Agenda

Time Item Presenter

8:30 – 9:00 Coffee All

9:00 – 9: 30 Welcome – Coupa Roadmap Tony Wessels, V.P. Marketing

Coupa

9:30 – 10:30 Amplifying Procurement’s Role Ravi Thakur, V.P. Customer

Success, Coupa

10:30 – 10:45 Break All

10:45 – 11:30 Project : Get Smart Mike Wilding, CPO,

Rent A Center

11:30 – 12:15 Extended Business Relationship

Management (EBRM)

Bruce McQuillen,

Deloitte Consulting

12:15 - 12:30 Closing Remarks

12:30 – 1:30 Coupa Demo Ravi Thakur, V.P. Customer

Success, Coupa

Purchasing

Purchasing

Procurement

Purchasing

Procurement

Spend

Management

Purchasing

Procurement

Spend Optimization

Spend

Management

Coupa Overview

Tony Wessels

Vice President, Marketing

Coupa’s Mission

Delivering software innovation that

breeds responsible spending while

impacting the company bottom line.

Innovation

Responsible Spending

Bottom Line

Spend Optimization

Coupa’s Explosive Growth

180% Bookings

YOY

+95% Renewal Rate

YOY

150% Platform Usage

YOY

One World, One Platform

10 Languages

40 Countries

100,000 Users

Customers Highlights

Retail Finance Mfg. Health Care High Tech

Amplifying Procurement’s Role

Ravi Thakur

Vice President, Customer Success & Services

CFO Financial Books

HR Personnel Files

Sales & Mktg Customer Records

Procurement Needs To Own Spend Transactions

Own The Transaction

Optimize Spend

Spend Optimization Platform & Processes

Procurement Must Orchestrate

VS.

How Do You Do It?

Proactively participate in growth strategy

Manage change effectively

Measure & demonstrate success

Participate In Growth Strategy

Understand Growth Strategies

Geographic Expansion

Understand Growth Strategies

Geographic Expansion

New Lines Of Business

Understand Growth Strategies

Acquisitions

Geographic Expansion

New Lines Of Business

Provide Truly Strategic Value

Ensure executive team supports your Spend Optimization strategy

Work with R & D / Product Development Be aligned with M & A and global expansion

Develop Agile Spend Processes

Bring distributed locations under management

Involve all stakeholders e.g. facilities, marketing

Proactively integrate acquisitions

Managing Change

Change Management Requirements

Leveraging change agents

Frictionless transition

Leveraging Change Agents

Functional Users

IT

Procurement

Payables

Suppliers

Functional Users

Familiar user interface

Support for function specific spend

Solution

A solution that they can use

Not stand in their

way

Needs

Procurement

Enables transaction ownership

Measurable results

Solution

Ensure policy compliance

Attain savings goals

Needs

Payables

Automation for invoice processing

Eliminates tedium

Solution

Reduce manual & error prone steps

Simplify tasks

Needs

IT

SaaS/Cloud based platform

User configurable

solution

Solution

Reduce burden on IT resources

Focus on value-add

tasks

Needs

Suppliers

No network fees or processes to support

Innovation e.g. Universal Search

Solution

No additional cost of doing business

Ease of adoption

Needs

Frictionless Transition

Familiar & convenient user interface Weave into daily life

Demonstrate Success

Set Targets

Measure Success

• Establish benchmarks and determine targets

• Use data to analyze: • Tradeoffs and interdependencies • Root cause

• Measurement excellence = capability to improve and stay ahead Be Excellent

Achieve Targets

Benchmark Success Productivity

Transaction cycle time

PO & invoices processed

per FTE (#)

Support costs – not just IT

Effectiveness

Spend under management

User adoption = customer satisfaction

% saving / spend

Communicate Success

CFO Financial Books

HR Personnel Files

Sales & Mktg Customer Records

Procurement Spend Transactions

Break

Mike Wilding

44

Chief Procurement Officer

Rent A Center

Project: Get Smart

- 45 -

Crank the Savings World Tour

May 1, 2012

- 46 -

Executive Summary

About Rent-A-Center

• The largest operator in the United States rent-to-own industry

• Over 4,000 locations (2,983 Core U.S.; 763 RAC Acceptance; 87 International, 218

ColorTyme franchisees)

• Stores offer high quality, brand name durable products such as major consumer

electronics, appliances, computers, and furniture and accessories under flexible rental

purchase agreements

• Allows customers to obtain ownership of the merchandise at the conclusion of an

agreed-upon rental period

• Approximately 20,000 employees

• Annual revenues projected to exceed $3.0 billion in 2012

• NASDAQ: RCII

• Headquarters: Plano, Texas (opened a Field Support Center in Monterrey, Mexico

dedication is May 15th)

- 47 -

A peek into the past

• Two procurement tools in past 18 months prior to June 30, 2010

• Lack of visibility into invoice submitted by vendor at store location

• Punch out catalogues and catalogues in general not consistently utilized

• Existing platform extremely clunky and lacked ability to find product quickly (minimum

of five clicks before you were able to place an order)

• User adoption was slow and intermediate; complaints were fast and frequent

• On boarding of suppliers was not an easy, friendly process

• Invoices were entered into ERP by hand

• Procurement of approximately $600 million of indirect spend was very decentralized

• No consistent esourcing tools utilized

• Invoicing off of a contract was foreign

• No central repository for contracts

• Spend analyzing was performed by tearing apart general ledger accounts

- 48 -

Need for Change

Process Path Migration

Catalog with

Purchase

Order

1

Non-Catalog

with

Purchase

Order

2

Invoice

Directly

Against

Contract

3

Invoice Only

4

Supporting Modules How They Help

Procurement

EIPP (for non-EDI enabled

suppliers)

Reporting

Catalog creation and

management

PO creation, routing, and tracking

Visibility to purchasing accruals

Three way matching and issue

identification

Procurement

EIPP

Reporting

Purchase request/PO creation,

routing, and tracking

Three way matching and issue

identification

Visibility to purchasing accruals

Electronic Invoice Presentment

and Payment (EIPP) Reporting

Invoice creation, routing, and

tracking

Ability to invoice against a

contract (or against open P.O.)

