Take That Little Step Exchanging

8/13/2019 Take That Little Step Exchanging

http://slidepdf.com/reader/full/take-that-little-step-exchanging 1/16

TAKE THAT LITTLE STEP

How pilot projects can be the beginning

of a long and successful engagement



© 2013 Xchanging plc

Horses for Sources Blueprint 2013 “HIGH PERFORMER” for ProcurementOutsourcing

Identified as a “LEADER” and “STAR PERFORMER” by Everest Research PEAK

matrix (Performance, Experience, Ability, Knowledge) for Procurement

Outsourcing

XCHANGING PROCUREMENT SERVICES

2

XPS at a Glance

• Practitioner Procurement Organization; led by former CPOs and SeniorSMEs.

• Ranked #3 globally (Everest Research Group). Annual sourcing ‘Spend

Under Management’: $4.4B and transactions of $21B processed• More than 5,000 sourcing initiatives completed that have delivered

savings in excess of $800M to our customers

• Customers in the USA, UK, Europe and Australia. Presently servingAerospace & Defense, Banking, Fast-moving Consumer Goods, Food &Beverage, Manufacturing, Real Estate, Retail and Logistics industries.

Xchanging provides Procurement, Processing and Technology servicesinternationally for customers across multiple industries

• $1B+ company founded in 1999 with more than 8300 staff supportingcustomers in 50 countries.




MARKET TRENDS

3

• Procurement outsourcing rapidly growing since 2000• 2013: Procurement outsourcing represented a US$ 1.7B market; CAGR 13%

• Service providers manage over $220B of spend for their customers

! Mega trends

– Revenues flat or declining " focus on cost management

– Regulatory pressures" need greater controls and improved compliance measures

– Globalization"demand for knowledge and capacity in multiple geographies

! Macro procurement trends

– Indirect Procurement is an under-exploited area of shareholder value

– 10-30% of savings in indirect generate 2-3 margin points improvement

– Many companies only manage 50% of non-core spend

– 40% of negotiated savings never hit the bottom line




THE CFO’S OBJECTIVES

4

Reduce

operatingexpenses

• Increase return to shareholders• Increase top line• Decrease bottom line

Improve businessoutcomes

• Any money saved has to be visible in the P&L – increase operating profit,earnings per share and working capital

Tangible savings

• Savings need to be:• Tangible – need to be viewable on a balance sheet• Measurable – should be able to calculate them easily

• Auditable – the calculation needs to be verifiable

Who can the CFO call upon to deliver this value?




THE CPO’S CHALLENGE

5

The view from

the executiveleadership

• Increased role and higher profile of the CPO in strategic operations• Increased impact of procurement on corporate effectiveness• Procurement has the potential to influence up to 80% of operating costs

Direct Materialsand supply chain

• Critical to the company’s business• High level of maturity• Already on the radar of CFOs and CPOs

• Indirect categories managed at the department level• Finance executives do not have visibility to the magnitude of spend in each

category

• Individual category spend seems very low compared to direct materials• Spend is fragmented across business units, locations and functions; large

number of end users• Organizational challenge to implement a program and provide results by

combining:

• Expertise and skill needed for specialized sub-categories• Best in class processes

• Technology• Market Intelligence

IndirectProcurement




DIY VS. PROVIDER

6

Criteria Do it yourself Provider / Partnership

Timeline

• Recruitment, training can takebetween 6-12 months

• Realization of benefits can takebetween 18 -24 months

• Team ready from day 1• Benefits can be realized quickly, in

3-6 months, impacting businessoutcomes

Cost &Savings

• Initial recruiting costs high• High operating costs, but sub-

optimal utilization

• Savings only generated throughindividual sourcing events

• Savings remain in budget and notvisible

• Self funded, P&L positive• Higher level of savings achieved

through a partner’s global

infrastructure, talent andrelationships

• Savings can be strategicallyredeployed

Process &

Governance

• Success of the programdependent on procurement’srelationships and capabilities of

getting buy-in from stakeholders• Compliance depends on end users

and not a procurement function

• External programs have high level ofvisibility in the organization – acts asa powerful change and

compliance agent• Providers have proven model for

stakeholder engagement


http://slidepdf.com/reader/full/take-that-little-step-exchanging 7/16 © 2013 Xchanging plc

CHOOSING A PROVIDER

7

Engage anadvisor

Build abusiness

case

Get internalbuy-in

RFI / RFPprocess

Selectionand duediligence

ContractingImplement

ation

Engagesupplier (s)

