Archive for the ‘Procurement’ Category
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How do CFOs perceive the procurement function? Is there a beautiful connection, or do relations continue to be prickly? And why do we continue to talk about this topic like it really, really matters?
Because it really… really matters.
At sharedserviceslink.com we insist on talking about the relations between procurement and finance for many reasons, but let’s start with the following:
- It’s not natural for finance and procurement to gel – they are functions that attract different types of people
- Therefore we as a business community for shared services feel duty-bound to share best practices on how to connect the two functions elegantly
- And alignment is so important as it has a massive effect on purchase to pay, and in turn the performance of the wider business
- But the nuts and bolts of creating this lovely, warm alignment are sometimes overlooked or not known to either party
Which is why we spend good time communicating to our 7000 members and beyond how to build the collaboration.
Which is why on the 26th April 2012 we hosted the webinar ‘CFO insight: the dividends of collaboration between finance and procurement’ sponsored by Ariba and co-presented by Sam Knox from CFO Magazine. The magazine runs a research report every five years, and the webinar drew on the key findings and trends.
Here are some of the key insights from the 263 CFOs interviewed:
- 26% believed procurement’s performance has improved over the past 5 years vs 15% in 2007. This is an improvement!
- 73% believed procurement has become more strategically minded.
- 73% said there is a great opportunity for procurement to increase its contribution by finding new savings
- 64% said procurement could increase its contribution by improving relationsships with suppliers
- 48% said procurement needs improvement in supporting risk analysis
- 42% said procurement needs improvement in providing information and analysis
- 44% said they strongly agreed or agreed that procurement frequently develop good ideas for improving business performance
The final assessment? Based on the perception of CFOs, there have been improvements but it looks like we are at the beginning of an exciting journey where impressive results will be realised from this tighter collaboration .
To get a full copy of the report visit http://www.sharedserviceslink.com/file/94502/the-dividends-of-collaboration-between-finance-and-procurement.html
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Matt Garrow-Fisher, our Head of Research, is attending Deloitte’s Annual Shared Services and Business Process Outsourcing. He has been sharing some valuable knowledge on twitter and we would like to do the same with our community via our Blog. Following are some highlights of what’s been said.
– Migration strategies: Most companies (51%) move to shared services Centre then standardise processes
– Many shared services centre are now looking at having 2 shared services Centre: 1 standardised, vanilla shared services Centre and 1 centre of excellence
– The tipping point for a final decision for site selection is down to the cooperation of the regional development agencies – this is key.
– Site selection: Corruption and operating environment need to be considered
– Access to location is key for shared services centre: employees need to commute, otherwise they may go to a better accessible competitor
On location selection
– 170 shared services centre location decisions were made over 2008-2011 in over 105 cities globally. Decisions based mainly around cities rather than countries.
– Top shared services centre destinations in 2008-11 were Dublin and Budapest.
– Top number of jobs created between 2008-2011 were from these countries: 1. India 2. US 3. The Philippines 4. Poland 5. China
– Ireland is known for being great at delivering on higher value activities.
– North America and West Europe are back in shared services Centre site popularity due to their capabilities to host CoEs and higher value-added activities
– Speaking in the right culture – ‘cultural speak’ and training on this is more important that having a good accent.
– H.R. skills / talent is the most important aspect of choosing a site if you want to move up the value chain
– Location is never fixed and usually shared services Centre move or expand every 5-7 years. This is due to scalability needs and sustainability
On change Management
– To enable change management: 1. Customer satisfaction 2. Ability to grow business through better buy-in and business engagement
– Deloitte global survey finds that 59% of shared services organisation have learnt that increased change management would have improved their shared services journey
– That will create, that will not forget” – people involved in the creation of your shared services organisation will take far more ownership of running it
– Site visits are the most effective way to connect with business units
– Governance: Performance metrics are the top part of a company’s governance structure (78%). “What gets measured gets done”
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e-Invoicing Europe: one year on
Posted on: July 5, 2011
- In: Conference | e-Invoicing | Electronic invoicing | P2P | Procurement | Technology | Working Capital
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Goodness! What a morning at e-Invoicing Europe 2011 in London.