Two way matching

NA Future spend expected to be

exception/emergency only

- 49 -

RAC Technology Scope

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management

T&E

Travel &

Expense Process

Module

Benefits

Increased savings through

competitive pressure and pricing

visibility

Automated project workflow for

RAC sourcing methodology and

contract authoring

Contract repository to support

invoicing against contracts (PP 3)

Increased electronic PO use for

spend management, compliance, and

2, 3, and 4 way matching

User-friendly interface to support field

adoption and compliance

Ability to invoice against a contract

(or against an open P.O.) to increase

pricing compliance

Automated invoicing will lower AP

department costs

Ability to monitor SMO

performance and identify future

savings opportunities

Supplier portal to enable vendor

initiated electronic invoicing and

payment

Vendor score carding to monitor

pricing and service compliance

Online booking with RAC

policies

Automated expense

management

Concur implementation

complete on 6/14/2010

- 50 -

The RAC Technology Assessment Approach

The RAC team assessed our spend needs and capabilities, developed the future state vision for the SMO, and created the options

that the Technology Steering Committee assessed to make the final recommendation

As – Is Assessment Strategy Development Technology Selection Implementation

Project: Get SMarT Accomplishments Potential Next Phase

Maturity survey

SMO vision development

Needs assessment

prioritization

Process and technology

assessment

Implementation scenario

development

Scenario ROI analysis

Implementation prioritization

Formation of steering

committee

RFP development and

distribution

Response analysis

Technology selection

RAC solution design

Solution implementation

User training

Business and technology

needs identified

Technology Business Case

created

Solution and vendor

recommendation developed

Technology implemented

Example

implementation roadmap

Majo

r A

cti

vit

ies

E

xam

ple

Do

cu

men

ts

Ou

tco

me

Technology cost / benefit

assessment

Technology demo

scripts

Maturity model assessment

and gap analysis

- 3 -

Tech Selection RFP Scoring Results

RAC stakeholders have completed the scoring process and identified SAP, Oracle, and Ariba as the best full suite providers,

and Emptoris as a leading single process provider.

Full Suite Upstream Only Downstream Only

Oracle SAP Ariba Ketera Emptoris BravoSolution Basware Lawson

General

Company

Information

3.9 3.9 3.7 3.6 3.8 3.9 3.4 3.7

Source to

Contract

4.4 4.7 4.6 3.0 4.8 3.3 N/A N/A

Procure to

Pay

4.6 4.3 4.3 3.3 N/A N/A 3.8 2.9

Spend

Analysis &

Reporting

4.2 4.2 4.3 3.5 4.2 3.8 2.9 3.4

Supplier

Management

4.5 4.4 4.4 3.2 2.7 1.9 3.1 3.2

Technical

4.0 3.4 3.8 2.9 3.5 3.4 3.4 3.6

Considering the strong performance of the full-suite providers and the relatively weak performance

of the niche providers, the team has not included Aravo and JPMC in this assessment.

2 13

2 13

1 2 3

12 3

1 2 3

1 2 3

Note: RAC stakeholders include M. Wilding, T. Fuller, P. Hall, J. Whitehead, B. Corley, N. Stevens, J.Chanani, M. Douglas, J. Arnette and R. Salvans

Technology

RFP evaluation

- 51 -

The Business Case - Executive Summary

Contracts eSourcing

Source-to-Contract

Invoicing eProcurement

Procure- to- Pay

Supplier

Management Reporting

Reporting & Supplier

Management

T&E

Travel &

Expense

RAC had some spend management technology in place, however further investments were required to reach the desired to-be

state

RAC had limited Sourcing and Contracting technology in place

The eProcurement technology was at a low level of maturity and required an upgrade to support new process paths if not replaced

RAC had very limited spend management Reporting capabilities, and no Supplier Management technology

Beyond basic electronic forms, the Travel and Expense (T&E) analysis, audits, and reporting were at a low level of maturity

5 Year financial analysis shows net savings of $ – $ MM for RAC

Scope of Business Case

Process

Module

- 52 -

The Technology Selection Process

Conducted high level market

analysis 44 vendors

Perform functionality review

and financial assessment

Down select to 19 vendors

that could potentially meet

RAC needs

Conducted capability

assessment and detailed

financial analysis

Down selected from 19 to 11

vendors that would receive

RFP

Developed and distributed

detailed RFP consisting of:

‒ 6 sections

‒ 275 questions

Evaluated responses and

identified 4 vendors that best met

RAC’s needs and provided

competitive pricing estimates

Developed seven page script

and executed detailed vendor

demos

Identified best-fit solution and

implementation scenario for

RAC

The RAC technology selection team conducted a 4 step process to identify the right technology solution to meet our needs

2. Detailed Analysis 3. RFP 1. Market Research 4. Demo Analysis

Vendors included in

initial assessment

Vendors included in

capability assessment Vendors receiving RFP

Vendors that provided

demonstrations

Where’s Coupa?

