2. INTRODUCTION
Oil Market
• Q408 marked an inflection point*
•Lower oil & gas prices; weak
energy demand
•Prudent approach to economic
downturn
•Standardization , cost reduction
and process optimization is
required
•Outsourcing
*Source: Shell Annual Report Q109
2
3. INTRODUCTION
Vendor Market
• BPO services increasing in
quality, accuracy, efficiency
•Tradicional BPO market increasing
CAGR 24%, $450Bn by 2012*
•Vendors are getting
better...market is growing
•Vendors Specialization
*Source: Infosys Market Report, 2009
3
4. AGENDA
1. INTRODUCTION
2. OBJECTIVES---METHODOLOGY
3. PROCUREMENT OUTSOURCING (PO)
4. GENERAL COMPANY OVERVIEW-WHY TO IMPROVE?
5. BPO ENGAGEMENT SCOPE-MAIN SCENARIOS
6. PO-VENDOR MARKET INSIGHTS
7. FINAL COMMENTS
4
5. OBJECTIVES
INTERNAL VENDOR SELECTION IMPLEMENTATION
• SG&A Ratio • Top vendors • Selection criteria • Work plan
• Posible • Characteristics • Recomendations
engagement • Locations
scenarios • Clients
ADVISORY VENDOR ANALYSIS REPORT
5
6. PROCUREMENT
PO Highlights
• Procurement processes Activity %SSC
•Direct- Indirect Procuremet
•Transactional Processes Catalogue 80%
•Captive vs. BPO solution Management
Supplier Help Desk 90%
Supplier Credit Check 90%
Quantity
Transactional 90%
Purchasing
Small Item Purchasing 90%
Nature Value Ordering 95%
Frecuency
6
7. COMPANY
Deutsch Shell Holding GmbH
OVERVIEW
• Shell Germany AG -> lack of corporate information
•Deutsche Shell Holding GmbH
Annett Buchholz (Shell Deutschland Oil GmbH
Exploration
Information und Presse) ...thanks! & Production
•Manufacturing, transportation and marketing of
hydrocarbons
•Revenue 2008: 2,200 mEuro
Oil Sands Gas & Power
•COGS: 1,800 mEuro
•SG&A: 110 mEuro *
•Procurement Pers.: 100-120FTE
7
8. COMPANY
SG&A Ratio
OVERVIEW
Company SG&A Sales/rev. SG&A ratio Rank
BP 15,412 361,143 4.27% 3
EXXON 15,873 459,579 3.45% 1
MOBIL
DUTCH SHELL 17,028 458,361 3.71% 2
SHELL 110 2,200 5.00% 4
GERMANY
Cost Savings Oportunities-> Reach Benchmarks
8
9. COMPANY
SG&A Ratio
OVERVIEW
SG&A Sales/revenue SG&A ratio
500,000 10%
450,000 9%
400,000 8%
350,000 7%
Revenue (mEur)
300,000 5.00% 6%
250,000 4.27% 5%
3.45% 3.71%
200,000 4%
150,000 3%
100,000 2%
50,000 1%
0 0%
BP EXXON MOBIL DUTCH SHELL SHELL GERMANY
Company
Cost Savings Oportunities-> Reach Benchmarks
9
10. BPO ENGAGEMENT
Procurement Process Costs (PPC) SCOPE
•Procurement Process Costs (PPC) are 1.49% of COGS (2008)
•Europe segment Income for 2008 corresponds to 8,809 mEuro,
which represent the 33.25% of the total Income of the period for
Royal Dutch Shell*.
