The Future of Procurement: Why is Technology Lagging Behind?
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The webinar titled 'The Future of Procurement: Why Is Technology Lagging Behind?' explores the challenges and gaps in traditional procurement technology while highlighting innovative strategies for transitioning to more effective tech solutions. It emphasizes the need for technology that enhances supplier relationships and supports data-driven decision-making in an increasingly complex procurement landscape. Key speakers included experts from SirionLabs, Kearney, and IACCM, discussing the significance of automation and advanced analytics in improving procurement effectiveness.
The Future of Procurement: Why is Technology Lagging Behind?
- 1. © 2012-17 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. A WEBINAR BY IACCM AND SIRIONLABS FEATURING A.T. KEARNEY AND FORBES SEPT 25, 2018 The Future of Procurement: Why is Technology Lagging Behind?
- 2. 2 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary. THE HOUSEKEEPING ITEMS: • Webinar slides and recording will be emailed • Enter questions in chat on webinar panel Before we get started
- 3. 3 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary. AJAY AGRAWAL Co-founder and Chairman SirionLabs DR. HUGO EVANS Vice President AT Kearney Meet the speakers SALLY HUGHES CEO IACCM PAUL MARTYN Supply Chain Expert Forbes Media
- 4. 4 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary. New generation of specialized platforms that have the potential to transform procurement effectiveness What will be covered today Challenges and gaps in traditional procurement technology set-ups Strategies for your organization’s transition to the procurement tech stack of the future 1 2 3
- 5. 5 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary. The International Association for Contract & Commercial Management enables organizations and professionals to achieve world- class standards in their contracting and relationship management process and skills. For more information, visit www.iaccm.com SirionLabs is transforming the way buyers and suppliers engage with each other in complex contracts using its SaaS platform – Sirion. Leveraging automation and advanced analytics, Sirion helps enterprises create higher value and more successful relationships, while effectively managing cost and risk in strategic supplier engagements. For more information, visit www.sirionlabs.com About the organizers
- 6. A different era, different types of relationship • Technologies: multitude of choice, but most under-perform • Relationships: increasingly complex portfolio to be managed • Procurement: inward, price-based focus is transforming to outward, value-based view Most Procurement groups are ill-equipped to meet the needs of today 6
- 7. Redefining needs • Technology to support the business, not the function • Integrated solutions facilitating data flows and user adoption • Expanding scope to drive performance, not just report problems The modern era requires technology that oversees networks and empowers human decision-making 7
- 8. Assessment & Evaluation ✓Ease and speed of implementation ✓Integration with other systems ✓User benefits to drive adoption ✓Value to be generated A whole-business solution, supporting collaboration, eliminating value erosion 8
- 9. Managing in an uncertain world • Trading relationships lie at the heart of every business • Change is the only certainty • Systems must monitor AND facilitate performance • Shared and actionable data is the critical competitive advantage Are you equipped for the emerging era? 9
- 10. Dr. Hugo Evans September 25th, 2018 The Future of Procurement: Why is Technology Lagging Behind?
- 11. 11 A.T. Kearney is a globally recognized consulting firm – offering scale in industries, functions, and geographies Americas Atlanta Bogotá Boston Calgary Chicago Dallas Detroit Houston Mexico City New York San Francisco São Paulo Toronto Washington, D.C. Asia Pacific Bangkok Beijing Brisbane Hong Kong Jakarta Kuala Lumpur Melbourne Mumbai New Delhi Perth Seoul Shanghai Singapore Sydney Tokyo Europe Amsterdam Berlin Brussels Bucharest Copenhagen Düsseldorf Frankfurt Istanbul Lisbon Ljubljana London Madrid Milan Moscow Munich Oslo Paris Prague Rome Stockholm Stuttgart Vienna Warsaw Zurich Middle East and Africa Abu Dhabi Doha Dubai Johannesburg Riyadh Clients We work with more than two-thirds of the Fortune Global 500, the world’s largest companies by revenues, as well as with the most influential governmental and non-profit organizations. Locations A.T. Kearney has 58 offices located in major business centers in 40 countries. Team We are 3,500 people strong worldwide who have broad industry experience and come from leading business schools. We staff client teams with the best skills for each project from across A.T. Kearney.
