How to Achieve Optimization in Outsourcing -...
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D E N V E R F A L L S U M M I T 2 0 1 4 How to Achieve Optimization in Outsourcing Infosys Rajiv Gupta Head – Procurement Services Americas www.sig.org/eval
Transcript of How to Achieve Optimization in Outsourcing -...
DE
NV
ER FALL
SU MMIT
2014
How to Achieve
Optimization in Outsourcing
Infosys
Rajiv GuptaHead – Procurement Services Americas
www.sig.org/eval
DE
NV
ER FALL
SU MMIT
2014
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How to Achieve Optimization in Outsourcing
10th Oct 2014
Company Background
In 1981 by 7 engineers
with a funding of US$250
Founded
Global leader in ‘next
generation’ business
consulting, technology
solutions, and business
process management
services
Today
910 (including 56 in
Fortune 100; 159 in
Fortune 500) strategic,
long-term client
relationships
Client Base
Over US$8.39 billion with
a market cap of US$ 31
billion (LTM Q2, FY’15)
Revenues
*as of 30th Jun 2014
Agenda
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How investing in highly capable internal expertise by outsourcing tactical, rules based
and analytics driven processes enables greater focus in high value add areas
How to fill gaps with external experts
How to leverage proven processes and enablement tools for automation and self service
capability
How to access technology through service specialists using business process
management platforms
Procurement capabilities of leading organisations…
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… have continued to evolve past traditional strategic sourcing and category management
initiatives into full-scope value optimisation through externalisation and outsourcing
• Harmonize the procurement
function
• Cost reduction & mitigated risk
• Leverage proven expertise to
optimize the sourcing &
procurement cycle
• Category performance optimization
• Category transformation roadmap
to realize benefits
End to End Category/
Process Transformation
DE
VE
LO
PM
EN
T T
RE
ND
PA
ST
& F
UT
UR
E
PROCUREMENT
MATURITY
PROCUREMENT
INNOVATORS
SLOW
PROCUREMENT
ADOPTERS
VALUE
OPTIMISATION
• Low cost / high value
• Deep category
expertise
• Strong business
engagement
• Category & demand
management
• Advanced systems &
tools
• Global, cross
business support
• Low cost delivery
model
CATEGORY
MANAGEMENT
• High cost / high value
• Ongoing cost
management
• Improved business
engagement
• National / regional
coverage
• Major spend areas
only
• Difficult to attract &
retain expertise
STRATEGIC
SOURCING
• High cost / medium
value
• Project based
• Small centralised
teams
• Often use consulting
support
• Benefits dissipate
over time
PURCHASING
• Low cost / low value
• Localised,
fragmented
• Largely transactional
– Raise Pos
– Draft contracts
– Basics (e.g.
stationery)
• Low business
enagagement
10 YEARS AUSTRALIA NOW +3 YEARS
TIMELINES (INDICATIVE)
€ £ ₹ $
Procurement transformation requires partnership…
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… with an experienced solutions provider that can provide on-site, near-shore and offshore
capabilities to ensure CMs are focused on strategic activities
S2P
Strategy
Strategic
Sourcing
Category Management
Tactical Sourcing
Purchasing & Payment
Helpdesk
Near or
Off-shore
Teams (in
low coast
countries)
Strategy &
Relationship
Sourcing &
Category
Execution
Procurement
Operations &Support
Onsite
Sourcing
Team
Sourcing & Supply Base Management:
• Spot Buys. Order reviews& Demand Management
• Negotiation and Supplier Contract Creation
• Requirements Definition and Supplier Bidding
• Internal/External Customer & Supplier Management
Operations & Compliance:
• PO support/Order Management
• Compliance Management
• Supply Data Management /(MDM)
• Receipt Processing & Query Management
• Supplier scheduling
Platform Based offerings:
• Proprietary S2P platform to provide gamut of S2P services
S2P Strategy:
• Function Strategy and Performance Management
• Procurement Function Management & Change management
Strategic Sourcing:
• Sourcing, Category Strategy and Planning Support
• RFx Management & Negotiation PreparationStr
ate
gic
Tacti
cal
Tra
nsacti
on
al
ProcureEdge – Procurement Services As Platform
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ProcureEdge Procurement Cloud ProcureEdge Procurement Insights
Next-Gen Procure-to-Pay
“enablement” Platform with a B2C
Experience
Advanced Spend Visibility and
Analytics tool to identify savings
opportunitiesRealize Rapid,
Measurable and
Sustainable
Procurement
Savings
Service-In-A-Box
Fast on-boarding, low TCO with minimal upfront investment and a pre-deployed solution
Supplier Insights
Consolidated data from multiple, disparate data sources to monitor price, delivery, and product quality
to determine supplier performance
Advanced Analytics
Dashboard view in real-time to perform root cause and analyze patterns, price and cost variations
Spend Visibility
Helps identify maverick spend and minimize savings leakage
Improved Compliance
Adoption to existing supplier agreements and reduce off-contract spends
• Flexible outcome based commercial
model
• Self funded, Supplier funded,
Ecosystem funded models
• Ability to extend on existing
P2P
• Ability to deploy complete stack
ground up
• Greater savings through SUM and
Elimination of work
• Greater spend visibility
• Tighter compliance
Why ProcureEdge?
