Unlocking the Value of Spend Management by Leveraging SAP’s Business Networks

Unlocking the Value of Spend Management
by Leveraging SAP’s Business Network
Jonathon Magick / Frederic Girardeau-Montaut, April 7, 2015
Shifting Gears for the Growing Global Economy

Agenda
• CPO Trends & Priorities – Deloitte Global CPO Survey
• Spend Management Framework
• Ways SAP Business Network and Ariba Can Support
Spend Management
• Developing a Spend Management Roadmap
2Copyright © 2015 Deloitte Development LLC. All rights reserved.

Deloitte Global CPO Survey, 2014
The 2014 Global CPO Survey included a record 239 CPOs, with the US accounting for 17%
of respondents
Key Highlights Responses by Region
• Responses to the 2014 survey were truly global in
nature – with responses from ~239 CPOs across
25 countries
• Most of the major industries were represented in
the survey
• The survey provides deep, cross industry views into
key business issues such as economic outlook,
organizational influence, risk assessment, analytics
investments and talent acquisition and retention
Responses by Industry Responses by Annual Turnover ($B)

CPO Focus Areas for 2015
• CPOs continue to focus on
consolidating their legacy
supply base
• Amid declining savings
performance, CPOs are
increasingly willing to collaborate
with suppliers and restructure
relationships to:
- Establish Procurement as
enabler for profitable growth
and business differentiation
– rapid, efficient, innovative
- Increase focus on spend
and relationship
management capabilities
- Measure performance in
terms of supplier delivery
and customer satisfaction
over savings
Consolidating spend
Increasing competition
Increasing level of supplier
collaboration
Restructuring existing relationships
Specification improvement
Optimizing supply chain costs
Reducing total lifecycle/ ownership
costs
Restructuring the supply base
Reducing demand
Reducing transaction cost
Outsourcing of non-core
procurement activities
Managing commodity price volatility

Observations from CPO Survey
US CPOs reported greater optimism and strong savings performance, while global
respondents expressed concerns over increasing uncertainty
Market Dynamics
Business
Engagement
Risk
Technology
Organization and
Talent
While cost control remains a top priority, businesses are increasing looking for
procurement input in innovation, product development and M&A
Poor quality of data or lack of data are major barriers to effective analysis, and
CPOs in the US also cite limited skills of analytics resources as a challenge
Attracting and retaining talent remains important as US CPOs look to increase
the size of their teams while also outsourcing some activities
Procurement has now largely awoken to the importance of business partnering, yet
68% of respondents describe their internal influence as “mixed”
Just half of CPOs play an active role in wider risk management process, and
their level of investment in related technologies and processes remains low

CPO Opportunities
Market Dynamics
Business
Engagement
Risk
Technology
Organization and
Talent
Based on the survey findings, CPOs have a series of opportunities
Move up the Value Chain – A new delivery model will be required to free up time
from operational processes, while enhancing the ability to deliver on new strategic
areas of support that the business is looking for
Technology Investments – Invest in a broad set of collaboration and analytics
solutions to enable the spend and relationship management value levers
Tomorrow’s Talent – Reposition Procurement as a “career destination”, while also
evaluating opportunities for managed services or outsourcing; Develop COEs
Strategic Partnerships - CPOs must move beyond category management and
strategic sourcing towards greater supplier collaboration and partnership
Broaden Risk Focus - Minimize business risk with stronger supplier
relationships, pre-qualification, on-boarding and continuous performance
management

Challenges for Effective Spend Management
Many Procurement Organizations can face several potential challenges in effectively managing
spend, including:
Incomplete Cost
Management
 Initiatives are applied uniformly to all spend categories vs. addressing unique aspects of
each category
 Available levers are applied only in pockets, with critical levers not being applied to
many categories
Lack of Seat at
the Table
 Only half of CPOs play an active role in the wider risk management process
 Just 28% of procurement functions feel they are well positioned as highly regarded strategic
business partners
 Roles and responsibilities are not defined or understood across spend categories
Analytics Potential
Not Realized
 Ability to make insight-driven decisions across the business which drive value as measured
across cost-service-quality-innovation dimensions
 Goal is to go beyond spend analytics to demand management, supply chain risk and
product complexity
Widening Talent Gap
 CPOs are being asked to drive top line growth, bringing insight and innovation from
the marketplace
 “Soft skills” are increasingly important to influence behavior across the organization
 A wide talent gap exists for advanced procurement skills
Technology Not
Fully Deployed
 Technology vision and roadmap not aligned with organization and strategy
 One or more critical components of an end to end P2P technology platform are missing
 Gaps in the areas of data management, supplier risk and collaboration

Technology Investment
CPOs recognize the importance of collaboration in the value chain and continue to make
technology investments in this area. However, technology by itself is not enough for effective
Spend Management
Technology
Investments
Supplier
Portal
65%
Cloud
Based
Computing
26%
Online
e-commerce
40%
Self Service
Portal
43%
Product
Collaboration
17%
Social
Media
6%
Spend
Analysis
46%
Contract
Management
40%
Supplier
Relationship
Management
39%
E-Sourcing
36%
Requisition to
Pay
32%
Supplier
Information
Management
29%
Supply
Risk
Management
16%
Electronic
Data
Interface
14%
P-Card
9%
Most Likely to invest in 12 monthsInvesting in Technology

