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Business Process Outsourcing

Driving high performance for Accenture through procurement outsourcing

Accenture is advancing towards high performance with a procurement outsourcing solution that has increased Accentures spend under management, reduced risk and produced performance improvements and innovation all while driving bottom-line savings.

Business challenge
Accentures journey to achieve high performance through procurement transformation began in the late 1990s, during a period of rapid global expansion and dramatic business change. Although company revenues were increasing, the cost base was rising at a similar pace. To maximize profitable revenue growth, Accentures procurement organization became a primary focus of a global operational efficiency program. For the typical company, procurement costs can represent between 50 and 75 percent of annual revenues; thus, procurement is frequently among the first functions that senior management targets as they look to reduce costs. Incremental savings in procurement can add up to impressive benefits. The decision to pursue procurement outsourcing was more than just a matter of having the companyitself a pioneering global outsourcing services providerpractice what it preached to its clients. It was also because outsourcing solutions have a unique power to meet the kinds of challenges that Accenture faceddisparate processes that were being employed across a fragmented, global operation. Accentures initial foray into procurement outsourcing delivered significant cost savings. By 2003, however, the company was looking to take its procurement outsourcing arrangement to the next level. In the midst of the global economic downturn at that time, the company sought to achieve additional cost advantages, and to expand the percentage of spend under centralized management. At the same time, Accenture also wanted to develop the deeper synergies of an integrated procurement outsourcing solution that can drive business value even beyond cost reduction. To achieve both these goals, the company turned to Accenture Procurement BPO Services, an Accenture offering that delivers a full suite of source-to-pay outsourcing services. The decision was based on much more than just proximity. Accenture Procurement BPO Services had demonstrated that it had the resources and capabilities to generate both cost savings and business value. With an integrated service model, deep sourcing skills and an industrialized delivery capability, Accenture Procurement BPO Services could provide flexible arrangements, global reach and consistently high service. According to David Boone, Accenture Procurement BPO Services lead executive for the Accenture account, This deal provided Accenture with an attractive combination of capabilities. Of course, we had detailed knowledge of Accentures business and its operational needs. At the same time, this would be an arrangement with the same rigor, and maybe more, of any outsourcing relationship. They would view us as they would any other service provider; we would relate to them as we would with any client.

Moving to a holistic procurement model through outsourcing


How Accenture Procurement BPO Services helped
One of Accentures goals as it began this next phase of outsourcing its procurement was to advance more quickly to a holistic procurement model, expanding the coverage of procurement outsourcing to more spending categories and more geographies. According to Al Williams, chief procurement officer for Accenture, Procurement is best delivered on a comprehensive basis, including demand management, sourcing, negotiations, transaction processing, compliance, help desk, reporting and analytics, and more. We believe there is tremendous upside for us in buying a large portion of our procurement capability from Accentures own procurement BPO services offering because of its ability to help us advance toward coverage that is truly global. That outsourcing team is serving a large number of clients, so they are able to leverage their advantages across a wide base. Historically, moving from a local to a global procurement model has been challenging for Accenture, which had been a partnership and became a public corporation in 2001. It has taken time to reinvent an organizational structure that had previously been similar to a franchise of hundreds of companies run by individual partners who oversaw procurement within their responsibilities. As David Boone says, Success in procurement transformation comes in part from leveraging volumes across the enterprise through centralized coordination. One of the successes we have enjoyed with Accenture, and a cornerstone of our future success together, has been in our ability to work with the companys procurement team to advance the goal of buying off of centrally negotiated deals. When we are able to help executive management agree to uniform or standardized requirementsrather than each local entity deciding on its particular brand of laptop computer, office chair or cubiclewe accrue significant savings for a client. More rigor in assessment and measurement of business impact has also been a goal of Accenture met by this outsourcing relationship. Says Boone, Accenture Procurement BPO Services uses validated external benchmarks of the procurement capability to assess the maturity of a procurement organization. This is a comprehensive assessment of people, processes, technology and organization structure. One of the key reasons for pursuing procurement outsourcing is in reducing risk and generating greater predictability and speed to value. Accenture Procurement BPO Services can deliver on those goals for Accenture through a tool box of subject matter experience, processes and technology enablers. A global delivery network, including Centers of Excellence focused on procurement, help to enable an industrialized, highquality, global procure-to-pay platform in a multiclient environment. Advanced business analytics capabilities and tools, also available through the Centers of Excellence, help drive additional savings. These assets enable Accenture Procurement BPO Services to deliver not only efficiency and cost savings, but innovation and consulting guidance, as well. A strong, teaming relationship between Accenture Procurement BPO Services and Accentures retained procurement team has been another hallmark of this successful outsourcing solution. Accenture maintains a purposely lean global procurement group with a sharp focus on strategy, policy, process, technology, change management and the customer experience. Williams notes that it is through this kind of close partnering with their service provider that organizations can dramatically improve the business impact of procurement outsourcing. Accenture Procurement BPO Services can focus on the details they are good atimproving procurement operational efficiency, for example. Our retained organization can focus on identifying new directions, new areas where the outsourcing provider can then apply its skills and resources to improve its impact. Access to expertise and deep procurement knowledge is also a benefit of the outsourcing relationship with Accenture Procurement BPO Services. With an outsourcing solution, says Williams, we look to maximize the advantages of having access to intellectual capital, supply market information, sourcing techniques and tools. Category expertise, for example, is one important area I am looking to Accenture Procurement BPO Services to provide. Information on contingent labor is another big value point for us right now, because that is Accentures single largest category expense. As we move forward together, these are some of the procurement areas where we are setting the bar even higher.

