Subcontractor Procurement and Cx Overview January 2006

Subcontractor Procurement and CxOverview

January 2006

Strictly Private and Confidential

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We’re beginning our procurement transformation agenda with Subcontractors

1. Subcontractors is the largest category of spend at $1.4 B and represents 28% of all goods & services.

2. Only 33% of subcontractor spend is through established procurement buying channels.

3. Where sourced and preferred suppliers are used, cost savings have been realised at $21M in FY04, yielding about 7 cents on the dollar.

4. If we use the established procurement buying channels, we could achieve at least $45M in subcontractor cost savings in FY06.

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Global Subcontractor Procurement Category

Vision Transparency, management, and reduction of our subcontractor and contractor spend

Mission All Staff Augmentation spend will go through a centralized procurement channel

Solution Based spend of $1 million or more per project will involve procurement for sourcing, contracting, reporting and management*

* Supplier performance monitoring and audits** In countries with centralized ops… by FY07

Objectives

Cost reduction, Process Efficiency, Reduced Risk, and Corporate

Citizenship

Goals Produce minimum $45 million in savings in FY06

Increase utilization to 80%**

Contribute to 250 bps reduction of subcontractor costs as a % of NR

Improve team engagement (employee sat.) scores by minimum 25%

Measure and improve upon Customer Satisfaction

Working Principles1. Live and breathe our Core Values

2. Be easy to do business with – SIMPLIFY!

3. Success comes together

4. Plan, Execute, Learn, Improve

5. Work fast, take risks, leave comfort zone

6. Have some fun!

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Value Delivered by Subcontractor Procurement

Reduced subcontractor procurement costs to support margin improvement

Achieved $18M in savings since FY03 through the BellSouth preferred program

Improved margin on select supplier contracts at SBC by delivering an 11% reduction in costs

Moved Microsoft from a negotiated rate card with their prime supplier to mark-up based pricing delivering cost savings of $1.2M/annum

Improved efficiency

Delivered cost reductions at SBC of $265K on charges not fundamental to service delivery

Negotiated agreement with SBC supplier to eliminate volume minimums, saving $3M

Facilitated a shift of certain types of call volumes to a lower priced location eliminating one SBC center to reduced management oversight costs

Increased visibility

Captured rate data and skill classification at BellSouth providing more refined contractor rate card and precise rate/skill match

Expanded visibility at Microsoft to select preferred suppliers to improve quality, cost and level of service

Introduced structured MI reporting across UK preferred supplier network

Manage legal and compliance risks

Evaluated a prime suppliers OT exemption classification at Microsoft based on OT Federal rules for State of Washington, reducing OT costs

Formalised supplier management structure for UK PSN and significantly reduced “off contract” contractors and late invoicing of charges

Increase diversity in our supply base

Added 6 diversity suppliers at BellSouth

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Subcontractor Procurement Plans For FY06

GU Policy or /Management

Directive

Sourced Preferred

Supplier Network

Managed Buying Channels

* Spend Under Management

Savings

Targets

FY05 Spend

Baseline*

US No Yes Yes Yes Yes Yes 42% 68% $28M $696M

UK Part Yes Yes Yes Yes Yes 39% 65% $5.7M $309M

Gallia No Yes No Yes No Yes 5% 50% $2.5M $131M

ASG Yes Yes Yes Yes Yes Yes 56% 80% $2.5M $41M

Canada Yes Yes Yes Yes Yes Yes 87% 90% $2.0M $10M

Ireland No Yes Yes Yes Yes Yes 82% 80% $1.0M $11M

Spain No Yes No Yes No Yes 0% 20% $0.7M $56M

Nordics No Yes No Yes No Yes 0% 50% $0.3M $23M

Italy Yes Yes Yes Yes Yes Yes 26% 51% $2.0M $69M

Totals 33% 60% $44.7M $1378M

From To From To From To From To

*Spend totals exclude Avanade spend as follows: UK $66m;

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What we asked from the Business Operations Council?

1. Require your client project teams to contact and use the contractor exchange before commitments are made with suppliers.

2. Expect Procurement to be part of the deal shape team for all projects with subcontractor expense of $1M or more. Check for Procurement’s involvement before signing off on a deal.

3. Set targets with your teams for Procurement utilization and quarterly cost savings goals that supports the 250 basis point reduction in subcontractor cost % net revenue.

4. Lead the Procurement Transformation by making a significant impact on Subcontractor cost.

Contact Al Williams, Global Subcontractor Procurement Category Lead with questions

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US Contractor Exchange (Cx)

Overview

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The Cx Team

ADOPTIONStrategic team to identify and facilitate the process of on- boarding new and

existing project teams to the Contractor Exchange CATEGORY MGMT

Team of sourcing experts with industry knowledge and experience to select suppliers and negotiate competitive

terms with suppliersTele- servicesSpot Buying

Solutions

LEGALTeam of attorneys available to review

contracts, ensure consistent terms and conditions in contracts with suppliers

and mitigate Accenture’s riskCX OPERATIONSTransactional team of specialists to facilitate day-to- day services that

support project teams

ENGAGEMENT SOURCING

MANAGER (ESM)Primary contact for

project staffing needs

PROJECT TEAMTeam focused on process design , change management and reporting and compliance

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ADOPTIONStrategic team to identify and facilitate

the process of on-boarding new and existing project teams to the Contractor

Exchange

• Research, analyze and profile top contractor usage projects within Accenture to identify Adoption targets

• Also support “self-generating” activities through the Adoption Process

• Develop strategies, messages and tactics to adopt these projects to CPS

• Team is responsible for laying out the framework to adopt the project into the Cx and for coordinating all activities within the applicable CPS teams

• Once implementation has stabilized, project support is transitioned to Operations