Need for a Fundamental Shift
Addressing the challenges confronting Procurement requires a disciplined Spend
Management strategy
Tenets of Effective Spend Management
• Broad business focus
• Clear roles and responsibilities
• The right number of the appropriately
skilled people
• All addressable spend categories
• Many or all levers applied across each
category
• Insight and innovation focus
• Organization aligned with process and
technology
• Technology enabled
• Risk and controls focus
• Continuous focus on realized savings vs.
planned

Spend Management Framework
Many companies that have unlocked significant value from procurement typically address
each of the following spend management levers
Strategy Sourcing Procurement Operations
Spend Management
Governance
Supplier Information
Management
Requisitions &
Approvals
Supplier Risk
Management
Category Strategies Strategic Sourcing Purchase Orders
Supplier Performance
Management
Demand Management Contracting
Invoice, Discount and
Payment Management
Spend Management
Analytics
Compliance Strategy
Supply Chain
Optimization
Supplier Collaboration
Financials Management –
Taxes, Assets, Treasury

Spend Management Levers - Strategy
Companies that have unlocked the greatest value from procurement consistently address
Spend Management
Governance
A plan to manage the spend
category that is comprehensive,
based on category best practices,
and well understood by all key
stakeholders
Management
Requisitions & Approvals Supplier Risk Management
Category Strategies
To help guide / inform category
decisions in the area of : Branding ,
Pricing , Go-To-Market.
Strategic Sourcing Purchase Orders
Management
Demand Management
A process to manage demand
through rationalizing specifications
and standards for materials and
services
Contracting
Invoice, Discount and Payment
Management
Spend Management Analytics
Compliance Strategy
Development and management of
compliance policies, tracking and
reporting to ensure adherence to
category strategies and reduction of
maverick spend
Supply Chain Optimization Supplier Collaboration
Financials Management – Taxes,
Assets, Treasury

Spend Management Levers - Sourcing
Spend Management
Governance
Management
Streamlined processes to discover,
qualify and onboard suppliers, and
facilitate efficient collaboration. Cost
effective maintenance and
management of supplier information.
Requisitions & Approvals Supplier Risk Management
Category Strategies
Strategic Sourcing
Methodology/process that is
continually refreshed and updated
by category; includes total cost
models, market trends, leverage and
benchmarking
Purchase Orders
Management
Demand Management
Contracting
Effective negotiation strategies,
stakeholder communication
alignment,, and an efficient process
to blend legal, business and supplier
requirements
Management
Compliance Strategy
Supply Chain Optimization
Analysis and modification of
logistics, distribution, warehousing,
inventory and receiving to optimize
costs with changing category
strategies
Assets, Treasury

Spend Management Levers - Procurement
Spend Management
Governance
Management
Requisitions & Approvals
Enabled requisition process with
appropriate financial and category
management approvals to improve
end-user compliance
Supplier Risk Management.
Category Strategies Strategic Sourcing
Purchase Orders
Efficient PO creation, delivery and
management processes that are
aligned with category objectives
Management
Invoice, Discount and
Payment Management
Highly automated payment and
receiving systems to support
category objectives such as spend
data management, negotiated
discounts and supplier
management
Compliance Strategy Supply Chain Optimization
Effective collaboration and
interaction with suppliers through
out the procurement process
Assets, Treasury

Spend Management Levers - Operations
Spend Management
Governance
Management.
Requisitions & Approvals
Supplier Risk Management
Identification and mitigation of
potential risks (e.g., adherence to
legal requirements like Sarbanes-
Oxley, environmental and labor laws;
supply and service/performance risks.
Category Strategies Strategic Sourcing Purchase Orders
Management
Processes (e.g., supplier qualification,
scorecards, regular supplier reviews)
to improve quality, service, value,
delivery and innovation
Management
Metrics and supporting data to
evaluate the success of a Spend
Management program
Compliance Strategy Supply Chain Optimization Supplier Collaboration
Financials Management –
Taxes, Assets, Treasury
Structured process to optimize taxes
(state, local and international tax
implications), manage assets
(software, hardware, hazardous
chemicals, facilities) , and maximize
working capital.

Deloitte Spend Management Framework 2.0
Strategy Sourcing Procurement OperationsSuccessful spend management does
not take a one-size-fits-all strategy:
All or most levers
addressed for each
spend category
Strategy to employ
lever applied to all
categories

Spend Management Value Generation
How It Works:
Spend
Management
Value
Objective
Strategy
Illustrative
Examples
Typical
Savings
=
Demand
Management
Spend
Management
Governance
Strategic Sourcing
Spend
Management
Analytics
Supplier
Collaboration
x x ++
Rationalize goods
and services
necessary for core
operations
 Tie spend to
business needs.
 Define standards
and specs.
 Design
procedures.
Enforce usage
5 – 10%
Institute improved
governance model
Focus on cost
reductions across all
supply-side drivers
(not just price)
Provide adherence
and transparency
through
measurement and
tracking
Minimize process /
collaboration
related costs
 Gain firm-wide
spend view
 Establish spend
accountability
 Institutionalize
compliance
 Baseline TCO
 Rationalize supply
base
 Reduce contracted
unit rates
 Design tracking and
feedback tools
 Measure and
manage
 Hardwire to
financials
 Inventory programs
(e.g., Consignment,
JIT)
 Process
improvements (e.g.,
network printing)
 Improve
manufacturing
process to reduce
waste
 Reduce Laptop
purchases
 Centralize IT
category buying
 Eliminate ability for
individual users to
purchase IT
hardware
 Reduce cost to
manufacture and
ship
 Reduce costs which
apply across
laptops from
deployment through
disposal
 Monthly or quarterly
cross checks of
vendor spend at the
item level vs.
corporate spend
data
 Migrating to a
centralized system
for tracking spend
 Restructuring the IT
asset acquisition
and disposal
process to reduce
cost
10 – 25% 1 – 3%
Tactics
Sourcing Procurement Operations