Success in procurement transformation comes in part from leveraging volumes across the enterprise through centralized coordination.

If procurement is to fulfill its potential for the business, it must transform itself from a support function to a value-generating function.

High performance delivered


Accentures experience has demonstrated that procurement outsourcing provides organizations with the ability to transform and scale much faster than they can solely by building up an internal capability. The gains made by Accentures procurement organization through a transformational outsourcing arrangement with Accenture Procurement BPO Services have surpassed the original business case. During this outsourcing arrangement, Accentures percentage of total spend under management has continued to increase. Were well on the way to achieving our aggressive target of percentage of spend under management, says Williams, a goal to be delivered over a three-year period. We are confident that, with continued focus on the end-to-end procurement approach from Accenture Procurement BPO Services, that we will achieve that goal. For a global professional services company, achieving our target would be quite an achievement. More important, it would advance us toward the ultimate goal of leveraging that spend under management to drive higher benefits to the bottom line and increase the quality of goods and services by our suppliers. Accentures successful outsourcing relationship with Accenture Procurement BPO Services highlights several important themes and keys to success with procurement outsourcing: has a much better chance of contributing to the competitiveness of a company if its positioned on a par with company leadership, and not simply as a clerical and tactical function. By extension, then, a procurement outsourcing arrangement must be based on a truly strategic relationship. As Williams puts it, Given the degree of outsourcing were doing, we have to link up with our provider at a strategic level. We expect to be partners all along the way in that innovative process. Accenture and Accenture Procurement BPO Services intend to increase the use of external, industry-specific benchmarks as a means of measuring progress toward high performancebenchmarks such as those established by CAPS Research. Such benchmarks provide the rigor that can demonstrate the business impact of procurement transformation, thus helping to deepen the strategic role of procurement.

1. Emphasize value creation and high performance.


If procurement is to fulfill its potential for the business, it must transform itself from a support function to a valuegenerating function. As David Boone puts it, To maximize the impact of procurement transformation, the way an organization views procurement has to change. Senior leadership must realize that procurement can be a strategic enabler. The procurement organization

2. Improve relationships with suppliers.


Procurement organizations can look to outsourcing to help get better performance fromand forge better relationships withtheir suppliers. According to David Boone, We can help Accenture improve its supplier relationships because we are continuously in the market and consequently have a broader and more comparative, multiclient view of how a suppliers performance stacks up in terms of pricing, technology, delivery and reliability. This experience enables us to very quickly establish realistic expectations for both our clients and their supply base, which significantly hastens the sourcing process and increases the likelihood of long-term success. Our continuous sourcing and category management activity in the market has enabled us to develop a supplier performance management process that is more efficient and neutral, resulting in more constructive reviews and facilitated conversations about execution and value creation.

organization. The pleasing the customer attitude at the heart of an effective service provider is hard for even the best internal organizations to beat. In terms of specific technologies, as Accenture moves forward, it is working to develop more advanced business intelligence capabilities available through Accenture Procurement BPO Services. According to Greg Spray, solution strategy lead of Accentures BPO Services, We are now working to develop new, Web-based desktop tools that will make information available for all procurement managers, enabling them to easily see the current status of the flow of, not just money, but supply chain events. We anticipate the day when we will be living in an environment of true inter-company shared information. As the supply chain/purchasing function becomes more intelligent, it also becomes more of a real-time function. That will be one of the keys to unleashing the true business value of procurement.