- 12. 12 “A.T. Kearney is the clear market leader in the procurement space” – Forrester Research Strategic Sourcing Assessment of Excellence in Procurement (AEP) The Purchasing Chessboard® Return on Supply Management Assets (ROSMA©) Holistic Procurement Transformation (HPTTM) Invention on demand Core cost analysis Vertical integration Bottleneck managem ent Sourcing community Procureme nt outsourcing Complianc e managem ent Leverage innovation network Design for sourcing Intelligent deal structure Political framework manageme nt Buying consortia Mega supplier strategy Closed loop spend manageme nt Functionalit y assessment Product teardown Composite benchmark Product benchmark Cost data mining Master data managem ent Supplier consolidati on Specificatio n assessment Design for manufactur e Process benchmark Complexity reduction Standardi- zation Spend transparen cy Bundling across generations Value chain reconfigu- ration Supplier tiering Collaborati ve capacity managem ent Visible process organizatio n RFI/RFP process Supplier market intelligence Make or buy Revenue sharing Sustainabilit y managem ent Virtual inventory managem ent Vendor managed inventory Expressive bidding Reverse auctions Best shoring Profit sharing Project based partnership Total life cycle concept Supplier developme nt Total cost of ownership Price benchmark Cost regression analysis Strategic alliance Value based sourcing Collaborati ve cost reduction Supplier fitness program Leverage market imbalances Unbundled prices Factor cost analysis Demand reduction Contract manageme nt Bundling across product lines Bundling across sites Global sourcing LCC sourcing Cost based price modeling Linear performan ce pricing • Introduced the idea of Strategic Sourcing • Landmark global engagements • Introduced 7-step sourcing, now a worldwide standard across industries • Periodic global benchmarking to identify best practices based on the “House of Procurement” • Hundreds of participants across all industries and regions with most recent update done 2018 • Toolbox to assign the right method to work with suppliers based on supply power and demand power • Works for all industries • Highly cross-functional • Sustainable frame-work to assess Procurement Performance Management • Illustrates value in “CFO resonating language” • Benchmarks performance on a peer-to-peer basis • Framework to chart a client's journey towards excellence in Purchasing • Provides right combination of content and people focused tools Sourcing-& commodity management Human Resources Management Supply Management Strategy Organizational Alignment Supplier Relationship Management Operating Process Management Performance management Knowledge/Information management
- 13. 13 The Future of Procurement series (September 2018) (November 2018) (December 2018) Procurement talent: It’s time to panic! (December 2018) The Complete Future of Procurement (October 2018) (October 2018) The Future of DirectsThe Future of DirectsThe Future of Directs (November 2018) The Real Disruption
- 14. 14 Why now? What’s driving the change? Key drivers Traditional suite providers are changing dramatically and others are going out of business Suite providers are changing 1 Why isn’t corporate procurement like Amazon?Consumerization 2 To compete (and survive) today you must be continually improving, innovating, and delivering value Good is no longer good enough 4 New businesses offerings, more specific solutions, new technology, new approaches mean massive disruption Disruptive offerings 3 Most traditional procurement is being automated and the rest will be very soon Automation, automation, automation 5
- 15. 15 Requisition Management Requisition Purchase Order Workflow Mgt. Catalog Mgt Traditional procurement technology follows a linear flow Source: A.T. Kearney Procurement Process Supplier Information Management (SIM) • Risk Assessment • Supplier Portal • Supplier Data eSourcing • eRFX • Auctions • TCO Analysis • Optimization Supplier Performance/ Risk Management • Surveys/Scorecards • KPI Tracking • Compliance Mgmt. Contract Management • Contract Warehouse • Contract Authoring • Dynamic Alerts Spend Monitoring and Analytics • Project In-Take / Pipeline Management • Initiative & Resource Mgt. • Spend Analytics • Benefits Tracking Governance and Management • Collaboration Tools • Benchmarking & Industry Reports • Best Practices • Master Data Management • Templates Strategic Procurement Planning and Performance Management “Upstream” Operational Procurement “Downstream” Compliance Management • Knowledge Management • Performance Management Payment Systems Accounts Payable SCF2 / eInvoicing P-cards Dynamic Discounting
- 16. 16 The traditional procurement technology vendor landscape does not effectively support automation, innovation, and analytics Non-exhaustive Source: A.T. Kearney Spend Analytics eSourcing Contract Mgmt. Supplier Info. Mgmt Procure to Pay Supplier Perf. Mgmt. Knowledge Mgmt. Suite Solutions Functional Specialists