SAP Solutions as Enablers
SAP procurement solutions help manage scale and complexity across each spend
management lever and category
However, innovation and value creation can be constrained by challenges of integration and collaboration

Business Network Elevates the Game
The Business Network simplifies business commerce collaboration by connecting people,
systems and processes between companies
The Business Network can extend the
power of procurement offerings with:
The Business Network helps companies support spend management for potentially greater value delivery
Real-time seamless
supplier collaboration
Comprehensive
management of spend
across all categories
Potential reduction in risk
and cost, and potential
improvement in efficiency
and user experience
© 2015 Ariba – an SAP company. All rights reserved.

Total Spend Management
Together the Framework, Applications and the Network helps companies achieve total
Spend Management
Cloud Solutions
Spend
Analytics
Sourcing
Contract
Management
Operational
Procurement
Invoice
Management
Supplier Management
SuppliersBuyers 1.5+ million
Trading Partners
65+ million
Annual Invoices
190
Countries
>60%
Global 2000 use the
Network
$600B
In Annual Commerce 40+ million
Annual Purchase Orders
Spend
Analytics
Sourcing
Contract
Management
Operational
Procurement
Invoice
Management
Supplier Management
OnPremise Solutions
strategic operational

Spend Management Roadmap
Implementing Spend Management requires a comprehensive approach
Step 1: Build
Foundation
Step 2: Establish
Baseline
Step 3: Assess
Opportunity
Step 4: Develop
Strategy
Step 5: Execute
and Manage
 Build leadership
team
 Understand current
initiatives and
backgrounds
 Conduct enterprise-
level benchmarking
 Develop high-level
goals and objectives
and business case
 Develop category
structure
 Collect spend data
 Review current
initiatives, roles,
and process for
each category
 Analyze spend and
usage data
 Review category
internal and external
benchmarking/
leading practices
 Assess category
improvements for
each level
 Assess technology
enablers
 Quantify
opportunities/ costs
 Prioritize
opportunities
 Develop enterprise
spend management
strategy
 Develop category
strategies
 Redesign
organization(s)
 Redesign key
processes
 Redesign technology
 Set specific
performance targets
 Staff project
management team
 Develop
implementation
roadmap and
execution plans
 Develop
communication and
change
management plans
 Measure and track
benefits