DESIRABLE FEASIBLE VIABLE
ASX Top 5 leading Australian Retail, Business, Institutional bank
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engaged Infosys BPO on its journey to become the “Most Efficient Bank”
Most Efficient Bank
(Lowest Cost to Income Ratio)
Reduce costs Increase valueIncrease speed of
benefit realisation
Scalable model to
drive more value
Drive suppliers to
deliver superior
outcomes
Partner For Procurement Efficiency &
Effectiveness
On-shore and Off-
shore delivery
Access deep
category & process
expertise
Leverage existing
experience &
technology
Leverage
capabilities of a
larger specialist
partners
Leverage
benchmarks &
market knowledge
Fully integrated onshore and offshore team
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providing procurement services from strategy through to operations
BenefitsExamplesProcurement Services
Develop category strategy
Manage business stakeholders
Assess opportunities
Develop sourcing strategy
Negotiate with suppliers
Manage project and change
Manage supplier relationships
Manage demand
Create spend baseline
Analyse supply market
Contract administration
Execute SOWs
Validate and process invoices
Update GL & balance sheet
Answer inquiries
Escalate issues
Root cause problem solving
Category Strategy
Strategic Sourcing
Category Management
Category Support
Procurement Operations
Help Desk
• Holistic approach to value
management
• Effective stakeholder
engagement
• Flexible resourcing
• Lower cost of delivery
• Local strength + global
innovation
• Higher ROI
Positive outcome have been demonstrated..
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… in several areas, generating results in improved processes, cost savings, improved
relationships and reduced risk
Process Improvement Cost Reduction Supplier Relationship Risk Mitigation
Learning & Development Consultants Contingent Labour Records Management
• No existing processes
• Backlog of 180 SOWs
• 56 different templates in use
• 600 suppliers in use
• No existing processes
• No preferred suppliers
• Client as ‘price taker’ with no
visibility on rate competitiveness
• 3000 contractors hired annually
• 300+ suppliers used
• Pay rates not aligned to market
• Pay rates vary for same job
• Supplier issues raised weekly
• Embargo on records destruction
• Broken supplier relationship
• High stakeholder ‘noise’Situation
• Panel of ~30 suppliers
• New ‘go to market’ process
• 4 templates agreed with legal
• Lower administrative burden;
e.g. Use of digital signatures
• Stakeholder training sessions
• Tiered panel by specialty
• Total panel of ~15 suppliers
• Capped rates and discounts
• Additional discounts on SOWs
• Pre-agreed T&Cs in MSAs
• Tracking of all SOWs
• Managed Service Provider
(MSP)
• MSP manages 17 panellists
• SLAs for MSP and panellist
operations
• Risk/rewards model for MSP
• New time-sheeting system
• Diagnostic on stakeholder
issues
• Weekly root cause analysis of
operational issues with supplier
• New supplier contracts
• Updating records policy
• Investigation of new record
tracking systems
Solu
tion
• Cleared SOW backlog
• Faster time to market of x
days
• Positive stakeholder feedback
• Negotiating discounts up to
10%
• 26% in year savings
• Short time to market of 3 days
• Low risk of suppliers on
premises without pre-
clearance
• Joint problem solving with
MSP
• Access to MSP global experts
• Extra MSP resources invested
• Hit 118% of savings target
• All major supplier issues
resolved
• Stakeholder noise stopped
• Destruction embargo lifted
• Negotiated cost savings of
8%
Ou
tco
me
Infosys Sourcing & Procurement - Overview
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67 Global Clients
supported by 1,850+
S&P professionals
worldwide
14+ Delivery centers
across the world for
front office, middle
office and back office
procurement
15+ Million invoices
processed per year
$ 95Bn spend managed
1.5+ Million Purchase
Orders managed per
year
~10-15x ROI
through Sourcing and
Category Management
5,000+ sourcing events
& 10,000 catalogs
created on an annual
basis
Proprietary suite of
Infosys Procure Cloud
Platform
Infosys S&P positioned as a Leader/Market star performer in the 2013 Procurement outsourcing peak matrix
Infosys S&P placed in “Winners circle “ in the HFS procurement outsourcing blueprint 2013, acknowledged as
global BPO service provider
Business
Benefits
• We enable Client Organizations to focus on Strategic spend and capability enhancement
• Global network of Sourcing and Category experts for helping increase spend management effectiveness and
metrics across all elements of the value chain
• Generate increment savings led value in tail and non contracted spend
© 2014 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to changewithout notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Exceptas expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical,printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.
Thank You
DE
NV
ER FALL
SU MMIT
2014
Session #WS04
How to Achieve Optimization in Outsourcing
Rajiv Gupta
Infosys5102849354
Speaker:
