each time a request was made What is Needed? • Executive Management Who is Asking? • Buyers • Finance • Internal Customers
- 9. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.9 Who are we spending money with? • Top suppliers • How many suppliers? Who is spending the money? • Which business unit? • Which department in the business unit? Needed insight into spend across all source systems • ERP, P-Card, Expense Reporting System • Multiple ERP systems • Multiple P-Card platforms Insight Into Our Spend Data Answer needed quickly so decisions can be made by upper management Where Do We Want to End Up on Our Journey?
- 10. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.10 • Ability to drill down to business unit and department Consolidate our spend by supplier across our business units • One location that houses all the spend from all the source systems • Do not need to manipulate the data in Excel Consolidate spend across source systems • UNSPC or Ariba Classification Taxonomy • Gives us insight into number of suppliers we used for a particular commodity Consolidate spend by commodity • Something we never had before • Ability to see our spend data by supplier’s global parent Visibility into hierarchal relationships between our suppliers • Information was available in short amount of time • Ability to save reports and be update as new data is loaded Reporting Right Tool for Our Journey - Spend Visibility System
- 11. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.11 Implementation • Smooth and easy implementation • Mapping fields from source systems to Ariba fields • Determining business unit structure and roll up • Dedicated project manager • Loaded three years of historical data Refreshes • Spend information is updated quarterly • Ariba validation tool makes file load easy • Updated information is available in the system to administrator even though not enriched • All supplier data is enriched, not just updated information Starting out on Our Journey
- 12. #AribaLIVE @ariba Spend information is nowat our fingertips • Ability to analyze spend from a variety of perspectives • View year-over-year spend We are viewed as experts for spend information • Internal customers and management rely on us for data Diverse Spend • Group together suppliers we consider diverse and save the grouping Spend influenced • Ability to categorize spend to determine percentage influenced by Procurement • Identify opportunities for centralized Procurement to be involved © 2015 Ariba – an SAP company. All rights reserved.12 Journey Is Looking Good
- 13. #AribaLIVE @ariba Looking tothe Horizon © 2015 Ariba – an SAP company. All rights reserved.13 • Ad-hoc requests by Executive Management • Visibility into spend by critical suppliers • Allocating spend by geographical areas we have a footprint • Internal customers use spend information when conducting supplier meetings • Business units that are going through a transformation rely on us to supply them with data to make good decisions • Buyers have visibility into spending trends and look for opportunities • Visibility into spend not previously managed and find hidden opportunities • Look for areas to consolidate suppliers and achieve cost savings by using commodity categories. Strategic use of our Spend Information Presenting spend in a straightforward manner – lining up spend
- 14. #AribaLIVE @ariba Facilities TransformationProject © 2015 Ariba – an SAP company. All rights reserved.14 Project initiated to transform and restructure business unit Room for improvement and opportunities for savings and efficiencies Information needed to isolate areas to focus our attention Could not work on the problem if we do not know where the problem is Data provided by our Spend Visibility was critical Information from the spend system showed the areas to focus on
- 15. #AribaLIVE @ariba Look atnumber of suppliers by category How many suppliers do we have providing similar services? Is there an opportunity to consolidate the suppliers? Can a supplier perform multiple services? Facilities Transformation Project © 2015 Ariba – an SAP company. All rights reserved.15 0 20 40 60 80 100 120 140 Vendor Count Per Category
- 16. #AribaLIVE @ariba Facilities TransformationProject © 2015 Ariba – an SAP company. All rights reserved.16 Which locations • Where are the services being performed? • Can we use the same supplier for various locations or do we need more than one supplier to cover our area? have the spend? ALPHARETTA COMMERCE DEERFIELD BEACH JACKSONVILLE MOBILE ST. LOUIS Total Spend for All Sites
