Leading global excellence in procurement and supply

Telecommunications, Mobility and Technology

Name: Ian Woollett, Managing Partner, CDRU Costs Down Revenue Up Date: 28th May 2013

CIPSA CONFERENCE

Leading global excellence in procurement and supply

Practical Approach : Clients Engaged

Leading global excellence in procurement and supply

ICT Market Disruption = Category Opportunity

Leading global excellence in procurement and supply

ICT Procurement in the EnterpriseEnterprise storage is increasing, about 45% per year or doubling every 18 months. Demand Mgt, & active storage management required.

80% of Australian Enterprise clients choosing the Apple iPhone for corporate use with increasing MDM take-up rates.

The worldwide enterprise Cloud-based services market will grow from $US18.3 billion in 2012 to $US21.9bn in 2017. Cloud is destabilising purchasing models.

Leading global excellence in procurement and supply

ICT IS ‘CORE’ TO ALL BUSINESS

Strong Case For ICT

Category Management

Government Mandates

Reduced ICT costs – a move from provider to broker and manager

M&A / Diverstiture

ActivityConsolidation, review of

ICT balance sheet

Australia &Asia

Everything as a Service Demand Management

Mobile Data explosion, decline in fixed line

services

Technology & Business Model

ChangesDisruptive Cloud

Fixed Access

ICT Competence, core to every business – Commercial cleverness, demand management, flexibility in ICT sourcing and contractual approaches are needed as ICT local & global market is moving at record pace

Leading global excellence in procurement and supply

ICT Procurement Challenges & OpportunitiesEvery day 2.5 quintillion (2.5×1018) bytes of data created.

Cloud market is expected to grow from $77B in 2010 to $210B in 2016. This growth relies on stable networks.

Consumerisation of IT – employees using devices and applications for both business and personal use.

iPhone 5S Remodelled Hardware Hints at Fingerprint-Scanning Technology. Increasing focus on data security in purchasing decisions.

Leading global excellence in procurement and supply

SOURCING APPROACHESRequest For Solution based approach with suppliers, focused on business outcomes, steps below circa 3-5 months before establishing to ongoing category management

ICT Strategy & Architecture

Market Benchmarks Options & Sensitivity

Sourcing to A Strategy

Business Requirements & Supplier Response

Frameworks

• Objectives, outcomes, KPI dates• Strategic alignment• Enterprise Architecture,

Current, Future States & Gap-Mapping

• FTE, Infrastructure $ per seat• Telco Carriage & Access• Managed services, voice etc

• Evaluation on agreed TCO baseline• Risk Models – Supplier/Technology Assessments

• Category Management – Telco & IT• Service requirements and scorecard• Performance management framework• Continual Improvement – remove reliance

on benchmark• Move from product – to total spend regime

Discovery Solutions & Sourcing Transition & Transformation

Current State Assessment Future State Architectures Business Case & Roadmap

Typical Process

Strategic Vendor Management

IT Strategic Plan IT Services Catalogue IT Services Cost Baselines

DeliverablesInputs

Key

RFx/RFS

Supplier Solution Briefing Docs

• Confirm market instruments• Probity & go-to-market• Target desired outcome targets

Leading global excellence in procurement and supply

ENTERPRISE MOBILITY MANAGEMENTD e fi n i ti o n

• Enterprise Mobility Management (EMM) is the collection of people, processes and technologies for managing mobile and tablet devices and related services to enable use of mobile computing for the business.

W h e r e A r e W e T o d a y ?

• EMM is an emerging discipline within the enterprise that has become increasingly important over the past few years as more workers are using and have brought smartphone and tablet computing devices and have sought support for using these devices in the workplace.

• The original software for Mobile Device Management (MDM) has evolved from a simple software solution to control a mobile device into a sophisticated platform for enabling the enterprise to deliver applications and mobile tools to their workforce.

• EMM is being delivered either as SaaS or as a traditional on-premise solution

T r e n d s

• BYOD is becoming more prevalent as a strategy, but

• Employees are becoming more resistant to installing an MDM agent on their personal devices

• There is no clear market leader in the software arena, and service providers are immature

• Independence from Telco carriers is an important decision, adopt independence or not ?

Leading global excellence in procurement and supply

TELECOM EXPENSE MANAGEMENT (TEM)D e fi n i ti o n

• Telecom Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. Expense management includes the policies and procedures which govern such spending, as well as the technologies and services utilized to process and analyse the data associated with it.

• Many research organizations like Gartner, Forrester and Aberdeen have mentioned in their reports that Telecommunications is the second largest non operating expense for most enterprises. But Telecom Expense Management is often overlooked, if followed diligently it can benefit organisations with more than 30% cost savings. Statistical analysis have often pointed out that telecommunications companies have more than 25% error on monthly bills which they send to their customers.

W h e r e A r e W e T o d a y ?

• TEM software is mainly being used for expense allocations, but not for expense management

• TEM software is maturing and allows customised reporting, but must be fully integrated into the complete lifecycle of telecommunications to be effective

• All the carriers are offering “partners” to provide TEM solutions, however, these partners do not have an incentive to decrease telecommunications costs and instead provide more of a reporting tool

T r e n d s ?

• Many companies are implementing TEM software with the mistaken belief that it is a panacea for controlling run-away costs in the telecommunications category.

• TEM and MDM solutions are starting to overlap, with TEM solutions beginning to offer real-time tracking of mobile usage & costs. This real-time tracking offers facilities such as controlling roaming usage, end-user alerts, real-time tracking of device.

