Secrets of Services Spend Management Leaders

B
Secrets of Services
Spend Management
Leaders
Speakers from:
National Bank of Canada
The McGraw-Hill Companies
Sourcing Interest Group - SIG

© 2012 Ariba, Inc. All rights reserved.

Session Abstract

While services spend is often overlooked or undermanaged due to
the complexity and unique challenges, it is one of the areas of
greatest potential savings. This must-see session investigates the
battle-tested strategies today's spend management leaders are
using to optimize source-to-settle performance of critical spend
categories -- ranging from temp labor and consulting to marketing
and facilities spending. If you're trying to get more complex spend
under management, then this session is for you!

2 © 2012 Ariba, Inc. All rights reserved.

Speaker - National Bank of Canada
Jacques Lavoie
Senior Manager Sourcing – Center of Excellence, National Bank of Canada
• Responsible for the Center of Excellence since its creation in 2008 reporting to the Sourcing Vice
President with the following services:
RFx support, spend analytics, market research.
Best practices research, process redesign and improvement, methodology expertise
Technology enablement, category exploration and expansion

A career spanning over 30 years in different fields with a long track record in performance
improvement including the management of the Process and Performance Improvement team servicing
the entire National Bank for 7 years.

Before joining the Bank he worked in the Performance Management Consulting field across North
America in various industries such as Banking, Telecom, Manufacturing, Transportation and Forestry.
Prior work experience in the manufacturing industry holding various Management position.


Speaker - The McGraw-Hill Companies
Alice Hillary

Alice Hillary, Manager, Procure to Pay Operations, The McGraw-Hill Companies

Alice Hillary is the Manager of P2P Operations at The McGraw-Hill Companies. Her
team was instrumental in the implementation of the Ariba On Demand P2P solution.
Her team is also responsible for end user support and training and supplier
enablement on the P2P application. McGraw-Hill went live in October of 2009 with
$300 million in spend on the P2P tool. Since going live her team has enabled an
additional $400 million in spend.


Speaker - Sourcing Interest Group
Alice Hillary

Dawn Tiura Evans, SIG‘s President and Chief Executive Officer, has
over 20 years of leadership experience, with the past 14 years focused
on the sourcing and outsourcing industry
• In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and
trusted advisor since 1999
• Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and
before that as a partner in a CPA firm
• Dawn is actively involved on a number of boards promoting civic, health and
children‘s issues in the Jacksonville, Florida area. Dawn is a licensed CPA
and has a BA from the University of Michigan and an MS in taxation from
Golden Gate University


B
Secrets of Services
Spend Management
Leaders
Jacques Lavoie
Senior Manager Sourcing – Center of Excellence


• National Bank of Canada is an integrated group that provides comprehensive financial
services to consumers, small and medium-sized enterprises and large corporations in its
core market, while offering specialized services elsewhere in the world. National Bank offers
a full array of banking services, including corporate and investment banking. It is an Active
player on international markets and, through its subsidiaries, is involved in securities
brokerage, insurance and wealth management, as well as mutual fund and retirement plan
management. As the sixth largest bank in Canada and the leading bank in Quebec, it has
branches in almost every province in Canada as well as numerous representative offices,
subsidiaries and partnerships, through which it can serve clients in the United States,
Europe and other parts of the world.
• Total revenues 2011 = $4.6 Billion
• Number of branches = 448
• Number of Employees = 19,431
• Sourcing info :
Over 10,500 suppliers
95% of the spend concentrated with 600 suppliers
25 –30% of spend services-related


Business Background
Sourcing at National Bank…a short timeline!!
2008 – Sourcing VP hired and centralization of all Sourcing teams (3)

2008 – Identification and formal agreement with 14 preferred consulting firms (59)

2009 – Centralization of IT contractors request using a manual process

2009 – Implementation of two Ariba modules: Spend Viz and Sourcing Pro

2010 – What should be our next steps??


Business Background
The P2P complex services…IT Contractors
Why did we focus on this category of spend?

• Largest percentage of the spend within the temporary labor category

• Manual centralized process already in place

• Impact and change management curbed to IT personnel

• Piloting within our own business line

• Executive will and visible support


Business Background
The P2P complex services…IT Contractors
What were the challenges faced with this category of spend?
Business lines viewpoint:
• Manual / E-mail-based process cumbersome (requests, approvals, etc.)
• Process taking to long to get resource on site
• Process difficult to follow

Sourcing viewpoint:
• High degree of confidence to capture more savings
• Lack of visibility on overall spend and on process
• Low compliance ( rate, preferred vendors, process)
• Analysis and reporting difficult to impossible

Supplier point of view
• Little feedback on submitted candidates
• Process cumbersome


Business Background
The P2P complex services story…IT Contractors
What were the Goals / Objectives?