In four hours we’ve covered ten success factors for e-invoicing; explored the future e-invoicing landscape from the perspectives of the European Union, government policies, and public and private-sector adoption; and had practitioner insight from Orange Business Services, easyJet, Kimberly Clark, Finncontainers and BBC.
This is the third year for our e-invoicing conference and it’s hugely satisfying to see how our delegates and their projects have developed, and how the discussions we’re having have matured.
The easyJet story is a prime example. At our event last year in Paris (which really was sizzling in 34-degree heat), Imtiaz Ahmed, Finance Systems Project Manager, participated as a delegate. He did a short interview with us to explain why he was there and how he was at the beginning of the easyJet e-invoicing journey.
Today, with his colleague Sarah Rutt, Finance Service Centre Manager, Imtiaz gave us an update on their progress. As all the speakers have said, before jumping into e-invoicing get your house in order. EasyJet identified the sticking points in its P2P process, understood what could be addressed by reviewing internal processes, and pinpointed which manual processes could be automated.
With the foundations in place they have been able to start considering in detail what e-invoicing will look like for the airline company in terms of technology, change management, invoice receipts, reporting, workflow and implementation.
To reach their goals of reduced time and cost of processing, improved working capital management, and greater billing accuracy, Sarah says that it is unlikely that there will be one solution that will work for all their suppliers.
And echoing another recurring theme of the morning, easyJet’s procurement team is set to play a significant role. The e-invoicing project is fortunate that a recent restructure means that finance and procurement both report to the CFO now, which will enable this crucial alignment.
This snippet from easyJet gives a flavour of how the market is evolving as companies continue to make the compelling business case and start to deliver real results. And it shows that a lot can happen in 12 short months.
If you couldn’t join us, you can follow the nuggets via twitter and our tag for this event #einv11.
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- In: Conference | P2P | Procurement
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To sum up the discussions that took place at Toning Up Purchase to Pay to Attain Touchless Processing in London yesterday, here are our top take aways:
- If you want to drive change in P2P, don’t think you can do it alone – finance and procurement need to work together
- Establish process owners who are not involved in ops but are there to govern
- No point having a global process if nobody complies with it
- Reference P2P in shareholder presentation reports
- A global process owner that reports into the CEO
- Look at when you pay invoices – don’t pay early
- Metrics drive behaviour, which drives improvement. Use league tables – they work!
- If you need evidence for the past horror do an audit
- There is a €900m opportunity to save costs in indirect spend among the companies that participated in the American Express study
- Automation alone won’t work: standardise, align and optimise your processes
- There isn’t a single technology silver bullet – you need a basket of approaches
There’s a lot more to come today as we have Surrey County Council, Rolls-Royce, Finnair and Pearson speaking. And that’s all before lunch!
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Making automation stick
Posted on: June 22, 2011
It’s lunchtime at Toning Up Purchase to Pay to Attain Touchless Processing and we’ve already explored a plethora of streamlining approaches for P2P functions and, importantly what you need to do to make them stick.
American Express shared the three key themes from this year’s European Indirect Spend Management Study. With detailed information from 162 organisations, it found that companies have opportunities to improve control, maximise visibility and drive efficiencies.
In terms of efficiency, it found that the impact of automation efforts are squandered if your overall processes are not aligned and the company culture is not receptive or encouraged to change.
Indeed, the change management piece has generated a number of questions this morning. How do you encourage people to change their normal ways of working so they comply with processes and you realise promised savings. Carrot approaches are to offer people incentives for compliance or to make it clear how much it costs the business if they continue with their renegade ways.
Using a stick, one company here runs a three-strikes-and-you’re-out policy. And a local council is approaching the task from a different angle and has asked businesses that aren’t approved suppliers not to accept orders from its employees.
Fundamentally though, the companies that make these changes stick are those that do not stop encouraging people to comply even when their compliance rates are high. You’ll hear it time and again, but communication is key.