- 17. #AribaLIVE @ariba Facilities TransformationProject © 2015 Ariba – an SAP company. All rights reserved.17 • Categorize spend by Ariba Classification Taxonomy • Renamed the categories to categories the business unit was familiar with • Use as a baseline for cost savings Spend by categories $0.00 $500,000.00 $1,000,000.00 $1,500,000.00 $2,000,000.00 $2,500,000.00 $3,000,000.00 $3,500,000.00 Acoustics AppliancesMaintenance Art AwningServices BuildingAutomation Ceiling Construction EHS Electrical ElevatorServices Fence FireProtection/Monitoring Flooring FurnitureMaintenance Generators GYM HandyManServices HVAC Irrigation Janitorial Landscaping/Tree Lighting Moving/StorageServices MRO Painting Parking/Paving PestControl PlantServices Plumbing RailRoad RestorationServices Roofing Safety Security Signage Uniforms/LaundryServices UPS VehiclesandEquipment… Waste/Recycling Windows/Doors… Total For All Categories
- 18. #AribaLIVE @ariba Facilities TransformationProject © 2015 Ariba – an SAP company. All rights reserved.18 Have the information ready to include in the RFP Types of Services Location for services to be performed Spend Information Once strategic analysis is done, we are able to determine what services need to be put to an RFP
- 19. #AribaLIVE @ariba Agenda © 2015Ariba – an SAP company. All rights reserved.19 • Overview and Introductions • Panel Presentations Teddy Artemiou, Procurement Operations Manager, JM Family Enterprises Tunc Yilmaz, Senior Manager - Global Supplier Programs & Strategy, NetApp, Inc. Dan Mattas, Business Excellence Manager, Harsco Corporation • Q&A
- 20. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.20 Leading organizations worldwide count on NetApp for software, systems and services to manage and store their data. From FORTUNE Magazine, February3, 2014© 2014Time Inc. FORTUNE and FORTUNE 100BestCompaniesto Work For are registeredtrademarks of TimeInc. and are usedunderlicense. FORTUNE and Time Inc. are not affiliated with, and do not endorseproducts or services of, NetApp. US $6.3B revenue Fortune 500® NASDAQ: NTAP Our Team:12,000+ 150+ countries Founded in 1992 12 Years in a Row: A Fortune 100 Best Place to Work Company Overview
- 21. #AribaLIVE @ariba Company Overview ©2015 Ariba – an SAP company. All rights reserved.21 Source: IDC Names NetApp Data ONTAP as the #1 Branded Storage Operating System Source: IDC Worldwide Quarterly Disk Storage Systems Tracker 2014 Q2, September 2014 IDC Storage Users Demand Study 2013 – Fall Edition, IDC #250106, August 2014 (based on IDC’s estimates for external storage systems capacity shipped in 1H 2013) Public cloud infrastructure includes storage acquired by service providers for delivering SaaS/IaaS/PaaS as well as storage acquired by value-added content providers (VACP) for delivering content. #1 Integrated Infrastructure Capacity - When measured by revenue in IDC’s Worldwide Quarterly Integrated Infrastructure and Platforms Tracker Q1 2014, published June 2014 (Integrated Infrastructure is a segment of the integrated infrastructure and platforms market that are designed for general-purpose, distributed workloads) Customers have made us their top choice for key technologies that drive data center transformation. #1 Storage Operating System #1 in Storage for Public Cloud #1 Integrated Infrastructure
- 22. #AribaLIVE @ariba GSPS -Global Supplier Programs and Strategy © 2015 Ariba – an SAP company. All rights reserved.22 GSP – Global Sourcing Partners Category Management & Business Relationship ESRM, Card Programs, Diversity Tools, Process, Policy, Data, Analytics, Tactical Operations • Part of Finance & Operations Group (CFO) • ~$1.2 Billion indirect spend • 4 major categories • Professional Services • Technology • Marketing • Facilities GSS Global Sourcing Services COECenter of Excellence Supplier Programs Travel
- 23. #AribaLIVE @ariba NetApp SpendVisibility Journey Where we started © 2015 Ariba – an SAP company. All rights reserved.23 • No standard spend analysis process or program • Spend data gathered from ERP & other systems manually • Data is not linked, different formats • Spend Analysis done on ad-hoc basis • Takes weeks to months to convert into usable format • No enrichment or validation • Low confidence in data and reporting
