The Future of Procurement: Why Is Technology Lagging Behind?

The Future of Procurement: Why is Technology Lagging Behind?

A WEBINAR BY IACCM AND SIRIONLABS FEATURING A.T. KEARNEY AND FORBES

SEPT 25, 2018

THE HOUSEKEEPING ITEMS:

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DR. HUGO EVANS PAUL MARTYN SALLY HUGHES AJAY AGRAWAL Vice President Supply Chain Expert CEO Co-founder and Chairman AT Kearney Forbes Media IACCM SirionLabs

Challenges and gaps New generation of Strategies for your 1 in traditional 2 specialized platforms 3 organization’s procurement that have the potential to transition to the technology set-ups transform procurement procurement tech effectiveness stack of the future

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

• 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 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 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 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 The Future of Procurement: Why is Technology Lagging Behind?

September 25th, 2018

Dr. Hugo Evans A.T. Kearney is a globally recognized consulting firm – offering scale in industries, functions, and geographies

Clients We work with more than two-thirds of the Fortune Global 500, the world’s Americas Atlanta Dallas San Francisco largest companies by revenues, as well as with the most influential Bogotá Detroit São Paulo governmental and non-profit organizations. Boston Houston Toronto Calgary Mexico City Washington, D.C. Chicago New York Locations A.T. Kearney has 58 offices located in major business centers in 40 countries.

Team We are 3,500 people strong worldwide who Asia Pacific Bangkok Kuala Lumpur Seoul Beijing Melbourne Shanghai have broad industry experience and come from leading business schools. Brisbane Mumbai Singapore We staff client teams with the best skills for each project from across Hong Kong New Delhi Sydney A.T. Kearney. Jakarta Perth Tokyo

Europe Amsterdam Lisbon Paris Berlin Ljubljana Prague Brussels London Rome Bucharest Madrid Stockholm Copenhagen Milan Stuttgart Düsseldorf Moscow Vienna Frankfurt Munich Warsaw Istanbul Oslo Zurich

Middle East Abu Dhabi Dubai Riyadh and Africa Doha Johannesburg

11 “A.T. Kearney is the clear market leader in the procurement space” – Forrester Research

Assessment of Return on Supply Holistic Procurement The Purchasing Strategic Sourcing Excellence in Management Assets Transformation Chessboard® Procurement (AEP) (ROSMA©) (HPTTM)

Value Invention Leverage Functionalit Specificatio chain on innovation y n Revenue Profit Strategic reconfigu- sharing sharing alliance demand network assessment assessment ration Supply Sustainabilit Design for y Project Value Management Core cost Design for Product manufactur Supplier based based analysis sourcing teardown tiering managem e partnership sourcing Strategy ent

Collaborati ve Virtual Intelligent inventory Total life Collaborati Vertical deal Composite Process capacity cycle ve cost integration benchmark benchmark managem Organizational structure managem concept reduction ent Alignment ent Political Visible Bottleneck framework process Vendor Supplier Supplier managem Product Complexity managed developme fitness managemebenchmark reduction organizatio ent inventory nt program nt n Sourcing-& Supplier Operating Cost data Leverage Process Sourcing Buying Standardi- RFI/RFP Expressive Total cost of market commodity Relationship community consortia mining zation process bidding ownership Management imbalances management Management Mega Master Spend Procureme data Supplier nt supplier transparen market Reverse Price Unbundled managem auctions benchmark prices outsourcing intelligence Performance Knowledge/Information strategy ent cy management management Complianc Closed loop e spend Supplier Bundling Cost consolidati across Make or regression Factor cost managem manageme buy Best shoring analysis on generations analysis Human Resources Management ent nt

Bundling Contract across Cost based Linear Demand manageme Bundling Global LCC price performan reduction product across sites sourcing sourcing nt modeling ce pricing lines

• Introduced the idea of • Periodic global • Toolbox to assign the right • Sustainable frame-work to • Framework to chart a Strategic Sourcing benchmarking to identify method to work with assess Procurement client's journey towards best practices based on suppliers based on supply Performance excellence in Purchasing • Landmark global the “House of power and demand Management engagements Procurement” power • Provides right combination • Illustrates value in “CFO of content and people • Introduced 7-step • Hundreds of participants • Works for all industries resonating language” focused tools sourcing, now a worldwide across all industries and standard across industries regions with most recent • Highly cross-functional • Benchmarks performance update done 2018 on a peer-to-peer basis

12 The Future of Procurement series

TheThe Future Future of of Directs Directs The Real Disruption Procurement talent: It’s The Complete Future of time to panic! Procurement

(October 2018) (November 2018) (December 2018)

(September 2018) (October 2018) (November 2018) (December 2018)

13 Why now? What’s driving the change?

Key drivers

1 Suite providers are Traditional suite providers are changing dramatically and others are going out of business changing