Analyzecurrentstate

Buildbusiness

case

Presentbusiness

case

Approvalto proceed Contracting

Implementation

Competitive process

Sole sourced process

• Time: Drawn out process, sometimes over 12 months• Cost: Consulting engagements are typically investment heavy• Unclear on provider’s real capabilities• Complicated decision making process• Loss of focus



DECISION MAKING PROCESS

8

• Cultural fit• Disruption to the business• Nervousness of the retained organization• Fear of the unknown

Federated decision making processC-Suite, Business stakeholders, Functional Heads, Procurement support

• References• Risk management• Executive mandate

Key challenges Mitigation strategies



START SMALL – WITH A PILOT

9

• Defined scope, defined end date, expected results

DefinitionDemonstration in principle, whose purpose is to verify that some concept or theory has

the potential of being used in a larger scale

Activities

Types • Category; initiative; location;

End game

Definite

Conditional

Undecided

• Leads on to a full-fledged engagement

• Will expand only if pilot is successful

• May not lead to a larger engagement, but can lead to otherprojects



SELECTING THE RIGHT CANDIDATE

10

• Manageable category• Contracts up for renewal

• Projects in-flight• Suitable stakeholders• Industry environment

• Critical mass spend• Ease of implementation• Availability of resources

Property and facilities IT & Telecoms

MRO Transportation

Categories Locations

• Similar language and market• Stakeholders eager for change• Important enough for the overall business

Function

• Central function• Established relationship with procurement• Commoditized



ORGANIZATION AND GOVERNANCE

11

Project Lead

Category manager

Sourcing analyst

Finance manager

Project Team

R e g u

l a r c o m m u n i c a t i o n a n d u p d a t e s

Steering committee

Provider Customer



TYPICAL TIMELINE

12

Week1

Week2

Week3

Week4

Week5

Week6

Week7

Week8

Week9

Week10

Review Spend Data/Contracts

Needs Formalization

Market Analysis/Supplier List Development

Finalize Strategy

Bid Analysis

Negotiations

Supplier Selection

Contract Execution

InternalCommunications

Savings Calculations

Launch eRFX



EVALUATION CRITERIA

13

Criteria Description

Cultural fit• Does the provider fit into the organization• Are they flexible and adaptable?• Do they manage change well?

Language andlocation support

• Can the provider handle local requirements?• How do they deal with stakeholders at a local level?• Did they leverage their regional presence?

Business and

Geographicaldifferences

• How does the provider manage conflict across regions?• How do they ensure stakeholders are always aligned?

Thriving in acomplexenvironment

• How does the provider deal with in-flight projects?• How do they deal with incomplete data?• How do they deal with changing requirements?

Savings andvisibility

• How much savings did the provider generate?•

How visible were they, during the process?• Did the customer see them as an extension of their organization?• Were they seamless in the way they implemented and transitioned their

services within the customer’s organization?




BENEFITS

14

RiskReduction

• Customer and provider understand each other’s processes• Risk mitigation occurs both ways

Financial• Benefits are realized in an accelerated time-frame for pilot projects• Customer is more confident in the overall business case

Validate

Capabilities

• Provider demonstrates capability• Exposes customer to best-in-class talent• Customer experiences providers research and benchmarking capabilities

Implementation• Validates implementation strategy• Provider aware of internal organization and constraints of the customer

CulturalFit

• Establish relationships with stakeholders• Establish relationships with customer’s suppliers

• Projects deliver immediate value and builds confidence in the program

Systems &Technology

• Provider understands customer’s system landscape




KAUSHIK DASBISWAS

15

Director of Solutions at Xchanging

14 years of experience in procurement, IT and business process outsourcing. Managed solutions, implementation and changemanagement for engagements in procurement, financial services, IT services and insurance services. Managed service deliveryprograms of up to $20M. Experienced in setting up, training and managing offshore service centers.Organizations

Kaushik has worked with organizations like BASF, Cushman & Wakefield, and GEP.

Defining process and solutions for full cycle source to pay processes as well as discrete projects; determining strategy andstandardization for delivery – onsite/onshore, near shore, offshore; defining multi-year solutions to increase process efficiency andeffectiveness; create business case, cost models and commercial models for outsourced services; help customers select best-of-breed technology solutions for spend analysis, sourcing, contract management and procure-to-pay processes;

Bachelor’s degree in Computer Engineering from the University of Mumbai and a certified PMP from the Project ManagementInstitute.



THANK YOU

For further information please contact:

Kaushik Dasbiswas

Director of SolutionsE: [email protected]: +1 (973) 452-2015

Documents

Take That Little Step Exchanging