- 24. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.24 DATA Prep work is key! • Do you understand your data? • Can you identify Direct vs. Indirect? • What’s in, What’s Out? (Company Sites, Cost Centers) • Do you have reporting from all your systems that you can link? • Is it accurate? 6 month – 1 Year figuring out our data internally Accelerated Deployment (<3 months) NetApp Spend Visibility Journey Lessons Learned
- 25. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.25 Garbage in, Garbage Out Spend Visibility is not the magic bullet • 44% accurately mapped • 15-20% at Level 1&2 • Rest requires work Utilize Spend Analysis to identify, prioritize and fix Data Issues • Category Codes • PO Descriptions & Lines • PO Hygiene • Accurate PO/Invoice Matching NetApp Spend Visibility Journey Lessons Learned
- 26. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.26 ADOPTION • Hard to overcome legacy low confidence • Is the way you create reporting aligned with how your procurement organization wants to consume? • Is your procurement organization tech savvy? • Do you have the right power users for support? • Procurement Expectations • Data will be ready and perfect from day one • No extra work for them • They don’t want to deal with reporting NetApp Spend Visibility Journey Lessons Learned
- 27. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.27 ADOPTION Plan for adoption support! • Identify reporting requirements from procurement & business • Involve business/finance, they know their data better • Train super users • Don’t expect everyone to use the tool • Complex reporting makes people confused • Create simple, easily distributable reports • Create a support structure to help users • Create a governance model to collect and incorporate feedback NetApp Spend Visibility Journey Lessons Learned
- 28. #AribaLIVE @ariba Agenda © 2015Ariba – an SAP company. All rights reserved.28 • Overview and Introductions • Panel Presentations Teddy Artemiou, Procurement Operations Manager, JM Family Enterprises Tunc Yilmaz, Senior Manager - Global Supplier Programs & Strategy, NetApp, Inc. Dan Mattas, Business Excellence Manager, Harsco Corporation • Q&A
- 29. #AribaLIVE @ariba Who WeAre © 2015 Ariba – an SAP company. All rights reserved.29 At a glance: • Harsco is a diversified, worldwide company serving industries that are fundamental to worldwide economic progress and infrastructure development • Our core markets include: • Steel and Metals Produce • Railways • Energy • Fortune 1000 company • In business since 1853 • Revenue:$2 billion • 200+ operating sites in 38 countries • Nearly 13,000 employees • Award-winning safety • Listed on the NYSE,ticker symbol HSC
- 30. #AribaLIVE @ariba What WeDo © 2015 Ariba – an SAP company. All rights reserved.30
- 31. #AribaLIVE @ariba Data EnrichmentJourney • Began in March 2012 • $1.3 Billion • 5 major ERPs (Oracle, Baan, JDE, Syteline, Invoice workflow) • Multicurrency spend data from over 50 countries • No standard spend category classification • Manual reporting of yearly spend • Large fragmented indirect spend © 2015 Ariba – an SAP company. All rights reserved.31
- 32. #AribaLIVE @ariba Implementation Timeline ©2015 Ariba – an SAP company. All rights reserved.32 Wave 1 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Wave 2 Wave 3 Wave 4 Wave 5 Divisional Dashboards Custom Reports Department Dashboards Quarterly Data Refresh Corporate Dashboard Implementation waves included a combination of Divisions and countries depending on spend data quality
- 33. #AribaLIVE @ariba Initial Results •Wave approach was required because not all ERPs/Divisions were ready for implementation by 2012 (data quality issues) • Achieved 90% agreement classification threshold, but too many classification issues with indirect spend • Tax, payroll, intercompany spend was not clearly differentiated • Some issues with currency conversions • Few users understood UNSPSC classification….where is MRO? • Spend reports needed to be done at the UNSPSC and also at the supplier level in order to capture all the spend for a given category © 2015 Ariba – an SAP company. All rights reserved.33
- 34. #AribaLIVE @ariba Where WeAre Now © 2015 Ariba – an SAP company. All rights reserved.34 • $6.7 Billion in spend enriched • Achieved 99% spend data classification • Still pulling data from 5 major ERPs (Oracle, Baan, JDE, Syteline, Invoice Workflow) • Use of Corporate and Divisional dashboards • Implemented global department dashboards and reports (IT) • Focus on addressable spend for UNSPSC enrichment classification (exclude taxes, payroll, intercompany, T&E) • Sourcing projects are supported with global categorized spend data