2 Consumerization Why isn’t corporate procurement like Amazon?

3 New businesses offerings, more specific solutions, new technology, new approaches mean massive Disruptive offerings disruption

4 Good is no longer good To compete (and survive) today you must be continually improving, innovating, and delivering value enough

5 Automation, automation, automation Most traditional procurement is being automated and the rest will be very soon

14 Traditional procurement technology follows a linear flow

Procurement Process

Strategic Procurement Planning and Performance Management Operational Procurement “Upstream” “Downstream”

Spend Monitoring and Analytics

• Project In-Take / Pipeline • Initiative & Resource Mgt. • Spend Analytics • Benefits Tracking Compliance Management Management

Supplier Requisition Supplier Information eSourcing Contract Performance/ Risk Management Payment Systems Management (SIM) Management Management Accounts Payable • eRFX • Risk Assessment • Contract Warehouse Requisition SCF2 / eInvoicing • Auctions • Supplier Portal • Contract Authoring • Surveys/Scorecards Purchase Order P-cards • TCO Analysis • Supplier Data • Dynamic Alerts • KPI Tracking Workflow Mgt. Dynamic Discounting • Optimization • Compliance Mgmt. Catalog Mgt

Governance and Management

• Collaboration • Templates • Benchmarking & • Best Practices • Master Data • Knowledge • Performance Tools Industry Reports Management Management Management

Source: A.T. Kearney 15 The traditional procurement technology vendor landscape does not effectively support automation, innovation, and analytics

Non-exhaustive

Procure to Spend Analytics eSourcing Contract Mgmt. Supplier Info. Mgmt Supplier Perf. Mgmt. Knowledge Mgmt. Pay Suite Solutions

Functional Specialists

Source: A.T. Kearney 16 The future will be a microservices (API) connected ecosystem of value creating technologies

Illustrative

services cognitive buying sourcing contract commodity management indirects smart contracts spend visibility AI Hub risk monitoring

p2p bot sourcing

esourcing travel analytics sourcing temp labor

17 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 3. Agile enhancement of existing 1. Full scale replacement with 2. Full scale replacement with procurement technology, new/upgraded end to end new/upgraded end to end procurement integrating and connecting to best procurement suite suite and adoption of new technology in class functional specialists

• Best of breed back-end procurement tool, fully • Modest investment over time and futureproof customized to user journeys (highest benefits • Single end to end procurement suite • Accelerated delivery of benefits Benefits potential) (lower complexity) • Tools can be chosen to customize the right • Agile adoption of new technology, enables short-term journeys benefits

• Significant investment commitment over a • Existing technology backbone remains (over- 2-3 year roll-out Trade-Offs • High level of investment over a 2-3 year roll-out time intelligent and automated technologies may • Benefits realisation takes years as supersede the old systems) opposed to months

Example Technologies

Source: A.T. Kearney 18 What this looks like in practical terms

Source: A.T. Kearney 19 Services dominate the enterprise sourcing spend across industries……

Purchased services as %age of aggregate procurement spend

Source: Forrester Research

Certain service categories require more active governance than others (highlighted below in Green)

GlobGlobalal bus iSpendness p uonrc hServicesases (2015)

$1.8T Logistics & $1.8T $3.6T $3.4T Transportation IT Professional Construction & Infrastructure

$1.3T $0.8T Facilities $0.8T Rental $1.6T Mgt. & T&E & $3.6T Leasing Financial $2.6T Telecom Other Real Estate Business Services $0.5T Staffing 21 © 2012-18 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential. Services buying challenges - Pre and post-signature

The lack of technology in The relatively small dot this space is indicated by sizes in this quadrant the fact that it is heavily SirionLabs indicates the fragmented dominated by sourcing nature of the post- advisory organizations. signature technology Hiperos landscape.

ISG RSA Archer GRC Market Market Penetration Oracle KPMG SAP Servicenow

Deloitte Remedy ITSM HPSM CA-Oblicore SERVICES Contract Financial

Performance Risk GOODS Ariba SirionLabs Coupa The most crowded Ariba quadrant because the BravoSolution Coupa The bulk of this group’s overwhelming majority of functionality is limited to Zycus procurement technology is Jaggaer contracts, e-invoicing, risk still being used to buy Zycus and catalog management. goods. Aravo

2000PRE-SIGNATURE2005 POST2000 -SIGNATURE

Q3, 2018

Traditional CLM Supplier Governance

CONTRACT CONTRACT Procure-to-Pay eSOURCING, AUTHORING REPOSITORY CONTRACT eRFX, AUCTIONS MGT. DUE-DILIGENCE PERFORMANCE /ONBOARDING MGT. FINANCIAL MGT. SUPPLIER INFO MGT. INVENTORY/ (SIM) & MDM CATALOG RELATIONSHIP PURCHASE MGT. ORDER/REQUISITION REQ. GATHERING INVOICING & RISK SPEND PAYMENT BENEFITS/ MGT. MONITORING & COMPLIANCE ANALYTICS TRACKING

