We've talked about savings in procurement in the past, and depending on your role, chances are you know a thing or 2 about spend analysis to drive sourcing and category plans; mining invoice and payment data for recovery opportunities; and tracking commodity, currency and other indexes to unleash total cost and savings tracking. But, oh, there's more. Join the Spend Matters team and Tungsten for the webinar, Procurement Savings We Promise You've Missed, on Tuesday, September 29, at 10 A.M. CDT.
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This is your last chance to register for this afternoon's webinar and learn The 7 Deadly Barriers to a Successful Procurement Business Case. Pierre Mitchell, chief research officer at Spend Matters, and Dipan Karumsi, managing director, operations advisory services at KPMG, will give you the confidence you need to makes the case to your CFO, who is increasingly upping his or her standard of what constitutes successful ROI. Register here and join us at 12 p.m. CDT. (Can't make it live? Register anyway and we'll send you a copy of the slides and recording of the webinar for you to review at your convenience.)
Brand new hot-off-the-press research is now available from the Spend Matters team! Jason Busch, founder and managing director, and Thomas Kase, vice president of research, present The Past and Future of Strategic Sourcing – Looking Back to Look Forward at E-Sourcing. What does the future hold for strategic sourcing? Have we reached the full value potential for this segment or are there even more savings to be had? Get the full story here!
The half-year results for Xchanging released yesterday were intensely disappointing to shareholders, who saw the value of their shares fall by 20% instantly, to a new 3-year low of £0.97. That is still above the bad days when founder David Andrews resigned, in 2011, after major profit warnings, and the shares fell to £0.50, but the current price is close to half what it was as recently as last autumn. We typically view Xchanging as a procurement outsourcing business, yet the results highlight 2 points. First, the procurement outsourcing and software element only accounts for some 6.5% of total revenue – £13 million out of £200 million. Yet it also casts a very long shadow, in that the poor results are being almost totally laid at the door of the procurement business. Before looking at the specific procurement issues, just run through the headlines. Gross revenue was £240.2 million in the half year, down from £282 million compared with a year earlier. Net income was £199 million against £205 last time. Operating profit was £20.4 million against last year’s £20.0 million, but statutory operating profit was down from £24.2 million to a loss of £41 million after the write-offs, discussed below. In terms of the divisions, the business process outsourcing (BPO) arm lifted adjusted operating profit 8.8% to £28.4m, with the technology segment 52% stronger at £4.1m. Procurement, which contributes just 6.5% of net revenue, saw some growth in the software business but a weak performance in the traditional outsourcing business, combined with underperformance in one of the new “tail-end spend management” contracts. “Net revenue was £13.0 million (HY 2014: £15.9 million), and the adjusted operating loss was £6.8 million (HY 2014: £1.7 million loss). This was after allocating central overheads of £1.8 million (HY 2014: £1.9 million),” the company said in its half-year report. “
On Friday, May 15, Spend Matters Chief Research Officer Pierre Mitchell will lead an Ask the Expert webinar on the alignment – or lack thereof – between finance and procurement. The webinar is based of provisional results from a study Spend Matters and the Institute for Supply Management conducted on the relationship between finance and procurement in a company. You wont want to miss this! Plus and PRO members are welcome to sign up for this webinar.
In the last 2 editions of our 50 Shades of Pay series, we tackled how to turn the hands of time forward to “spend planning” rather than forensic spend analysis. Yet, before we get even more forward-thinking and strategic, we’re going to explore a few shades in the realm of the present, namely, making sure that hard-fought savings are getting realized. So, one of the ways that spend analysis can be used here is to tie the spending data to contract data for the purposes of maverick spending analysis. Let’s also put in the language of cost. In procurement, cost is still king, and costs can certainly increase in many ways.
The victory of left-wing party Syriza in this week's Greek elections could have far-reaching implications well beyond Greece itself, and at the extreme, could be the beginning of the end for the Euro. It is important, therefore, that anyone involved in procurement and supply chain activities where currencies have some relevance does, at the very least, keep an eye on events and thinks about the implications of the various possible outcomes following the Greek election. However, we should also note that many observers have been predicting the breakup of the Eurozone for at least 3 years now. So nothing is certain.
Getting the Most From Consulting Firms and Engagements – The Evolution of the Operations, Procurement and Sourcing Consulting Market (Part 4) [PRO]
Today we wrap up our "Evolution of the Operations, Procurement and Sourcing Consulting Market" PRO series, written by Jason Busch, founder and managing director, and Pierre Mitchell, chief research officer. In this installment, Jason and Pierre share the best strategies to get the most from consulting firms in the current climate of the procurement and operations areas. They share a number of best practices they have observed by “smart” consumers of consulting services.
In most procurement organizations, spend analysis is in place to support corporate procurement groups performing top-down sourcing and category management. Larger and more progressive organizations may also have a “customer management” process for aligning to internal budget-owning stakeholders to make sure they are gaining value from their supplier spending – and also getting the eye from procurement. In earlier installments of the series, we discussed how to provide spend information to support these processes. Unfortunately, FP&A is a process that is mired down in preparing budgets rather than the more strategic role that it should occupy.
We recently started our analysis of the services procurement market by looking at the evidence showing how the staffing marketplace is failing procurement organizations. Today, we turn our attention to the “why” and the various sets of factors that are holding back organizations from gaining more value from their services procurement spend. This value includes greater savings, of course, but also reduced risk, increased compliance, better talent management and time to focus on innovation, continuous improvement and business outcomes. In this Spend Matters PRO analysis, Jason Busch, founder and managing director, goes beyond the standard “fox watching the henhouse” issues with the traditional MSP/staffing market. Finally, to conclude this series, we will offer a prescription for changing the market from the inside out with procurement-led initiatives.
In the previous 10 installments of this series, we’ve discussed how (and why) to build a foundational capability to analyze spending history and then identify a myriad of opportunities to improve not just sourcing outcomes, but also opportunities to improve processes, master data, policies, etc. These are opportunities for procurement as well as the spend owners themselves. What this transformation means is that we begin to focus on future spending in order to best shape it and gain more value. Rather than just looking in the proverbial rearview mirror to see black smoke, we begin to look forward with our passengers and discuss where we need to go and what type of vehicle and fuel is needed for the journey.
With apologies to Meghan Trainor, it’s not all about the bass, at least not when it comes to P2P success and integration. Rather, it’s all about data quality. Successfully integrating P2P solutions into back-end ERP systems (and other applications) is not just a question of file formats and structures. Nor is it just about aligning objectives between stakeholders through the workshop model we advocated for earlier in the first installment of this research brief. In this Spend Matters PRO analysis, Lead P2P Analyst Xavier Olivera tells us how to think through all the key data quality issues in implementations and also provides his list of overall key success factors for P2P and ERP integration.