Spend Management Roadmap
Define your vision and develop a multi-year transformation roadmap
SAMPLE SOURCE-TO-PAY TRANSFORMATION ROADMAP
Copyright © 2010 Deloitte Consulting LLP. All rights reserved.
The Strategic Sourcing & Procurement
(SS&P) organization wants to achieve
effective spend management…
Objective
 Create sustainable value for the companyby managing
external spend comprehensively
Goals
 Balance businessunit objectives, controls, compliance, cost
savings, and transaction efficiencyobjectives
 Get categorygovernance right (e.g. key stakeholdersown
key decisions)
 Set the right prioritiesand empowerthe stakeholdersto
manage their spend appropriately
CURRENT STATE BUSINESS IMPACT FUTURE STATECORE PROCESSES FOCUS
Category
Management
Category
Strategy &
Governance
Requirements
& Demand
Management
Compliance
Integration and
Collaboration
with Business
Units
Procurement
/ Procure-to-
Pay
Requisitioning
& Approvals
Purchase
Orders
Receiving &
Payment
Increased P2P
Automation
STRATEGY
 Spend analysis isused as an input into
sourcing strategy
ORGANIZATION
 The Procure-to-Payorganization supportsthe
Sourcing organization by (i)providing it with
visibility into purchasing activityand spend
and, (ii) enforcing compliance to Sourcing &
Procurement policies
PROCESS & POLICY
 Goods/Services Receipt is required before
payment is made
 Suppliers are given self-service options
 Frequency of data reporting meets the needs
of categorymanagers
 P-Cards are used forlow-dollar/high-volume
purchasesand utilitiesto reduce PO
processing. Also used for cash management
and rebates
TECHNOLOGY
 Purchase Requisition system is fully integrated
with contract management and payment
systems
 Automated approvalworkflow exists
 High adoption rate of requisitioning system
 Purchase Order systemis fullyintegrated with
the Accounts Payable system
 Systematic controls in place to trackBlanket
POs against budgets and limits
 Purchase Order processis automated
 Electronicinvoicing systemregularlyused
 Electronicpayment systemsare used
 Enterprise-wide spend data analysisis
automated
Financial
Performance
Measurement
Savings
Tracking
PROCESS & POLICY
 Operating, financialand service metrics are
regularlygathered on procurement performance
 Comprehensive reporting process in place
 Metrics are regularly reported, tracked and
externally benchmarked
 SupplierRiskManagement processis used to
addressbusinesscontinuity, employment,
insurance risks
 Contingency planning is done forkey suppliers
 Continualreview and development of
procedures to optimize state, federal and
internationaltax implications
 Structured processto manage assets ranging
from software to equipment, as well as parts and
maintenance scheduling
Year 1 Year 2 Year 3
Spend Data
Management
Asset
Management
TechnologyStrategy Organization
Process &
Policy
Develop a demand planning
process
Implement a document repository
Develop Category Playbooks
Implement Category
Management Tool
Select one
catalog
management tool
Automate expense checking/audit process
Implement processto track non-compliance to purchasing policies
STRATEGY
 Sourcing & Procurement hasa transactional
role for a number of categories
 A significant amount of sourcing occursat the
businessunit level
 The focus is more on cost rather than value
acrossmultiple dimensions
ORGANIZATION
 For categoriessuch as IT and Real Estate,
sourcing is performed by a dedicated group
outside of Corporate Sourcing
 The skillset of the Sourcing organization is
mixed and can be improved through training
and use of methodologies
PROCESS & POLICY
 Requirements are collected from business
units but there is limited rationalization
 Demand planning is either absent in some
categoriesor based on historicaltrends
analysis forothers
 Policies are documented but are not
comprehensive enough to meet the needs of
the organization
 System and organizationalenforcement of
controlsis limited
TECHNOLOGY
 Best-in-classtools and modulesare in place
but with suboptimal deployment and adoption
 Inabilityto extract full savingspotential
 Inadequate spend controls
 Excess costsresulting from inadequate
demand management and compliance
 Unrealized savingsfrom inabilityto measure
and manage compliance
 High processcostswithin the businessunits
 Inadequate spend controls
 Excess back-end costs in A/P
 Excess costsfrom lack of touch-less
procurement technologies
 Unrealized savingsfrom limited analysisof
spend and savings data
STRATEGY
 Performance of sourcing and procurement
initiativesis not systematicallytracked
 Savingsare tracked
PROCESS & POLICY
 Risk measures are mainlyforgovernment
regulationsor legallybinding reasons
 Risk mitigation is mainlythrough contract
terms
 No risk management processto address
different formsof risk
TECHNOLOGY
 A Supplier Risk Management system is not in
place
 Regulatory/fraud risk
 Unrealized savingsfrom limited analysisof
spend and savings data
 Potential unmitigated supplier level risks
STRATEGY
 The vision and strategyare communicated at
all levels of the organization
 Actionable initiativesand goals are driven by
leadership
 Sourcing & Procurement plays a strategicrole
in sourcing of allcategories
ORGANIZATION
 Flexibility to operate in centralized and
decentralized environments
 Sourcing collaborateswith businessunitsto
rationalize and standardize specifications
 Demand expectations are shared with
suppliers
PROCESS & POLICY
 Requirements are collected from allbusiness
units using a standard process
 Detailed policiesto coverthe purchasing,
financialand regulatoryneedsof the
organization
 Centralized and easilyaccessible policies
accompanied by training and communication
 Compliance metrics are tracked and tied to
employee performance evaluation
TECHNOLOGY
 Systems are designed to enforce compliance
and minimize manualerrors
AddressiProcurement issues(including the implementation of Oracle AME for automated approvalworkflow)
Provide approval
capability via mobile
devices
Expand online catalog availability& usage
Roll-out newapproval
levels
Automate expense reporting & eliminate
paper receiptsforcard payments
Re-rollout and expand Ariba
eInvoicing
Evaluate opportunity
to outsource invoice
scanning & entry
Expand the use of a 3-way
match through policy&
system changes
Implement Evaluated Receipt Settlement
Expand the use of P-Cards
Evaluate 0% invoice
tolerance
Implement revised P-Card audit process
Implement a supplierportal
Develop savings
tracking approach by
category
Develop approval
workflowto validate
savings
Enable self-service
spend analysis&
reporting capabilities
Define and roll-out appropriate spend-
analysis tool
STRATEGY
 The Procure-to-Payfunction doesnot fully
support the Sourcing strategies
ORGANIZATION
 There is a limited number of requestorswho
collect purchase requests and enter
requisitionsinto the system
 The role and levelof requestorsis varied
PROCESS & POLICY
 Blanket POs are used for some items but no
processto track Blanket POs
 Cycle times for PO creation are short
 Receiving processis not standardized
 Goods Receipt is not entered for low dollar
items
 Invoice receipt and verification is manual
 Payment cycle timesare short
 Payment by checksis prevalent
 Limited adoption of spend data reporting
 Lack of enterprise-wide spend analysis
TECHNOLOGY
 System in place to capture and report relevant
spend data
 Purchase Requisition process ismostly
automated but involvesmanual account
coding
 Requisitioning system is not intuitive and does
not contain adequate controls
 Setting of approval routesis not fully
automated
Policy
Development,
Communication
& Enforcement
IT Strategy on
Tools: Ariba vs.
Oracle
Sourcing /
Supplier
Management
Sourcing
Contracting
Sourcing,
Contracting &
Negotiation
Strategy
STRATEGY
 Procurement is a key lever to lowerenterprise
costs and increase operating margins
 Relationshipsbetween categoriesare
considered in the sourcing strategy
 Contracts are managed to proactivelyidentify
opportunities
 Well-defined negotiation strategies
ORGANIZATION
 Procurement department collaborateswith
businessunitsto proactivelyto respond to
future needs
 Collaboration between Sourcing, businessunits
and Legal on negotiation, contract setup
 Suppliers are segmented via relevant criteria to
determine the level of relationship
PROCESS & POLICY
 There is a well-defined processto collect
industry/ supplier information on all categories
