This video is a recording of the webcast “Hey Nineteen: Procurement’s Playbook for 2019“ that was hosted by Zycus in association with The Hackett Group and SIG. The webcast features a presentation by Christopher Sawchuk, The Hackett Group on the findings of the recent Hackett study “Procurement Key Issues 2019” and a case study presentation by Brittany Muirhead, Brookdale Senior Living on the application of “Assisted Sourcing” as a part of their digital transformation journey. The webcast also features insights from Richard Waugh, Zycus on application of technologies like AI, RPA in procurement for greater compliance, visibility and savings.

1. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
About Zycus – Comprehensive Source-to-Pay Suite
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2. 2019 PROCUREMENT KEY ISSUES STUDY INSIGHTS
Christopher Sawchuk, Principal & Global Procurement Advisory Practice Leader
The Hackett Group

3. | 3© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
 What enterprise development
areas do Procurement see as
critical?
 What is driving these critical
development areas?
 How is Procurement
addressing these areas?
 What is Digital Transformation’s
role?

4. | 4© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Check out this
webinar at  https://zyc.us/2GNw7jJ

5. | 5© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Capabilities like improving analytical, modeling and reporting skills will be crucial to
supporting enterprise objectives
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Critical development zone*
5 Critical Development
Priorities
Low/Moderate Importance
Low
Moderate/Hig
h
Abilityto
Address
Critical
Critical development area
Source: 2019 Key Issues Study, The Hackett Group

6. | 6© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Procurement will be focused primarily on modernizing application platforms and
improving analytical capabilities in regards to supporting enterprise goals
54%
50%
39%
39%
36%
32%
32%
27%
27%
25%
20%
20%
14%
Modernize application platform(s)
Improve analytical capabilities
Reduce operating cost
Measure/manage performance and value
Accelerate adoption of software tools
Optimize resources placement (BU, corporate, GBS, COE)
Align skills/talent with business needs
Invest in hiring/training/retaining top talent
Leverage category management
Improve procurement function agility*
Improve customer centricity
Leverage supplier relationship management (SRM)
Data and systems security
C
Percentage of procurement organizations with major improvement program planned or ongoing
Critical development area*
C
C
C
C
C
Source: 2019 Key Issues Study, The Hackett Group
Several capabilities that fall into
the critical development area
(high importance, but low ability
to address) are excluded from
planned initiatives, indicating a
gap in priorities from business
needs.

7. | 7© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Key Findings
In order to support the enterprise, procurement ranked the following development areas as critical:
1. Improve Analytical Capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage Supplier Relationship Management
More than two-thirds of organizations rank all of these as a low ability to address and 75% have no
programs in place to develop these areas

8. | 8© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
 What enterprise development
areas do Procurement see as
critical?
 What is driving these critical
development areas?
 How is Procurement
addressing these areas?
 What is Digital Transformation’s
role?

9. | 9© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
(Digital) business transformation risk drivers
Driver #1: Risk – Cybersecurity tops the risk ranking while talent will see the biggest
increase in risk
48%
39%
36%
33%
31% 30% 30%
24%
72%
66%
56% 58%
36%
41% 39%
34%
Cyber / information
security
Access to critical
talent
Intensified
competition
Disruptive
innovation
Reputational risk Regulatory risk Global trade
barriers / tariffs /
regulatory change
Geopolitical risk
2018 Projected (2019-2020)
24%
% Projected increase
27%
20% 25%
5% 11%
9%
10%
Percentage of companies ranking as “high risk”
Source: 2019 Key Issues Study, The Hackett Group

10. | 10© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Driver #2: Revenue growth is expected to increase 14% while operating budget and
FTE growth is expected to decline. Thus, doing more with less.
5.0%
2.8% 2.7%
5.7%
0.9%
1.3%
Revenue growth Number of staff (FTEs) Operating Budget
2018 2019 projected
Efficiency
Gap
Productivity
Gap
4.4%4.8%
Source: 2019 Key Issues Study, The Hackett Group

11. | 11© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Driver #2 cont.: Procurement organizations project an overall increase in workload
with the highest projections expected for corporate procurement and self-service
1.1%
1.8%
2.9%
4.1%
4.3%
4.5%
4.9%
Outsourced
Business unit
Offshored (captive only, exclude outsourced)
Global Business Services (GBS)
Centers of excellence
Self-service
Corporate procurement
Projected workload change 2019
Source: 2019 Key Issues Study, The Hackett Group

12. | 12© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
 What enterprise development
areas do Procurement see as
critical?
 What is driving these critical
development areas?
 How is Procurement
addressing these areas?
 What is Digital Transformation’s
role?

