Nine out of 10 CPOs believe their procurement and sourcing teams could be doing better. That’s according to a recent study by Andrew Bartolini of Ardent Partners, and he explains why in the slides from the recorded webinar. Andrew shares keen insights and key performance and operational benchmarks that he captured in his study, CPO Rising 2015: The Agility Agenda. If you find yourself in that 90-percent segment of CPOs, you’ll appreciate this in-depth look at how you can improve your team’s performance, including: The key drivers that enable best-in-class performance The use of statistics in benchmarking performance The strategies and approaches needed to improve processes, operations, and results

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PROCUREMENT 2015:
BENCHMARKING THE BEST-IN-CLASS
Andrew Bartolini
Chief Research Officer
Ardent Partners
May 14, 2015

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AGENDA
 Introduction
 The State of Procurement 2015
 Benchmarking the Best-in-Class
 Recommendations
Copyright © 2015 - Ardent Partners Ltd.

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INTRODUCTION

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 Chief Research Officer, Ardent Partners
 Publisher, CPO Rising & Payables Place
Summary
 Recognized expert in sourcing, procurement, AP, and supply management
 Advisor to solution providers & CPOs alike around the world
 Presented more than 200 times in seven countries
 Benchmarked 10,000+ enterprises across all facets of their supply management operations
 Published 1000+ research reports, analyst insights, articles, and other briefs
 Named a “Pro to Know” by Supply and Demand Chain Executive three times
Experience
Decade plus as Industry analyst. Leadership roles in sales, marketing, and services at Ariba and
Commerce One. Rich experience in strategic sourcing, business process transformation, and
software implementation. Background also includes consulting and investment banking.
Education
 MBA – Indiana University
 BA – College of the Holy Cross
ANDREW BARTOLINI
Copyright © 2015 - Ardent Partners Ltd.

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Ardent Partners is a research and advisory firm
focused on defining and advancing the supply
management strategies, processes, and
technologies that drive business value and
accelerate organizational transformation within
the enterprise.
ARDENT PARTNERS
Copyright © 2015 - Ardent Partners Ltd.

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www.cporising.com
CPO RISING: GLOBAL RESEARCH & ANALYSIS FOR CPOS
Copyright © 2015 - Ardent Partners Ltd.

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October 20 & 21 — Boston, MA
Join us for Ardent Partners’ CPO Symposium
This exclusive event promises valuable networking
opportunities and the interactive exchange of ideas
Don’t Miss Out on the Procurement Event of the Year!
Visit www.cporising.com for more details
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Research Report
 Goal (I): Capture the strategies, performance, and intentions of Chief
Procurement Officers in 2015 (and beyond)
 Goal (II): Present a clear and comprehensive view of the “State of Procurement”
 Goal (III): Identify the strategies and levers that drive Best-in-Class results
Approach
 Utilize a web-based survey to capture responses from 318 CPOs and other
procurement executives
 Interview 26 leading CPOs (and ex-CPOs) to add context and understand
critical and emerging trends
 Leverage experience and orientation of a leading analyst team
RESEARCH PROCESS
Copyright © 20145- Ardent Partners Ltd.

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TODAY’S PRESENTATION
Report Demographics
318 Respondents
o 72% VP or Director-level
o 82% work in procurement
o 63% from large enterprises
o 61% North America; 26% EMEA
o 28 industries
o Interviewed 26 CPOs
Copyright © 2014- Ardent Partners Ltd.

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THE STATE OF PROCUREMENT 2015

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“Procurement is an incredibly
important part of the business. You
need to get that right.”
~ Sam Walsh, CEO, Rio Tinto
THE CEO’S VIEW OF PROCUREMENT
Copyright © 2015 - Ardent Partners Ltd.

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CPO REPORTING IN 2015
Copyright © 2015 - Ardent Partners Ltd.
CFO, 32%
CEO, 22%
COO, 19%
Supply
Chain, 7%
Shared
Services , 6%
Line of
Business , 4%
President, 2%
Other,
7%
© Ardent Partners - 2015

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THE CPO’S TOP PRESSURES IN 2015
Copyright © 2015 - Ardent Partners Ltd.
51%
27%
25%
21%
18%
Find more savings Increase overall
effectiveness and
influence
Better communicate
value and
performance
Increase the
percentage of spend
under management
Better align
procurement with
business goals and
needs
© Ardent Partners - 2015

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TOP CPO STRATEGIES
(SAVINGS PRESSURE OR NO SAVINGS PRESSURE)
Copyright © 2015 - Ardent Partners Ltd.
44%
36%
26%
22%
36%
21%
17%
29%
Improve use of
technology (buy
new and/or
improve current)
Improve staff
capabilities
Optimize current
systems and
processes
Improve
collaboration with
suppliers
No Savings Pressure
Savings Pressure
© Ardent Partners - 2015