- 53 -

RAC Technology Scope

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management

T&E

Travel &

Expense Process

Module

Benefits

Increased savings through

competitive pressure and pricing

visibility

Automated project workflow for

RAC sourcing methodology and

contract authoring

Contract repository to support

invoicing against contracts (PP 3)

Increased electronic PO use for

spend management, compliance, and

2, 3, and 4 way matching

User-friendly interface to support field

adoption and compliance

Ability to invoice against a contract

(or against an open P.O.) to increase

pricing compliance

Automated invoicing will lower AP

department costs

Ability to monitor SMO

performance and identify future

savings opportunities

Supplier portal to enable vendor

initiated electronic invoicing and

payment

Vendor score carding to monitor

pricing and service compliance

Online booking with RAC

policies

Automated expense

management

What was

selected?

eSourcing

Emptoris

eContracting

Emptoris

eProcurement

Coupa

eInvoicing

Coupa

Reporting

Spend Analysis / Business

Objects

Supplier Management

Emptoris / Coupa

Concur implementation

complete on 6/14/2010

- 54 -

June July August September October December Q1, 2011

6/7 6/14 6/21 6/28 7/5 7/12 7/19 7/26 8/2 8/9 8/16 8/23 8/30 9/6 9/13 9/20 9/27 10/4 10/11

PMO

Source to

Contract •eSourcing

•eContracting

Spend Analysis

Procure to Pay •eProcurement

•eInvoicing

Supplier

Management

Master Data

CTC

Technology Implementation Timeline

Change, Training, Communications

Build Validate Go-Live

Coupa Release 21

(Invoice to Contract, PP3)

Build Validate Go-Live

Coupa Release 31

(Tiered Pricing)

Build Validate Go-

Live Plan Design

Installation

completed

Configuration

completed

Integration

completed

Program Leadership (PMO)

Plan Build Validate Go-

Live Design

Master Data

Validate Build Go-Live Design Plan

Validate Go-

Live Design Plan Build

Installation

completed

Configuration

completed

Integration

completed Coupa Release 1

(Blanket PO)

Installation

completed

Configuration

completed

Configuration

completed

Integration

completed

Installation

completed

- 55 -

eSourcing Overview

What’s at Stake for RAC

eSourcing Benefits to RAC

Increased competitive pressure and visibility into market pricing

Streamlined RAC supplier evaluation for rapid “apples to apples” analysis

Automated workflow to ensure enforcement of RAC’s 6 step sourcing methodology

Module Assessment

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management Process

Module

eSourcing advanced functionality will be used by the SMO to achieve incremental soft dollar savings for RAC.

Sourcing Impact

All current and future events can use traditional and advanced sourcing functionality

SMO can use auction functionality for rapid “spot sourcing” events

Like other retailers, RAC can use the eSourcing tool for merchandise

- 56 -

eContracting Overview

eContracting Benefits to RAC

Contract authoring automates contract development, enforces internal approval flows, and provides visibility to progress

Contract repository enables uploading of new and existing contracts for automated procurement and invoicing (PP3)

Automated tracking enables pricing, commitment, vendor compliance, and lifecycle management

Module Assessment

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management Process

Module

eContracts automated authoring, storage, and procurement integration will drive efficiencies, compliance, and savings identification.

What’s at Stake for RAC

- 57 -

eProcurement Overview

What Coupa brings to RAC

Electronic PO acknowledgements and approval flows lower cost to serve and increase visibility and compliance

Reduction of headcount in our AP group

Advanced search functionality and user friendly interface drives compliance and use of catalogs and punch-outs in the field

Extremely high adoption rate of tool

Ability to order supplies from the desktop keeping our employees in the store renting and selling merchandise

Labor hours under control; sales going up

Business partner to discuss other needs and solutions (sales tax)

Increased performance against established KPIs

Module Assessment

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management Process

Module

Invoiced spend will

be moved to PO

based process path

(PP 1 & PP 2)

Catalog

with

Purchase

Order (PO)

1

Non-

Catalog

with PO

2

Invoice

Directly

Against

Contract

3

Invoice

Only

4

Transparent Controlled

- 58 -

eInvoicing Overview

What Coupa brings to RAC

Ability to invoice against a contract (or against an open P.O.); pricing compliance to negotiated agreements

Automated invoicing lowered our AP department costs and shorten the time required to process payments

Electronic approvals and tracking has increased our visibility and compliance for our users and vendors

Module Assessment

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management Process

Module

- 59 -

Reporting & Supplier Management Overview

Reporting Benefits to RAC

Spend analysis has provided visibility into our costs and helped us prioritize the activities of SMO

Supplier Portal has facilitated automated registration and management of supplier information

Supplier Management gives us data and scorecards to identify pricing compliance issues and new sourcing opportunities

Module Assessment

eContracting eSourcing

Source-to-Contract

(Upstream)

eInvoicing eProcurement

Procure-to-Pay

(Downstream)

Supplier

Management Reporting

Reporting & Supplier

Management Process

Module

- 60 -

Lessons learned

• View a live environment, see how other companies use the product and see what

hardware they are using

• Engage internal IT group earlier and more frequently in the process (what will be

required on ongoing basis after implementation)

• Engage Internal Audit and IT Security earlier in the process

• First significant Software as Service model for RAC (IT, Legal, IA)

- 61 -

Contact information

Mike Wilding

SVP- Accounting/Global Controller & CPO

Mike.wilding@rentacenter.com

972 801 1404

Confidential and proprietary

Extended Business Relationship Management (EBRM)

62

Bruce McQuillen

Deloitte Consulting LLP

Deloitte Consulting LLP

Extended Business Relationship Management (EBRM)

A Deloitte Perspective

May 2012

- 64 -

The launch of a technology company’s long-anticipated white smartphone was delayed for 10 months because of the

quality and longevity of the white paints manufactured in China.

Companies across industries are feeling the impact of ineffective management of

their business relationships

Examples

A toy maker was forced to recall nearly 2 million toys and pay $2.3 million in fines due to identification of lead paint in

toys made by one of its Chinese contract manufacturers.

Note: Sources listed on slide 17

Due to a concern over the role of third party risk in bank failures, the Office of the Comptroller of the Currency has

required that national banks establish a “comprehensive program for managing the relationship” with third parties.

The closure of the German company responsible for supplying a convertible model’s folding roof left the otherwise

finished car in purgatory while the automaker searched for a new supplier.