• 10% savings on spend

• Ensure compliance of entire process until payment

• Ensure proper visibility on spend for analysis and reporting

• Reduce elapsed time to acquire talent

• Go live within 10 weeks!!


Business Background
The P2P complex services . . . IT Contractors
Who were the Champions?
• IT and HR SVP
• Sourcing VP

Who was involved?
• Sourcing
• Technology
• Manage Service Provider
• Finance / Accounts Payable
• Human resources
• Suppliers
• Ariba implementation team


P2P Complex Services…The Story

2010 Sept /Nov – Business case, market research demo and tool selection

2010 Dec23 – Signed agreement with Ariba
• Benchmarking to competition in complex services did not show
major hurdles
• Flexibility versus long-term plan to expand to other categories
with one solution

2011 Jan to April – Deployment within 10 weeks. An Ariba record!!
• Out-of-the-box configuration
• No system links

2011 from May - Phase 2 of deployment : adjustment and links to payment system


P2P Complex Services…Numbers

Since implementation
Total PO created = 1087 active = 544

Active vendors = 30 ( prefered and non )
Contractors created = 632 active = 486
Requesters = 88

Job descriptions = 207 used = 98

Invoices paid = 1454 = 27M $


P2P Complex Services…Benefits
1 ) Savings
• 2010-11 (6 months) $600K hard savings* or 3.3%. (year over year same period).
• 2011-12 (3 months) $600K or 5.1% (year over year same period).
• 2011-12 full year projection $1,54 M and $711K cost avoidance
* Verified by the finance dept.
2) Benefits:
• Faster and easier requisition and approval. High satisfaction level from business
• Greater visibility & traceability, Positionned to influence executive on non-compliance
• Competitive bid
3) Operational KPIs
Headcount, Cycle time, Request, Rate, Tenure,
Vendor performance
Request received, Submissions, Quality evaluation


P2P Complex Services…Takeaway
Positive points
• High level of operational support . . . To keep positive spin with users and suppliers
• Executive buy in and ongoing support . . .
• Availability for management to make decisions quickly . . . Keep the team moving
• Quick implementation did acquire visibility . . . Highlight non compliant personnel
• Partnership with Accounts Payable . . . to catch rogue spend

Biggest challenges
• Linkage to payment and time reporting systems ( manual or mechanized)
• Change and communication ++++ to all stakeholders
• Get the different team members to be on the same page at the start of the project
• Keep the team focused after 1st phase


Conclusions

• If you can,
Get someone who has been there and done that!!
Try to focus on a spend category you already have
a good knowledge of.

• Technology is an enabler, the success of your program
will depend on its management!!


B
Secrets of Services
Spend Management
Leaders
Alice Hillary
Manager, Procure to Pay Operations
The McGraw Hill Companies


Company Overview
• Founded in 1888, The McGraw-Hill Companies is a global
information and education company providing knowledge,
insights and analysis in the financial, education and
business information sectors through leading brands
including Standard & Poor's, McGraw-Hill Education,
Platts, and J.D. Power and Associates. The Corporation
has more than 280 offices in 40 countries. Sales in 2011
were $6.25 billion.


P2P Background
• Went live in 2009 with limited categories of spend totaling $300 Mil
♦ IT Hardware & Software & Product Development
♦ 300 Users trained

• Enabled an additional $400Mil in the tool by 2011
♦ Consulting, Temporary Labor, Cell Phones, Marketing Research
♦ ‗Lite‘ version in UK
♦ In 2011 processed 37k POs totaling over $570Mil
♦ Approximately 5k requisitioners

• Self-Service Invoicing enabled in 2012
♦ Available to all domestic employees
♦ YTD 1.3k invoices processed totaling $3.6Mil


Implementation of Services
Procurement
• 85% of overall spend is services-related

• Catalogs built to support specific service items with rates and
generic categories

• Implemented the following modules
♦ Generic Driver – attribute driven rate cards/generic categories
♦ Temp Labor Driver – attribute-driven rate cards/generic categories
♦ Consulting Driver – generic categories

• Use contract compliance to support supplier specific rates


Prioritization and Categories

• How We Prioritized
♦ Amount of spend
♦ Ability to implement the category
♦ Availability of existing rate cards
• Categories Implemented
♦ Product Development
♦ Consulting/SOW
♦ Temp Labor
♦ HR Recruiting