13. | 13© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Critical development areas
1. Improve analytical capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage supplier relationship management

14. | 14© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Ongoing or completed analytics-related initiatives in the procurement function
Procurement organizations have several ongoing analytics initiatives but are focused on AI and talent
Analytics initiatives by lifecycle stage
• Establishing analytics COEs represents
the most completed analytic initiative,
yet at more than half of procurement
groups it is only in the exploration stage
or still in progress.
• Master data management is the largest
area of activity at present. Poor MDM
has led to challenges in managing
processes, due to inefficiencies and
poor decision-making based on bad
data.
• Most organizations are either exploring
AI/cognitive computing or have a project
underway in this area. Today predictive
insights are provided by algorithmic
models that improve classification,
prediction and data recognition.
23%
23%
31%
15%
19%
15%
19%
19%
31%
58%
46%
35%
19%
31%
27%
31%
31%
46%
19%
19%
46%
73%
38%
42%
35%
27%
4%
4%
8%
12%
15%
15%
23%
Develop or improve capability to analyze different structured and
unstructured data types
Develop AI/cognitive computing based predictive analytics capability
Acquire or develop new analytical talent and skills in procurement
Upgrade or adopt advanced new analytical toolsets to support
procurement analytics
Establish or improve data stewardship, data governance and Master
Data Management (MDM)
Redesign / implement modern data architecture to supporting advanced
analytics
Develop or improve data visualization capability level
Consolidate and/or rationalize existing analytical tools used in
procurement function
Establish procurement analytics center of excellence
No imminent plans Exploring Ongoing initiative Completed initiative

15. | 15© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Critical development areas
1. Improve analytical capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage supplier relationship management

16. | 16© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Thriving in the digitally enabled workforce will require these skills
Business Acumen
Understand key business drivers
Knowledge of factors, priorities and business demands
Identify problems and prioritize alternatives
Relationship Management and Collaboration
Advanced interpersonal skills
Positively influence decisions
Open and approachable
Supply Risk Management Expertise
Assess and prioritize business and category-specific
risks
Measure, prioritize, and address risk
Develop risk mitigation plans for high-priority drivers
Data Analysis and Modeling
Process data and extract relevant information
Knowledge of analytical tools and methodologies
Translates analyses into actionable plans
Strategic Mindset
Develop strategic frameworks and visions
Anticipates market changes
Address challenges and outline future direction
Savings and Financial Analysis
Translate savings and value improvements to P&L
impact
Develop tools to track, measure and forecast savings
Analyze supplier financial statements for detailed
insights
Agility and Change Orientation
Welcomes change
Comfortable with shifting priorities
Able to deal with ambiguity
Creativity and Innovation
Create diverse and novel ideas, or novel combinations of
ideas
Create and recognize new patterns/categories
Curiosity, broad interests, constructive criticism
Agile and
Trusted
Business
Advisor

17. | 17© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
What makes talent management different?
TALENT MANAGEMENT AND ENTERPRISE PERFORMANCE ARE POSITIVELY CORRELATED
48%
Higher Return
on Equity
17%
Higher Return
on Assets
13%
Higher Net
Profit Margin
13%
Higher
EBITDA
$
GETTING IT RIGHT MATTERS
%
RETENTION
Effective talent management reduces
uncontrolled attrition, lowers costs and provides
more consistency in customer service
SKILLS
Skills and competencies over and above technical
skills are essential to successfully manage
interactions with clients and deliver customer
excellence efficiently
CAREER DEVELOPMENT
Active preparation for career development to
move people from role to role and business to
shared services and vice versa
DEMAND MANAGEMENT
Workforce needs to be flexible and
knowledgeable to meet varying customer
demand for services
RECRUITMENT
Having an attractive value proposition provides
an edge in competitive locations
TRAINING
Is valued by employees, increases
competencies, improves morale and productivity
and the ability to add value to business
customers
Source: HR Benchmark, The Hackett Group, 2018

18. | 18© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Critical development areas
1. Improve analytical capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage supplier relationship management

