Google Confidential and Proprietary

David NatoffHead Procure to Paydnatoff@google.com

The Search for Excellence in Procurement Stakeholder Relationship Management

SYMPOSIUM San Francisco Bay Area,

November 12

Tim JonesHead Supplier Sourcingtimjones@google.com

Google Confidential and Proprietary

To organize the world's information and make it universally accessible and useful.

We’ve barely started on our Mission

2006 2008 2011 2012 2013

Revenue $10.6B $21.8B $37.9B $50.2B $60.0B

Net Income $3.1B $4.2B $9.7B $10.7B $12.9B

Employees 5,680 20,123 32,467 53,861 47,756

Google Confidential and Proprietary

Google has experienced hockey stick growth in P2P

2008 2012 2013

Supplier Spend

$5B $10B $16B

# of Suppliers 28K 62K 78K

# of POs 49K 68K 80K

# Invoices 202K 463K 510K

# of Expense Reports N/A 360K 426K

Total Spend ($B) # of Suppliers (K)

# of POs (K) # of Invoices (K) # of Expense Reports (K)

Source: Google Internal Data, 2014.

Source: Andertoons.com, 2014.

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We’ve barely started on our Mission

“We talk a lot at Google about thinking ahead and having big ideas that will change the world.

But just ‘being more innovative’ isn't enough to bring about big changes.

To avoid incrementalism, you need to focus on radically new approaches to the problem."

Astro Teller (Captain of Moonshots for Google x)

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Stakeholder Relationship Management

Google’s Philosophy #1: Focus on the user and all else

will follow.

Become a Trusted Adviser of the Business rather than a RFP Shop.

We our Stakeholders.

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Procurement a trusted adviser early in the process?

Source: Cartoonstock.com, 2014.

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An Introduction to Supplier Sourcing

Team of 35 Googlers in 9 offices worldwide.

G+ Community Site.

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Historical disconnects

● Fails to recognize uniqueness of business, cultures, etc.

● History of dictating standardized process and policy.

● Focus on savings, rather than customer needs.

● Integrating procurement technology globally and in non-technology areas.

● Lack of understanding value of sourcing or role of procurement

● Not required to comply w/ policy or process; want to control decision making authority.

● Focused on THEIR KPI’s, not savings.

● Not accustomed to considering buying process or thinking globally.

Procurement Internal Stakeholder

Source: Whitney Taylor, Effective Stakeholder Management in Sourcing & Procurement, April 2009.

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What we thought of ourselves in Supplier Sourcing...

● Lack of investment in category knowledge.

● Difficult to scale - takes time to find great resources.

● RFP fatigue amongst team members.

● Single global integrated team and process.

● Great business alignment in key categories.

● Rigorous project documentation.

● High ROI in terms of Rate Reduction per Googler.

● Untapped potential of team members.

● Key stakeholders asking to take a bigger role.

● Increasing corporate governance agenda.

● Our single minded focus on rate reductions to the detriment of Google - they don’t measure full value.

● Stakeholders create their own fragmented Sourcing Teams more in tune with their specific needs.

Weaknesses

Threats

Opportunities

Streng

ths

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Time for a course correction

● Outsource administrative tasks

● Focus the team on Stakeholder Relationship Management

● Look for new measures of success

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Definitions

Customer Relationship Management

is a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups.

Relationship Marketing

(...) emphasizes customer retention and satisfaction, rather than a dominant focus on transactions.

Source: Wikipedia.

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We love data!

We actively gather information on internal stakeholders

We use account management techniques with our stakeholders

Our teams have targets for stakeholder (new) engagement

We focus on researching the market for our stakeholders

We collect internal customer satisfaction data and act upon it

We have a CRM system for our internal stakeholders

Is improving stakeholder relations a top priority?

Survey with 200 Procurement Executives, Percentage Responding Often or Very Often.

Source: HBR, The Problem with Procurement, August 2013.

51%

36%

27%

27%

28%

?

45%Survey with 100 Procurement Professionals. Source: SM100, January 2013.

Google Confidential and Proprietary

Customer Relationship Management

● Not all Stakeholders are created equal.

● The value of Supplier Sourcing is not covered by a rate reduction number.

● Focus on services your stakeholders really want.