Coupa is one of several components that can help address the impact of ineffective business relationships

- 65 -

A peek into the past at Rent-A-Center and where Coupa addressed key EBRM

concerns

• Two procurement tools in past 18 months prior to June 30, 2010

• Lack of visibility into invoice submitted by vendor at store location

• Punch out catalogues and catalogues in general not consistently utilized

• Existing platform extremely clunky and lacked ability to find product quickly (minimum of five clicks before you were

able to place an order)

• User adoption was slow and intermediate; complaints were fast and frequent

• On boarding of suppliers was not an easy, friendly process

• Invoices were entered into ERP by hand

• Procurement of approximately $600 million of indirect spend was very decentralized

• No consistent esourcing tools utilized

• Invoicing off of a contract was foreign

• No central repository for contracts

• Spend analyzing was performed by tearing apart general ledger accounts

Coupa enabled Rent-A-Center to capture consistent data on transactions and suppliers in order to

accurately understand and manage its key business relationships

- 66 -

How do you rate your organization’s relationship management capabilities?

1. Do you have risk assessment and mitigation strategies in

place to manage your business relationship risks effectively?

Do you monitor them on a periodic basis?

2. Do you monitor globally and on a continuous basis the

performance of your extended value chain in terms of service

levels, responsiveness and quality?

3. Do you gather intelligence from third party and other sources

on your business partners to identify potential financial and

compliance issues?

4. Do you have an effective technology solution that provides

“one stop” enterprise wide visibility into the extended value

chain of your company i.e., the network of suppliers,

customers, outsourcers etc.?

NO PARTIALLY YES

YES

0

0

0

0

1

1

1

1

2

2

2

2

Survey Questions

A net score between 0 – 5 indicates the lack of an effective business relationship management strategy

within your organization

- 67 -

Lack of effective business relationship management can expose your company to

risk in four broad areas

Loss of Revenue

− Supply disruptions caused by environmental, financial or political issues

− Lack of adherence to sell side contract terms

Increased Costs

− Inefficient process of measuring business relationship performance on a periodic basis

− Lack of adherence to buy side contract terms

Legal Issues

− Lack of effective contract management practices

− Lack of contract compliance, standardized contracts, etc.

Brand Reputation

− Lack of adherence to CSR by its suppliers or customers

− Improper monitoring of the carbon footprint of trading partners

A Score of

0 – 5 means

- 68 -

Business relationships have evolved significantly over the last decade with increased

focus on effectively integrating and managing those relationships

Legacy

transactional

systems

Information centralization

Centralized or center-led

management of relationships

Effective risk prediction and

mitigation strategies

Advanced analytics to assess

relationships

Collaborative

Relationships

Transactional

Relationships

Integrated

Relationships

Decentralized functions

Limited internal and external

collaboration

Basic data analysis capabilities

Limited integration across systems

Significant increase in number of

business partners

Centralized internal support functions

Limited information visibility across

the enterprise

Transactional systems and point

solutions

Risk prone

Relationships

Future Present Past

Information dispersed across the

organization

Limited organizational capability to

manage relationships

Lack of visibility into data across

systems

Lack of risk mitigation strategies

An evolving strategy to

enable companies

manage business

relationships effectively

Bu

sin

es

s R

ela

tio

nsh

ip M

an

ag

em

en

t

Cap

ab

ilit

y

Time

No significant change in

existing business

relationship

management practices

- 69 -

Extended Business Relationship Management (EBRM) is a strategy to monitor and

manage key business relationships across the company

Sales

Finance

Operations

IT

HR

Procurement

Logistics

Marketing

Direct Materials Suppliers

Indirect Suppliers

Trade Partners

Customers

Alliance Partners

Corporate Functions Buy Side Partners

Sell Side Partners

Other Partners

Contract Manufacturers

Outsourced Service

Providers

Extended Business Relationship

Management (EBRM)

Provide central visibility to business

relationships

Measure, monitor and manage relationships

risk, performance, compliance and

information

Manage relationships proactively vs.

reactively

Deepen and improve key relationships

Improve top ad bottom line performance

- 70 -

Responsibility and ownership to take

necessary actions for risk mitigation

Alignment of organizational structure

and governance with EBRM strategy

Shift in mindset towards the nature of

business relationships – from

transactional to a long term strategic

perspective

Superior database management and data analytics capabilities

Integration of different information systems within the enterprise

Improved visibility into the systems across different functions

Ability to assess and correct existing

business processes that monitor risk

and performance metrics

Continuous benchmarking with

industry best practices to measure the

effectiveness of the relationship

Standardized data capture,

management and reporting processes

EBRM Strategy

Technology Capability

Successful EBRM strategy requires building capabilities at a people, process and technology level

Illustrative Capabilities

- 71 -

Ele

men

ts o

f E

BR

M

Our EBRM Lifecycle Framework provides the capability to assess and manage

relationship across multiple elements of EBRM

EBRM Lifecycle Framework

Manage Relationships Evaluate Relationships Prioritize Relationships

• Segment

relationships

within each type

based on various

criteria (e.g.,

importance,

business impact,

financial

obligations, etc.)

• Identify key

existing

relationship types

(suppliers,

customers,

channel partners,

contract

manufacturers,

outsourced

service providers,

etc.)

Define

Criteria

Segment /

Prioritize Identify

Set Target

Levels

Monitor

Performance

Implement

improvements

• Assess

performance of

companies based

on pre-defined

criteria

• Set performance

targets for each

relationship type

and segment

• Define

evaluation criteria

(quantitative and

qualitative) for

each relationship

type and

segment

• Identify data

required to

measure defined

criteria

• Identify and

execute

performance

improvement

opportunities

based on gaps

observed against

the key criteria

• Monitor

performance of

companies within

a relationship

type on a

periodic basis

against the set

targets

Risk Management

Compliance Management (regulatory, financial, sustainability, etc.)