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THE CPO’S TOP PRIORITIES (NEXT 3 YEARS)
Copyright © 2015 - Ardent Partners Ltd.
42%
39%
33%
28%
27%
Savings Processes Compliance Innovation People
© Ardent Partners - 2015

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WHAT’S HOLDING PROCUREMENT BACK?
Copyright © 2015 - Ardent Partners Ltd.
57%
31%
29%
26%
37%
35% 35%
38%
Staff/Talent constraints Budget constraints Lack of technology
infrastructure (i.e.
gaps)
Challenges aligning
processes and
systems
2014 2015
© Ardent Partners - 2015

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WHAT WILL DRIVE PROCUREMENT FORWARD?
Copyright © 2015 - Ardent Partners Ltd.
Technology Usage and Intentions
37%
48%
42%
16%
50%
40%
28%
39%
29%
38%
42%
33%
30%
37%
Automated
Spend
Analysis
eSourcing Automated
Contract
Management
(Repository)
Automated
Contract
Management
(Authoring)
eProcurement ePayables (AP
Automation)
Business
Network
Currently Use
Plan to Use
© Ardent Partners - 2015

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PROCUREMENT PERFORMANCE BENCHMARKS

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2015 PROCUREMENT BENCHMARKS
Copyright © 2015 - Ardent Partners Ltd.
Metrics Market Average
Spend under management 61.4%
Savings 2014 (Actual) 6.0%
Savings 2015 (Target) 6.6%
Addressable spend that is sourced 47.9%
© Ardent Partners - 2015
Value Drivers

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2015 PROCUREMENT BENCHMARKS
Copyright © 2015 - Ardent Partners Ltd.
Metrics Market Average
Spend that is contract compliant 55.2%
Transactions that are contract
compliant 63.0%
Contracts stored in a central,
searchable repository 57.4%
Percentage of catalog-based spend 14.3%
PO-based spend 63.0%
© Ardent Partners - 2015
Compliance Metrics

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2015 PROCUREMENT BENCHMARKS
Copyright © 2015 - Ardent Partners Ltd.
Metrics Market Average
Suppliers representing 80% of total
spend 21.9%
Enabled suppliers 29.2%
High-risk suppliers 6.5%
© Ardent Partners - 2015
Supplier Metrics

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BUT, SHOULD YOUR PROCUREMENT DEPT. BE DOING BETTER?
Copyright © 2015 - Ardent Partners Ltd.
90%
3%
7%
Yes
No
Not Sure
© Ardent Partners - 2015

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THE CPO’S TOP DRIVERS FOR FUTURE SUCCESS
Copyright © 2015 - Ardent Partners Ltd.
44%
48%
53%
53%
66%
Better team execution
Better communication plan
Larger and/or more talented staff
New (or improved) technology
Earlier engagement on sourcing
opportunities
© Ardent Partners - 2015

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BEST-IN-CLASS PROCUREMENT DEFINITION
Copyright © 2015 - Ardent Partners Ltd.

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PROCUREMENT METRICS (BEST-IN-CLASS V. ALL OTHERS)
Copyright © 2015 - Ardent Partners Ltd.
© Ardent Partners - 2015
Metrics
Best-in-
Class All Others
Spend under management 90.0% 53.1%
Savings 2014 (Actual) 6.7% 5.8%
Savings 2015 (Target) 6.6% 6.6%
Addressable spend that is sourced 61.8% 43.9%
Spend that is contract compliant 66.3% 51.7%
Transactions that are contract compliant 73.8% 59.7%
Contracts stored in a central, searchable repository 68.9% 53.9%
Percentage of catalog-based spend 14.5% 14.2%
PO-based spend 79.2% 58.6%
Suppliers representing 80% of total spend 18.8% 22.6%
Enabled suppliers 36.7% 27.3%
High-risk suppliers 8.4% 5.6%

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BEST-IN-CLASS TECHNOLOGY ADVANTAGE
Copyright © 2015 - Ardent Partners Ltd.
© Ardent Partners - 2015
25%
38%
52%
14%
38%
46%
33%
40%
47%
64%
24%
55%
55%
48%
Business Network
ePayables (AP Automation)
eProcurement
Automated Contract Management
(Authoring)
Automated Contract Management
(Repository)
eSourcing
Automated Spend Analysis
Best-in-Class
All Others

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BEST-IN-CLASS CHARACTERISTICS
Copyright © 2015 - Ardent Partners Ltd.
© Ardent Partners - 2015

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RECOMMENDATIONS

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RECOMMENDATIONS
 Develop a spend under management “pipeline”
 Work to get engaged earlier on sourcing opportunities
 Deploy new and improved technology
 Use technology to make collaboration a habit within the
enterprise
 Use business networks to make collaboration a habit
across the supply chain
Copyright © 2015- Ardent Partners Ltd.

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For more information please visit:
www.ardentpartners.com & www.cporising.com
Contact Info
Andrew Bartolini
Chief Research Officer
abartolini@ardentpartners.com
@andrewbartolini
Copyright © 2015- Ardent Partners Ltd.