fixing the broken promise of eprocurement

Fixing The Broken Promise of eProcurement

Agenda

● The current state of eProcurement

● What has not worked

● Why it’s time for a change

● What the future of eProcurement looks like

● About Tradeshift Buy

Amy FongSenior Procurement Advisor & P2P Program LeaderThe Hackett Group

Christian LanngCEO & Co-FounderTradeshift

4© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

The Hackett Group DifferenceIntellectual capital and implementation expertise

Profile▪ The Hackett Group is an IP-based consultancy focusing on enabling world class

performance improvement by leveraging of our intellectual capital, based on over 8,000 benchmarks and performance studies

▪ More than 20,000 performance metrics▪ More than 1,900 best practices▪ Best practice process flows, capability maturity models, and

configuration guides▪ Enterprise and Functional Service Delivery Model Frameworks

Approach▪ We help clients measure performance compared to World Class performance▪ We identify opportunities and an actionable roadmap▪ We implement our recommendations which result in accelerated benefit realization

Results▪ Sustainable performance improvement leading to an agile enterprise with lower

costs and improved service levels

WORLD-CLASS

WORLD-CLASS

EFFICIENCY

WORLD-CLASSEFFECTIVENESS

Accelerating the time to sustainable benefit realization

The Hackett GroupValue Grid

Hackett defines, designs, and delivers sustainable World-Class performance

Vishal Patel

[email protected] Amy, are there are couple of slides you can cut, want to make sure you both have enough time. You'll have about 15min, Christian 15min and demo & Questions 15min.


Enabling World-Class: Hackett’s Solution PortfolioBenchmarking, Advisory, Business Transformation

▪ Unlimited inquiry access for members to Hackett experts for transformation steering▪ Library of 2,500+ Best Practice Research Perspectives, Books of Numbers, and Hackett Certified

Best Practices through the Best Practice Intelligence Center▪ Peer-to-Leader 1-2-1 Best Practices sharing, and Best Practices networking events▪ Enterprise, functional and process-based performance studies & value accelerators

▪ “Gold Standard” Benchmark – over 8,500 conducted, the empirical backbone for your transformation at the SG&A Enterprise, Functional, and Process level.

▪ World-Class, Peer, and Custom Peer comparative metrics and best practices▪ Ability to provide multiyear World-Class Program view of performance over time▪ Hackett Performance Exchange (automatic accumulation of performance data from Oracle or SAP

▪ Finance▪ Human Resources▪ Information Technology ▪ Procurement ▪ Supply Chain and Operations

Membership Advisory & Research

(Provides insights into World Class Performance)

Benchmarking(Defines World Class

Performance)

Business Transformation

(Transforms Performance into World Class)

▪ Enterprise Performance Management ▪ Shared Services, Global Business Services & Outsourcing ▪ Merger Integration▪ Working Capital Management

▪ Oracle EPM (Platinum Partner)▪ SAP ERP (Gold Partner)▪ Hyperion ▪ Kronos▪ Workforce Management

▪ Application Managed Services▪ Source to Pay Solutions

▪ Assessment▪ Selection▪ Implementation▪ Change Management

Best Practice Technology Enablement

(Implements Technology to enable World Class)


Procurement’s main objective is to support the strategic plan of the business

Procurement’s strategic objectives in 2015

Source: Key Issues Study, The Hackett Group, 2015


P2P is evolving to support enterprise objectives

Enterprise Theme

P2P Top Performer Characteristics

Best Practice Tactics

Customer centricity Internal Stakeholder Centricity

• Guiding and supporting requisitioners • Enabling self service• Streamlining policies

Business Agility Process Automation • Enhancing process efficiency• Optimizing processes• Defining payment strategy

Big Data for Performance Management

Digitalization of Information • Driving visibility with analytics• Predicting spending patterns• Anticipating requisitioner needs• Creating dynamic scorecards• Rationalizing supplier data

Protecting the Business from Risk

Balancing Risk and Control with Efficiency

• Establishing S2P channel strategies • Monitoring supplier contract compliance• Customizing supplier onboarding• Streamlining information gathering• Identifying fraud• Addressing internal policy non-compliance


What exactly is eProcurement?

E-procurement is defined as:

Solutions that provide a self-service utility for buying goods and services, creating requisitions, viewing catalog content with pre-negotiated prices, finding preferred suppliers, obtaining approval for purchases, managing spend against a budget and communicating POs to suppliers.

Increasingly, the scope of these solutions also includes a means to accept supplier invoices and match to POs for approval.


P2P Top Performers use more Catalog buying to guide requisitioners to preferred suppliers and pricing - most companies still have opportunity

Percent of Indirect Transactions through E-

catalog

Percent of Indirect Spend through E-catalog

Peer Top Performer

Percent of indirect requisition volume supported by catalog content vs free text

Source: 2015 Hackett P2P Performance Study


Why are organizations revisiting their e-Procurement strategy?

