1. How IT Leaders Are Capturing Missed Savings Honorio Padrón Executive Advisor, IT Global Practice Leader The Hackett Group Tuesday, October 6, 2009 Carl Guarino Chief Executive Officer ICG Commerce
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5. Recent Performance Study: Approximately 1/3 of indirect spend is under-managed Spend Demographics – Spend by “Type”… Study Focus
6. IT leaders reported that NRBC purchases are optimally managed only 29% of the time Procurement process skills, but not deep domain expertise – may sub-optimize business needs Domain expertise, but not necessarily deep procurement expertise – may sub-optimize savings and add contract risk Optimal Approach
7. IT leaders report lukewarm satisfaction with chosen suppliers, turnaround time, pricing and contract flexibility Avg.= 3.42 Strongly Disagree Neutral Strongly Agree Study respondent: “ Purchase Bureaucracy implies too many levels of approval, which slows down the process and depletes confidence from buyers in a fast purchase.”
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9. Closing the spend influence gap and improving sourcing effectiveness can have a big impact… * Moving from 62% of spend competitively bid to World-Class performance levels of 91.13% ** 3.53% is the difference between World-Class Procurement savings level sand non-World-Class (for indirect spend) Illustrative example: $10B CPG Co. 5-Year Program Savings: $12.5 – $22.5MM $22.5 $4.5 $4.5 $4.5 $4.5 $4.5 Savings reported by those who manage/track project spend Incremental savings opportunity if optimally managed Per year NRBC IT/Telecom Spend $30MM Savings currently reported $2.0MM Additional savings created by managing more spend* $0.9MM Additional savings by adopting sourcing best practices** $1.6MM Total additional savings opportunity $2.5MM Total annual savings on project spend $4.5MM
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14. Sample IT sourcing projects Project Purchase Timing Spend Savings % Purchase code maintenance appliance to improve development time Code Maintenance Appliance 2 weeks $100K 65% Develop custom software (content delivery platform) for Marketing organization Content Delivery Software 4 weeks $400K 17% Enterprise Data Management (EDM) roadmap development by 3 rd party consultants EDM Roadmap 8 weeks $320K 20% Global implementation of EIPP project in conjunction with Accounts Payable Electronic Invoicing 12 weeks $540K 24%
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Notas do Editor
12 Slide Objective: Create a common understanding of the definition of Commercial Print Key Points: Before I begin, let’s make sure we all understand the acronym Commercial Print. In some cases it’s almost easier to describe what Commercial Print is not. Commercial Print is not Direct Material, Capital Equipment or Contract Services. It is products that are used to operate and maintain facilities. Within Commercial Print, there are typically two kinds of “buys.” One is stockroom replenishment. The second is non-stock, or “spot buy” purchases for material that is used as soon as it is received.
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