transforming procurement to an outcome based model sig ......| confidential wipro limited - a...
TRANSCRIPT
Transforming Procurement to an
Outcome-Based Model
Extreme Makeover:
Wipro
Ashish SinglaVP, North America
Tradeshift
Elliot BeaudoinDirector of Product Marketing
sig.org/eval
| Confidential
Extreme Makeover: Transforming Procurement to an
Outcome-Based Model
SIG Summit Wednesday, October 19, 2016
Omni La Costa Resort, Carlsbad, CA
| Confidential
Agenda
● Introductions
● Continued challenges in procurement today!
● What is “Outcome Based” procurement
● Enablers of outcome based model
● What technologies are key to the approach
● Challenges making the approach mainstream
● What do customers gain with this model
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Wipro Limited - A trusted partner for over 1100+ clients
Sustained
Growth
$7.6Bn
Partner to
Industry
Leaders
1105
Attracts the
Best Talent
170,664
Global
Leader
No.1
Global
Presence
100+
Revenue
in FY 2014-15
(IT Services – $ 7.06 Bn,
IT Products – 0.55 Bn)
Active Global Clients Workforce in Dow Jones
Sustainability World
2014-15 Indices
Serving clients in
100+ countries
Banking,
Financial Services
& Insurance
Retail, Consumer
Goods &
Transportation
Manufacturing
& Hi-Tech
Healthcare,
Life Science & Services
Energy,
Natural Resources Utilities and
Engineering & Construction
Global Media and
Telecom
Business
Application Services
Business Process
Services
Consulting
ServicesGlobal
Infrastructure
Services
Product
Engineering
Services
Wipro
AnalyticsWipro Digital
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Challenges in procurement
Deliver more value within constrained budgets
Savings achieved in traditional model has hit roof
“Cinderella” function
Struggle to capture the full value associated with compliant processes & systems
70% 25%Basic level of maturity around “Risk management” – Risk is high in globalized environment
40%Low # of companies with clear digital strategies
Shorter cycle time, actionable insights , transparent & efficient performance
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What is “Outcome Based” procurement?
Focus on the What rather than the How
Traditional model Outcome based model
A model where the Customer is focused on the ‘Desired Outcome/Results’ rather than prescribe how the results will be achieved by the Service Provider
Key characteristics -
• Focus on business outcomes rather than activities and tasks
• Use of measurable performance metrics aligned with the desired outcomes
• Model that creates a ‘Win-Win’ situation that includes rewards and risk
Command and
control
Inputs and processes
Price
Collaboration
Result
Value
Flexibility
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Examples of “Outcome Based” procurement
• 5000 contracts• Extract key contract terms
and other metadata• Project Timeline: 12 weeks
Traditional model
Outcome based model
• Need insight into Supplier contracts
• To analyze current supplier relationships
• Target Supplier Consolidation and Supply continuity
• Determine Average Handling Time per Contract
• Finalize FTE requirement to deliver project within 12 weeks period
• Leverage technologies such as optical character recognition, machine learning, and natural language processing
• Rapidly and securely identify key terms and other metadata
• Integrate data with analytical platforms to find cost avoidance and savings opportunities
• Delivers project in 2 weeks
• Focus on meeting project deadline only
• Doesn’t provide opportunity for Service Provider to bring value
• Provides flexibility to the Service provider to choose execution strategy
• Higher efficiency in Service delivery
• Better outcomes
Customer ‘ASK’Service Provider
Execution Strategy Key ‘Take Aways’
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Enablers of an outcome based model
Design Thinking
“Cloud”
solutions
Smart
automation
Artificial
Intelligence
Intelligent data
Creative
engagement
models
• Think end to end
• Business solutions
• Get rid of redundant legacy
platforms
• Easy, fast and flexible solutions
• Cognitive RPA
• Analytics
• Skill sets
• Structures and Unstructured
data interpretation & analysis
• Predictive & Prescriptive
Analytics
• Multiple sources
• Real time
• Gain share
• Outcome based
Less focused on how
application works in
the back end and
more focused on the
outcome
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Technologies are key to the approach
“Upstream” or Strategic elements
• Cognitive analytics,
• Crowd Sourcing
• Digital reporting
Source : Global CPO Survey 2016
And yet, only 40% of the companies has a clear digital
strategy in the procurement space
• Provide evidence
based options for
decision making,
using artificial
intelligence to greatly
improve accuracy
and speed of
execution
• 70% respondents are
focused on delivering
self-service solutions
• Increasing ‘Robotic
Automation’ ranked
2nd priority
“Downstream” or Operational and Transactional
• Self Service tools
• Agile platform like Tradeshift
• Network based technologies
• RPA (robotics)
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Challenges making the approach mainstream
Although there has been traction in public and international sector, why
is it not yet mainstream...
• How do we define the “Desired Outcomes” – laying down the outcomes in
sufficient detail so as to ensure the requirements are understood and are
measurable.
• Balance Autonomy and Risks - If the outcomes are defined in such a way that it
affects Service providers flexibility and discretion to decide on how the outcomes are
delivered, the benefit from this model is significantly impacted. Similarly, it is pertinent
to clearly articulate the actual outcomes that will be contracted for, and fine balance
to be maintained, in the transfer of risk to the Service provider.
• How to measure the outcomes – Establishing appropriate performance standards
is critical
• How to price it
• Influencing the Mindsets - the very approach of defining outcomes, instead of
prescribing what is required and how involves a need to “Manage Change in
Mindset”. Lack of training or aversion to risk, can act as a ‘Showstopper”.
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What customer gain with this model
Advocates of outcome based contracts point to the following benefits:
• Cost savings (savings of trillion dollars in US over next decade has been forecasted
in government healthcare spending)
• Efficiency (The World Bank has highlighted it as key area focus for procurement efficiency)
• Closer alignment of objectives between the customer and the service provider
• Increased motivation for the service provider to achieve the best outcome to
maximise its financial gain
• More responsive to customer requirements
• Greater efficiency in service delivery, through allowing the service provider flexibility
in its method of delivery and an ability to adapt to technological advancements
• Better outcomes for customers
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About Tradeshift Users: 190+ countries
Offices: 9 countries Background
Awards
Tech Tour Growth 50
"Among Europe’s fastest growing pre-exit
high-tech companies"
The Top 100 Cloud-based
"Enterprise Software Startups of 201
The Circulars' 2015
Digital Disruptor Award
Global Network
50+Global Customers
800KUsers
Diverse Team
300+Employees
42Nationalities
Founded - Copenhagen, 2010
Headquarters - San Francisco
Funding ~$175m USD
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End-to-End Commerce Platform
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Tradeshift Customers –the Choice for Innovative Leaders
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Future of Industry
• Indirect, Direct and Services will all mix
○ You will be buying an outcome, not a commodity
• There will be no one size fits all
○ Rapidly changing business requirements and environments
will require process agility
• The buying process will be highly collaborative
○ Defining needs, responding to change and solving complex
problems will require collaboration between stakeholders
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Flexible Platform that enables agility
Tradeshift flexible platform
Tradeshift Build your own
Tradeshift flexible platform
Third party
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Apps = Extensibility
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Example - Supply Chain Collaboration Apps
• Order / Order Response Process
• Vendor Rating & KPIs • Delivery Schedule & Forecast management
Order Collaboration e-Logistics
Single
Version of
Truth
Single
Version of
Process
My Supply Chain Forecast Collaboration
• Shipment Collaboration process
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Insights = Outcomes
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Extreme Makeover:
Transforming Procurement to
an Outcome-Based Model
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Ashish Singla
Wipro
Elliot Beaudoin
Tradeshift
