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ONCE 2009 Fall SummitONCE 2009 Fall Summit”P2P During Global Economic Recession””P2P During Global Economic Recession”
The Impact of the Global Recession
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The Financial Crisis is RealThe Financial Crisis is Real
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Our Response needs to be…Our Response needs to be…
DON’T WASTE A CRISIS!
... says Rahm Emanuel, just appointed chief-of-staff by President-elect Barack Obama.
"You don't ever want a crisis to go to waste; it's an opportunity to do important things that you would otherwise avoid. In 1974 and 1978 we never dealt with it, and our dependence on foreign oil never changed."
[BBC News, 7 November 2008]
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How is this Crisis affecting Hubwoo?How is this Crisis affecting Hubwoo?
• Less spending by our Customers is resulting in less Supplier fee revenues
• Renegotiation of all contracts with focus on short term cost reductions
• Currency exchange churn based on weak USD• Access to Capital difficult thus we are using
cash to fund growth• Many projects are being delayed (55% of
CPOs have delayed major initiatives this year according to Aberdeen)
• Pipeline has never been stronger!• Access to Executives like never before
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The Market Response Is ConsistantThe Market Response Is Consistant
2009 is the year of cost containment. 70% of our current client engagements are cost reduction focused.
The harsh economic climate of late 2008 and early 2009 has shifted the agenda of many of our clients to cost cutting.
The global recession is taking no prisoners. 91% of CPOs rated the need to identify cost reductions as a top-three business pressure.
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Is a penny saved really a penny earned?Is a penny saved really a penny earned?
“Enabling Profitable Growth Through Procurement: Transforming the Sourcing and Procurement Organization”An ASUG/SAP Collaboration, 2007
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Should we cut heads or spend less?Should we cut heads or spend less?
Right Sizing your Organization
vs.Right Sizing you Spend
Procurement is in a unique position to make a real impact of their company’s bottom line while at the same time
laying a foundation for a more profitable future.
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So what‘s a CPO to do?So what‘s a CPO to do?
Supplier Risk Management Define metrics to measure/track risk Implement formal Vendor Performance Mgt Develop contingency plans Hire in Achilles
Reduce/Avoid Costs Analize Spend Source effectively Manage Contract compliance Realize savings thru spend visability Increase spend under management
Cash Management Negotiate better terms Integrate CLM, Procurement and AP Automate P2P process Avoid unnecessary spending
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Let’s face it…Sourcing is fashionable againLet’s face it…Sourcing is fashionable again
And the name of the game is still
Saving$
YET, market penetration <50%
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Top 10 Reasons why not to eSource Top 10 Reasons why not to eSource
1.Would you use a sourcing solution from a company named Hubwoo?
2.Suppliers will never participate in an eSourcing event3.Our commodity managers are already expert
negotiators4.Reverse auctions are inappropriate to use with our
partner suppliers5.My category is too specialized or complex to be
eSourced6.Price is not the only factor you know7.The contract is already with the best supplier from a
value perspective8.The incumbent supplier has already agreed to the
company’s reduction target9.Auditability and standardization are really over rated10.The technology lacks needed functionality and is not
user friendly
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When should you use Sourcing?When should you use Sourcing?
Best in Class companies source 71% of their Spend
Aberdeen Group – The CPO’s Agenda 2009April 2009
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Roapmap to Success in ProcurementRoapmap to Success in Procurement
• Implement formal Spend Analysis program across all companies, all categories
• Source almost everything• Measure and report spend under
management• Conduct regular contract compliance
reviews• Enhance Supply Risk mitigation capabilities• Integrate the Source-to-Settle process• Everyone carries a savings quota• Source almost everything
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In conclusion…In conclusion…
As a result of this Global Recession, many of the historical barriers preventing the successful implementation and adoption of procurement
solutions are gone as the CEO, CFO and CPO each now share a common goal – COST REDUCTION .
Therefore, don’t waste this crisis, focus on HARD SAVINGS (rather than process savings), be
innovative, and be a Player in not only helping your company navigating its way through these troubled financial waters but emerging from the crisis even
more profitable than before.
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THANK YOUTHANK YOU