● Value the relationships and speak with your customers.

Key Points:

Google Confidential and Proprietary

● Key stakeholder in several projects.

● We regularly support them but may not be all the time.

● Frequent touchbase but does not need to be formal.

● May report to a platinum stakeholder.

● Does not need to be Director-level.

How do we define gold and platinum stakeholders?

Platinum StakeholdersGold Stakeholders

● Influencer within a Business Unit group.

● Does not need to be involved with projects but provides inputs to sourcing strategies and directions.

● Someone the Sourcing Lead meets with in Quarterly Business Reviews (~2 times a year).

● Typically Director-level and above.

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Focus on key stakeholders - Components

StakeholderRelationshipManagement

Plans

Stakeholder and Spend Profile

Projects Roadmap

Status Update

Attribute Map (Stakeholder

Interview Results)

SWOT Analysis

Action Plan

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Attribute maps and action plans’ key themes

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1. Agile Responsive Process

2. Category Knowledge

3. Transparency/Compliance

4. Global Coordination

5. Rate Reductions

6. Delivery Model Consulting

7. Supplier Management

8. Long Tail Projects

531 2 4

Supplier Sourcing Delivery Future Delivery Divest Invest

Moving from "Process Facilitators" to "Business Advisors"

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To know what our customers think (and its good)

CSAT HangOut Parties!

Project (RFP Level) CSAT Surveys

Focus on Key (Gold + Platinum) Stakeholders. Deliverables: Attribute map and action plans to support the business.

Monthly operational surveys and interactive feedback videoconferences at project level. Deliverables: Quarterly CSAT Report.

Interviews with “Platinum”

StakeholdersInterviews with “Gold”

Stakeholders

VOICE OF THE CUSTOMERS

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RFP level CSAT surveys / trending example

Two question survey: 5-scale score and open feedback.

Quarter on Quarter

CSAT Feedback in Word Map

Target

Target

Source: Google Internal Data, 2014.

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Recorded feedback - CSAT hangout parties

Ideally with two or more stakeholders at the same time so they can interact.

Two questions only - takes about 15 minutes and the call is recorded (opt in):

1. What are the aspects of working with Supplier Sourcing that drive most value for you?

2. Improvement Opportunities - Magic Wand Question - Make your life easier.

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How close is Supplier Sourcing to the business?

Engagement Level Self-Assessment1 - Skeptic2 - Non-Aware3 - Aware - we work with the team, but not relationship with (yet)4 - Transaction bid5 - Frequent super user6 - Strategic Partner7 - Raving Fan

Google Confidential and Proprietary

Summary of key points

Identify your platinum and gold stakeholders. There are many ways to collect

the voice of the customer.

Experiment - launch and iterate.

Dare to be bad in the service of good.

Celebrate successes.

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Achievements

BRM Interviews with 60 stakeholders (46 Gold, 14 Platinum), resulting in 21

concrete action plans.

Source: Google Internal Data, 2014.

62% CSAT response rate with 97% satisfaction score (73%

very satisfied!)Team of 35 in Supplier Sourcing took 3$B of spend out to bid…

...and achieved rate reductions of $276M.

Hit the milestone of 1000 auctions.

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What’s next?

● Go deeper with our SRM Plans - building joint business plans

● Pilot using Salesforce for sharing Stakeholder intelligence and SRM plans

● Fund what is important and stop doing the rest.

“Know where to find the information and how to use it – That’s the secret of success.” Albert Einstein

Google Confidential and Proprietary

The Search for Excellence in Procurement Stakeholder Relationship Management

Questions?

David NatoffHead Procure to Paydnatoff@google.com

Tim JonesHead Supplier Sourcingtimjones@google.com

Google Confidential and Proprietary

Images purchased from Bigstock, Andertoons, and Cartoonstock.

Google Confidential and Proprietary

We love data!

Source: Ipsos Mori Social Research Institute, Understanding your Stakeholders, November 2009.

A very satisfied customer is nearly six times more likely to be loyal and/or recommend your product than is a customer who is just satisfied.1

Only 4 percent of dissatisfied customers will complain.2

The average customer with a problem eventually tells nine other people. 3

Satisfied customers tell five other people about their good treatment. 4