6.8.2017 1215pm Accenture Walko - Olney
6.8.2017 1215pm Accenture Walko - Olney
6.8.2017 1215pm Accenture Walko - Olney
June 2017
Today’ s Presenters
John Walko
Managing Director
Mark Olney
Managing Director
1. Introductions
Our research:
• Analyzed Procurement trends from 2007 to 2017
• Surveyed over 150 organizations across 13
dimensions
• Interviewed 52 organization leaders
2007 2008 2009 2010 2011 2012 2013 2014 2015 – 2022...
1 http://www.accenture.com/SiteCollectionDocuments/PDF/HHP_brochure_low10_07_07.pdf
2 http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Compulsive-Contributors-More-is-asked-and-more-is-delivered.pdf
Masters speak and impact Masters deliver more with Masters are the heart of the
finance less. They are: business
88% Masters have better Delivering a 15x ROI, compared Masters are 53% more likely to be
Pre-Tax ROIC compared to their to Masters in 2011 who delivered integrated into the executive
peers. 10x. ROI goes beyond cost committee providing great
63% of Masters have higher savings and expands into influence over buying behavior
Capital efficiency compared to procurement value. Masters are 63% more likely to
their peers. Achieving returns by increasing use their ecosystem for value
63% Masters had lower SG&A spend under management, chain partnering
expense ratio (as % revenue) influencing demand and Masters are 50% more likely to be
than their peers. specification embedded in product design
Doing more with fewer FTEs.
current difference between
masters and contenders.
Smaller,
Industrial central
Internet Analytics
procurement
of Things
core team
Cloud
Copyright © 2017 Accenture. All rights reserved. 9
Digital Procurement operating models will look different than today’s
Seamless Collaboration Internal & external collaboration via social media platforms is
within and across business as usual
companies Innovation is significantly driven through open innovation
networks
Our experience shows that Health Payer Organizations are facing common Procurement
challenges. Health Payers are seeking ways to procure more effectively while generating savings
throughout the organization.
Insufficient
Difficulty with technologies to
tracking and measure and support
measuring realized procurement
savings operations
Health Payers have the opportunity to use Digital and Other technologies to innovate, reduce
costs, expand strategic impact, and improve capabilities
Digital Communication
1
Strategic Harmony
5
Staying Sharp
in the Supplier
Ecosystem
The 5
Imperatives of
the Virtually
Integrated
2
Transparency
through
Technology
Enterprise
3
Cohesive Talent
Planning
16
Getting real in supplier
collaboration
Supplier agreements
Virtual Company Mail Suppliers
Requestors of goods and
Company Stores
services have a self-service,
Business (Negotiated mall-like experience assisted as
Logic and content) required by virtual 'personal
Procurement Rules
shoppers' to guide them.
Buying
Portal
Goods and Services may be
Business Supplier Stores Existing
Requestors (Standard
located within a 'Company Store'
Marketplaces
Content) where the buying org has
negotiated pricing or within a
'Supplier Store/Marketplace' for
Procurement infrequent, tail of the tail items.
systems Support Agent
1. Health Organizations will rely more heavily than ever on a small group of strategic
suppliers that will be asked to help substantially reduce waste and risk but, even more
important, to significantly boost the top line through more effective innovation. How
much spend do you have managed using strategic partnerships?
3. A company also must have a formal process and technology to support innovation so
the right ideas are identified and nurtured. Do you have standardize process and
technology to support strategic partnerships?
A
Central core team – smaller, and amped on digital
The Organization of One Takes Shape from procurement resources that are embedded in the
business and will be connected back to a smaller core team focused on 5 key areasIn this
model, digital pushes cost to serve down dramatically
Smaller, central
procurement core team
… parameters for …
• Business strategy
• Global demand and supply
• Policy
• Compliance
• Global strategic supplier
management
1.0% cost to
overall spend
0.8% cost to
overall spend
0.3% cost to
overall spend
?
The Organization of One Structure can move
Procurement to more strategically involvement
Greater than 50 percent of health CPOs believe their current teams’ skills and capabilities are not
sufficient to deliver their procurement strategy.
1. Strategic activities will be handled by embedded resources, who will create more value by:
• Working with the business and suppliers to develop new products
• Help manage price and supply risk
2. Procurement individuals will have markedly more advanced and diverse skills. They will
often be a specialist with expert knowledge in some business domain - such as care
management, provider services, marketing - depending on the need and likely will come
from an area of the company other than procurement.
What strategic procurement activities could be moved to embedded resources?
3. The non-strategic activities will either be handled by the business in a skilled and
compliant manner through the use of automation, or it will be managed by members of the
virtually integrated enterprise
What non-strategic activities could be moved to a VIE?
4. Opportunities to recruit individuals with specific or expand capabilities of staff.
Are there members of your team that could assume a role in the business with the right
training?
Copyright © 2017 Accenture. All rights reserved. 24
Cloud Computing – Leading
Through Content
be a competitive advantage
B
The Virtual Category Room provides up to date information
on key categories
Accenture proprietary
collaboration solutions
‘Grapevine’ and ‘WhiteSpace’
improve idea sharing and
innovation within Procurement
Community, other departments
Access to eSourcing and with suppliers
and Contract
Management
application Initiative driven value tracking Central/zone spend area specific
(pre-defined category The fields used for project identification and scoping in the dashboard.
specfic templates initiative overview (above) are the basis for the Value Access to EDWH for
Tracking reporting. BI/Reporting.
New cloud computing technologies are enabling breakthrough innovations in supply chain
management (SCM) applications delivered via SaaS (software as a service) models.
1. A strategic approach to implementation is essential. This should recognize that not all
supply chain processes are suitable candidates for migration to the cloud. Two
categories of process in particular may prove to be unsuited to cloud computing.
– First, complex and/or unique processes that require a heavy degree of customized processing are
less likely to be delivered as cloud computing based services, at least in the near future. And
– Second, processes that require heavy integration with either a physical flow or with other
information systems—particularly those requiring ultrafast response times—are currently not well-
suited to cloud.
2. What functions should take the lead from a cloud computing perspective:
– Source to Payment
– Supplier network development
3. Alongside these core strategic advantages the replacement of on-premise solutions with SaaS-
based SCM models have the potential to deliver four immediate tactical benefits, with quick wins
helping to support buy-in: Speed, single source of truth, low cost of entry and business value
• What opportunities have you taken advantages of? Many of our Health clients
use the cloud to support ERP functions, Souring and spend analysis, and
supplier networks and low cost of entry.
Copyright © 2017 Accenture. All rights reserved. 30
Industrial Internet of Things –
A Wake-Up Call For
Procurement
to procurement
Question the fundamentals with IIOT: allow it to inform your procurement strategy and completely
reshape your processes
2008
0.9 billion
installed units
2020
26 billion installed units
Copyright © 2017 Accenture. All rights reserved. 36
Poised to Ride the Analytics
Wave
Virtually
Business
Integrated Procurement
Stakeholders
Enterprise
Supply Analytics
C
company and industry
The following 5 types of analytics are areas to watch, and will become more advanced over time.
What will your company need in the future?
1. Commodity Pricing
and Risk Management
4. Procurement Planning
3. Compliance
& Supplier Collaboration
A Cognitive Computing is on
your doorstep
• Advantages abound
1
Perceive
Sense: Computer vision, audio the World
01
processing, or sensor processing
2 3
Analyze & Make
Understand Decisions &
Take Action
Technologies Capabilities
2 3
Analyze & Make Machine Learning Applications
Understand Decisions &
Take Action
Health
Deep Knowledge Ventures appointed to its board of directors a machine learning program
capable of making investment recommendations.