▪ Reduce the total IT cost of ownership by eliminating redundant systems

▪ Explore alternatives to heavily customized legacy systems

▪ Support procurement’s expanding global footprint

▪ Extend workflow to support mobile

▪ Be a catalyst for process change and compliance

▪ Take advantage of usability advancements in web 2.0, social collaboration, and analytics


E-Procurement adoption brings efficiency benefits, if done right

P2P Process Efficiency–Overall order processing efficiency gains of 38%

Benefits for master data management–15% lower item master data maintenance costs –14% reduction/rationalization of item master –14% reduction/rationalization of supplier master

Reductions in invoice processing delays and errors–Greater level of automated matching as invoice information can be matched to line item PO information from the catalog

–Higher first-pass match rates between invoices and POs as pricing mismatches are reduced

Source: Hackett Group e-Procurement Quick Poll


Requisitioner satisfaction is a lofty goalGuided buying from approved supplier catalogs at pre-negotiated prices creates higher levels of compliance and spend visibility

Percent of Savings Lost due to Non Compliance

Source: 2015 Hackett Procurement Benchmark

E-Procurement users reported a 20% increase in indirect spend compliance and 9% annual savings increase attributed to increased indirect compliance – there’s still room for improvement


Challenges with the current state of e-ProcurementCatalog Challenges▪Items in catalogs are difficult to find▪Information in catalogs is out of date▪Minimal description or pictures of items▪Confusion around UOM and pricing

Process Challenges▪ Timeliness of approval process▪ Lack of understanding for when to use e-Procurement

solution▪ Required receiving in the system is cumbersome▪ Lack of system and process support

▪ Complexity of ordering for multiple departments▪ Difficulty in updating information

System Challenges▪ Multiple sign-on requirements and environments▪ System times out resulting in loss of information▪ Lack of order status visibility▪ Little system configuration by user or history


Take a process-centric approach to selectionFocus On The Differentiators

List the primary and exceptions use cases that can be reviewed and ranked based on the likelihood you will actually use the feature, then focus on ways each provider is different and which have the most value for your organization

▪ Search capabilities– “Google” keyword search of supplier catalogs. Quick results filtering. Ability to search across multiple catalogs.– Saved lists and shopping carts

▪ Category specific expertise▪ Graphical event management workflow ▪ Non-IT rules configuration

– Purchasing stage clearly displayed throughout the process (e.g. TurboTax) ▪ Analytics

– Operational dashboards and reporting with drill down capabilities▪ Geographic considerations

– Particularly true in Europe where strong local vendors have a competitive advantage due to local knowledge of the supplier base and culture

▪ The implementation team– In the end, it may come down to the culture of a vendor and the actual implementation team they can offer up.


Closing Thoughts: Plan For A Journey

▪Simplify, simplify, simplify.▪There is no one size fits all business case.▪Don’t underestimate on-boarding efforts.▪Embrace an agile, iterative implementation.

Fixing The Broken Promise of eProcurement

Christian Lanng, CEO of Tradeshift

It’s time to rethink eProcurement

Buying should be a simple, intuitive act

What happens today?

Frustration, lost value, inefficiency and complexity, poor spend visibility

● Lack of content● Poor search● Inaccurate information● No collaboration

● Maverick/rogue spend

WHAT CAN WE DO ABOUT THIS?

Step 1. Kill the catalog as you know it

● It’s not working● Millennials● Trust not command & control● It’s about value vs. savings

Why?

Step 2. Let employees buy from anywhere

● Maverick spend is here to stay - embrace it.

● Your catalog will never be Amazon

● Not everything can be sourced and put into a contract

Why?

Step 3. Change behavior through technology

Why?

● Our first customer had been using an eProcurement solution for >10 years

○ Never achieved their goal

● You don’t need different systems to manage direct, indirect and services spend

● You do need a collaborative process

Why?

The Disruption of How We Buy

PAST

• Static and costly sourcing processes that rarely deliver value in time

• Anyone who broke the process was a maverick buyer

• Full spend coverage was never achieved because of lacking supplier and employee participation

FUTURE

• Sourcing can be done on the fly from a network of trusted suppliers that are pre-approved

• Software allow employees to be agile and create value while capturing spend from all channels supported by a professional buying organization

• Full spend coverage is the default due to increased supplier and employee participation

Become a strategic leader. Innovate with your suppliersStop squeezing your sources – collaborate to save.

Be a trusted advisor, not the spend policeHelp your requisitioners get what they need, instead of feeling like the bad guy.

Help your users, help yourself Make things easy for employees and suppliers.

Tradeshift Buy ®

Tradeshift

All your suppliers. All in one place

Tradeshift Buy

It’s time to rethink eProcurement.

You don’t eProcure things, you buy them.

Tradeshift BuyTradeshift Product EngineWorld’s first central, searchable, product database

Tradeshift ShopVirtual store across all your suppliers and product and services categories

Tradeshift Buy AnywhereEmpowers requisitioners to buy from the whole Internet and stay within policy

Tradeshift CollaborateCollaborate together within Tradeshift during the entire buying process

AppsConnect all your data and processes on the Tradeshift platform

Thank you

tradeshift.com/buy