Procurement Solutions

Workforce Management
Crowdsourcing
Staffing
On/Offshore BPO

The Future of Procurement

Roy Anderson randerson@metasysinc.com 1

 Under Paid
Over Worked
We in the Cranky Internal Customers
Education NO BUDGET
Limited Technology
Space No Seat at the decision table
Leaders do not know our value
WE DO NOT HAVE TIME
Are What authorization structure

DIFFERENT
Paper Work
Social Responsibility
Diversity
Priorities
What is Vision 2020
Dialog between leading procurement practitioners and
influencers:
Group 1: Visionary and seasoned executives
Group 2: CPOs in charge of high-performing spend management organizations
Responsible for over $100B in annual spend
Including: Sodexo, KeyBank, AXA, Huntington National Bank, MetLife, Varian,
AstraZeneca, The Home Depot, Hewlett-Packard, Sourcing Interests Group,
General Motors, JP Morgan Chase Bank, Maersk, Association for Contract &
Commercial Management

Objectives:
What is the future of procurement

2010 Ariba, Inc. All rights reserved.

Concepts Explored
Automation
Synthesized info
Mobile
Virtual
Predictive data
Price transparency
Procurement redesign
Outsourcing
Financial focus
Spend Management sophistication
Supply knowledge
Strategy expansion
Talent competition
Outward focus
Extended enterprise
Innovation convergence
Shift from product to solution
Supplier value
Profits over savings

2010 Ariba, Inc. All rights reserved.

 Burning Platform

Cut your Budget 10-30%

Build New Capabilities
Be More Responsive
Make Business Agile
Think Strategically
Drive Innovation
Reduce Risk
Control Costs

Photo by Wilka Hudson

 Burning Platform

Do More with Less

Photo by Wilka Hudson
HOW
ORGANIZATION
 Procurement Imperatives

Value Creation
-Focus on value creation that impacts organizational success
Be Innovative
-Create, enable and develop innovation from the supply base
Massive Skill Improvement
-Radically improved Procurement skills embedded in the LOB
Understand Risk
-End to end risk aware supply chain ecosystem
Technology
- On the cloud
Risk
"We are going to see a big awakening around
supply risk in the coming decade"
John Campi,
former CPO Home Depot, Chrysler, DuPont
There are very few secrets out
there anymore.
The only competitive advantage
becomes speed.
Organizations need to keep
embracing innovation and new
technology models.

Rollin Ford, CIO, Wal-Mart

80% of all professional jobs will
change dramatically in the next 15
years
- Tom Peters Re-Imagine- March 2004
12
www.scottmcleod.net 13
Yesterdays CIO Technology Priorities

Source: CIO Technology Priorities Study February 2010

14
Todays CIO Priorities

Source: CIO Technology Priorities Study February 2010

15
 The government should adopt Web-
based and free technologies over
proprietary ones wherever possible to
reduce government spending on long-
term maintenance and consulting
contracts. - Aneesh Chopra
White House CTO

Steve Ballmer
President of Microsoft
SOCIAL MEDIA
MMO
Massively multiplayer
online games

18
Virtual worlds that exist around the clock
Sprawling cyberspace universes let as many as several
thousand fans connect and play games
simultaneously.

19
Fantasy, is just the beginning
Distant friends or SUPPLIERS the world over to
chat or interact

20
 98% adults aged 18-24
in the United States
are using social media
http://www.thenewage.co.za/38836-1021-53-Social_networking_is_the_most_popular_online_activity

21
Close to 65% of all smartphone users in the
US visited a social network

Every Month
http://www.thenewage.co.za/38836-1021-53-Social_networking_is_the_most_popular_online_activity

22
 2 in 5 used their mobile device
to connect to a social network

Every day
http://www.thenewage.co.za/38836-1021-53-Social_networking_is_the_most_popular_online_activity

23
Social Media

Feedback Tools 2011 Fear of Social Media 2012

60% 80%
70%
50%
60%
40% 50%
30% 40%
30%
20%
20%
10% 10%
0%
0%
Fear of Too much to Leery of Dont know
email/online formal phone informal Social Media
information manage sharing where to begin
surveys surveys phone calls
overload sensitive
information

Study by MarketTools: Social StrategySurvey 2012:

http://www.mediapost.com/publications/article/ http://www.mediapost.com/publications/article/166618/amex
142811/#ixzz1kzlsfCMw -helps-small-biz-use-social-media.html#ixzz1kzoPpyHf

