SirionLabs Webinar Featuring Forrester - Plugging Value Leakage in IT Outsourcing Engagements -...

1© 2012-16 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.

The Challenges and Opportunities for the CIO

Webinar

Plugging Value Leakage in IT Outsourcing Engagements


Agenda

Plugging Value Leakage in IT OutsourcingEngagements

• Growing importance of services providers

• Issue of ineffective governance and value leakage in complex services engagements

• Role of back-end vendor management processes in determining success

• Filling the gaps between CLM, SRPM, and e-Invoicing

How Sirion addresses the issue of ineffective governance and value leakage?

Andrew Bartels, VP and Principal Analyst, Forrester

Ajay Agrawal, CEO, SirionLabs

Q & A


Today’s Speakers

Andrew Bartels, VP and Principal Analyst, Forrester

Andrew Bartels primarily contributes to Forrester's offerings for the CIO. As an analyst,he is a leading expert on tech market trends and sizing, cloud and smart computingtechnologies, tech budget benchmarks and processes, and tech's impact on businessoperations. He also researches the growing customization of tech systems for industry-specific solutions for utilities, energy, government, education, and professionalservices sectors. He is a thought leader in buy-side technologies and businessnetworks. Andrew has been with Forrester for 15 years, starting with Giga InformationGroup which Forrester acquired in 2003.

Ajay Agrawal, CEO, SirionLabs

Ajay has been a product visionary in the strategic legal technology space for more than20 years. He founded UnitedLex Corporation in 2006 – a global leader in legal processoutsourcing and strategic legal technology – leading the company through a period ofprofitable growth creating over $100mn in enterprise value in 4 years. Ajay has workedas a securities law expert in some of the world's leading firms and investment banks.He serves as an entrepreneur-in-residence at CodeX, the Center for Legal Informaticsat Stanford University. Ajay holds an LL.M. from Columbia University, LL.B. from TrinityCollege, Cambridge and a B.A. in Semiotics from Brown University.

Plugging Value Leakage in IT

Outsourcing Engagements: The

Challenges and Opportunities for

the CIO

Andrew H. Bartels, VP and Principal Analyst

October 5, 2016

CIOs buy lots of consulting and outsourcing services

© 2016 Forrester Research, Inc. Reproduction Prohibited 6

Source: Forrester Research, Inc.

CIOs and their firms in 2016 will spend over $1 trillion on tech services

Computer equipment, $354 , 12%

Communications equipment, $334

, 12%

Software, $585 , 20%

Tech consulting and systems integration

services, $536 , 19%

Tech outsourcing and hardware

maintenance, $484 , 17%

Telecommunications, $590 , 20%

2016 global tech spending by category(US$ billion, percentage of total)


Source: Forrester Research, based on data from US Bureau of Economic Analysis

Tech consulting and outsourcing is just a quarter of all firm spending on professional services

Legal services13%

Custom computer programming

services9%

Computer systems design services

7%

Other computer related services, including facilities

management5%

Accounting, tax preparation,

bookkeeping, and payroll services

8%

Architectural, engineering, and related services

15%Specialized design

services2%

Management consulting services

11%Environmental and

other technical consulting services

3%

Scientific research and development

services13%

Advertising, public relations, and related

services9%

Marketing research and all other miscellaneous professional, scientific, and technical services

5%

US professional services spend by category, percentage of total 2015


Source: US Bureau of Economic Analysis, US Gross Output By Industry

In fact, firms in most industries spend more on professional and other services than they do on goods

13%

16%

17%

17%

28%

36%

40%

38%

53%

54%

60%

62%

72%

81%

83%

91%

Wholesale trade

Manufacturing

Retail trade

Construction

Agriculture, forestry, fishing, and hunting

Utilities

Oil and gas extraction

Mining

Transportation and warehousing

All industries

Arts, entertainment, accommodation, restaurants

Government

Education, health care, and social assistance

Information

Professional and business services

Finance, insurance, real estate, rental, and leasing

Purchased services as a percentage of purchased inputs, 2012


Getting value from a services provider is a complex process

Define services to be provided

Choose vendor and scope, price

and timing of services to be

provided

Engage with services provider

to initiate work

Manage services provider’s

performance during

engagement

Process invoice and pay vendor

Repeat process

for next services

engagement


Many firms manage this process with manual tools




provided


to initiate work


performance during

engagement


E-mail,

MS Word

E-mail,

MS Word,

conference calls

E-mail,

conference calls

E-mail,

MS Excel,

conference calls

E-mail,

MS Excel,

AP system


But today there are specialized software products for each stage




provided


to initiate work


performance during

engagement


CLM,

Services

procurement

Supplier risk and

performance

management (SRPM)

Spend analysis,

eSourcing,

services procurement

eSourcing,

contract

lifecycle

management

(CLM)

SRPM,

CLM,

eInvoicing


Most CIOs focus on the front end processes for services engagements




provided


to initiate work


performance during

engagement


Spend analysis,

eSourcing,


eSourcing,

contract

lifecycle

management

(CLM)