Sirion P2P Solutions (Ariba/Coupa)

P2P hygiene required for all suppliers

REQ. SUPPLIER eSOURCING CONTRACT CONTRACT SUPPLIER INVENTORY PO/ PxQ SPEND RELATIONSHIP RISK GATHERING INFORMATION/ /eRFX/ AUTHORING MANAGEMENT PERFORMANCE /CATALOG REQUISITION INVOICE ANALYSIS MGT. MANAGEMENT MDM AUCTIONS AUDIT

DYNAMIC RISK AI/NLP DRIVEN OBLIGATION ASSESSMENT CONTRACT COMPLIANCE METADATA ISSUES, CAPTURE ACTIONS, AUTHORING OF (OBLIGATIONS, AUTOMATED PREDICTIVE DISPUTES REGULATORY COMPLEX SL/KPIs, SERVICE LEVEL INVOICE MGT. AND POLICY Deeper functionality required CONTRACTS PRICING, MGT. AUDITING FOR COMPLIANCE for strategic services suppliers (DOCUMENT RESOURCE SERVICES FAMILIES) UNITS) GOVERNANCE CREDITS & FORUMS EARNBACKS CAPTURE OF KEY CONTRACT CHANGE DATA DURING MANAGEMENT AUTHORING

25 ©© 2012 2012-18-18 SirionLabs SirionLabs Pte. Pte.Ltd. TheLtd. contents The contents of this presentationof this presentation are proprietary are proprietary and confidential. and confidential. The enterprise procurement tool stack today

WHAT WAS WHAT WAS WHAT ACTUALLY HAPPENED? PROMISED? INVOICED?

LEGAL / SERVICES E R V I C E RELATIONSHIP CORPORATE FINANCIAL PROCUREMENT DELIVERY

SILOS CONTRACTS DELIVERY MANAGEMENT RISK MANAGEMENT FUNCTIONAL

PRE-CONTRACT (6-12 MONTHS) Strategic supplier lifecycle

CONTRACT PERFORMANCE RELATIONSHIP PRE-SIGNATURE RISK FINANCIAL PROCUREMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT

PROCESSES

ISLANDS TECHNOLOGY

INTEGRATION THROUGH REST API LAYER Sirion – Integrated Enterprise Platform for Supplier Governance

CONTRACT CONTRACT PERFORMANCE RELATIONSHIP RISK FINANCIAL AUTHORING MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT

CLAUSE LIBRARY TEMPLATE LIBRARY AUTHORING WORKFLOW E‐SIGNATURE

DOCUMENT REPOSITORY REGULATORY COMPLIANCE OBLIGATION CAPTURE POLICY COMPLIANCE DOCUMENT CHANGE MANAGEMENT SUPPLIER AUDITS CONTRACT INTERPRETATIONS

GOVERNANCE FORUMS ISSUE/ACTION ITEM MANAGEMENT SERVICE LEVEL MANAGEMENT GOVERNANCE PROCESS HEALTH OBLIGATION COMPLIANCE SURVEY MANAGEMENT SOW/WO/PO MANAGEMENT CREDITS & EARNBACKS

INVOICE AUDITING SPEND POOL MANAGEMENT FINANCIAL ANALYSIS AND PLANNING VALUE ASSURANCE

Hard savings of over $300M delivered by Sirion 250,000+ Hard savings = Invoice reductions SUPPLIERS ON SIRION

$18B+ Invoice Amount TCV UNDER MANAGEMENT Validated 600,000+ $3.1B TOTAL OBLIGATIONS MANAGED Hard Savings $3.1B Achieved INVOICE AMOUNT VALIDATED $303M

28 © 2012© 2012-18 SirionLabs-18 SirionLabs Pte. Ltd. Pte. The Ltd. contents The contentsof this presentation of this presentation are proprietary are and proprietary confidential. and confidential. Sirion’s automation reduces manual governance effort by 45%

MANUAL GOVERNANCE MODE

Manual effort reduction distribution

DISCIPLINE MANUAL EFFORT DELTA 45% Contract Management -42% reduction in Performance Management -42% manual effort Financial Management -49% Relationship Management -47% OVERALL GOVERNANCE -45%

POST-SIRION GOVERNANCE MODE

The Rise of the Social Enterprise

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

What Skills Are Needed To Use AI Effectively

Source: Deloitte Global Human Capital Trends survey, 2018. Deloitte Insights | deloitte.com/insights Change Management is Difficult

Only 12% of companies that launch major change initiatives fully achieve their goals Managing Change Is Critical To Success

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