How do you structure your procurement transformation program to optimize benefits within a complex environment? Based on its experience with 300+ procurement technology projects, Deloitte shares insights and lessons learned in preparing for and delivering a procurement technology transformation program. Build the road map, underpin with the business case, and succeed in delivering change.

1. Kathryn Thompson, UK Procurement Technology Lead, Deloitte / June 14, 2016
Developing a Roadmap and Business Case –
Deloitte Sponsor Session
Public

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3. Source to Pay
Operation
Transformation
Kathryn Thompson,
UK Procurement Technology
Lead
14 June 2016
Speed to Value

4. 2016 CPO survey results
Procurement 2.0: the change agenda
Creating a Procurement Technology roadmap
Questions
Contents
Speed to value must underpin the change agenda

5. Survey Participant Overview
The 2016 Global CPO Survey captures sentiment from over 320 Procurement Executives
from 33 countries.
2016 CPO Survey
Manufacturing
26%
Consumer
Business
13%
Energy &
Resources
13%
Healthcare & Life
Sciences
11%
Financial
Services
10%
Technology,
Media, &
Telecom
7%
Public
Sector
7%
Other
14%
RESPONSES BY INDUSTRY
7%
26%
42%
20%
> $50B
$10B - $50B
$1B - $10B
< $1B
RESPONSES BY ANNUAL
REVENUE
179Europe
93North America
52Rest of World
RESPONSES BY REGION
Source: Deloitte Global CPO Survey, 2016

6. Market Outlook
Return to Cost Focus
CPOs are responding to declining financial forecasts by focusing on cost reduction, a change
from last year’s focus on supporting growth.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2011 2012 2013 2014 2015
Uncertainty Financial Outlook
TOP PRIORITY BUSINESS STRATEGIES FOR NEXT
YEAR
ANTICIPATED ECONOMIC UNCERTAINTY VS.
FINANCIAL OUTLOOK*
Expanding Organically
43%
45%
15%
74%Reducing Costs
47%
New Products /
Services / Markets
Increasing Cashflow
Increasing CapEx
2015: From 2014:
Source: Deloitte Global CPO Survey, 2016
*Net percentage of respondents that anticipate economic uncertainty to increase;
net percentage of respondents that anticipate financial outlook to improve

7. Risk Management
Stepping Up
CPOs are increasingly involved in managing supply risk, requiring different capabilities to
meet new challenges – but involvement is still low.
REPORTED LEVEL OF PROCUREMENT-RELATED RISK
PERCENTAGE OF CPOs INVOLVED IN RISK MANAGEMENT
AND MITIGATION
Today’s CPO faces new challenges as the
steward of supply chain risk:
• Need for increased collaboration with
suppliers
• Establish coordination across multiple
internal functions
• Gain visibility into operations of all global
suppliers
• Capture and analyze internal and third-
party data
Source: Deloitte Global CPO Survey, 2016

8. Talent
A Widening Gap
Procurement teams increasingly lack the skills required to execute the vision of the CPO, and
organizations are slow to invest in talent.
TEAM HAS SKILLS TO DELIVER CPO’S
STRATEGY
PRIORITIES FOR TALENT IN THE NEXT
YEAR
Source: Deloitte Global CPO Survey, 2016

9. Talent
Has Outsourcing Peaked?
While interest in outsourcing as a means to plug the talent gap has increased in recent years,
the trend has slowed this year.
FOCUS ON OUTSOURCING ACTIVITIES
2013
2014
2015
AREAS OF OUTSOURCING FOCUS
Business
Planning &
Develop-
ment
Category
Management /
Strategic
Sourcing
Operational
Buying
Contract and
Supplier
Management
Requisition
to Pay
2014 2015Source: Deloitte Global CPO Survey, 2016

10. Technology
Digital Divide?
Investments in traditional procurement technologies continue to grow, as are new emerging
disruptive technologies – but most CPOs have no clear digital strategy.
LEVEL OF PROCUREMENT DIGITAL
STRATEGY
No clear
digital
strategy, but
exploring
options for
digital
enhancement
No clear
digital
strategy and
not exploring
options for
digital
enhancement
Clear digital
strategy
aligned with
wider
organization
Clear digital
strategy, but
not aligned
with wider
organization
40%
Clear digital
strategy
60%
No clear
digital
strategy
INVESTMENT IN INNOVATIVE DIGITAL
SOLUTIONS
2014
2014
2014
2014
2015
2015
2015
2015
Social Media
Self Service Portals Cloud Based
Computing
Mobile Technologies
23%
42%
43%
70%
26%
45%
16%6%
Source: Deloitte Global CPO Survey, 2016