- 17. 17 The future will be a microservices (API) connected ecosystem of value creating technologies AI Hub commodity indirects contract management services sourcing spend visibility p2p smart contracts esourcing temp labor travel sourcing analytics bot sourcing risk monitoring cognitive buying Illustrative
- 18. 18 The panacea of “one size fits all” is rapidly fading, as best-of-breed functionality comes of age Procurement Technology Journey As-Is Blend Best of Breed 1. Full scale replacement with new/upgraded end to end procurement suite 2. Full scale replacement with new/upgraded end to end procurement suite and adoption of new technology 3. Agile enhancement of existing procurement technology, integrating and connecting to best in class functional specialists Benefits • Single end to end procurement suite (lower complexity) • Best of breed back-end procurement tool, fully customized to user journeys (highest benefits potential) • Agile adoption of new technology, enables short-term benefits • Modest investment over time and futureproof • Accelerated delivery of benefits • Tools can be chosen to customize the right journeys Trade-Offs • Significant investment commitment over a 2-3 year roll-out • Benefits realisation takes years as opposed to months • High level of investment over a 2-3 year roll-out • Existing technology backbone remains (over- time intelligent and automated technologies may supersede the old systems) Example Technologies Source: A.T. Kearney
- 19. 19 What this looks like in practical terms Source: A.T. Kearney
- 20. 20 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Services dominate the enterprise sourcing spend across industries…… Source: Forrester Research Purchased services as %age of aggregate procurement spend
- 21. 21 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. …the typical services procured by enterprises vary in type, scale and complexity. Certain service categories require more active governance than others (highlighted below in Green) Global business purchases (2015) $3.6T Professional $3.4T Construction & Infrastructure $1.8T Logistics & Transportation $1.8T IT $3.6T Financial $2.6T Real Estate $1.6T Telecom $1.3T Facilities Mgt. & Other Business Services $0.8T T&E $0.8T Rental & Leasing $0.5T Staffing Global Spend on Services
- 22. 22 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Services buying challenges - Pre and post-signature The bulk of this group’s functionality is limited to contracts, e-invoicing, risk and catalog management. Performance Risk Contract Financial The most crowded quadrant because the overwhelming majority of procurement technology is still being used to buy goods. Ariba BravoSolution Zycus Aravo Coupa 2000 2005 2000 Jaggaer Ariba Zycus Coupa ISG KPMG Oracle SAP Hiperos RSA Archer GRC Servicenow CA-Oblicore Remedy ITSM HPSM PRE-SIGNATURE POST-SIGNATURE SERVICESGOODS Deloitte MarketPenetration SirionLabs SirionLabs The relatively small dot sizes in this quadrant indicates the fragmented nature of the post- signature technology landscape. The lack of technology in this space is indicated by the fact that it is heavily dominated by sourcing advisory organizations.
- 23. 23 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Evolution of the CLM landscape Q3, 2018
- 24. 24 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Supplier Governance Procure-to-Pay eSOURCING, eRFX, AUCTIONS PERFORMANCE MGT. FINANCIAL MGT. CONTRACT MGT. RELATIONSHIP MGT. RISK MGT. CONTRACT REPOSITORY SPEND MONITORING & ANALYTICS REQ. GATHERING CONTRACT AUTHORING SUPPLIER INFO MGT. (SIM) & MDM INVOICING & PAYMENT PURCHASE ORDER/REQUISITION INVENTORY/ CATALOG Traditional CLM How contract management, supplier governance and P2P come together P2P Solutions (Ariba/Coupa) Sirion DUE-DILIGENCE /ONBOARDING BENEFITS/ COMPLIANCE TRACKING
- 25. 25 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. The radical insufficiency of P2P P2P hygiene required for all suppliers REGULATORY AND POLICY COMPLIANCE AI/NLP DRIVEN CONTRACT METADATA CAPTURE (OBLIGATIONS, SL/KPIs, PRICING, RESOURCE UNITS) CHANGE MANAGEMENT OBLIGATION COMPLIANCE AUTOMATED SERVICE LEVEL MGT. CREDITS & EARNBACKS PREDICTIVE INVOICE AUDITING FOR SERVICES Deeper functionality required for strategic services suppliers DYNAMIC RISK ASSESSMENT AUTHORING OF COMPLEX CONTRACTS (DOCUMENT FAMILIES) CAPTURE OF KEY CONTRACT DATA DURING AUTHORING SUPPLIER PERFORMANCE PxQ INVOICE AUDIT RISK MANAGEMENT eSOURCING /eRFX/ AUCTIONS CONTRACT MANAGEMENT REQ. GATHERING SPEND ANALYSIS PO/ REQUISITION INVENTORY /CATALOG RELATIONSHIP MGT. SUPPLIER INFORMATION/ MDM CONTRACT AUTHORING ISSUES, ACTIONS, DISPUTES MGT. GOVERNANCE FORUMS © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.
