Services Spend Management: Industry Trends, Best Practices, and Going Global – Thomas F. Kaminsky, Managing Director

1. Services Spend Management
Industry Trends, Best Practices, and Going Global
Thomas F. Kaminsky, Managing Director
Crescendo Consulting Solutions
March 9 – 11, 2010
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com

2. Jobless U.S. Market…Reading the Tea Leaves
Full-time Employment
 Difficult times continue…
– 9.3M permanent job losses as of Jan
31, 2010
– Since Dec 2007, construction
employment has decreased by 1.9M
jobs
 However, there is hope… January 2010 positive indicators
– Healthcare employment increased 15k
– Federal employment increased 33k including 9k temporaries for census
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com *Source: BLS Report for January 2010 2

3. Jobless U.S. Market…Reading the Tea Leaves
Economic recovery begins with Contingent Labor…
 … buried on Pages 3 & 20 of the
BLS report …
– Temporary help services added
52k jobs in Jan 2010
– Since Oct 2009, 247k
temporary help services jobs
have been added.
How will this shift impact your organization? What are the
risks and opportunities? How does this impact other
initiatives within Procurement and Human Capital?
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com *Source: BLS Report for January 2010 3

4. Simplified Industry Terms*
Master / Prime Vendor Model
 Single staffing vendor
 Supplies and manages all contingent labor needs
Managed Service Provider (MSP)
 Vendor-neutral
 Facilitates end-to-end lifecycle (e.g., requisition through payment)
 Single point-of-contact
Vendor Management System (VMS)
 Automated system for tracking supplier data (e.g., candidates, rates, spend, performance metrics, etc.).
 Expedites requisition-to-pay process across categories (IT, administrative, manual labor, consulting,
manufacturing, finance, etc.)
 Integrates with client legacy IT platform (e.g., Oracle Financials, PeopleSoft, etc.)
Independent Contractor Engagement Specialists (ICES)
 Minimize the risk of co-employment or federal audits
 Provide electronic compliance surveys
 Payroll services
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com *based on research by Aberdeen Group, 2009 4

5. Definitions: Simplified Categories
1 2 3
Services
Direct Hire Contingent
Procurement /
Labor Other Services
• Full-time or Part- • Temporary Help • Specialized labor
time Employees
• Clerical / • Professional
Administrative Services
Support
• “Statement of Work”
• “Time & Materials”
• Fixed fees / contract
• Hourly rate rate
• Staffing firms • Independent
Contractors / 1099
• Off-shore suppliers
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 5

6. Value
Why consider a services spend management program?
Strategic Positioning
 Enables organizations to re-focus on core businesses and shift non-core functions to
highly skilled, lower-cost suppliers.
Cost Containment and Savings Potential
 Shifts business planning and expense from a standard, fixed model to a more flexible,
scalable, “pay as you go” model.
Talent Management & Workforce Planning
 Provides companies across all industries access to specialized talent and skills
without losing productivity.
Based on continuing market analysis and client work, it is our view that a
proactive services spend management program supported with the right tools
and processes will be a competitive advantage for forward thinking companies.
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 6

7. Assessing Global Services Spend Management
 Headcount, location, category, and spend
 High volume end-users
 Top suppliers
Visibility
 Specialized requirements
 Right-size your workforce
 Processes to up or down skill in times of change
Scalability  Speed to access specialized talent
 Sustain productivity
 Co-employment & Tenure risk
 Proper screening
Risk  On & off-boarding
Management  Financials
 Normalized job titles, skill levels, and job definitions
 Accurate classification of contingent workforce
Program  Highest quality workers at the lowest possible rate
Savings  ROI / Sustainable savings
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 7