At the same time, transforming the retained procurement organization is also critical, regardless of its size. In Accentures case, having marketing capabilities on the retained team has been important to advancing the visibility of procurement within the global company. Having change management expertise on the team has also helped by enabling the organizational changes that have to occur for procurement transformation to be successful.

5. Foster an environment of continuous learning and innovation.


Procurement transformation is truly a journey. For that journey to be successful, both the company and its outsourcing provider must be open to continuous learning and the possibilities of innovation. As Williams puts it, We are in many ways creating our own trail, teaming with Accenture Procurement BPO Services. One of the hallmarks of our joint team is that, although we are developing advanced procurement solutions based on todays leading thinking and practices, we are continually learning, too. Accenture Procurement BPO Services is helping its clients learn and is continually watching the market, innovating and driving continuous improvement in itself. There is a basic humility at the heart of an effective outsourcing relationship. Where we are right now is great; but we know that it can always be greater. Piloting innovative ideas is part of this learning-based approach to procurement transformation. For example, Accenture and Accenture Procurement BPO Services are piloting a program to put centralized contracts in place in a limited geography around several strategically important spend categories. Compliance will then be monitored against these centrally sourced contracts.

4. Secure procurement talent.


Access to deeply knowledgeable and experienced people is a key reason many organizations such as Accenture have turned to an outsourcing model. In addition to experience and skills across the range of procurement strategy, supply management, technology and processes, Accenture Procurement BPO Services also has access to consultants experienced in related areas such as supply chain management and specialized category management. The talent management process overall can be more robust for organizations leveraging procurement outsourcing. Thats because a service provider such as Accenture Procurement BPO Services is constantly hiring experts across the range of procurement capabilities, and also incorporates leading practices in hiring, developing and managing procurement talent.

3. Leverage advanced technologies and business intelligence tools.


Outsourcing can deliver several important benefits to procurement organizations from a technology point of view. First, the standardized and increasingly multiclient platforms used by a service provider such as Accenture Procurement BPO Services deliver leverage on license, implementation and run costs. The service provider also has in place proven architectures for interfaces, as well as a road map for new features, tools and integration technologies. Second, from an organizational perspective, a procurement organization is likely to get higherpriority service from a third-party provider than it will from an internal IT

When it comes to procurement transformation, you can do it yourself if you have the time, resources, skills and ongoing leadership commitment. Or, you can turn to an organization that has already made the investment in time, effort, money and experience in developing advanced procurement capabilities.

A trusted guide on the journey to procurement transformation


Companies are making the procurement transformation journey at different paces. Says Spray, It is interesting for Accenture Procurement BPO Services to find that customers we spoke with two years ago are now coming back to us and asking for more details about what weve learned on our own journey. We werent ready for outsourcing back then, they tell us, but we need to talk about it again now because we just havent made the progress ourselves we hoped we would. Recent research by Accenture into the characteristics of procurement masterythe strategies and tactics that separate the high performers from the also-ranshas shown that procurement outsourcing is key to achieving high performance. The high performers in the study clearly showed greater take-up of outsourcing across the six functional dimensions identified in the research: order management, accounts payable, supplier help desk, user help desk, catalog management and goods receiving. Concludes Al Williams, The choice facing executives in both the commercial and government sectors is, in one sense, fairly straightforward. When it comes to procurement transformation, you can do it yourselfif you have the time, resources, skills and ongoing leadership commitment. Or, you can turn to an organization that has already made the investment in time, effort, money and experience in developing advanced procurement capabilities. For us, this choice remains an easy one to make. Since procurement must contribute to an organizations overall goal to achieve and maintain high performance, we owe it to our shareholders to construct our operations on the best thinking and experience in the marketplace.

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Let us show you how procurement business process outsourcing from Accenture can help you on the journey to high performance in procurement. For more information on Accenture outsourcing services, go to www.accenture.com/outsourcing.

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About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 181,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become highperformance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

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