11. Technology
Safe Investments
Planned technology investments reflect the increased focus on cost control and
risk management.
PLANNED INVESTMENTS IN PROCUREMENT TECHNOLOGY
• Improved insight into key
areas for cost reduction,
volume consolidation, SKU
rationalization and other
opportunities;
• Dynamic category view of
spend over time; and
• Understanding of spending
across the organization
• Increased spend under
management;
• Improved ability to capitalize
on supplier incentives
such as dynamic discounting
and volume discounts; and
• Better leverage with major
suppliers.
• Improved reliability of
spend data, which has
positive implications for the
effectiveness of analytics
tools;
• Better compliance with
purchasing policies and
adherence to negotiated
pricing; and
• Streamlined procure-to-pay
process.
38% 37% 30%
Spend Analysis Contract Management eSourcing
Source: Deloitte Global CPO Survey, 2016

12. Procurement 2.0 is a new breed of technology solutions
1990 2000 20101980 Today
1980 1990 2000
R2P transactional
processes
supported within
ERP systems
eSourcing
technology
Self service
eProcurement
Dot com
bubble burst
2010
Mobility
and the
cloud
NASDAQ Composite (1990-2003):
The New Procurement
Revolution
Procurement
2.0
On line
Collaboration
Mobile
Working
Social
Networking
Embedded
Analytics
Cloud
Deployment
Usability
Prioritised

13. Procurement 2.0 leverages on and off-premise technology to
drive business outcomes
Procurement Challenges
Operating
Model
Enablement
Benefits
Realisation and
Control
Collaboration
and Innovation
Productivity
• Supports decentralised working
• Engages leadership
• Improves processing time
• Deliver hindsight, foresight,
insight
• Real time data
• Cross system view
• Enhanced productivity
• User satisfaction
• Increased compliance
• Enhanced business engagement
• "It's who you know"
• Real time feedback
• Lower Total Cost of Ownership
• Leverages innovation
• Simpler implementation and
maintenance
• Faster issue resolution
• Traceability and visibility
• Better specifications
Procurement
2.0
On line
Collaboration
Mobile
Working
Social
Networking
Embedded
Analytics
Cloud
Deployment
Usability
Prioritised

14. Evaluating Procurement 2.0 opportunities can be complex
Procurement 2.0 provides the opportunity to leverage established ERP solutions alongside
innovative cloud options.
Operating Model
Procurement Strategy
Infrastructure
IT strategy
Procurement 2.0 Decision Drivers
Procurement 2.0 Portfolio

15. Procurement 2.0 applications support the full process cycle
Systemsof
Innovation
SystemofDeliverySystemsofRecord
Demand forecasting and planning
Innovation management
Source to pay performance management
Supplier data management
P-cards
Catalogues and content
Requisition management
Planning
Supplier
relationship
management
Requisition to
receipt
Spend and market analytics
SPM
Contract lifecycle management
eSourcing
Sourcing
Operational
buying
Invoice to pay
OCR
Invoice
management
Supplier portal
Buyer portal

16. Preparing to implement
Develop your Transformation
Strategy and Roadmap
Clearly articulate future benefits:
lead with the Business Case
Develop the technology enabling
roadmap
Design your Source To Pay Process
with the end in mind

17. Assess current capability across all dimensions of your
Procurement operating model
Procurement Capability Assessment Framework
Assessment Framework Dimension Activities Covered
Procurement Strategy Strategy Alignment, Make v Buy, Spend Under Management
Business Engagement
Stakeholder Management, Demand management,
Requirements Definition
Category Management/
Strategic Sourcing
Category Strategy, Savings Planning, RFP Management,
Negotiation
Contract Management Contract Clauses, Management, Risk Management
Supplier Relationship
Management
Supplier Performance, Relationship Management, Supplier
Development
Requisition to Payment
Workflow controls, Catalogue management, Compliance,
Payments
Supply Chain Supply assurance, Stock management, Logistics
Organisation Structure, Global/Regional/Local, Tax efficiency
Knowledge & Skills Capabilities, Training, Recruitment
Performance Management Balanced Scorecard, KPIs, Benefits Tracking
Risk & Regulation Data Protection, SoX, Base II, TUPE, IR35
Technology
Self-service procurement, electronic transactions, data
management
Information Spend cube, Market Knowledge, Benchmarking
Organisation
Knowledge
&Skills
Risk &
Regulation
Information
Technology
Performance
Management
Business
Engagement
Supplier
Relationship
Mangement
Supply
Chain
Category
Management
/ Strategic
Sourcing
Contract
Management
Requisition
to Pay
Procurement
Strategy
Strategy Process Infrastructure
Key