•Shell operation in Germany will be estimated considering**:
Revenue 2008: 2,200 mEuro
COGS: 1,800 mEuro PPC = 0.0149 x 1,800 = 26.82 mEuro
SG&A: 110 mEuro **
Procurement Pers.: 100-120FTE
*Source: Shell Earnings by Business Segment and Identified Items 2008, Financial
reports, shell.com
**Informed by communications department of Deutsche Shell Holdings GmbH 10
11. BPO ENGAGEMENT
Scope SCOPE
Procurement processes in Scope
Activity Employees and Costs
Procurement Process
Catalogue Management € 26.82 M
Costs (yearly basis)
Supplier Help Desk FTE in Scope 120 FTE
Supplier Credit Check Average Tenure 11.5 years
Transactional Purchasing Fully Fringed Costs € 56,500.00
Small Item Purchasing Retained FTE 15%***
Procurement expected
Ordering +25%*
savings
Countries /Locations
1 location
Germany
(Hamburg)
*Source: http://logisticstoday.com
**Informed by communications department of Deutsche Shell Holdings GmbH
***Similar businesses retained FTE 11
12. BPO ENGAGEMENT
Scope SCOPE
20000
10000
0
1
2
3
4
5
Investment
-10000
-20000
-30000
-40000
-50000
-60000
-70000
-80000
50%Savings
Scenario At least 5 years Contract
12
13. VENDOR MARKET
Mayor Players 2008-2009
2009* Company Name Country
1 Genpact India
2 Infosys India
3 Accenture USA
2 1
4 ICG Commerce USA Europe
5 IBM Global USA USA
6 Ariba USA India
7
7 Oracle BPO USA
8 Corbus USA
9 Capgemini France
10 D & B Supply Chain USA
Solutions
*According Rank Procurement Vendors, Source: The Black book of Outsourcing,
Brown-Wilson Group 13
14. VENDOR MARKET
Mayor Players 2008-2009
Genpact
*India
*It was formerly a GE owned company called GE Capital
International Services or GECIS.
*37,000 people in various locations,30 languages on a 24/7 basis.
Key Clients: Philips, Shell, Allianz, and Akzo
Locations: United States, Mexico, Guatemala, Netherlands, Poland, Hungary,
Romania, Spain, Morocco, South Africa, India, China, Philippines
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
1 Genpact India 37000 1040 619.2 166.4 254.4
14
15. VENDOR MARKET
Mayor Players 2008-2009
Infosys
*India
*Second-largest IT company in India, 106,000 professionals
*Offices in 22 countries and development centers in India,
China, Australia, UK, Canada and Japan
Key Clients: Tesla Australia, Phillips, DHL
Locations: Asia Pacific, North America, Europe (Belgium,Denmark,
Finland, France, Germany, Stuttgart, Milano, Poland, The
Netherlands, Spain, Sweden, Switzerland and UK)
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
2 Infosys India 106000 4700 2803 645 1252
15
16. VENDOR MARKET
Mayor Players 2008-2009
Accenture
*USA
* It is said to be the largest consulting firm in the world.
*186,000 people in 52 countries.
*Accenture's clients include 96 of the Fortune Global 100 and more than
three quarters of the Fortune Global 500.
Key Clients: Microsoft, ING, BC Hydro, Deutsche Bank, Roche, Bayer MaterialScience,
Royal Dutch Shell
Locations: Asia Pacific, North America, South America, Africa, Europe, including
Germany and UK.
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
3 Accenture USA 186000 23170 16329 3948 2893
16
17. VENDOR MARKET
Mayor Players 2009
IBM Global Services
*USA
*IBM Global Services has the modest goal of making a smarter planet
*Operates in about 170 countries.
*Global Technology Services (GTS) encompasses IBM's business process
outsourcing, infrastructure support, and product maintenance offerings;
Global Business Services (GBS)
Key Clients: TBD
Locations: Asia Pacific, North America, Central America, South America, Africa,
Europe, including Germany and UK.
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
3 Accenture USA 186000 23170 16329 3948 2893
17
18. VENDOR MARKET
Mayor Players 2009
Capgemini
*France
*One of the world's largest information technology,
transformation and management consulting, outsourcing and
professional services companies
*91,000 people operating in 36 countries.
Key Clients: Syngenta , Prudential
Locations: Asia Pacific, North America, Central America, South America,
Africa, Europe, including Germany and UK.