CLM,

Services

procurement

Supplier risk and

performance

management (SRPM)

SRPM,

CLM,

eInvoicing


But the back-end processes of vendor management and payment determine success




provided


to initiate work


performance during

engagement


CLM,

Services

procurement

Supplier risk and

performance

management

(SRPM)

Invoice doesn’t

agree with contract

Work performance

is poorWork doesn’t agree

with contract

Spend analysis,

eSourcing,


eSourcing,

contract

lifecycle

management

(CLM)

SRPM,

CLM,

eInvoicing

Contract lifecycle management is software to manage all stages of a contract’s lifecycle

2

1

3

4

5

6

Contract

optimization

Contract renewalContract

storing and

repository

Contract

importing

Contract

drafting and

negotiation Contract

compliance and

administration

What are best practices in CLM?

Function What should be in the

application

What’s involved in

implementation

Contract

repository

Electronic repository for all contracts, with

all attachments and related documents;

easy-to-use tools for tagging key terms

and conditions

Importing of existing or third-party

contracts; tagging of key terms and

conditions in imported contracts

Contract terms

and conditions

library

A library of approved terms and conditions

should be included in different kinds of

contracts

Legal department needs to define

what terms and conditions are

needed when and where

Reporting and

analysis tools

Easy-to-use tools for analyzing contracts

in terms of linkages, consistency, and

common elements

Development of right reports;

employee training, process re-design

Contract

creation

wizards and

templates

Easy-to-use tools for end employees to

determine what contract they should use,

and to assemble the right contract for their

needs

Legal needs to define the rules for

what terms and conditions are

needed in a given contract and who

can approve changes

Integration of

CLM to

transaction

systems

Contract terms and conditions can be

linked to buy-side or sell-side transactions

systems for checking during a transaction

Identification of integration points

and set up of the right data

integration

Contract

optimization

Contract managers can see all aspects of

a contract throughout its lifecycle

Defining information contract

managers need to see

Supplier lifecycle

management

What is supplier risk and performance management?

› Supplier risk and performance management is convergence of four domains

1. Supplier information management

2. Supplier risk management

3. Supplier performance management

4. Supplier qualification management

› New function of supplier lifecycle management

Supplier information

managementSupplier

risk and compliancemanagement

Supplier performancemanagement

Supplier qualification

management

What are best practices in SRPM?

Function What should be in the

application

What’s involved in

implementation

Supplier

information

management

Single source of truth on supplier data;

Supplier self-service portal to update

information;

Linkage to external data sources on

supplier information like D&B;

Easy access to master supplier data

Identify all systems that have or use

supplier data;

Map data needed by different

systems;

Aggregate data in SIM, with

integration to other system

Supplier

performance

management

Collection of internal data on supplier

performance (e.g., order accuracy, order

timeliness, invoice accuracy);

Surveys of employees on their satisfaction

with supplier;

Supplier dashboards with data

Identify key performance indicators

for suppliers;

Create dashboards with relevant

data for SVM professionals;

Share rankings with suppliers and

help them improve performance

Supplier risk

management

Source of data on supplier financials,

licenses, social responsibility ratings,

diversity ratings, supply chain

vulnerabilities, and other information

Supplier dashboards with risk ratings

Identify key risk variables you want

to track;

Design dashboards with the relevant

risk ratings;

Train employees on how to use!

Supplier

qualification

management

Directory of qualified vendors organized by

category, with ratings and rankings of

qualifications and performance

Integrate into your sourcing and

vendor management processes and

practices


Filling the gaps between CLM, SRPM, and eInvoicing

› CLM and SRPM provide great value in helping firms

maximize the value from their services providers

› But they leave a gap between what the contract says the

price for the services should be, and what should be paid

based on the performance of the supplier

› So, you need to make sure there’s a way to get the

information on supplier performance into the invoice

system to make sure you pay for what you actually get


Conclusion

› Spending on tech consulting and outsourcing services

specifically, and for professional and business services in

general, is too big and too important to be left

unmanaged

› eSourcing, CLM, SRPM, and eInvoicing solutions can

help firms better manage their services contracts and

relationships

› But make sure you are closing all the gaps between

these applications, so you only pay for the value you

actually get

Thank you

forrester.com

Andrew H. Bartels

+1 516 869-0128

[email protected]


How are Services Suppliers Managed Today? | Largely Manual, Performed in Silos

PRE-SIGNATURE PROCUREMENT

PROCESSES

Ente

rpri

se

Silo

sTe

chn

olo

gy

& T

oo

ls

FINANCIAL MANAGEMENT

Financial Management

PERFORMANCE MANAGEMENT

Service Delivery

RISK MANAGEMENT

Corporate Risk

CONTRACT MANAGEMENT

Legal / Contracts

RELATIONSHIPMANAGEMENT

Relationship Management

Pre-contract (6-12 months)

STRATEGIC SUPPLIER LIFECYCLE Post-contract(3-5 years)

Procurement

What was promised?