Performance Management

Information Management

- 72 -

Element Financial Services

Industry

Health Care & Life

Sciences

Consumer & Industrial

Products

Technology, Media &

Telecom

Risk

• High debt levels

• Default/Credit risk

• Fraud

• Brand damage

• Success rate of drugs

• Supply chain disruption

• Over-reliance on few

vendors

• Supply chain disruption

• IP security

Performance

• Data security

• System reliability

• Brand equity

• Co-manufacturing

management

• Expensive delays

• Higher cost

• Quality issues

• Co-manufacturing

management

• Project costs and delays

Compliance

• SEC guidelines

• Regulatory approvals and

licenses

• Federal/State/Local

regulations

• International and country

regulations

• Safety, Health, Environment

policy

• Carbon footprint

• Labor laws

• IT laws and security

• Global e-Sustainability

Initiative (GeSI)

• Labor laws

Information

Management

• Customer database

• Portfolio management

• Audit

• Electronic Health Records

(EHR)

• Seamless mobilization of

health information exchange

(HIE)

• Customer Relationship

Management

• Vendor and item master

• Customer Relationship

Management

• Vendor and item master

The EBRM framework applies across industries, however, the prioritization of

EBRM elements differs

High Low Applicability

- 73 -

The key to effective EBRM is capturing and managing three inter-connected layers of

data: Strategic, Tactical and Transactional

Data Management Example: Performance Management

Data Category Description Example Data

Strategic Data that directly drives shareholder value

such as revenues, costs of goods sold, and

cost of capital

Increased

Supply Cost Lost Revenue

Tactical

Data that is used to help make day-to-day

management decisions

Tactical data is derived by consolidating

transactional data elements such as

contractual price and invoice price to calculate

purchase price variance

Purchase Price

Variance % of On-Time

Deliveries

Transactional Data that describes a business transaction

such as orders, invoices, payments, and

delivery details

Invoice Price Delivery Date

- 74 -

EBRM Technology can be classified into 3 broad categories – Transactional, Tactical,

Strategic, in conjunction with the type of data it handles

EBRM Solutions by Data Type

Strategic Tactical Transactional

SAP

Oracle

CVM solutions

Hiperos

Emptoris

Coupa

Aravo

Xcitec

Tools like ERP and CRM capture

transactional data useful primarily

at an operational level

Typically fail to capture tactical or

strategic data

Some ERP providers also provide

“upstream” tactical solutions

Solutions like spend analysis, e-

sourcing, contract management

provide expertise in respective

domains

Can access tactical and even

transactional data but fail to

assess strategic aspects (e.g.,

risk)

Lack an enterprise-wide view of

business relationships

Consolidate information from

several solutions like ERP, CRM,

and CLM

Provide seamless data integration

and analysis for “one-stop”

enterprise-wide snapshot of

relationships

Enable comprehensive

assessment and management of

key business relationships

- 75 -

EBRM is not just implementation of a technology solution

An effective EBRM strategy requires

Understanding and prioritizing the key drivers of a business relationship - performance, risk, compliance,

sustainability

Understanding industry trends and supplier/customer behavior

Understanding the right data elements to track and maintain in order to monitor the effectiveness of the business

relationship

Assessing the readiness of an organization to implement EBRM strategy from a people, process and technology

standpoint

Identifying the right technology based on the business needs

Understanding the change management practices of the firm

Developing a roadmap to implement an EBRM technology solution

Deloitte Approach

Identify Risk Areas and Gaps

based on Benchmarks

2

Build EBRM Solution Roadmap

4

Understand “As-Is” Business

Relationship Landscape

1

Develop Improvement

Opportunities

3

- 76 -

• Current State Analysis

• Business Relationship Profile

• Maturity Assessment

• Gap Analysis/Prioritization

• Solution Roadmap

• Business Case

Deloitte helps companies begin the EBRM process by assessing existing relationship

management processes and developing improvement plans

Identify Risk Areas and Gaps

based on Benchmarks

2

Build EBRM Solution Roadmap

4

Understand “As-Is” Business

Relationship Landscape

1

Des

cri

pti

on

• Understand current business relationship landscape, processes, organization, and technology for each stage in the EBRM lifecycle

• Validate baseline with key stakeholders

• Develop the “As-Is” business relationship landscape profile

• Compare “As-Is” state with industry best practices. Use a defined scoring method that ranks each EBRM element from I - Basic to IV – Superior

• Quantify relationship management risk exposure and prioritize areas that need to be addressed

• Develop list of improvement initiatives based on gap assessment and identified risk areas

• Identify key metrics and develop target state leveraging framework

• Determine resources and technology required for each initiative

Ke

y D

eli

ve

rab

les

Implementation Roadmap

May JulyJune Aug.MarFebJanDec AprilOct Nov May JulyJune Aug.MarFebJanDec AprilOct Nov

Process

People

Tech.

(subset)

FSS &

Facility

Assessment

Detailed Design

Post Go-Live support & monitoring

Location Selection

FSS

Leader Identified

HR, Change Leadership, CommunicationsFSS Mgrs.

HiredFSS Mgrs.

HiredFSS Staff Begins

FSS Staff Begins

Train

Integrated

Testing

Go-LiveGo-Live

Interview & Hire

Activity to Role, Role to

Job Mapping

Develop Org.

Model

Post Job

Desc

Straw-man

Org. Model

Lease Negotiations

User Accept-

anceTesting

Facility Buildout (Including technical infrastructure)

Design Available for Occupancy

Design

Workshops

By location gap analysis/ Design Modifications

Config./Document

Process Document.

Training Mat. Develop.