8. High Level Vision: Optimal Model
The integrated service and technology solution builds internal and external strategic
business partnerships and provides labor, supplier, and spend expertise supporting an
organization's business goals and cost reduction objectives in compliance with
applicable legal and regulatory requirements.
Optimize Sourcing & Achieve Savings
Establish a global, centralized Program
1 Management (PM) model overseeing the all
services spend categories Managed Change
Service Management
Provider
(CM)
Strengthen Preferred Provider Programs (PPP) (MSP)
2 seeking highly qualified, cost-effective suppliers
Program
(IT & Non-IT Temp, IT Consulting, Mgt Consulting, etc.) Management
(PM)
Outsource implementation and administrative
3 Program Mgt Office (PMO)
services to a Managed Service Provider (MSP) Preferred
Provider
Vendor
Management
Program Solution
Implement a Vendor Management Solution (PPP) (VMS)
4 (VMS) that improves data management, spend
visibility and reporting
Continue comprehensive Change Management
5 (CM) effort to root new policies, procedures and
practices across the organization
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 8

9. Timeline: Global Program
 Assess current state
Business Case / Approvals  Define future state vision & requirements
2-3 Months  Complete financial model & budget
 Create governance & secure executive sponsorship
 Gather market intelligence
VMS & MSP Selection  Identify suppliers
3-6 Months  Complete RFI / RFP process
 Negotiate Terms & Conditions
Strategic Global Phased Implementation
6-18 Months
 Complete program planning  Complete system & end-user configuration
 Define Regional / Global strategy  Ensure technology integration
 Gather business requirements  Conduct supplier & end-user training
 Complete Fit/Gap  Distribute knowledge management
 Facilitate change management  Enable service delivery model
 Deliver program communications  Launch operations and optimize SOPs
 Gather market intelligence Preferred Provider
 Identify suppliers Program
 Complete RFI / RFP process 3-6 Months
 Negotiate Terms & Conditions
12-24 Month Duration
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 9

10. Critical Program Attributes
 Program Engagement – Conduct engagement meetings with high touch executives
and high volume suppliers. Define program success, responsibilities and expectations
ensuring program success.
 Program Planning – Engage key stakeholders and high volume users early in the
process gaining their participation, input and ownership of the business process.
 Implementation – For global implementation, ensure data privacy and local regulatory
issues are addressed.
 Supplier Management – Establish a single point-of-contact to manage the supply
base from start to finish.
 Integration – Engage cross-functional business and technical resources during
discovery sessions to gain a complete understanding of data requirements, approvals,
payment requirements, etc.
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 10

11. Critical Program Attributes (Cont’d)
 Reporting – Communicate inventory of standard reports during training sessions.
Conduct follow-up sessions to gather ad hoc / customized reporting requests. Define a
plan for delivering customized reports.
 Communications – Ensure business communications have a clear message.
Disseminate information through a formal top-down and bottom-up approach.
 Training – Provide hands-on, integrated training sessions on changing business
process and new technology with follow-up conference calls / in-person debrief
sessions. Ensure all job aids and training collateral are available to participants prior to
each session.
 Services – Launch services team at least 30 Days prior to Go Live ensuring time to
establish services capability and delivery to hiring managers and suppliers.
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 11

12. Program Challenges
 “Tip of the Spear” – Workforce Planning
 Supplier-funded vs. Buyer-funded Model
 Consolidation of IT Temporary & IT Consulting Job Titles
 “Global Localization”
 Professional Services program engagement (e.g., Mgt Consulting, Legal, Audit, Tax)
 Risk Management
– 1099 Independent Contractors
– Off-shore suppliers
– Status Quo
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 12

13. The Future is Taking Shape Now
The “Req-to-Check” process and support technology is similar across all three categories
1 2 3
Services
Direct Hire Contingent Procurement /
Labor Other Services
Consolidation and investing across Services and Technology suppliers continues in order to
gain competitive advantage and capture multiple categories of spend.
1 2 3
Services
Direct Hire Contingent Procurement /
Labor Other Services
©2010 Crescendo Consulting Solutions www.CrescendoConsult.com 13

14. Services Spend Management
Industry Trends, Best Practices, and Going Global
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