- 35. #AribaLIVE @ariba Future Roadmap •Migration to the SAP Hana architecture for speed reporting • Dashboards customization and predefined reports for department use (Legal, HR, Travel, Conflict Minerals) • Increase end-user adoption (manager-buyer level) • Implementation of a Harsco commodity classification (to enhance UNSPSC) • Implement Spend Visibility with new Harsco acquisitions © 2015 Ariba – an SAP company. All rights reserved.35 Spend Visibility Dashboards
- 36. #AribaLIVE @ariba SV CaseStudy: Hardware Fasteners - NA • Spend Visibility data was used to: Define what hardware categories to include: off-the-shelf type Gather part numbers, descriptions: 5,000+ parts Identify supplier base and locations: 80+ suppliers, 50 NA Harsco locations Identify what other categories and services were provided by current supply base Prepare market basket for quoting: 2,700 line items • RFP posted using Ariba Sourcing • Identified cost savings: 15-18% © 2015 Ariba – an SAP company. All rights reserved.36
- 37. #AribaLIVE @ariba SV CaseStudy: Conflict Minerals Compliance • Spend Visibility data was used to: Target “at-risk” commodities / suppliers globally Cross reference other commodities that suppliers supplied us Identify all locations / divisions that suppliers served Develop annual supplier listing to survey • Allowed us to keep process internal vs external • Path to on-time, compliant SEC reporting • Identified cost avoidance: 25-30% © 2015 Ariba – an SAP company. All rights reserved.37
- 38. #AribaLIVE @ariba Spend VisibilityKey Takeaways • Start small and grow fast • Close collaboration between Purchasing-IT-Ariba • Define early what spend data should be enriched and tracked • Heavy use of enrichment rules • Use 12-month spend data for enrichment not just previous quarter • Heavy use of dashboards and predefined reports • Take advantage of the Ariba Classification Taxonomy (ACT) in addition to UNSPSC classification • Set enrichments goals higher © 2015 Ariba – an SAP company. All rights reserved.38
- 39. #AribaLIVE @ariba Agenda © 2015Ariba – an SAP company. All rights reserved.39 • Overview and Introductions • Panel Presentations Teddy Artemiou, Procurement Operations Manager, JM Family Enterprises Tunc Yilmaz, Senior Manager - Global Supplier Programs & Strategy, NetApp, Inc. Dan Mattas, Business Excellence Manager, Harsco Corporation • Q&A
- 40. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.40 It doesn't matter how many "resources" you have if you don't know how to use them
- 41. #AribaLIVE @ariba © 2015Ariba – an SAP company. All rights reserved.41 Contact Us Contact Information: (Panelists) Dan Mattas DMattas@harsco.com Teddy Artemiou teddy.artemiou@jmfamily.com Tunc Yilmaz Tunc.Yilmaz@netapp.com Contact Information: (Moderator) Annie Vaseekaran annie.vaseekaran@sap.com
Editor's Notes
- #7 Distributor of Toyota since 1968 to over 175 dealers. Account for 20% of all Toyotas sold in the US (retail and fleet). We buy the cars from Toyota, accessorize them and wholesale them to the dealer in our region. Mention which modules of Ariba we use.
- #9 How did our spend visibility journey begin? As is common with many companies we were asked questions about our spend that was not readily available. The information was not house in one common area Common questions were asked that I am sure are asked by many companies Many source systems exist that contained the needed information. Each source system had it’s own reporting tool and numbers had to be consolidated using Excel. Had to match up fields from each source system to consolidate the information Grueling task that took a long time to manipulate in Excel. To report on spend took a long time to get information from source system then combine information and make it presentable.
- #10 We needed insight to our spend and have it readily available. We needed the capability to consolidate our spend by supplier across our business units and consolidate our spend by categories. We needed information from all sources for our data to be accurate. Different ERP system. Our dealership has a system that run the entire operations. We bought a company some time ago that does vehicle inspections for our finance company. They had their own ERP that is tailored to their industry. We use AMEX as our P-Card provider but still need a VISA platform for those that do not accept AMEX.