19. | 19© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Most Procurement organizations lack an explicit customer management strategy
Explicit customer
management
organization, formal
service delivery model,
and set of engagement
processes, 2%
Do not do it (ad hoc
only), 24%
Ensure alignment
through
"stakeholder
management"
processes in the
strategic sourcing
processes, 56%
Formal customer
management roles,
processes, and
tools to measure
customer
satisfaction, 18%
How do you get "the voice of the customer" from internal spend owners?
Source: 2017 Procurement Value Measurement Study, The Hackett
Group, 2017
Improving the stakeholder experience:
 Identify key stakeholder groups and individuals, their
interactions and general attitude (segmentation)
 Develop measurement approaches tailored to key
stakeholder groups
 Analyze stakeholder feedback, plan for action by
leadership to own and deliver
 Provide feedback to key stakeholder groups on
customer satisfaction and action plans to address
identified improvement needs

20. | 20© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Organizations that have adopted open marketplaces are seeing substantial
benefits especially in improving the customer experience
10%
13% 13%
10%
5%
18%
13%
15% 15%
35%
30%
32%
34%
40%
25%
28% 29%
25%
Improve
operational
efficiency of the
purchase to pay
process
Reduce maverick
spend /
requisitioner non-
compliance
Effectively
respond to
unplanned and
reactive sourcing
or short-term
needs
Improved spend
visibility
Increase internal
customer
satisfaction
Product cost
savings from
market-based
pricing
comparisons
Shipping savings
from reduced /
free shipping
rates
Supply base
consolidation
from not
onboarding low
spend suppliers
Technology
enablement cost
savings from not
onboarding low
spend suppliers
If you have used open B2B marketplaces are you seeing substantial benefits?
No Yes
Source: 2019 Key Issues Study, The Hackett Group

21. | 21© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Critical development areas
1. Improve analytical capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage supplier relationship management

22. | 22© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Digital transformation is a key strategy for organizational agility improvement –
more flexible and responsive, but also predictive
• Move beyond just automating existing processes
• Define completely new ways of doing things
• Enable with new technologies (e.g., cloud, big data, RPA, social
media)
• Move beyond internally focused transformation
• Design from the “outside in”, starting with customer needs
• Design new ways to engage the customer (internal and external)
• Embrace a fail fast philosophy
• Execute pilots in targeted areas and scale up rapidly
• Shift focus from discrete projects to continuous transformation
New Ways of
Doing Things
A Customer-
Centric
Approach
Velocity of
Change

23. | 23© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Check out this
webinar at  https://zyc.us/2GNw7jJ

24. | 24© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Critical development areas
1. Improve analytical capabilities
2. Align skills/talent with changing business needs
3. Improve customer-centricity
4. Improve agility
5. Leverage supplier relationship management

25. | 25© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Supplier Relationship Management has always been important, but objectives and
practices need to evolve
Traditional SRM Goals/Model
 Establishing an enterprise wide and coordinated SRM
program
– SRM Center of Excellence (COE) for process
management
– Dedicated SRM staff versus part time
 Utilizing broad and holistic supplier measurement
systems
– Addressing the execution of key business outcomes
and capabilities
– Focus on strategic suppliers, not all suppliers
– Supplier metrics integrated with category management
metrics
 Focusing on being better customers
– A “Voice of the Supplier” feedback process is utilized
– Supplier development resources are provided to help
suppliers
Source: SRM Book of Numbers, The Hackett Group
Next Level SRM Objectives
 Facilitating supplier engagement
– Structured buyer-supplier senior executive relationships
- “supplier advisory boards”, best practice sharing
– Extracting new ideas and technologies before
competitors
 Creating an explicit gain sharing and mutual cost
reduction environment
– Suppliers as the key to growth
 Leveraging enabling technology
– “CRM for SRM” functionality for supplier account
management
– Collaborative workspaces and applications
– Supplier portals for supplier self-service information
management – with attention to ease of use

26. | 27© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
 What enterprise development
areas do Procurement see as
critical?
 What is driving these critical
development areas?
 How is Procurement
addressing these areas?
 What is Digital
Transformation’s role?

