Accenture - Happy clients profitable suppliers

1. ‘HAPPY CLIENTS
PROFITABLE SUPPLIERS’
Sezgin Kaya
Global Practice Lead
Accenture Operations – Procurement
Property and Facilities Management

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Accenture Procurement
Leading Procurement Shared Service
Centre Transformation Provider
$10m+ R&D Budget
for Sourcing & Procurement
Leading Innovation
in above market
aggregation
Manage
$95bn+
in annual spend
24+ years
of BPO experience
120BPO clients across a broad
range of industries and geographies
Process 9 million+
transactions annually
Procurement transaction services in
56+countries and
43+languages
More than 18+ locations in
Accenture Delivery Network
11,000+sourcing and procurement professionals combined in Operations, Strategy and Technology
3300+ Procurement
Professionals in Operations
1120+ Source to Contract
experts
2180+ Procure to Pay (PtP)
specialists

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• FM market growth will be impacted by a slow-down in new
outsourcing
• The public sector FM market will remain tough
• Control over costs will become ever more important
• Fragmentation in contract structures continue
• Increase in realising value from 'green FM' services
• Increase in M&A - for those companies prepared to extend their
position in the market
Some Market Headlines in FM

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• Pressure to cut costs.
• Demand for simplification and standardisation of services
• Internal pains – performance, productivity and retention of key
personnel.
• War for talent – attracting the best employees
• Deliver a great place to work, with an increased focus on
lifestyle of work, collaboration, cost of operations, flexibility,
telecommuting and movement of people.
Key Market Pressures… still?

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Industry Structure under Force-Field Analysis
INDUSTRY COST STRUCTRUE
Pressure to
cut costs
More
demanding
customers
Increased
competition,
industry
consolidation
Tough public
sector
Saturated
service
integration
Increasing
labour
costs
More stringent
regulations,
unions, etc
War for talent
- Performance
- Productivity
- Retention
Investment into
technology to
cater for
automated
building
operations
Aging building
stock
Eroding Profit Margins,
Increasing Cost to Serve

6. Market Dynamics on Property and Facilities Management…
Organisational Ability to match Business Needs with Market Capabilities
6
COMMERCIAL
MANAGEMENT
FINANCE
OPERATIONAL
MANAGEMENT
‘Market CAPABILITY’ ‘Customer NEEDS’
POLICYINNOVATION
DELIVERY CONTROLS
Organisational ‘ABILITY’
I N S I D EO U T S I D E

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The Key Attributes for Organisational Ability
• Profitable Suppliers, Happy Clients, or vice versa
• Right Price and Profit for the Purpose
Three key attributes of Organisational Ability to match the Market Capability to
Business Needs
Innovation and Business Development

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Profitable Suppliers, Happy Clients, OR
Happy Suppliers, Profitable Clients…?
Positive Customer Experience:
• Empowered leadership
• Continuously improving
• Operationally effective
• Delighted Staff willing to work
related to:
• Skills improved (ρ = 0.97)
• Happy to work (ρ = 0.96)
• Team Excellence (ρ = 0.93)
Service Excellence Research Framework, CFM
Research shows that satisfaction of service provider’s personnel (“Staff Delight”)
has significant impact on achieving positive ‘customer experience’.
Businesses with higher employee engagement scores report 48% fewer safety
incidents; 41% fewer patient safety incidents; and 41% fewer quality incidents.
https://hbr.org/2013/07/employee-engagement-does-more/
Service Excellence, CFM

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“What needs to emerge, and in some
circles is emerging, is what I call a
mutual economy that focuses on the
needs of both the individual and the
collective”. – Adam Smith – The Wealth of
Nations
Right Price & Profit for the Purpose:
Balancing Pricing and Profitability…
2.4%Fixed Cost
3.4%Volume
8.4%Variable Cost
11.9%Price
1% improvement
in …
Creates operating profit
improvement of …
Comparison of profit levers
• Pricing is the biggest profit improvement lever, more effective at improving
margin than increased sales or cost reduction.
• 1% increase in average prices lift operating profits by anywhere from 7-15%.
Source: Accenture Insights, 2014

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…looking for flat spots on the Pricing and Volume curve…
Right Price & Profit for the Purpose:
The balance between Price and Volume
Source: Accenture Insights, 2014
Price increases, with the same volume.
E.g.: Doing more with the same resources on a single site.
Price increases, with the same volume.
E.g.: moving out the redundant processes.

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As the focus has shifted to
working with fewer suppliers,
it has become more important
to forge long-lasting
relationships and treat
suppliers as Preferred
Suppliers.
Right Price & Profit for the Purpose:
Architecture of ‘Deal Making’.. How does a deal start?
Transactional
Interaction
Tacit
Coordination
Balanced
Concerns
Relationship
Building
Importance of Ongoing Relationship
Importance of
Deal Terms
High
0
High
Product &
Commodity
Services &
Processes
…hardly ever from scratch…
It may be that in some cases
Suppliers can trade off
relationship building with the
deal terms.

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• Do market capabilities match with needs?
• Are we jointly able to implement the best match?
• Happy Clients and Profitable Suppliers or vice versa.
• Profit erosion and increasing cost base
• Profit v Volume : Business engagement and building relations
• “It is a long-term strategy”
A win-win scenario for Clients and Suppliers

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Thank you!
Sezgin Kaya
Sezgin.kaya@accenture.com
Global Practice Lead
Accenture Operations – Procurement
Property and Facilities Management