You have to do it different

24
 Visits to Facebook accounted for
1 in every 7 minutes internet users spent
online in October
and
75% of all time spent on all social
networks.
http://www.thenewage.co.za/38836-1021-53-Social_networking_is_the_most_popular_online_activity

25
The emergence and widespread global
adoption of social networks has vastly
influenced human interaction on an
individual, community and larger societal
level
Linda Boland Abraham, comScore

26
Social networks are weaving themselves
ever more intricately into the fabric of the
digital experience,
opening a world of new opportunity for
business and technology.
Linda Boland Abraham, comScore

27
What are we doing to ourselves?

6.999 billion people on the planet

4.8 billion have a mobile phone
SADLY ONLY
4.2 billion own a toothbrush.

The Mobile Marketing Association of Asia (60 Second Marketer)

http://www.census.gov/main/www/popclock.html
28
What is
Innovations
Role?

29
Innovation

.we will be looking for suppliers who can help

us innovate the ways in which we go to
market and sell our products, especially in
emerging markets where traditional sales
models don't scale.
CPO large pharmaceutical firm

2010 Ariba, Inc. All rights reserved.

 Innovation
Supply managers will need
to go beyond merely
looking for innovation in
the supply base.

Our job, will be to drive

innovation where it is
needed in the supply base

2010 Ariba, Inc. All rights reserved.

Innovation Weasel Words

What I see is weasel words put into contracts

We will hold an innovation meeting once
a year
We will bring our innovators
We will all talk.

Okay, well what is that?

Senior Contacts Major Consulting Firm

32
Innovation Sharing

Youre asking me to innovate and then youre going

to turn around and share my innovation with
everybody

What do I get for that?

North America Senior Contacts Manager Major Consulting Firm

33
Demotivators need to disappear
30-day escape clause
"How can you ask a supplier
to invest in people, talent
and innovative thinking, to
put money into the
development of your
relationship

And we can leave the

relationship in 30 days
when we feel like it?
Innovation

The seller has to

be encouraged
by the buyer,
to allow for
innovation

International Contracts Manager, Manufacturing Firm

35
How Do We Motivate Suppliers

Our contracts need to

motivate suppliers, to offer
solutions that:
-invest in creating the
best solutions
-give us their best and brightest
people

Tim Cummins President IACCM

International Association for Contract & Commercial Management
Interview with a Program Change Manager
at a Global Telecom

37
Perception

Theres always this desire to squeeze the vendor.

It looks good in your balance sheet

It looks good in your annual report
Giving a lot of headlines in your boardroom.

Global Change program manager at a global telecom

38
The Death of Innovation

When it comes to the actual procurement

They have been really picking apart our

wonderful, holistic proposals into atoms and
then you buy one atom at a time at the best
price on the spot market.

39
Global Change program manager at a global telecom
Is Procurement the
death of
innovation?
40
Innovation

41
 The Next Generation Labor Solution

IT Outsourcing BPO Outsourcing

Incremental Annual Savings

eProcurement

Strategic Sourcing/e Auctions ?

1995 2000 2005 2010 Today
CROWD SOURCING
 Variable Labor Strategy

Complimentary to FTE Labor

Strategy Labor Resource Strategy

-Contingent Labor
-SOW
-Crowd
Supplier Management and
Innovation
Integrate resource planning with
corporate objectives

Associates SOW Contingent Worker Crowd

Optimization - Labor Strategy, Financial Services
Example
. More common distribution ____________ Actual distribution

Potential Opportunity: Alter spend distribution

and reduce cost by $285,000 (4.1%)

Hire

$2.7M

Off shore
$2.2M

Contract Labor
$1M
$ .864M
From Global to Hyper-Local
Capability to build new services and global products as demand grows
6 Continents

20 Regions

102 Countries

4,604 Cities

120,000 Qualified Independent Multilingual Workers in 102 countries

Translators Interpreters Web Raters Transcribers Subject Matter Experts
Fixed to Variable Model

Pursue Efficiency Gains

Shed fixed costs

Eliminate single points
of failure
Organize and manage a
flexible workforce
Attain output-based
charges
 Skills

