Accelerating Values in Procurement through Shared Services

Accelerating values in Procurement through Accelerating values in Procurement through Shared ServicesShared Services

Shared services and Outsourcing week 2011 - Amsterdam

Terje Kløvås - Telenor Key Partner

Sources: The Hackett Group, Volvo Business Sevices AB, Infineon technologies, ING, Mattel, Accenture, SAP and Oracle

Telenor is one of the leading international telecommunication companies and has 202 million mobile subscriptions, including 92 million subscriptions from VimpelCom Ltd.

Our Largest markets# of subscribersGrameene Bangladesh 30,0 millTelenor Pakistan 24,7 millDTAC Thailand 21,6 mill

Total workforce 32 100

Accounting & reportingERP system development & supportPayroll & HRProcurement

Telenor’s shared service center

Created in 2001 as a separate legal entity

120 legal entities approx 30,000 end users.

65 M Euro

400 employees Offices in Norway, Denmark and Pakistan.

Telenor Key Partner is

Services

Customers

Employees / Locations

Revenue

About Our SSCAbout Our SSC

MissionMissionTKP is a professional supplier of technology based administrative services within the Telenor Group. In partnership with our customers and the Group functions, we deliver cost effective services, improve quality, reduce risk and create added value.

Communication platformGroup Infrastructure

Identity and access mgmt

3

4

44

Value DriversValue DriversWe create value for

Reduced unit costs of

administrative services

Appropriate quality of

administrative services

Improved internal control

and transparency

Increased organizational

flexibility

Business units through Telenor Group through

Minimise errorsOn time

Governance of common services

Business units focus on core

Increased speed and reduced risk in green field rollouts

ScaleCommon processesCommon platformLabour arbitrage

Reduces riskGroup policiesStandardisationCommon account

string

SustainableSustainableShared service support centresShared service support centres

Establishing clear governance Establishing clear governance models and accountability for models and accountability for

Procurement operationsProcurement operations

Where to focus first?

• Evaluate processes

– Look for value to business v’s implementation complexity

– Synergies with other Key Business Initiatives

• Look for less visible benefits

– Reduced admin time for managers and procurement

– Simplified flows to eliminate waste

– Transparency in financial data


Embracing the easy wins by Embracing the easy wins by reducing Purchase to Pay cycle reducing Purchase to Pay cycle

timetime

Call off underexisting contract

Procurement Process in a shared service perspective

Vendorselection

Contract&

Catalogueregistration

RFI,RFQ

Reversedauction

Vendorsearch

Deliveryacceptance

Call offApproval

&authorization

ReconciliationAP/GLPosting PaymentInvoice

entryReporting

Purchase order process overview PR

Web form

PR

Web form

Delivery acceptance

Delivery acceptance

Enter data in PO module

Enter data in PO module

Invoice matchInvoice match PaymentPayment Reconciliation AP/GL and

vendor accounts

Reconciliation AP/GL and

vendor accounts

ReportingReporting

SSC Customer

PO processing and shipment PO processing and shipment

Approval:•Purchase order•New vendor

Approval:•Purchase order•New vendor

• 75% of all internal invoices on e2b (potential approx 85%)

– 5% of all internal invoices on PdF

– 20% on paper

• 4 alternatives for external suppliers

– XML

– EDI / EDIFACT

– PdF (attachment to e-mail)

– Evenex i-procurement & invoicing portal

E-invoicing in Telenor


Closing RemarksClosing Remarks

12

HUB locationHUB locationThe selection of a location for a shared service center is driveThe selection of a location for a shared service center is driven by a n by a combination of cost, suitability and risk drivers to meet both scombination of cost, suitability and risk drivers to meet both short term and hort term and long term business needslong term business needs

Labor flexibilityLabor availabilityLanguage availability

SUITABILITYSUITABILITY

Infrastructure – transportInfrastructure – technology and telecommunications stabilityAttractiveness

COST

Occupancy

Labor costs

COUNTRY RISK

Financial risk

Political risk

Legal risk

13

Telenor experience Initial cost savings Norway = 34%

Hackett experience65% save more than 20%

What is difficult?

• Supplier adoption in different markets

• To many allowed access in core systems

– Use Help Desk, Web forms and workflow systems instead

• Accept that some processes are extremely costly to automate – then don’t

• Deny supplier registration and move to reimbursement of personal expences

What has gone well?

• Local Scanning of invoices

• Personal order ID

– Mine is: TN BC 540944

• One common account string

• One common IT platform

• Do not sell process without system support

• Do not sell IT systems without process governance

Cross-centre training Meetings & visits

International job opportunities Performing work in projects

Special assignments

CrossCross--centre training centre training Meetings & visitsMeetings & visits

International job opportunitiesInternational job opportunitiesPerforming work in projects Performing work in projects

Special assignmentsSpecial assignments

People PowerPeople PowerMotivationMotivation

QUESTIONS?QUESTIONS?