Crescendo Services Spend Management

©2010 Crescendo Consulting Solutions www.CrescendoConsult.com

Services Spend Management

Industry Trends, Best Practices, and Going Global

Thomas F. Kaminsky, Managing Director Crescendo Consulting Solutions

March 9 – 11, 2010

2 ©2010 Crescendo Consulting Solutions www.CrescendoConsult.com

Jobless U.S. Market…Reading the Tea Leaves

  Difficult times continue… – 9.3M permanent job losses as of Jan

31, 2010 – Since Dec 2007, construction

employment has decreased by 1.9M jobs

  However, there is hope… January 2010 positive indicators – Healthcare employment increased 15k

– Federal employment increased 33k including 9k temporaries for census

*Source: BLS Report for January 2010

Full-time Employment


Jobless U.S. Market…Reading the Tea Leaves

  … buried on Pages 3 & 20 of the BLS report …

– Temporary help services added 52k jobs in Jan 2010

– Since Oct 2009, 247k temporary help services jobs have been added.

*Source: BLS Report for January 2010

Economic recovery begins with Contingent Labor…

How will this shift impact your organization? What are the risks and opportunities? How does this impact other initiatives within Procurement and Human Capital?


Simplified Industry Terms*

Master / Prime Vendor Model   Single staffing vendor

  Supplies and manages all contingent labor needs

Managed Service Provider (MSP)   Vendor-neutral

  Facilitates end-to-end lifecycle (e.g., requisition through payment)

  Single point-of-contact

Vendor Management System (VMS)   Automated system for tracking supplier data (e.g., candidates, rates, spend, performance metrics, etc.).

  Expedites requisition-to-pay process across categories (IT, administrative, manual labor, consulting, manufacturing, finance, etc.)

  Integrates with client legacy IT platform (e.g., Oracle Financials, PeopleSoft, etc.)

Independent Contractor Engagement Specialists (ICES)   Minimize the risk of co-employment or federal audits

  Provide electronic compliance surveys

  Payroll services

*based on research by Aberdeen Group, 2009


Definitions: Simplified Categories

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Direct Hire Contingent Labor

Services Procurement / Other Services

•  Full-time or Part-time Employees

•  Temporary Help

•  Clerical / Administrative Support

•  “Time & Materials”

•  Hourly rate

•  Staffing firms

•  Specialized labor

•  Professional Services

•  “Statement of Work”

•  Fixed fees / contract rate

•  Independent Contractors / 1099

•  Off-shore suppliers


Value

Strategic Positioning   Enables organizations to re-focus on core businesses and shift non-core functions to

highly skilled, lower-cost suppliers.

Cost Containment and Savings Potential   Shifts business planning and expense from a standard, fixed model to a more flexible,

scalable, “pay as you go” model.

Talent Management & Workforce Planning   Provides companies across all industries access to specialized talent and skills

without losing productivity.

Based on continuing market analysis and client work, it is our view that a proactive services spend management program supported with the right tools

and processes will be a competitive advantage for forward thinking companies.

Why consider a services spend management program?


Assessing Global Services Spend Management

Visibility

Scalability

Risk Management

Program Savings

 Headcount, location, category, and spend  High volume end-users  Top suppliers  Specialized requirements

 Co-employment & Tenure risk  Proper screening  On & off-boarding  Financials

 Normalized job titles, skill levels, and job definitions  Accurate classification of contingent workforce  Highest quality workers at the lowest possible rate  ROI / Sustainable savings

 Right-size your workforce  Processes to up or down skill in times of change  Speed to access specialized talent  Sustain productivity


The integrated service and technology solution builds internal and external strategic business partnerships and provides labor, supplier, and spend expertise supporting an organization's business goals and cost reduction objectives in compliance with applicable legal and regulatory requirements.

Program Mgt Office (PMO)

Program Management

(PM)

Change Management

(CM)

Preferred Provider Program

(PPP)

Vendor Management

Solution (VMS)

Managed Service Provider

(MSP)

Establish a global, centralized Program Management (PM) model overseeing the all services spend categories

Strengthen Preferred Provider Programs (PPP) seeking highly qualified, cost-effective suppliers (IT & Non-IT Temp, IT Consulting, Mgt Consulting, etc.)

Outsource implementation and administrative services to a Managed Service Provider (MSP)

Implement a Vendor Management Solution (VMS) that improves data management, spend visibility and reporting

Continue comprehensive Change Management (CM) effort to root new policies, procedures and practices across the organization

1

3

4

5

2

Optimize Sourcing & Achieve Savings

High Level Vision: Optimal Model


VMS & MSP Selection 3-6 Months

Strategic Global Phased Implementation 6-18 Months

 Gather market intelligence   Identify suppliers  Complete RFI / RFP process  Negotiate Terms & Conditions

 Complete program planning  Define Regional / Global strategy  Gather business requirements  Complete Fit/Gap  Facilitate change management  Deliver program communications

 Complete system & end-user configuration  Ensure technology integration  Conduct supplier & end-user training  Distribute knowledge management  Enable service delivery model   Launch operations and optimize SOPs

Preferred Provider Program

3-6 Months

12-24 Month Duration

Timeline: Global Program

 Assess current state  Define future state vision & requirements  Complete financial model & budget  Create governance & secure executive sponsorship

Business Case / Approvals 2-3 Months

 Gather market intelligence   Identify suppliers  Complete RFI / RFP process  Negotiate Terms & Conditions


Critical Program Attributes

  Program Engagement – Conduct engagement meetings with high touch executives and high volume suppliers. Define program success, responsibilities and expectations ensuring program success.

  Program Planning – Engage key stakeholders and high volume users early in the process gaining their participation, input and ownership of the business process.

  Implementation – For global implementation, ensure data privacy and local regulatory issues are addressed.

  Supplier Management – Establish a single point-of-contact to manage the supply base from start to finish.

  Integration – Engage cross-functional business and technical resources during discovery sessions to gain a complete understanding of data requirements, approvals, payment requirements, etc.


Critical Program Attributes (Cont’d)

  Reporting – Communicate inventory of standard reports during training sessions. Conduct follow-up sessions to gather ad hoc / customized reporting requests. Define a plan for delivering customized reports.

  Communications – Ensure business communications have a clear message. Disseminate information through a formal top-down and bottom-up approach.

  Training – Provide hands-on, integrated training sessions on changing business process and new technology with follow-up conference calls / in-person debrief sessions. Ensure all job aids and training collateral are available to participants prior to each session.

  Services – Launch services team at least 30 Days prior to Go Live ensuring time to establish services capability and delivery to hiring managers and suppliers.


Program Challenges

  “Tip of the Spear” – Workforce Planning

  Supplier-funded vs. Buyer-funded Model

  Consolidation of IT Temporary & IT Consulting Job Titles

  “Global Localization”

  Professional Services program engagement (e.g., Mgt Consulting, Legal, Audit, Tax)

  Risk Management

– 1099 Independent Contractors

– Off-shore suppliers

– Status Quo


The Future is Taking Shape Now

The “Req-to-Check” process and support technology is similar across all three categories

Consolidation and investing across Services and Technology suppliers continues in order to gain competitive advantage and capture multiple categories of spend.

1 2 3

Direct Hire Contingent Labor

Services Procurement / Other Services

1

Direct Hire

2

Contingent Labor

3 Services

Procurement / Other Services

©2010 Crescendo Consulting Solutions www.CrescendoConsult.com

Services Spend Management

Industry Trends, Best Practices, and Going Global

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