The folks who are going to make a difference in a

contracts role are those that recognize that a critical
component of what they do is to:

enable and drive change

Partner in Business Advisory Service

48
Organization
"will have people embedded in their organizations,
working as dedicated members of their teams, who
will be part of their businesses in every aspect.
VP Procurement Technology Company

It means establishing highly skilled

technical entities that can be
embedded with engineering.
CPO Global Bank

2010 Ariba, Inc. All rights reserved.

 Abundance
The future is better than you think
Dr. Peter Diamandis is the
Chairman and CEO of
the X PRIZE Foundation

Steven Kotler is a
bestselling author and
an award-winning
journalist
 Innovation
Aluminum WAS more valuable than gold
Caps the Top of the Washington monument
Then came electrolysis technology
Now we throw it away Abundance the future is better than you think
 What Stops Us
Global Access
Communication
Energy
Water
Investment
Education
Cell Phone Penetration in Africa
28% in 2009
70% in 2012

Global Access
A Massi Warrior in Kenya
With a mobile phone
has better capability
than President Reagan
25 years ago.
With a smart phone he
has more information
at his finger tips than
President Clinton had
15 years ago
 What Stops US
Global Access
Communication
Energy
Water
Investment
Education
 Energy
Global Population uses 16 terawatts of
electricity
That is the amount of energy our Sun
delivers to the Earth
Every 88 minutes
5000 times more energy than we use

Abundance the future is better than you think

 Energy
Solar energy costs have dropped 50% in
the past year
What happens when it drops 99.99999%
When we have so much energy
It is unlimited

Abundance the future is better than you think

 What Stops US
Global Access
Communication
Energy
Water
We fight for 2% of the drinkable water
Living on a planet of water
Investment
Education
The sling shot
(Dean Kamen)
Using 100 watts
of power
Generates 1000
litters of water a
day
Cost of less than
$.02 per litter
 What Stops US
Global Access
Communication
Energy
Water
We fight for 2% of the drinkable water
Living on a planet of water
Investment
What happens when we invest?
Education
India Festival of Color (HOLI)
India Gross Domestic Product
 Where are These Investments?
Infinite Computing (Cloud computing)
Sensor and Networks
Robotics
3D Printing In
Synthetic Biology
Digital Medicine
Universities
Nan materials like yours
Artificial Intelligence
Allows the vast masses to
earn a living
Books, medical
information

Innovate on a Global Scale

 $10M Qualcomm
X prize
-Cloud computing
-Artificial
intelligence
-Digital Medicine
-Lab on a chip
-Hand held mobile
device
-Diagnose people
better than a
team of doctors

tricorder
 Lowell
Massachusetts
For 150 years the Merrimack
River was used to fish
 1803
Opened 27-mile, 20-lock Canal
Revolutionized transportation by
providing an all water route from
Concord New Hampshire to Boston
 1840
Lowell used the canals to drive water
turbines and built the textile industry
Second largest city in New England
and the industrial center of America
Lowell Technology College
 1940
The collapse of that industry
placed Lowell into recession

To the Carolinas
To India

To Vietnam
 1960

Electricity from the canals

And
Educated workers from
UMass Lowell
 1990

They were gone

And
Lowell had to transform
Again
 Today, The Mills and the Canal
Tourism to show the life of a Mill Girl
Artists Community
Places of learning
as a part of UMass Lowell

Investing in Nano technology,

Solar energy and Smart Textiles
Skills

The future is:

The inquisitive mind

Trying to push the boundaries
Look at how you do things differently
Ability to balance passion and objectivity

Senior Contracts Manager, Software Firm

75
The 2020 Supply Professional
Professional.
Polished.
Intelligent. Executive. Your
Respected. picture
Influential. here

Persuasive.
Strategic.
Sharp. Visionary.
Global. Collaborative.
Savvy in business.
Internal Consultant
Change Manager
Domain Expert
Share your Ideas

Roy Anderson randerson@metasysinc.com 1-678-218-1627

https://twitter.com/#!/procureguyvp http://www.linkedin.com/in/royranderson
How Can You Get Involved

For additional predictions, or to join the

conversation visit:
www.futureofprocurement.com

To download the full report:

www.futureofprocurement.com

2010 Ariba, Inc. All rights reserved.

 Procurement Solutions
Workforce Management
Crowdsourcing
Staffing
On/Offshore BPO

The Future of Procurement

Roy Anderson randerson@metasysinc.com 79