18. Value drivers will underpin the Transformation Roadmap
Competitive
advantage by
enabling a flexible,
low-cost, world
class STP,
leveraging scale &
scope.
Time/Activity Waves (Illustration)
FY 17 FY 18 FY 19
Processes Technology Benefits
People
DevelopmentSourcingOrganisation
Training
programme in
use
New job profiles
defined
Competency
toolkit in place
Supply Chain
academy
Improved purchasing
competence measured
through self assessment
tools
Global
performance/competen
ces being measured
Benchmarked best in
class resources
Full category alignment
to Procurement Models
Harmonised category
implementationSupply market
exploited
Sustained savings
delivery through
category waveplan
Category Strategy
implementation in
progress
Cross functional
teams established
Category transition
to procurement
models
Continuous process
improvement in place
Operating model
established with clear
roles & responsibilities
Category Management
structure established
FSOM processes
implemented
Clear definition of roles &
responsibilities across Category
& Operations
Supplier Adoption
processes established
Best in class Source to
Contract and Purchase to Pay
processes established
Contract compliance
enabled systems
Content Management
structure for categories
System category coverage
aligned to waveplan
Current
situation

19. 1. Reduced spend
2. Process efficiency
3. Increased control
4. Technology rationalisation
Understand the
strategic value drivers

20. Fund the change for the roadmap you choose
Reduce
Demand
+ x x=
%
Increase
Spend Under
Management
%
Decrease in
Contract
Costs
%
Compliance
to New
Contracts
Process /
Collaboration
Cost
Reduction
+
Objective: Rationalise
Requirements /
Change Policies
Improve
Governance
Model
Improve
Compliance
Management
Tax Strategy
Process Redesign
Mechanisms
for Applying:
Typical
Savings: 5 – 10% 1 – 3%10 – 25%
Spend
Management
Value
 Tie spend to
business needs
 Enforce
appropriate
usage patterns
 Design new
procedures
 Gain enterprise-
wide spend view
 Establish spend
accountability
 Define standards
and specs
 Institutionalise
compliance
 Design tracking
and feedback
tools
 Benchmark
 Hardwire to
financials
 Identify/correct
overpayments
 Quantify reduction
from reduced spend
 Design
Procurement Co
entity
 Competitive
marketplace
sourcing
 Baseline TCO
 Rationalise
supply base
Effective “Total
Cost” Sourcing
x
How It Works: Figure out what you
really need to buy…
1 …Source good or service in a
competitive environment…
…Gain business
compliance…
2 …Work with supply base
to gain further reductions.
43
Governance and
Category Management
Sourcing/Supplier
Management
Procurement/P2P Financial
Governance &
Category
Management
Sourcing / Supplier Management Procurement
/ P2P Financial

21. Sample Procurement 2.0 roadmap
Demand and
planning
Performance
management
Supplier data
management
P-cards
Catalogues and content
Requisition management
FY17 FY18 FY19
Spend & market
analytics
SPM
Contract lifecycle
management
eSourcing
OCR
Invoice management
Supplier portal
Buyer portal
Example scenario:
• Fragmented legacy data and systems
• Driver to increase control and decrease
spend
• Limited annual budget for change

22. Designing with the end in mind, why not?

23. Suppliers &
Customers
Points of
failure
Timings
Policy
Compiance
Variances
Process X-
ray
Analysis
HandoversBehaviours
Process X-Ray
Process inspection & improvement using advanced analytics
Inspect Your Processes
Uses advanced analytics software to
mine data captured in existing ERP
systems to examine your processes
Identify
Issues & Improvements
Use the intuitive interface to see a
complete view of how processes are
actually performed and identify issues
& areas for improvement
Implement
Best Practice Fixes
Deloitte's business process modelling
tool containing best practice process
models ("IndustryPrints") for 50+
industries. To accelerate repair &
improvement of processes
!

24. Questions

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