More updates from the conference to follow, or you can keep track of the nuggets by following us @sslink_hq or #p2pconf on twitter.
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Fusion 2011 in Orlando is under way. Three singers in suits and ties sang about the hilarities of being an AP manager well before 9am, getting 2,000 delegates in the mood to look in the mirror but retain a sense of humour.
The event so far has largely been about two things: becoming one and taking responsibility. Are we at an AP event or a personal development conference? The reason for my questioning will become clear when you read the following:
1/ Becoming one: During the event’s opening session, Tom Bohn, CEO and President of what is now the Institute of Financial Operations, talked about the importance of becoming one. The walls are coming down – you have to realise you cannot do this alone. Achievement in accounts payable is heavily reliant on very tight collaboration with purchasing. But, as he said, you are responsible for creating this alliance.
Which takes me on to key message number two
2/ You are responsible: A few speakers this morning, including the inspirational Cynthia Cooper, Former Chief Audit Executive of WorldCom, and whistlerblower of the company’s fraudulent activities, have stressed the importance of realising that only you can make it happen.
So… finance conference or personal development event? Well, both, but the reality is, we know that in our personal and professional lives we are faced with choices and have the ability to chose. It is key that we use this knowledge to get procurement on side and become one, and take responsibility for that action to secure success quicker. And what does success look like? That’s a whole other blog…
The other big news from the event: Tom Bohn and the team announced that the IAPP, IARP, TAWPI and NAPP have also fused into one with the birth of the Institute of Financial Operations – congratulations!
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Hewlett Packard is the world’s largest technology company. Not only does it sell IT hardware and related services, but it also lives and breathes the benefits. And its finance function is no exception.
Through its hugely successful e-invoicing programme, it has converted 1.8m of its invoices to electronic. Speaking on our latest sharedserviceslink.com webinar, Peter Downie, Global Invoice Automation Lead at HP, revealed how the company has managed to deliver such impressive results.
A shared-services pioneer, HP first embraced centralisation in 1990. Since then it has stormed ahead in its adoption and implementation of automation technologies. By 2000, the company already received 30% of its invoices via EDI and knew that e-invoicing would help bring more of its suppliers on board.
HP’s drivers were process efficiency, standardisation and cost savings, but it also pursued more intangible benefits, such as greater auditability, business intelligence and improved cash management.
Partnering with e-invoicing network, OB10, HP’s goal was to convert 80% of its entire manual invoice population to electronic through a fully tax compliant, global solution that was viable for all its suppliers.
With these objectives pretty much ticked off, Peter is focusing his attention on the resisting one hundreds (the suppliers who won’t convert), developing a portal that offers self-help tools, and embracing the benefits of dynamic discounting.
When asked to share his top-three strategies for success, he highlighted:
- Understand your stakeholder framework; finance and procurement must work together hand in hand
- Focus on economies of scale
- Maintain ongoing programme management to support supplier enrolment, manage service providers and stakeholders, and process improvement.
Watch a recording of the webinar on the sharedserviceslink.com website.
Peter Downie is also speaking at e-Invoicing Europe 2011 in London in July.
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It’s nothing new; we talk about it all the time: finance and procurement need to work hand in hand if accounts payable automation is going to work. Listening to our speakers’ presentations and their lists of critical success factors at the recent AP Automation summit, their messages were no different.
The question is, if it’s such a commonly cited pre-requisite, what’s stopping companies from doing it?
Scouring my notes from the conference, I’ve jotted down, in no particular order, some of the key points discussed around collaboration between procurement and finance.