 Compliance to contracting process
 Supplierevaluation metrics are standardized
and considerTotalCost of Ownership
TECHNOLOGY
 Use of a Contract Management System for
contract creation workflow and archiving
 SupplierRelationship Management system used
 Excess costsresulting from inadequate
suppliermanagement
 Excessive time required forsourcing
 Excess costsfrom inabilityto aggregate and
source self-service requisitions
 Lost savings from inability to internally
leverage pre-negotiated contracts
Supplier
Management
Rationalize the
number of
vendors
Develop and implement standardized sourcing & TCO methodology
Increase adoption
and utilize full
functionality of
eSourcing tools
Implement categorygovernance changes
Develop a standard
negotiation strategy
Develop contract management
processes supported by an
appropriate tool
Implement a supplierperformance
measurement and reporting process
Develop enhanced
Vendor Master &
maintenance process
Develop a Supplier Relationship
Management process
STRATEGY
 A complete savingsmodel isnot used to drive
Sourcing strategy
 Sourcing of most categoriesis not linked to
corporate strategy
 Sourcing is focused on contract renewals
ORGANIZATION
 Analytical skills (market analysis, spend
analysis, contract analysis) need development
 The value of the Sourcing organization is not
communicated acrossthe enterprise at all
levels
PROCESS & POLICY:
 Categorydata collection is unsystematic
 Nationalcontracts are in place for major
categories
 Negotiation checklists and contract
documentation templatesare used fora few
categories
 Supplierperformance is measured forsome
categoriesbut the metrics are basic
TECHNOLOGY:
 Contract Management System isnot used
 SupplierRelationship Management system is
not used
Supplier
Relationship
Management
Organization-
wide Spend
Analysis and
Reporting
AREA
Current Future
Procedural/Tactical Strategic
AutonomousSelf-Service Guided Self-Service
Reactive Proactive
Policies & Procedures Customer-Centric
Nascent Leading
Operation Silos(“Me”) One Enterprise (“We”)
Cling to Legacy Embrace Change
Low Appetite for Risk Empowered with Limits
Focus on Hard Skills Focus on Hard & Soft Skills
…and the vision is to transform from a
tactical & siloed function to a strategic &
collaborative function
Savings are dependant on successful execution of S2P initiatives
 Sub-optimaloperating model
 Lack of processstandardization
 Best-in-class-toolswith sub-optimal deployment and adoption
 Weak development, communication and enforcement of policies
and procedures
Unrealized savingsopportunities
There are four themes that SS&P should
focus on to achieve its goals and realize
potential savings
A
B
C
D
The Source-to-Pay transformation roadmap will guide Strategic Sourcing & Procurement’s efforts to improve the 14 underlying processes of Spend Management by addressing issues in Strategy, Organization, Process & Policy, and Technology
Under each theme, a specific set of initiatives would help P2P better support Sourcing,
Business Units and Suppliers Sample assessment of company’s Spend Management maturity
Marketing and Real Estate would benefit from increased coordination with SS&P while IT, Telecom
and Facilities should be centralized
A choice needs to be made between the P2P systems that may be currently deployed.
Subsequently, the functionality and controls need to be improved
There is a large number of non-PO transactions/spend and low P-Card activity
Wave 1& 2 savingsopportunities Ongoing sourcing execution
11
Develop RASCI
models
Develop Sourcing Centersof Excellence
Module Platform Observations Recommendations
eSourcing Ariba
Small number of Ariba RFPs because business unitsbypassStrategic Sourcing group
(RFPs this year: HR, Facilities, Telecom, Networking, Security =10-12, Curriculum &
Library Services =3-4)
 Create power users
 Implement a processto increase adoption,
tie to individualgoals
Contracts
Mgmt.
Oracle Application
 Lack of processto ensure that contractsare submitted to repository
 Recently submitted contracts take long to get scanned and filed
 Attachments and addendums are scanned as separate filesmaking it cumbersome to
view entire contract
 Inabilityto collaborate with Legaland supplierson contract formulation
 Inabilityto tracksupplier compliance to the contract, no reminders formilestones
 Evaluate whether ornot existing toolcan
serve contract management needs
 Implement processes to fully utilize
existing tool if the toolis deemed adequate
Catalog
Mgmt.
Ariba Oracle Limited number of catalogs (11), not user-friendly Decide between Ariba & Oracle
eProc. Oracle
 Approvalroute defaultsto that of the Preparerand he/she is unable to see complete
approvalroute without changing first approver
 Account coding is manual. Expense code defaultsto Business Meals(6012) and
multiple expenses are being incorrectlycharged to it
 Capital items need to be entered on separate lines
 Blanket PO functionalityis absent
 Inabilityto use custom deliveryaddress
 Lack of automated remindersforapprovers
 No visibilityinto out-of-stocksat the beginning of requisition process
Investigate whetherthe planned upgrade to
Oracle version12 would addressthese
issues
eInvoicing Ariba Electronicinvoices get stuck in system, ~30 suppliers on ASN
 Abandon or re-rollout after doing a root-
cause study
 Add more supplierson re-rollout
SRM None Include on a long-term roadmap
Spend
Analytics
Ariba
Low adoption of Spend Visibility because of inaccuracyof data and infrequent updates
(quarterly)
 Conduct root-cause analysisto understand
why users preferOracle
 Evaluate need for monthly refresh
Mktg.
Prof.
Svcs.
Real
Estate
HR
Facilities
IT
Stud.
Svcs.
T&E
Telecom
Financial
Services
0
1
2
3
4
0 1 2 3 4
Centralized Coordinated
Decentralized
Future State
High
High
Low
Potential
Benefit from
Procurement
Need for Business Unit Involvement
Centralized Coordinated
Decentralized
Current State
 Travel &
Entertainment
 Student
Services
 Professional
Services
 Human
Resources
 IT
 Telecom
 Facilities
 Financial services
 Real estate
 Marketing & Communications
 Buying power
 Potential leverage
 Commonalityof
category
 Strategic/criticalpurchases
 Difficult to standardize
 Highly specialized/technical
Future StateCurrent State
CurrentState Target State
Area Core Process
Gap between Current & Target State
Lagging Developing Performing Leading
Category
Management
CategoryStrategy &
Governance
Requirements &
DemandManagement
Compliance
Sourcing/
Supplier
Management
Sourcing
Contracting
Supplier Management
Procurement/P2P
Requisitioning &
Approvals
Purchase Orders
Payment / Receiving
Spend Data
Management
Financial
Performance
Measurement
Risk Management
Tax Strategy
Asset Management
Theme Issues Initiatives
Sub-optimal
operating model
Business units don't involve Strategic Sourcing
group in sourcing because of high autonomy, strong
supplier relationships, slow turnaround
Centralization/coordination of categories
The Procure-to-Pay policies and processes don't
sufficiently support the Strategic Sourcing group and
the business units
 P2P service expansion
 Invoicing and payment improvements
Current category taxonomy is inadequate for
category management and spend analysis needs
Category taxonomy
Lack of process
standardization
Lack of process standardization for:
 Sourcing, negotiation, contracting
 Demand & requirements management
 Supplier evaluation
 Savings tracking
 Requisitions & Approvals
 Standardization of existing processes with
customization where needed
 New methodology/process development &
documentation
Best-in-class
tools with sub-
optimal
deployment &
adoption
Issues with:
 iProcurement
 Ariba Supplier Network & eInvoicing
 Spend Reporting
 Expense Reporting
 eSourcing
 Vendor Master
 Catalogs
Initiatives around:
 iProcurement
 Ariba Supplier Network & eInvoicing
 Spend Reporting
 Expense Reporting
 eSourcing
 Vendor Master
 Catalogs
Weak
development,
communication
and enforcement
of policies and
procedures
Violation of policy on terms, POs, catalogs, reviews
Policy enforcement through compliance reporting
and changes in processes/systems
Ineffective policies on approvals, PO threshold,
tolerances, P-cards, matching & receipt
Policy re-evaluation & improvement
A
B
C
D
Improve self-service process& tools
Implement revised category
taxonomy
Expand the T&E card program
21
6
7
9
11
12
16
18
8
17
10
4
13
14
3
5
15
Evaluate the capitalization threshold
1 2
3