T3

Kick-off

Bus. Specs

Prioritize/ Approve Specs

Prioritize/ Approve Specs

Tech Spec

Development/ Mods, Unit Testing

!st Draft Detailed Designs

Build & Test Implement

Designs Complete

Design

Challenge Sesions

Develop Test Scenarios & Scripts

User

Accept-ance

Testing

Develop Governance & Service Level Agreements, performance measures

Business Case Update

Steering Committee Updates, Change Leadership, Communications

Various Technology (Software licensing, Hardware

selection, other prep)

Tax implications &

benefits

Change

readiness assessment

Leadership Action Plan

Controls Compliance

Review Complete

Cont.

Review

Assessment

Develop Improvement

Opportunities

3

• Develop a roadmap to realize target state across people, process, technology and governance

• Identify cost/benefits for each initiative on the roadmap

• Develop business case

• Improvement Initiatives

• Key Initiative Charters

Project Roadmap Process People Tech.Difficulty of

ImplementationTimeframe Status

Identify the Sales contracts that will be part of

the central repository across functional groups

and regions Medium Difficulty 3- 6 Months -

OCR existing contracts and store in a central

repository to allow for key-word searches and

associate “meta-data” (header data) with each

contract to improve reporting and searching

functionality

Medium Difficulty 3- 6 Months -

Use an integrated process and platform to create

and store contracts to enable Apple to search

through all contracts using advanced filters and

restrict access as needed

High Difficulty Long-Term -

Automate customize alerts/notifications based on

key contract attributes (e.g., expiration date,

customer certification status) High Difficulty Long-Term -

Develop the ability to audit executed to contracts

for the following:

• Contracts with sections and clauses that differ

from the “model form” (template)

• Cycle time for contract creation and other key

performance metrics

• How often alternate clauses are used by

negotiator

High Difficulty Long-Term -

Initiative Type (Place ‘X’ Next to Correct Type) Analysis & Planning X Implementation

Initiative Summary

Initiative Description Assess current org structure and align reporting lines and define internal KPI reports for effective performance of the contract team

Initiative Objective Improve the performance of the contracts team

Dependencies None

Initiative Driver(s)

Driver Place ‘X’ if it Applies Driver Description

Revenue Enhancement X Minimize revenue leakage by including proper checks and balances

Stakeholder Engagement (Request)

Cost & Efficiency X Improved performance of the contracts team leading to better efficiencies in the contracting process

Risk Management & Compliance

X Improvements in risk and compliance owing to improved performance of the contracts team

Initiative Business Case Estimates (Optional)

Resource CostTechnology Cost

(Hardware)

Technology Cost

(Software)Total Cost

Investment Rationale Benefit Rationale

(Risk Mitigation/Cost Savings/Revenue Opportunity)

Benefits Achieved to Date

(if Existing Initiative)

Revenue enhancement/Efficiency/Risk Management/Compliance

Investments Needed (Resources,

Software, Hardware)

Timeline

FY 2011 FY 2012 FY 2013

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Apple Executive Sponsor: Eric Dante

Apple Lead: XXX

Roadmap Element: Organization Development & Training

Initiative Name: Organization development

Thank You

Closing Remarks

Coupa Demo

Back-up Slides

- 81 -

EBRM Technology Landscape

EBRM solutions available are centered primarily around following four key indicators

Risk

– EBRM provides a comprehensive risk assessment framework which captures all kinds of risks

specific to the business, partner, relationship

Performance

– EBRM provides a complete solution to build key performance indicators for both internal as well

as for external stakeholders

Compliance

– EBRM tracks compliance related information and requirements different aspects of corporate

responsibility like safety, health, environment, diversity etc.

Information Management

– EBRM provides a ‘one-stop’ solution with consolidated information collected over a period of

time giving an enterprise-wide visibility

Solutions Providers of EBRM

Users of EBRM

Following companies provide packaged solutions with five

modules aligned with key indicators mentioned.

Hiperos

– provides an on-demand platform with the all the required functions

to track five key indicators of all the partners

Aravo Solutions, Inc.

– provides a complete solution which includes configuration and

implementation of the system, both on-site and remote training

and a global technical support.

- 82 -

Clients of EBRM Solutions

Diversified global infrastructure with operations in more

than hundred countries

One of the world’s most complex supply chains with over

500,000 suppliers across thousands of entities

Needed to more accurately track compliance,

certifications, white papers and contracts and other

procurement related information

Highly configurable SaaS platform automates and

manages global supplier information processes to improve

supplier data quality, reduce costs, and enhance ability to

negotiate better terms with suppliers

With Aravo SIM, GE now has over 500,000 suppliers under

management in six different languages

A Fortune 100 financial services company with over

60,000 vendors

Needed an effective vendor management system that

suits the complex requirements of the company and is

flexible enough to address changing demands of internal

stakeholders and external regulators

All supplier information is maintained using Hiperos with

appropriate data pushed to update multiple ERP systems.

Vendor lifecycle management platform of Hiperos

assesses the risk, monitors compliance, and measures

performance of over 60,000 vendors, thus providing a

comprehensive solution

A software provider company of size $4 billion

Needed to monitor and mitigate risk in the supply chain

Phase I involves managing a global outsourcing provider

delivering services in over 40 countries.

Phase II includes building a supplier risk assessment

process and over 30 supporting compliance programs to

effectively manage the entire supply base.