- 26. 26 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. RELATIONSHIP MANAGEMENT PERFORMANCE MANAGEMENT FUNCTIONAL SILOS TECHNOLOGY ISLANDS FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT S E RVIC E DE LIVE RY RISK MANAGEMENT CORPORATE RISK LEGAL / CONTRACTS RELATIONSHIP MANAGEMENT Strategic supplier lifecycle PROCUREMENT WHAT WAS PROMISED? WHAT ACTUALLY HAPPENED? WHAT WAS INVOICED? PRE-SIGNATURE PROCUREMENT PROCESSES CONTRACT MANAGEMENT PRE-CONTRACT (6-12 MONTHS) SERVICE DELIVERY INTEGRATION THROUGH REST API LAYER FINANCIAL MANAGEMENT PERFORMANCE MANAGEMENT RISK MANAGEMENT CONTRACT MANAGEMENT RELATIONSHIP MANAGEMENT CONTRACT AUTHORING Sirion – Integrated Enterprise Platform for Supplier Governance The enterprise procurement tool stack today
- 27. 27 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Sirion’s end-to-end solution for managing complex contracts CLAUSE LIBRARY TEMPLATE LIBRARY AUTHORING WORKFLOW E‐SIGNATURE DOCUMENT REPOSITORY OBLIGATION CAPTURE DOCUMENT CHANGE MANAGEMENT CONTRACT INTERPRETATIONS SERVICE LEVEL MANAGEMENT OBLIGATION COMPLIANCE SOW/WO/PO MANAGEMENT CREDITS & EARNBACKS INVOICE AUDITING SPEND POOL MANAGEMENT FINANCIAL ANALYSIS AND PLANNING VALUE ASSURANCE GOVERNANCE FORUMS ISSUE/ACTION ITEM MANAGEMENT GOVERNANCE PROCESS HEALTH SURVEY MANAGEMENT REGULATORY COMPLIANCE POLICY COMPLIANCE SUPPLIER AUDITS
- 28. 28 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Sirion has successfully delivered hard savings of 9.78% through invoice reductions $3.1B INVOICE AMOUNT VALIDATED 600,000+ TOTAL OBLIGATIONS MANAGED $18B+ TCV UNDER MANAGEMENT 250,000+ SUPPLIERS ON SIRION © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Hard savings of over $300M delivered by Sirion Hard savings = Invoice reductions Hard Savings Achieved $303M Invoice Amount Validated $3.1B
- 29. 29 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Sirion’s automation reduces manual governance effort by 45% MANUAL GOVERNANCE MODE POST-SIRION GOVERNANCE MODE 45% reduction in manual effort DISCIPLINE MANUAL EFFORT DELTA Contract Management -42% Performance Management -42% Financial Management -49% Relationship Management -47% OVERALL GOVERNANCE -45% Manual effort reduction distribution
- 30. The Rise of the Social Enterprise Source: Deloitte Global Human Capital Trends survey, 2018. Deloitte Insights | deloitte.com/insights The evolution of the social enterprise
- 31. What Skills Are Needed To Use AI Effectively Source: Deloitte Global Human Capital Trends survey, 2018. Deloitte Insights | deloitte.com/insights Expected emphasis on workforce skills as AI/robotics are integrated in the enterprise
- 32. Change Management is Difficult Only 12% of companies that launch major change initiatives fully achieve their goals
- 33. Managing Change Is Critical To Success
- 35. 35 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary. • Please complete a brief survey at the end of this webinar to give us your feedback • Look out for a follow-up email with a copy of these slides and a recording of the webinar • Join us for more such events What’s next?