Institutionalize a
processto rationalize
requirements
Implement a SupplierRisk
Management system
5 6
9
10
8
4
1
7
32
3
1
2
5
7 9
4
6
10
8
High Medium Low
Opportunity for Improvement:
Payment Channel as
% of Total Transactions
Payment Channel ($M)
Payment Tranche Non-PO ($) P-Card ($) PO ($) N/A ($) Total Spend ($)
<$0 (74,053,685) (394,778) (148,762,030) (360,737,826)
$0-$500 55,225,621 5,169,492 4,916,744 72,471,197
$500-$1,000 33,767,078 2,538,384 9,689,459 52,868,516
$1,000-$2,000 28,547,688 1,338,662 10,155,851 50,091,639
$2,000-$5,000 57,249,594 1,960,191 15,746,400 93,513,121
$5,000-$10,000 46,209,941 557,892 25,728,534 90,353,170
> $10,000 1,220,386,521 935,181 739,550,543 2,303,027,811
Total 1,367,332,757 12,105,024 657,025,500 265,124,346 2,301,587,628
Major Spend Categories ($M)
 Most spend is in Marketing &
Communications. Professional services
costs are driven by Legal and Outsourcing
 Vast majority of transactions are Non-PO
 PO and P-card make up only 10% of
activity
 Non-PO spend is double that of PO spend
 P-card has small share of spend: $12M
Mktg. &
Comm.,
396.4
Real
Estate,
199.1
HR, 199.0Facil.,
127.4
Prof.Svcs.,
126.4
IT, 105.7
Stud.Svcs.,
66.3
T&E, 52.1
Unclass.,
32.7
Tel., 43.1 Fin.Svcs.,
35.2
Non-PO,
83.9%
P-Card,
3.1%
PO, 6.8%
N/A, 6.2% P-Card,
12.1
Non-
PO,
1367.3
PO,
657
N/A,
265.1
Initiative Short-term Projects Mid-term Projects Long-term Projects
Centralization/
coordination of
categories
Develop RASCI models
Develop categoryplaybooks
Implement a document repository
Develop Sourcing Centersof Excellence
Implement categorygovernance
changes
Implement a Category
Management tool
P2P service expansion
Expand the use of P-Cards
Improve self-service process& tools
Implement supplier
portal
Invoicing and payment
improvements
Automate the expense checking
and audit process
Evaluate the opportunityto outsource the
scanning and entry of invoices
Implement Evaluated
Receipt Settlement
Category taxonomy
Implement revised category
taxonomy
None None
Standardizationof
existing processes with
customization where
needed
Develop a standard negotiation
strategy
None None
New
methodology/process
development &
documentation
Develop savings tracking approach
by category
Develop approvalworkflow to
validate savings
Institutionalize a processto
rationalize requirements
Develop a demand planning
process
Develop and implement
standardized sourcing & TCO
methodology
Develop contract management
processes supported by an
appropriate tool
Implement a supplierperformance
measurement & reporting process
Develop enhanced VendorMaster and
maintenance process
Implement a Supplier
Risk Management
system
Develop a Supplier
Relationship
Management process
eSourcing
Increase adoption and utilize full
functionality of eSourcing tools
None None
iProcurement
AddressiProcurement issues
(including the implementation of
Oracle AME for automated
approvalworkflow)
Expand the use of a 3-way match
through processand system changes
Provide approval
capability via mobile
devices
Ariba Supplier Network &
eInvoicing
Re-rollout & expand Ariba
eInvoicing
None None
Spend Reporting
Define and roll-out appropriate
spend-analysistool
Enable self-service spend analysis&
reporting capabilities
None
Expense Reporting Expand the T&E card program
Automate expense reporting & eliminate
paper receipt requirement forcredit card
payments
None
Vendor Master Rationalize the numberof vendors None None
Catalogs
Select one catalog management
tool
Expand online catalog availability&
usage
None
Policy enforcement
through compliance
reporting and changes in
processes/systems
Implement processto track non-
compliance to purchasing policies
None
Policy re-evaluation &
improvement
Evaluate the capitalization
threshold
Roll-out newapproval levels
Evaluate the 0% invoice tolerance
Implement revised P-Card audit process
Make policies specific
and enforceable
5
6
9
10
8
4
1
7
3
2
3
1
2
5
7
9
4
6
10
8
21
6
7
9 11
12 16
18
8
17
10
4
13
14
3
5
15
1
2
3
Category Management Sourcing/Supplier Management Procurement/P2P Financial
Based on the maturity assessment and the deep dives into issues, a set of phased
projects would enable SS&P to achieve its objective and vision
22 opportunities across 6 categories, representing estimated savings of $7-$14
million, have been identified as ‘quick-wins’ and represent opportunities that can
be addressed in less than 6 months
Category
Addressable Spend
Description
Spend
($M)
Strategy
Office
Supplies
Spend on Staples contract items list $1.67 Rationalize core item list on office supplies catalogue
Office
Supplies
Spend on Staples non-contractitems $2.10
Improve percentage spend on core items through
communications,policies,and catalogue controls
Office
Supplies
Spend on office supplies through employee
expenses and P-Card (notincluding BPP
spend)
$2.19
Improve percentage spend on contractthrough
policies promoting the Staples catalogue,and
strengthening P-Card blocks
Postage &
Courier
Spend on postage and courier through
Point-and-Ship software (i.e.with FedEx
and UPS contract pricing)
$3.13
Consolidate courier spend with one preferred
supplier through a competitive bid
Postage &
Courier
Spend on postage and courier through
Point-and-Ship software (i.e.with FedEx
and UPS contract pricing)
$3.01
Design policy to establish "ground"as defaultservice
level
Postage &
Courier
Spend on postage and courier through UPS,
FedEx,and DHL directly
$1.48
Develop communication /policy strategy to improve
adoption of Pointand Ship tool, reduce rogue spend,
and increase spend on contract
Food
Services
Spend on coffee services with Arizona
Gourmetand on water services with Nestle
$1.69
Establish national contractfor coffee,water,and
vending machines across all campuses and
corporate offices
Rent
20% of spend on lease payments (reflecting
restrictions on external audits at major
facilities)
$34.31
Hire an external party to conducta contingency
based auditon all applicable large-scale lease
agreements
Wireless
Service
Total spend on wireless service with AT&T
and Verizon
$3.44
Optimize plan model and services purchased based
on utilization and user requirements
Telecom
Equipment
Total spend on Avaya phone sets $0.70
Auditphone system equipmentand software
licenses,and redeploy unutilized assets /licenses
Hotel
Hotel spend in Phoenix area through BCD,
noton preferred rates
$0.29
Consolidate hotel use in Phoenix area and drive
more spend through preferred rates
Hotels &
Events
Total spend on hotel and events, excluding
BPP
$14.49
Establish MSAs with major hotel chains to
standardize terms and conditions (i.e.cancellation
and attrition policies,etc.) for transientand event-
based hotel spend
Air
Total spend on domestic air service,through
BCD
$5.36
Tighten advance booking policy and low-fare policy
to take advantage of preferred air rates
Travel
Total travel spend not through the B of A P-
Card,excluding BPP,and under $500 per
transaction
$19.10
Optimize travel card program (consolidate to one
card,leverage studentvolume,improve data /
reporting)
Printers &
Copiers
Estimated unadressed printer / MFC spend $4.50
Accelerate HP MFC deploymentand implement
greater printer management
Data Storage Spend (ASG) $8.90
Data retention / migration strategy and policy
Computers
Peripherals
PCs and Peripherals Category Spend $22.00
Establish IT hardware policy for desktops / laptops /
monitors
Computers
Peripherals
PCs and Peripherals Category Spend $1.20
Manage demand for Apple vs.Lenovo PCs (desktop
and laptops)
Software $3.80
Oracle negotiation
Servers &
N/W Equip.
Riverpoint data center budget $45.00 Source Riverpointdata center hardware
Temporary
Labor
$20M currenttemp / contingentlabor plus:
- Estimated $2.5M (50% of $5M est.) IC
labor may be redirected
- Estimated $2.5M (25% of $15M est.) SOW
labor may be redirected
$25.00
Competitively bid temp labor
- Define requirement/develop new job catalogue
- Bid directto agencies / reduce markups
- Increase spend through VMS
Relocation
Services
Spend relating to relocation services $4.30 Competitively bid relocation services
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Compliance Demand Process Total Cost of OwnershipSavings Levers:
Objectives, Vision and
Business Issues
Initiative Activity
and Timing
Prioritized
Initiatives
Focus for
Savings Lever
Future
State
Spend
Management
Levers
Maturity
Assessment
TechnologyStrategy Organization Process & PolicyILLUSTRATIVE