27. | 28© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Impact of digital transformation on procurement performance and operating model
Procurement roles,
skills profiles and needs
32% 56%
Current 2-3 years
Achievement of
enterprise objectives 32% 60%
Current* 2-3 years*
Procurement service
delivery model 31% 78%
Current 2-3 years
Procurement performance
(e.g. cost, quality, cycle-time) 40% 73%
Current 2-3 years
Percentage of procurement organizations reporting high or very high impact
Source: 2019 Key Issues Study, The Hackett Group

28. | 29© 2019 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Digital transformation strategic maturity, alignment, execution and IT capability gaps
IT capability gap
Procurement organizations adequately
supported by internal IT organization 57% 83%
Current 2-3 years
Strategic maturity
Procurement organizations with
digital transformation strategy in
place and executing
58% 98%
Current 2-3 years
Execution gap
Procurement organizations with
competencies and resources
in place to execute the strategy
37% 87%
Current 2-3 years
Alignment gap
Procurement organizations with strategy
aligned with enterprise strategy 67% 98%
Current 2-3 years
Source: 2019 Key Issues Study, The Hackett Group
Level of impact of digital transformation

29. Chris Sawchuk
Principal & Global Procurement Advisory Practice Leader
The Hackett Group
csawchuk@thehackettgroup.com
Contact Information

30. Transformation Talk:
“Assisted Sourcing” Drives
Digitization at Brookdale Senior Living

31. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Assessing Procurement Pain Points
Top Pain Points:
 Procurement Spend Influence Limited
 “Win Locally” Culture Presents Compliance Challenges
 Granular Spend Visibility Lacking
 Fragmented Supply Base Limits Leverage
• What were the key
challenges you faced prior
to your Digital
Transformation initiative?
• What tools were available
and where did you see the
biggest gaps in your
procurement technology
infrastructure?
• Where did you rate your
pain level on the “Pain-O-
Meter”?

32. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Addressing Stakeholder Perceptions of Procurement
• Before starting your Digital
Transformation journey,
what was the perception of
Procurement within your
enterprise?
• What tools or methods do
you use to engage
stakeholders and elicit
feedback on their
perception of
Procurement’s
performance?

33. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Benchmarking Spend Visibility
38%
99%
Peer Top Performer
Line-Item Spend Visibility Rate
Source: Purchase-to-Pay Study, The Hackett Group, 2017
Ability to View Spend Data by Supplier
• How did your spend
visibility – at the
Supplier and Line-
Item Level – compare
to the Peer Group and
World-Class
Benchmarks?
• How did a lack of
spend visibility impact
your ability to
influence spend?

34. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Benchmarking the Sourcing Process
• How did your Sourcing
cycle time compare to
the overall benchmarks?
• Which steps consumed
the most time? Where
were the choke points in
the process?
• What is ideal time
allocation by step that
would help to maximize
the value created in the
Sourcing process?

35. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Creating the Business Case for Digital Transformation
• What were the key value
drivers of your business
case for Digital
Transformation?
• What were the key criteria
you applied in the
technology selection
process?

36. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Getting the C-Suite On-board
CIO CFO CPO
• What were the “hot button”
issues for each of these key
executives that you had to
address?
• How were you ultimately
successful in getting
consensus?
• What role does the C-Suite
play beyond funding the
initiative, in helping drive
enterprise-wide adoption?

37. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Best Practices for S2P Transformation Sequencing
Spend analysis E-Sourcing SBM
Map external spend
Negotiate Strategic
Agreements
Manage compliance
Manage Supplier
Relationships
CLM
VMSP2P
Source: Gartner “Best Practices for Sequencing Procurement Solution Investments”
• How did your approach for sequencing S2P Transformation conform to
or differ from this best practice model?
• When did you start the S2P Transformation process and how long did
each step take?

38. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
Digitization’s Impact on Spend Influence, Efficiency
• How has Digitization enabled
Procurement to increase your
Spend Influence?
• How does Spend Visibility
translate to “Assisted
Sourcing” – i.e. what has
been the impact on Sourcing
effectiveness?
• What efficiencies have you
seen, e.g. spending less time
compiling data vs. gaining
insights from the Analytics?
Source: The Hackett Group

39. Source to Pay Suite: Spend Analysis | eSourcing | Contract Management | Supplier Management | Savings Management | Project Management | Request Management | Procure-to-Pay
What Digital Transformation Means for Procurement
Four pillars support
procurement’s digital
business strategy
Data and analytics
form the foundation
The Digital Business Strategy
2
Omnichannel,
personalized
stakeholder
experience
3
Digitally
enabled
procurement
workforce
4
“Smart”
orchestration
of source-to-
pay services
5
Ecosystem of
networked
solutions
1 Analytics-driven insights
Source: The Hackett Group
• How is Procurement’s role
evolving in the era of Digital
Transformation?
• How do analytics-driven
insights underpin the Digital
Transformation?
• What are the next
steps/major focus areas on
your Digital Transformation
Journey?

40. Check out this
webinar at
 https://zyc.us/2GNw7jJ

41. +1 866 563 9219
info@zycus.com
www.zycus.com
Thank You