Client Base of EBRM Strategy

Multinational

Conglomerate

Financial

Services

Company

Software

Provider

As-is business state Benefits of EBRM Implementation Client

- 83 -

Trend Description Impact

Increased

Regulatory

Complexity

Complexity of local and international regulatory regime: Need to

comply with a multitude of US and international regulatory and

standards (e.g., FDA, NIH, CDC, HHS, WHO, ICH)

Increasing number of laws and regulations: Increasing number of

regulations covering all aspects of the Life Sciences industry. E.g., the

Drug Safety and Accountability act of 2010 gives the FDA broad

authority to mandate recalls and requires improved raw material

tracking

Difficulty tracking increasingly complex

regulatory compliance across supply base

Need for increased visibility into supply chain

Significant cost of non-compliance – potential

recalls and criminal penalties

Growth of Co-

Manufacturing

29% of Life Sciences manufacturing output in 2010 is produced by 3rd

parties vs. 21% in 20071

The average CM Manager manages 10 CMOs (contract manufacturing

organizations) which increases the risk of missed warning signs

Increased risk of supply shortages, quality

issues, and recalls if co-manufacturers are not

effectively managed

Recent trends in the life sciences industry have increased the need to proactively

and effectively manage extended business relationships

Recent Trends in the Life Sciences Industry

1 – Contract Manufacturing in Life Sciences, AMD Research, 2007

Relevant Elements of EBRM

Risk Management

Compliance

Management

Performance

Management

Information

Management

Integrate risk management tools with internal and third party supplier data to monitor supplier financial and

other risk elements

Measure and track supplier performance criteria, including quality, cost and service

Drive compliance to contract terms, including regulatory requirements

Proactively manage supplier and item data to enable more effective risk, performance and compliance

management

- 84 -

Impact Area Impact Magnitude Real World Examples

Recall

Expense

Product recalls cost, on average, more than

$8 Million per incident1

Toyota recall to exceed $2 Billion (2010)

Peanut recall cost producers over $1 Billion (2009)

Share Price Stock price of affected company

underperforms sector index by an average of

2.3 percent2

P&G shares fell share 3% the day they expanded

their pet food recall (8/3/2010)

Within 48 hours of the Renu recall, Bausch & Lomb's

stock price dropped from $57.67 to $45.61

Category Sales 57% of consumers stopped eating foods of a

certain category after a recall3

After the Mattel recalls of 2007, other toy

manufacturers suffered a 25% decrease in sales

from previous years5

Brand Equity Loss of sales of manufacturer’s other brands

can be as high as $2.4MM per recall4

From CNN.com: "Tylenol recalls: big opportunity for

private label rivals“6

279

384 393 396

266 293 255 240

338

565

923

0

100

200

300

400

500

600

700

800

900

1000

1999 2001 2003 2005 2007 2009

Lack of EBRM strategies contribute to the recent increase in recalls that negatively

impact a company’s bottom line, market value, and brand image

Year

Nu

mb

er

of

Re

ca

lls

Number of recalls has increased by 3X

since 2005

Number of Food & Beverage Recalls by Year4

Impact of Product Recalls

Sources: See Appendix for source details

- 85 -

Life Sciences

Consideration Description Impact

Increased

Regulatory

Complexity

Complexity of regulatory regime: Need to comply with regulatory bodies

spanning country, regional, and international jurisdictions (e.g., FDA, CDC,

HHS, WHO, ICH, EU Health Authorities)

Expansion of regulations: Increasing number of regulations covering all

aspects of the supply chain (e.g., procurement, inventory management,

manufacturing, transportation)

Difficulty tracking increasingly complex

regulatory compliance across supply base

Increased financial and operational burden on

companies to comply with regulations (e.g.,

input organisms must be BSE-free)

Greater Impact of

Non-Compliance

Life or death impact: Non-compliance can have disastrous impacts to

end-users (e.g., mis-calibrated radiation therapy machines overdosed

hundreds of patients2)

Brand reputation

Increased testing required

Disaster planning required

Growth of

Contract

Manufacturing

Contract manufacturing growth: Third parties produced 29% of Life

Sciences manufacturing output in 2010 vs. 21% in 20071

Increased scrutiny: FDA increasing their filings of consent decrees

against Contract Manufacturer Organization (CMOs)

Lack of CMO oversight: The average Contract Manager oversees 10

CMOs, increasing the risk of missed warning signs

Increased risk of supply disruptions, quality

issues, and recalls if contract manufacturers

are not effectively managed

Limited Supply of

Some Critical

Materials

Fewer qualified suppliers: Biotech companies face a significant number

of single-source supply markets due to the difficulty to produce certain live

cultures and rarity of some raw materials

Increased risk of supply disruptions

Importance of Lot /

Batch Traceability

Track and trace throughout the supply chain: Need to be able to trace

defects back to the lot, requiring increased collaboration across the supply

chain

Not only a regulatory requirement but governs the impact of a quality

issues (speed to recover, amount of goods impacted)

Increased use of material tracking tools

required

Increased need for information sharing with

suppliers

Attributes specific to the life sciences industry have increased the need to

proactively and effectively manage extended business relationships

Life Sciences Industry Considerations

1 – Contract Manufacturing in Life Sciences, AMD Research, 2007

2 - http://www.antiguaobserver.com/?p=61313

- 86 -

Financial

Services

Consideration

Description Impact

Increased

Regulatory

Pressure

Increased regulatory pressure from the Office of the Comptroller of

the Currency (OCC): The OCC has increased their rate of enforcement

actions since the baking melt down of 2008 causing many banks and

financial services company to scramble to meet EBRM related

requirements

Banking-Related Regulations from Other Federal Agencies: As a

response to financial crisis in 2008, Federal Reserve System increased

reserve requirements for the banks

Other Laws and Regulations: Secure and Fair Enforcement for

Mortgage Licensing Act of 2008 (S.A.F.E. Act) Implementation

Risk of non-compliance to tighter regulatory

and legal requirements in future

Need to precociously identify any potential

compliance related issues of all the business

partners

Need to update on a regular basis the existing

performance metrics used to track the

performance of suppliers and other business

partners for them to be consistent with most

recent regulations

Increase in M&A

Activity

Banking sector is witnessing consolidation among small- to mid-size asset

management firms, FDIC assisted M&A deals.