How Deloitte can Help
Deloitte is a recognized leader in evaluating, designing, and implementing technologies to
enable leading sourcing and procurement offerings, and has delivered sustainable results for
300+ clients in over 30 countries
Service OfferingsKey Alliances Differentiating Factors
Design &
Implementation
Strategy
Advisory &
Execution
Comprehensive
Approach
Global services
 Tax
 Financial Advisory Services
 Assurance and Enterprise Risk
Services
 Consulting
World-class consulting practice
 Strategy & Operations
 Technology
 Human Capital
Deloitte has nearly 200,000
individuals worldwide, with over 500
focused on Sourcing & Procurement
business, advisory, technology
implementation, and change
management
Deloitte has specific experience with
sourcing and procurement strategies for
more than 250 spend categories
© 2015 Ariba – an SAP company. All rights reserved.
 Making the right technology selections
 Providing the right level of spend visibility
 Creating transparency to support risk management and compliance
 Designing and implementing technologies to sustain cost reduction strategies and vision
 Enabling quicker time-to-value with pre-built platforms, templates, integrations, and documents
Best-In-Class Tools
IndustryPrintTM
and Enterprise
Value DeliveryTM
Vendor
Assessments
Software
evaluation models
P2P business
case tool
Sourcing-On-
Demand
Copyright © 2013 Deloitte Development LLC. All rights reserved.6
3. Catalog Content Management
 Load & Enrich
 Approve
 Publish
 Connect via Punch-Out
4. Operational Procurement
 Shopping Cart/Requisition
 Spend Approval
 Purchase Order
 Tactical Bidding (RFx)
 Execution Contract Management
 Goods/Services Receipt
1. Category Management/Sourcing
 Develop Category Sourcing Strategy
 Manage Sourcing Initiatives/Projects
 Execute Category Sourcing (RFx,
Reverse Auctions)
 Manage Supplier Relationship
and Monitor Performance
2. Contract Lifecycle Management
 Create and Manage Buy-Side Contracts
 Manage Legal Templates and T&Cs Library
 Report on Contract Performance
 Electronic Signature (EchoSign)
Key Source-to-Pay Processes Supported
6. Invoice Verification
 Invoice Entry
 Routing and Sorting
 Review and Exception Handling
 Approval
 Scheduling for Payment
SSTP
5. Supplier Collaboration
 Order Management (PO, PO
Response, PO Change)
 Advanced Shipping Notification
 Confirmation / SES
 Invoice Entry via Portal
 Demand Forecasting
 Supplier Managed Inventory
 Release Processing
7. Supplier Lifecycle Management
 Registration
 Qualification
 Evaluation
 Data Maintenance
9. Mobile Procurement
 Shopping Cart Approval
 MobileAnalytics
8. Reporting & Analytics
 Transactional Reports
 SpendAnalytics
 Management Dashboards
Pre-configured SAP
System
Deloitte delivers value to our clients by…