- #11 Spend Vis would give us the capability to consolidate our spend by supplier across our business units. We have one storehouse for all the spend from all the source systems. No need to use Excel to combine data and make presentable. We have visibility into our category spend using Ariba classification. Never had this before. We now are able to see supplier hierarchy which give buyers leverage. Reporting can be saved and just be updated when additional refreshes are loaded.
- #12 Smooth implementation Have to go through exercise to map fields from different source system to the Ariba fields but this would be a one time exercise. Determine how we wanted our business structure to roll up. Parent company to subs to Business unit to departments. Having a dedicated project manager through our implementation and the life of the contract is very helpful. We decided to load three years of historical data to have a starting point. We update our information quarterly. Very helpful is the validation tool Ariba has to validate the files before loading them into the system. Even though we need to wait for enrichment to complete is it nice for the admin to have access to the data in the system although it is not enriched. Enrichment is done on all supplier not just the updated information.
- #13 We now have the ability to report on spend quickly. At our finger tips. Able to analyze data from different perspectives rather easily. See trends as we can see year over year information. Procurement is viewed as the source for spend questions. Our internal customer rely more and more on us to provide them with the data. Have the ability to group supplier together in a saved search like our diverse suppliers. Ability to see the percentage of spend we influence as a procurement department. We are not mandated so this is important for us to see our impact. Also identifies opportunities for us to become involved in
- #14 Now that we have our data in one area we are able to report spend data easily. Our executive teams has many ad-hoc requests that we can supply information quickly. They have insight to our critical suppliers. Spend by area for corp comm to use in marketing materials Start and need to do more of a strategic use of data Our internal customers request or search on their own spend by a supplier if they have a meeting. Are able to go into meeting prepare with spend for supplier, other suppliers we use. Business units rely on us to supply them with information used to make decisions. Buyer now have insight to look for opportunities to source more. Buyer have insight to areas not influencing and become involved. Better to show internal customers is black and white how many suppliers they are using.
- #15 Spend Visibility was critical to the data they needed to benchmark and transform the business unit. Knew we had room to improve but could not isolate the areas without the data. Data from spend showed us where the issues were not where we thought they were
- #16 The first area they were going to address was vendor optimization. They needed to see how many suppliers we have in each category. Could isolate the area to concentrate on first. Could one supplier perform more then one service and have more leverage in negotiating Needed to determine the areas we could consolidate supplier and achieve savings. Could not focus on the right area without the data from spend visibility
- #17 Needed to see spend by our location. Needed to drill down to that level Needed to see if there were opportunities for using a national supplier.
- #18 We categorized the spend by ACT. Then renamed the categories to what the business unit is familiar with. We tagged the suppliers not only by the category but what service they provided to us. Could see where most of the spend was isolated
- #19 Once all this strategic data was compiled we were prepared to determine which areas should be put to an RFP. Also had the information needed to include in the RFP…spend, services provided. Information from spend was critical not only in the planning stages but going in the proposals and determining savings going forward.
- #21 NetApp is a Fortune 500 global provider of software, systems and services that help you manage and store data. You can get the skills and knowledge you need from our people, as well as our vast network of partners, in more than 150 countries. Customers have been relying on our team to help with the most challenging storage and data management challenges for more than 20 years. (Almost all of the Fortune 100 are customers of ours (96 of 100 are).) We attract people who are passionate about customer success. Our company culture and work environment support that passion and dedication. This helps us retain a committed team who deliver a better experience for our customers and who have earned us global recognition for being a great place to work. This includes being named to the Fortune 100 Best Companies to work for list for the past 12 years straight.
- #22 Our team is equally dedicated to making sure we stay on the forefront of innovation that helps you evolve your technology environment. According to market analyst firm IDC’s research, customers have made us their top choice when it comes to storage operating systems, storage capacity shipped for the public cloud infrastructure, and storage capacity revenues from integrated infrastructure. NetApp is also one of the top providers of flash storage arrays – both hybrid and all-flash – having shipped more than 100 petabytes.