• Adoption monitors spend tracking and participates in checkpoint calls

• Responsible for operation of a formal training program and for communications

Driving new business to the Cx

Team Members – Jessica Nyman (lead), Ken Smith, Talia Elkin, Lesley Batson

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CX OPERATIONSTransactional team of specialists to

facilitate day-to-day services that support project teams

• Manage day-to-day contractor transactions

• Contractor Procurement

• Engaged with the ESM’s

• Customer Relationship Management

• Supplier Management (operational aspects)

• Contractor Relations

• Accenture Policy/Legal Facilitation

• Payment/Billing Facilitation

• Reporting/Metrics capturing

• ACP Super-user/SME to manage issue resolution and capture enhancement requests

ENGAGEMENT SOURCING



Day to day operations and customer service

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• Manage supplier sourcing and ongoing supplier management (sourcing aspects)

• Manage MSA’s with Preferred Supplier Network (PSN)

• Assess sourcing opportunity

• Profile the sourcing category

• Develop sourcing strategy and gain client approval

• RFx as appropriate

• Negotiate terms and finalize contracts

• Implementation of the Agreement

• Track savings from Agreements - Create and deliver on savings target agreed with client

• Support Adoption team efforts when needed (i.e. non-Cx suppliers subcontracting, etc.)

• Spot Buying – Solutions Based

Supplier selection and on-going management

Team Members – Jon Kesman (lead), Ken Kerrigan (lead), Mark Lamphere, Chris Misiak, 3 TBH

CATEGORY MGMTTeam of sourcing experts with industry

knowledge and experience to select suppliers and negotiate competitive

terms with suppliersTele-servicesSpot Buying

Solutions

Suppliers

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• Draft, negotiate and maintain new services agreements and exhibits

• Review pre-existing agreements and assess risks (i.e. non-Cx supplier MSA's)

• Mitigate legal risk to Accenture

• Educate Accenture executives and CPS team in legal and risk management issues related to the use of contractors

• Maintain MSA's and provide template when appropriate

• Maintaining a database where agreement information is housed



and mitigate Accenture’s risk

Dedicated Legal support

Team Members – Tony Sadowski (lead), Amy Gifford, Troy Barron

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• When adoption identifies new opportunities with existing supplier requirements, engage sourcing

• Sourcing to support Adoption discussions with new targets to bring credibility to the supplier management and negotiation components

• Sourcing would review one-off contracts identified through adoption activities and make the decisions on the right approach – contract with suppliers, sub-tier through Cx, etc.

• Look for additional input and required support from the Adoption team

Adoption teaming with Sourcing

ADOPTIONStrategic team to identify and facilitate the process of on-boarding new and

existing project teams to the Contractor Exchange CATEGORY MGMT

Team of sourcing experts with industry knowledge and experience to select suppliers and negotiate competitive


Solutions

Suppliers

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ADOPTIONStrategic team to identify and facilitate

the process of on-boarding new and existing project teams to the Contractor

Exchange

CX OPERATIONSTransactional team of specialist to facilitate day-to-day services that

support customers

• Assist in identification of projects to target for adoption activities

• Act as an additional sales force to create “self generating” activity

• Notify adoption when assistance is needed

• Support with adoption activities to onboard projects

• Post operation follow up with adoption activities

Adoption teaming with the Cx

ENGAGEMENT SOURCING



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• Review, draft and negotiate supplier agreements with Cx suppliers

• Providing and reviewing internal and client-facing services agreements

• Assess risks and determine how those risks can be mitigated

Sourcing teaming with Legal

CATEGORY MGMTTeam of sourcing experts with industry



Solutions



and mitigate Accenture’s risk

Suppliers

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• Sourcing supports the day to day operations of the Cx as it relates to the supplier management component:– contractual issues – major performance

issues/concerns

• Operations acts as the “eyes and ears” for the Sourcing team in managing suppliers

• Sourcing participates in Operations updates as appropriate

• Operations supports Sourcing in category analysis and management

• Skills identification, rate tracking, etc.

• Operations resources contribute to supplier audits, led by Sourcing

Sourcing teaming with the Cx

ENGAGEMENT SOURCING



CX OPERATIONSTransactional team of specialist to facilitate day-to-day services that

support customers

CATEGORY MGMTTeam of sourcing experts with

industry knowledge and experience to select suppliers and negotiate competitive terms with suppliers

Tele-servicesSpot Buying

Solutions

Suppliers

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• Educate, guide and advise Cx Reps regarding legal risks, terms and conditions of the Agreements, proper use of contractors (supplemental staffing contractors, subcontractors and independent contractors), and to ensure appropriate contract interpretation and that legal risks are addressed and handled appropriately

• Create, review and prepare flow down terms and conditions for the suppliers from each Accenture/Client master agreement

• Assess risks and determine how those risks can be mitigated• Maintain Vendor Variance Report and Cx templates, including agreements and

exhibits, and provide templates when appropriate• Review and analyze whether or not an individual meets policy guidelines to be

an independent contractor



and mitigate Accenture’s riskCX OPERATIONSTransactional team of specialist to facilitate day-to-day services that

support customers

The Cx teaming with Legal

ENGAGEMENT SOURCING



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Contractor Procurement Services (CPS)ADOPTION

Strategic team to identify and facilitate the process of on- boarding new and existing project teams to the Contractor

Exchange CATEGORY MGMTTeam of sourcing experts with industry


terms with suppliersTele- servicesSpot BuyingSolutions



and mitigate Accenture’s riskCX OPERATIONSTransactional team of specialists to facilitate day-to- day services that

support project teams

ENGAGEMENT SOURCING

MANAGER ( ESM)Primary contact for


PROJECT TEAMTeam focused on process design , change management and reporting and compliance

Suppliers

Subcontractor Procurement and Cx Overview January 2006

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