Leading global excellence in procurement and supply

CASE STUDY: CDRU delivering its promise to APA Group

APA Group (APA) is Australia’s largest natural gas infrastructure business, owning and/or operating approximately $12 billion of energy infrastructure assets.To support APA’s business a strategic ICT initiative was undertaken to begin a path of understanding expenditure levels in Telecommunications and looking at optimisation of this core category.

Using CDRU’s UPS process (Understanding, Solutioning, Proposing) sourcing process APA mapped out the practical steps to be performed over a 6 month period

An additional 3 months to finalise contracts and initiate vendor transition was required.

“We appointed CDRU as our strategic sourcing partner across Information Technology and Telecommunications, with an APA ‘option’ to move into supplier transition, should sourcing meet its stated outcomes. Their fees were aligned to agreed timeframes and generating real savings, whilst building new strategic networks for us”

APA’s General Manager Group IT Bill Fazl.

Challenge:

Solution:

Leading global excellence in procurement and supply

CASE STUDY: CDRU delivering its promise to APA Group

• Significant network improvements, with single points of failure removed • Improved Quality of Service, better quality and increased bandwidth across key sites• Double Digit operational cost reduction, year one and beyond• Achievement of 160% of the savings target set at the initiation of the engagement• Additional funds are now available for future strategic enablement projects, • Re-investment in increased mobility initiatives and video conferencing underway .

“We appointed CDRU as our strategic sourcing partner across Information Technology and Telecommunications, with an APA ‘option’ to move into supplier transition, should sourcing meet its stated outcomes. Their fees were aligned to agreed timeframes and generating real savings, whilst building new strategic networks for us”

APA’s General Manager Group IT Bill Fazl.

Results/Benefits

Leading global excellence in procurement and supply

CASE STUDY: CDRU’s Strategic Sourcing Partnership with InvoCare

As the APAC market-leading funeral services provider, InvoCare has taken the lead in introducing a new way of interacting with it’s customers and the friends and family of the deceased by implementing a customer-centric ‘Digital Business’ strategy and capabilities. Traditionally, technology expenditure is not a core business function and is generally viewed as a business cost. They required a Strategic Sourcing initiative aimed at realising tangible cost savings to support the implementation of its Digital Business strategy.

Using CDRU’s UPS process (Understanding, Solutioning, Proposing) process mapped out the practical steps to be achieved. Three (3) core areas were identified , IT infrastructure, Telecommunications and Print/Copy were immediate savings could be achieved.

“We appointed CDRU as our Strategic Sourcing partner across our telecommunications, infrastructure maintenance and printing supply arrangements as they had a track record of aligning their fees against tangible savings delivered.. We are all very pleased with what the CDRU and InvoCare ‘One Team’ has achieved. We had no appetite for an ICT-centric engagement. What we wanted was to deliver a great result for our business as a whole, and the results speak for themselves.”

InvoCare’s Chief Information Officer Andi Luiskandl

Challenge:

Solution:

Leading global excellence in procurement and supply

CASE STUDY: CDRU’s Strategic Sourcing Partnership with InvoCare

• Renewed supplier arrangement that deliver an overall reduction in ICT operating expenditure of over 20+% with the bulk of the cost savings (and supplier loyalty funds) flowing straight through to line of business P&L.

• This made a real difference to the overall profitability of individual funeral homes, cemeteries and crematoria, and to the InvoCare business as a whole, rather than being confined to ICT

• The CDRU and InvoCare team achieved 152% of the saving target, within agreed timeframes set at the initiation of the engagement

• Delivered cost savings that are not contingent on transitioning to new products and services and was performed with existing incumbent suppliers only

“We appointed CDRU as our Strategic Sourcing partner across our telecommunications, infrastructure maintenance and printing supply arrangements as they had a track record of aligning their fees against tangible savings delivered.. We are all very pleased with what the CDRU and InvoCare ‘One Team’ has achieved. We had no appetite for an ICT-centric engagement. What we wanted was to deliver a great result for our business as a whole, and the results speak for themselves.”

InvoCare’s Chief Information Officer Andi Luiskandl

Results/Benefits

Leading global excellence in procurement and supply

13% - 20% CONTRACT LEAKAGE IMPROVEMENTCase Study – Typical ICT Supplier Assessment

Review of key ICT supply contracts ; typical spend ~$100 million in annual expenditure ; expected outcomes from, financial, commercial, and supplier strategy and relationship analysis. Discovery 3-4 months ; Implementation 12+ months

Leading global excellence in procurement and supply

MARKET ICT LEARNING1. Cloud services & vendor selling practices target business units, not centralised ICT functions – 60/40%.

Effective supplier categorisation/consolidation following the spend visibility analytics baseline 2. TEM & SAM Software available , need significant ongoing interpretation of reports to make sense

Software just a tool, Asset Lifecycle Management Process and People resources needed.

3. Know what the actual software usage across your business is, as ‘over or under’ licence a problem Constant liability/threat of supplier audit teams in the ‘tough’ times, beware hidden claims

1. Use TCO : 30-50%+ savings resulting from IPTEL/ PABX ( in cloud ), rather than Traditional on-premise owned 2. Capital avoidance and general move to Opex for many organisations is occurring3. IaaS / PaaS still immature as a market in Australia

• Watch out for punitive complex contracts, allocate greater proportion to legal costs than normal • 20% + above in savings if a sourcing and category management process implemented • Telecommunications a constant provider of savings opportunities, as services evolve so rapidly

A Category Mgt KPI – % increase needed in suppliers that are performance managed, very low base today.

Lack of Spend Baseline Visibility

CLOUD actually delivering value when using TCO :

Results/Benefits

“ICT as a market is undergoing massive global and unprecedented change, the old rules are not working and enterprises are having to re-think ICT category Management”