Decreased revenue sources on account of low interest rates and slow

loan growth coupled with higher legal and compliance costs will continue

to provide impetus for M&A activities in banking sector. 1

Risk of failure to successfully integrate

processes, information systems as well as

internal stakeholders of two entities

Need to have a unified risk management

framework in place for the combined entity

Increase in Bank

Failures

Bank failures in the US have increased significantly from meager 3 in

2007 to 146 in 2010. 2

FDIC fund which reimburses customers in case of a bank default

witnessed a deficit of $15.2 billion in June 2010.

Need to monitor and mitigate credit risk the

bank is exposed to on account of increased

instances of loan default

Increase in

Outsourcing

US banks have been increasingly outsourcing middle-level executive jobs

for key functions like accounts maintenance, risk management.

It is estimated that US banks will outsource back-office activities totaling

$67.2 bn in 2015 with annual market growth of 7.6% from 2010 to 2015. 3

Need to have advanced data privacy and

information security measures in place as the

back-end operations go truly global

Attributes specific to the financial services industry have increased the need to

proactively and effectively manage extended business relationships

Financial Services Industry Considerations

1 – http://www.sourcingline.com/resources/us-banks-outsourcing-middle-level-jobs-to-economize-operations

2 – http://www.reuters.com/article/2011/03/30/us-ubs-deals-idUSTRE72T2GN20110330

3 – http://www.marketwatch.com/story/bank-failures-surge-credit-crunch

- 87 -

Increased

Regulatory

Complexity

Growth of

CMOs

Limited

Supply of

Critical

Materials

Greater

Impact of

Non-

Compliance

Importance

of Lot /

Batch

Traceability

Sample EBRM Solutions

Ele

me

nts

of

EB

RM

Risk

Management - -

Supplier background checks

(e.g., fraud, legal, financial)

Supplier/CMO manufacturing

audits

Secondary sources of supply

(e.g., contingency plans)

Compliance

Management - -

On-going contract compliance

monitoring (e.g., to regulatory

requirements)

Geographic specific requirements

gathering, implementation, and

monitoring

Performance

Management -

Measure and track supplier/

CMO performance criteria via

automated scorecards (e.g.,

deliver, quality, price, quantity,

payments, electronic data

transfers, etc.)

Information

Management - -

Integrate information systems

across the supply chain and

partner base for improved

product quality management,

supplier management, and

traceability

Extended Business Relationship Management (EBRM) provides solutions that can

help Life Sciences companies effectively address these considerations

EBRM Solutions to Address Life Sciences Considerations

- 88 -

Recent trends in macroeconomic indicators and their implications on financial

services industry have increased the need to proactively and effectively manage

extended business relationships

Recent Trends

Public debt and federal deficit have increased at an

alarming rate over the last decade.

Credit rating agency Standard and Poor's

downgraded the US to AA+, its first downgrade

since 1941.

US public debt currently at an unprecedented high

level of $14.3 trillion is set to only increase further.

Outstanding government debt in most other

developed economies too has overshot widely

accepted prudent limit of a debt-gross domestic

product (GDP) ratio of 60%.

Impact and future implications

Steep upward rise in debt and deficit since FY’ 07 are the

signs of ominous future of financial services sector.

With negative long term outlook, US debt faces a risk of

further downgrade to AA within next two years.

Chances of default will go up leading to increased credit

risk.

Interest rates will go up to offset for increased investment

risk which will make debt financing even more difficult.

There is a potential risk of major devaluation of USD and

slower domestic growth on account of higher interest rates.

Financial services sector might see stricter laws and

regulations to comply with in future.

EBRM successfully captures various financial indicators that provide early warnings of risks and enable companies

to have proactive risk mitigation strategies in place rather than take only post crisis reactive measures.

Relevant Elements of EBRM

Risk Management

Compliance

Management

Performance

Management

Information

Management

Establish and update consistently the risk management framework that successfully captures inherent risks

involved in a business relationship and caution about the possible loss in advance

Measure and monitor key performance indicators of all the financial institution partners on a periodic basis

Track compliance of partners e.g. compliance requirements of SEC and/or other regulatory bodies

Gather and analyze data as well as qualitative piece of information of the business partners that enable more

effective risk, performance and compliance management

- 89 -

Sources

1. http://www.reliableplant.com/Read/25897/Outsourcing-failure-tough-times

2. http://www.businessweek.com/autos/autobeat/archives/2009/09/toyota_recalls.html

3. http://www.joc.com/logistics-economy/sony-idles-japan-plants-may-shift-production

4. http://articles.boston.com/2011-06-07/bostonworks/29630335_1_child-labor-labor-cases-minors

5. http://hbr.org/product/ikea-s-global-sourcing-challenge-indian-rugs-and-c/an/906414-PDF-ENG

6. http://www.wikinvest.com/stock/Toyota_Motor_(TM)

7. http://www.businessinsider.com/oil-supply-disruptions-2011-4

8. http://www.theregister.co.uk/2001/12/05/dutch_officials_seize_cadmiumpacked_playstation/

9. http://www.siteselectiongroup.com/_blog/Site_Selection_Group/calendar/2011/3/

https://kx.deloitteresources.com/G1000/Lists/Qualification/DispForm.aspx?ID=3736

https://kx.deloitteresources.com/G1000/Lists/Qualification/DispForm.aspx?ID=30207

https://kx.deloitteresources.com/G1000/Lists/Qualification/DispForm.aspx?ID=25943

http://epaper.livemint.com/ArticleText.aspx?article=08_08_2011_001_011&mode=1#

http://www.usgovernmentdebt.us/us_deficit

Slide # 22:

http://www.marketwatch.com/story/bank-failures-surge-credit-crunch

http://www.sourcingline.com/resources/us-banks-outsourcing-middle-level-jobs-to-economize-

operations

http://www.reuters.com/article/2011/03/30/us-ubs-deals-idUSTRE72T2GN20110330