What actually happened?What was invoiced?

Integration through REST API Layer

Sirion – Integrated Enterprise Platform for Supplier Governance

FINANCIAL MANAGEMENT

PERFORMANCE MANAGEMENT

RISK MANAGEMENT

CONTRACT MANAGEMENT

RELATIONSHIP MANAGEMENT

Corporate Risk


Sirion Performance Sep ’15 to Aug ‘16

Why Supplier Governance Matters | The Bottom Line Impact

Common Forms of Leakage• Computational errors• Incorrect scope• Missed service level credits• Delivery and quality failures• Missed entitlements

Pre-contract award(procurement)

Post-contract award(supplier governance)

Time

What is delivered “Value Realized”

The business case “Value Expected”

Value captured during procurement “Value Promised”

Val

ue

12% Hard Leakage

8% Soft Leakage

20%

Total Invoices Processed

$650M

Hard Savings Achieved

$44M

Ineffective supplier governance drives huge value leakage in services engagements.

Sirion has driven 6.8% of hard savings (invoice reductions) in just the past 12 months !


Strategic Supplier Governance | Sirion Overview

Invoice AuditingSpend Pool Management Financial Analysis and PlanningValue Assurance

Regulatory CompliancePolicy Compliance

Supplier Audits

Governance ForumsIssue/Action Item

ManagementGovernance Process Health

Survey Management

Document RepositoryObligation CaptureDocument Change

ManagementContract Interpretations

Service Level ManagementObligation ComplianceSOW/WO/PO ManagementCredits & Earnbacks


Sirion Impact

Total Suppliers Managed

10,143

Total Suppliers Audited

59

Invoice Discrepancies

Total Invoices Processed

$ 650 M

Hard Savings

$44.2 M (6.8%)

TCV Under Management

$2.68 B

Sirion has delivered hard savings of over $44.2 M for its clients through identification of discrepancies in supplier invoices.


$200 BN of value is lost annually due to lack of effective governance of services suppliers!

SirionLabs Overview

PORTFOLIO COMPANY

USA

INDIA

GERMANY

DENMARK

UK

SINGAPORE

UK Government G-Cloud Supplier

Sirion is transforming the way buyers and services suppliers engage with each other


SirionLabs’ cloud-based solution gave Western Union what it was looking for: an integrated supplier

management system-of-record for our key IT managed service providers.

Testimonials and Endorsement

Tim Langley-HawthorneSVP, Technology Governance and Global Customer Care

Operations

“

We recovered our investment in Sirion within the first few months as it enabled us to identify discrepancies in

our supplier invoices which would otherwise go unnoticed.

Henrik Krarup StefansenSenior Director, Global IT Sourcing

“


Case Study | Supplier Governance Automation to Support IT Expansion

BackgroundThe client adopted a multi-vendor IT sourcing strategy to support expansion of IT infrastructure and customer support capability. Supplier governance capability was needed to effectively manage its complex IT services agreements in a precise and proactive manner.

Sirion Modules DeployedContract Management, Performance Management, Financial Management and Relationship Management.

Consistency and efficiency in governance

through end-to-end automation of supplier

governance processes resulting in reduction of

manual effort involved

Improved supplier performance

through real-time monitoring of performance against contractual service levels and obligations

Fortune 500 Financial

Services Client

Significant cost savings

through validation of invoices against underlying performance and contract data

4000+ 95%

Strategic suppliers managed

Obligations under management

Reduction in time to produce SL

reports

8


Sirion | Customers and Type of Strategic Services Managed

17 FORTUNE 500 AND GLOBAL2000 CLIENTS

Banking and Financial Services

Oil and Gas

Healthcare Wind Energy

Insurance Telecommunications

Information Technology

Aerospace andDefence

Airport Operations Information and Media

TYPES OF IT SERVICES MANAGED

ADM

Infrastructuremanagement

IT Helpdesk

Asset Management

Network Management

Data Center Management

Telecommunications Services

OTHER COMPLEX SERVICES MANAGED

BPO

Facilities Management

Third Party Logistics

Complex Manufacturing

Construction Projects

Contingent Workforce

Healthcare Services


Summary and Key Takeaways

CIOs and their IT departments often struggle to achieve the value of IT Outsourcingand other complex services engagements due to ineffective governance and lack ofperformance alignment between the enterprise and its suppliers.

Key Takeaways

• The growing importance of service providers to firms (both for IT

and for business overall)

• Traditional tools and technologies are not adequate to manage

today’s complex supplier management challenges

• CIOs can take the lead in embracing specialized software tools to

enable not just the IT organization but the entire enterprise to

get the most value from their service providers


QnA

31© 2012-16 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.© 2012-16 SirionLabs Pte. Ltd. The contents of this presentation are proprietary and confidential.

Thank You

[email protected]

SirionLabs Webinar Featuring Forrester - Plugging Value Leakage in IT Outsourcing Engagements -...

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