- Supplier relationship management: with finance and procurement working together, your supplier data will be more accurate so you can easily identify your strategic suppliers, and spot the ones who are falling out of process and why
- Appreciate your differences: finance professionals will focus on control, segregation of duties, compliance and making accounting easy. Procurement wants the right goods and services to arrive at the right place, at the right time. You don’t have to become an expert in each other’s functions but you need mutual respect. As one speaker said, there’s no point having an end-to-end process if you have brick walls between the functions
- Blur reporting lines: consider making accounts payable report to procurement or recruit a procurement professional into a finance-led P2P team
Align goals: give finance and procurement shared performance goals and balanced scorecards - Contracts and T&Cs: if you’re rolling out e-invoicing, work with procurement at contract renegotiation time to introduce new terms and conditions to your suppliers
- Communicate: run internal trade fairs to help procurement teams understand your objectives and communicate regularly
- Data analysis: consider recruiting a supply chain management analyst to focus on getting the detail out of the data and delivering continuous improvement for procurement and finance processes. This will also help you take advantage of financing options such as early payment discounts and reverse factoring
- Multi-function collaboration: why stop at collaboration between finance and procurement? Every function that triggers an invoice needs to be on board with accounts payable automation activities.
These nuggets come from companies such as HP, Orange Business Services, Eaton Corporation and P&G, so there’s considerable evidence to suggest they know what they’re talking about.
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We ran our ‘Finance shared services for local government’ masterclass in September 2010. I chaired the same event in January 2009 and saw a stark difference in the mood of the room last month.
What was the difference? It was clear from the organisations present that their finance-process maturity is far more advanced. In 2009, conversations were more focused on handling paper and dealing with a lack of technology support. This year organisations like Surrey County Council and The Ministry of Justice illustrated that their productivity was comparable to high-performing shared services centres in the private sector.
What has driven this change? First, the public sector has been adjusting to cuts for a while. They were hit by the Icelandic Bank crash where many councils held sizeable chunks of capital and have had council tax freezes or cuts. So the demands from the UK government for 25% cost reduction are just another step for them – albeit a challenging and disruptive one.
Here are my top-15 take aways from the event:
- The public sector has come quite far in terms of savings in finance and procurement over the past couple of years. The most obvious next step for process efficient organisations is collaboration. As a concept collaboration is a no-brainer, but it’s the detail that can often be the show stopper
- To get collaboration between councils off the ground, get the sponsors and leadership teams from councils concerned in a room around round tables (avoid tables with corners as this will encourage a ‘them and us’ mind set, and a committee-type approach)
- If you can have senior management conceptually agree that collaboration is the way forward you can then hammer out the detail about how it will work. This may prove the best approach but have them buy-in to the concept first
- Shared services is a model (collaborative or independent) that impacts the organisation… not just finance, so the organisation needs to be aware of the change and how it affects different stakeholder groups
- A ‘big bang’ approach may result in chaos, according to Gerry Smith from the Ministry of Justice. So create a phased plan with achievable deadlines to maintain your credibility
- Are the people in you shared services leadership team mainly civil servants? If they are, is this the best team make-up to meet your targets? Again, Gerry Smith explained that there were no civil servants in his team, which he believed was a good thing
- Shared services means that finance now has ‘customers’. These customers used to be your colleagues, so the shift in attitude can be hard to manage. But remember to treat customers as if they have a choice regarding their service provider, because one day they might
- Find a powerful sponsor and stand behind them. Use their voice and their influence
- Is outsourcing the best deal for you? Buckinghamshire Council found that the business case only showed a 15% savings and they would have been locked in for ten years. Instead Buckinghamshire decided to manage this without an outsourcer and collaborate with local councils. The result: 20%-40% savings
- Look at your procurement activities for quick wins. If you don’t collaborate with another council on finance, at the very least do so for procurement, as the savings here once volumes of spend increase, are significant.
- We are dealing with politics, so be quick to identify private agendas and deal with them quickly before individuals spread a toxic message. Be paranoid – shared services is not a model welcomed by many
- Find out about the organisation by hanging out in the ‘smoking room’. Find out what people throughout the organisation are saying about your initiatives
- Challenge the need for your long KPI suite. Surrey County Council is a high-performing shared service and has customer satisfaction as its sole KPI
- Cambridgeshire and Northamptonshire County Councils have collaborated with excellent effect. It can now invest in technologies it wouldn’t have been able to had it remained independent
- Use technology in its vanilla form rather than bending it around a process. Review your process instead and see how this can be massaged to suit the technology
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