Deloitte’s Ariba Practice
Deloitte has been a leading Ariba integrator for over 15 years with more than 60 clients.
That’s why we have significant experience to share with our clients. We have also
received the SAP North America Partner Excellence Award 2015 for Cloud Services, in
recognition for our contribution and performance, including an absence of
escalation issues.
Deloitte’s Ariba Capabilities
• Deloitte is an authorized reseller of the Ariba suite of upstream and downstream applications as well as
the Business Network.
• Successfully led more than 60 Ariba Spend Management projects (both On Premise and Cloud), with
tremendous client satisfaction
• Rich history in delivering complex implementations, including: Novartis, Roche, Allied Waste, Liberty
Mutual, Sysco, BioMarin, Tesoro, Illumina, T-Mobile and INVISTA
• Our extensive client list covers a wide spectrum of industries:
• Deep experience across all modules of the Ariba Spend Management Application Suite, with over 150
resources either experienced or trained
• World class Ariba off-shore and near-shore implementation capability
• Installed and configured Ariba at clients with various ERP back ends including SAP, Oracle, PeopleSoft,
JD Edwards
• Global experience with client locations in 150+ countries with implementations in 12 different languages
• Deloitte US itself is an Ariba customer (internally)

Visit us to learn more
Jonathon Magick, Principal, Deloitte Consulting LLP
jmagick@deloitte.com or +1 (602) 315-8387
Frederic Girardeau-Montaut, Director, Deloitte Consulting LLP
fgirardeau@deloitte.com or +1 (610) 905-2042
General enquiries: SAP@Deloitte.com
Follow us on Twitter: @DeloitteSAP

Unlocking the Value of Spend Management by Leveraging SAP’s Business Networks

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