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
9 Capgemini France 91000 12678.3 9429.4 1246.0 2002.9
18
19. VENDOR MARKET
Mayor Players 2009
COGS SG&A EBIT Employees
70000 200000
180000
60000
160000
50000 140000
Revenue USD
120000
Employees
40000
7.5%
100000
30000
80000
4.5% 5%
20000 60000
3.3%
3% 40000
10000
20000
0 0
Genpact Infosys Accenture IBM Global Capgemini
(Services)
Vendor
% of Revenue from PO
Sources: Annual Reports of each company, financial statements 2008
19
20. VENDOR MARKET
Chilean Player
Sonda, Chile
Sonda is the leader IT Service center in Chile and one of the most important in
South America, with operations in Argentina, Brazil, and Mexico between
others. Has clear expertise in the IT Outsourcing field in Chile, and in last years
started some small PO services projects in Chile and Argentina.
Key Clients: Shell Chile, Esso, Banco Chile, Miscrosoft
Locations: Chile, Argentina, Mexico, Guatemala, Colombia
Rank Company Country Employees Revenue (2008) COGS SG&A EBIT
2009 Name
Sonda Chile 50000 872.0 679.0 87.0 106
20
21. VENDOR MARKET
Mayor Players 2009
COGS SG&A EBIT Employees
5000 120000
4500
100000
4000
3500
80000
3000
Employees
Revenue
2500 7.5% 60000
2000
40000
1500 4.5%
1000
1%
20000
500
0 0
Genpact Infosys Sonda
Vendor
% of Revenue from PO
Sources: Annual Reports of each company, financial statements 2008
21
22. VENDOR SELECTION
Weighted selection CRITERIA
Criteria Summary Weight 1=very bad, 3=avg, 5=very good
BPO1 BPO2 BPO3 BPO4 BPO5 BPO6
Experience and 40% 4.525 4.2 4.3 4.3 4.35 2.5
reputation
Capabilities and 15% 4.2 4.2 4.4 4.4 4.5 2.55
knowledge
Cost and contract 25% 4.3 4.3 3.7 3.7 3.6 2.4
Cooperation and trust 20% 4.05 4.05 4.1 4.1 4.55 2.6
Sum 100% 17.075 16.75 16.5 16.5 17 10.05
Capabilities and Knowledge Weight 1=very bad, 3=avg, 5=very good
BPO1 BPO2 BPO3 BPO4 BPO5 BPO6
IT and SAP capabilities 30% 5 5 5 5 5 3
Consulting Capabilities 10% 4 4 5 5 5 4
Industry Expertise 10% 5 5 4 4 4 1.5
Process Expertise 30% 4 4 4 4 4 3
Language Capabilities 20% 3 3 4 4 4 1
Sum 100% 21 21 22 22 22 12.5
**Expertise, Culture,language, PO capabilities, SAP 22
23. VENDOR SELECTION
Weighted selection CRITERIA
5
4.5
4 Cooperation and trust
Cost and contract
3.5
Capabilities and knowledge
3
Experience and reputation
2.5
2
BPO1 Genpact
1.5 BPO2 Infosys
1 BPO3 Accenture
BPO4 IBM Global (Services)
0.5 BPO5 Capgemini
0 BPO6 Sonda
BPO1 BPO2 BPO3 BPO4 BPO5 BPO6
23
24. VENDOR SELECTION
Workplan proposal CRITERIA
Phase December January February March
Agreement on RFP
&Long list
Send RFP
Select short list and
send notif.
Bidders
conference/one-one
meetings
Submission final
offer
Negotiations/due
Diligence/site visit
Final
decision/contract
closing
Based on Offshoring Institute approach
24
25. FINAL
PO- Vendor market analysis RECOMENDATIONS
•Analysis usability
•SG&A and economical downturn
•Expertise, cultural and language fit, market participation
•Different engagement options should be evaluated
•+25% costs savings as base
•PO-growing market-control required-Shadow Operations
•CPI (Country and from Vendor provider)->Negotiation structure
25
26. END
Thanks!
Questions??
How can Company objectives regarding
BPO project affect the vendor selection?
26