Benefits Realized

• Better spend management
• Decentralized buying while enforcing preferred suppliers
• Streamlined, consistent process across the organization
• Compliance to rate cards
• Improved accrual process
• Controls
• Reporting


Challenges We Faced

• Quantity-Based Invoicing on Services
• Compliance/Training
• Manual Migration of Data
• AN Compliance/Manual Orders
• End-user Adoption/Change Management
• Business Segments Changing their Process
• Supplier Enablement (data cleanup effort)


Top “Lessons Learned”

• The Business Units must drive the initiative from an ROI
and Change Management perspective.
• Compliance checks need to come early.
• Communication is key, both internally and with suppliers.
• Establish partnerships with Suppliers; this process is new
for many of them.


B
Secrets of Services
Spend Management
Leaders
Dawn Evans
CEO
Sourcing Interests Group – SIG


Agenda

• About Sourcing Interests Group
• Trends in Sourcing Services
• Best Practices in Sourcing Services


Company Overview
• Sourcing Interests Group (SIG) is in its 21st year as a membership organization
comprised of sourcing and outsourcing professionals.
• SIG is unique in that it blends service providers, law firms, advisory firms,
consultants and practitioners in a non-commercial environment to share
industry knowledge, gain trusted insight and make powerful connections.
• SIG is acknowledged by many as a leader in providing an ongoing forum for
sharing best practices and thought leadership in procurement, outsourcing,
offshoring, insourcing and shared services.
• SIG offers venues for the active sharing of non-competitive information and
practices among members, and provides environments conducive to learning and
relationship building.


Challenges in Sourcing Services
• Changing marketplace as a result of the economic recovery
Supply market often not as ―well-defined‖ as for physical goods
• Limited visibility into human capital-related services expenditures
(e.g., consulting, marketing, F&A, temp labor)
Difficult to predict total spend, much less project or verify savings
• Managing large number of suppliers with maverick buying and in the absence
of adequate:
Category management expertise
Common systems, processes, interfaces
• Indirect spend often considered non-strategic, therefore it has taken a back seat,
yet indirect spend is often equivalent to 20% of company revenues—too high to ignore
• Lack of expertise and knowledge of relocation, tax, compliance and other
related issues
• Requirements are often more complex and difficult to standardize compared to
physical goods
Source: HCMWorks, Thought Leadership in Indirect Procurement Services, 2010; NelsonHall Research; Ariba and Agco
Presentation at the SIG Global Leadership Summit, October 2010’ SpendMatters, ―Relocation Services Sourcing – Best
Practices for 2011 and Beyond Part 2), 9/26/11; SpendMatters, ―Seven Reasons Complex Services Spend is Difficult—and
Unique! (Part 1 and 2), 12/21/11 and 12/22/11


Best Practices in Sourcing Services
• Over the past 10 years, many companies have implemented
systems and programs to gain more visibility into their
services supply chain
• More transparency has resulted in improved savings, but to
gain more efficiencies, drive costs down further, reduce cycle
times and gain control, other things must happen
♦ Recognize that technology has enabled an on-demand, online,
flexible workforce
♦ Don’t make it personal, even though services procurement often
is to the budget holder
♦ Make sure you engage key executive stakeholders from
the onset
Source: Elance and Johnson & Johnson Presentation at the SIG Global Sourcing Summit 2012;
SpendMatters, ―Seven Reasons Complex Services Spend is Difficult—and Unique! (Part 1 and 2), 12/21/11
and 12/22/11


Best Practices in Sourcing Services
• As with any sourcing program, success depends on great change management
♦ Understand your stakeholders and their drivers
♦ Work from the top-down to understand which stakeholder has ―veto‖ power
♦ Ensure that you have strong executive sponsorship
• Engage the Legal department early in the process to better understand risk
• Communication is a key component to program adoption
♦ Create training materials that are simple and available
♦ Program success depends on program adoption—people won‘t use what they
don‘t understand
• A robust program governance structure is critical, with regularly scheduled
steering committee meetings in place
• Sourcing ―Review Board‖ put in place to vet critical sourcing strategy and award
decisions as required
• Be customer-service oriented—both internally and externally

Source: Capital One Presentation at the SIG Global Sourcing Summit, March 2012; Ariba and Agco
Presentation at the SIG Global Leadership Summit, October 2010.

Q&A

Contact info:
John Lark jlark@ariba.com


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