POST CONTRACT MANAGEMENT Unlocking the Potential
Mira Ristovich
Senior Consultant: Group ProcurementCIPS Sothern Africa Pan African Conference
24 - 26 May 2011
Agenda
• MTN Quick Overview
• Procurement Helix
• Sourcing Methodology & Relationship Life
Cycle
• L&D Vendor Rationalisation
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As MTN, we…
• Connect people with family, friends and jobs
• Create jobs, directly in the operations with
entrepreneurs who sell airtime, cleaning services,
advertising services, office rentals, security services –
which generates the economic multiplier
• Create a positive atmosphere for other investments
into the country
• Pay taxes which enable government to invest back
into the communities with infrastructure development
• Create infrastructure where non exists (in place of
rail, roads)
• Inspire the youth
• Invest in the communities in which we operate
© 2009 Accenture. All rights reserved. 3
Political risk map High growth is in high risk markets
4
2000 2005 2010
Operations 5 11 21
Population 68m 344m 552m
Market cap (ZAR bn) 58 (31 March 2000) 103 (31 Dec 2005) 253 (31 Dec 2010)
Revenue (ZAR bn) 6 29 115
EBITDA 2 12 50.5
Subs(m) 2,3 12 141,7
Business Growth
National Player African Player Emerging Market Player
Procurement Helix
6
Sourcing Methodology & Relationship Life Cycle
7
Identify
Opportunity
Post
Contract
Management
Contract
ManagementSolution
Definition
Seller’s
activities:
Develop offering
Advertise
Create needs
Condition
Sell
Buyer’s
activities:
Buyer has need
Specifies need
Search
Condition
Negotiate frame
agreements with
key suppliers to
ensure better
price and more
efficiency
Detailed
agreement
Implementation
Initial delivery
Refining
Ongoing delivery
Continuous improve.
Business dvlpmnt.
Extension
Completion
Termination
Sourcing
Methodology
Process
Relationship
Life Cycle
Model
Diagnostic
Phase
Business Case
Development
Approval by
Technical
Committee
Cross Functional
Team approval
CFT defines the
scope
RFx issued
Evaluation process
(desktop,
presentation,
additional
questions, price
review)
Short listed vendors
identified
High level plan
L&D Vendor Rationalisation - Background
MTN Group Learning and Development (L&D) aims
to rationalise its learning vendor base to:
• Improve the quality and consistency of learning
delivered
• Enable and sustain a rationalised learning vendor
base and
• Realise the potential savings opportunity
8
Pre-Contract:Planned Achievement Against Project Goals
Goal Planned Result
Rationalise the vendor base In the targeted competency clusters by 25 – 50%
Achieve cost savings Between 7% and 20% in net nominal savings opportunity. MTN’s strategic objective is to be a least cost operator
Achieve economies of scale Negotiate price, screen the quality and content
Standardisation of vendors per competency cluster
In line with critical skills required
Identify suppliers and rationalise supplier base
Assess suppliers on full set of criteria, including capabilities, offerings, price and quality
Incorporate leading practices of sourcing of Learning Vendors into MTN
Remaining four sourcing steps to be used to realise the savings opportunities
Reduce administrative efforts Standardise learning vendor management processes and improve integration between L&D, Procurement and Finance functions
The business case findings indicate that the rationalisation of L&D vendor management
will lead to costs savings, a reduced vendor base and consolidated programme catalogue
9
Sourcing: Vendor Filter Process
10
Shortlisted vendors from RFP process and
selected priority vendors will proceed to the
next sourcing event (auction/negotiation)
Final vendor selection will be made to align
with the project mandates of vendor
rationalisation and cost savings
Final
Proposal
Minimal
Requirements
Value Add
Supplier pool identified via
internal and external research
Screen 3
Screen 2
RFI information provides input to
this processScreen 1
Final
Agreement
MTN
Vendor
External
VendorsTotal
No. of
vendors
invited
160 33 193
No. of
vendors
responded
60 17 77
No. of
vendors
shortlisted
26 7 33
No. of
vendors to
be
contracted
15 4 20
• Combination of RFP and RFI issued
• MTN incumbents and external vendors were sent the RFP’s based on their capabilities
11
TCO
Programme
Costs
Ancillary
Costs
(delegate and
facilitator)
Programme
Initiation
Training
Environment
Build Learning
Solution
Travel
Accommodation
Per Diem
Setup & Run Charges
Administrative
Venue hiring (Internal/External)
Catering
Tech. Equipment
Cancellation
Course Materials
© 2010 Accenture. All rights reserved.
Visa
Physical
VirtualNetwork / Connectivity
E-Learning user license
Stationery
Research and Development
Out of scope are:
• Needs analysis costs
• CAPEX vendors
• Investment in L&D
Facilitator (internal/external)
Other
Operational
Costs Marketing &
Commun.
Personnel
Opportunity Cost
Content Customisation
Branding
Promotional Items
Communication Tools
OLM
Course Materials
TCO Model Components
The TCO model
Operating Guidelines - MTN
Procurement Programme
• Comparisons will be made based on total
cost of ownership, including cost of
switching and qualitative aspects• Strategies will optimize group scale and
align approaches to match individual
business needs• No group company will be worse off in
the current environment than they were
pre-strategy• “The Contract” -Once potential suppliers,
evaluation and risk criteria and
implementation plans are defined by the
operating companies, all sourcing
decisions are to be honored.
Contract
Prioritisation and
Assessment
Contract Strategy
Development
Contract Plan
Implementation
Results Tracking and
Reporting
Supplier Relationship
Management
The earlier Procurement is involved in the sourcing process, the greater the
savings achieved
Procurement Ambassador : Mira Ristovich – [email protected]
Contract: From “Purchasing” … To “Procurement”
Savings Realisation Model
© 2010 Accenture. All rights reserved. 13
Savings report to be compiled in LADDS and calculated in USD, Rands and Local Currency
Approved Vendors
Approved Courses
Prices per Vendor
% of Savings
Data Input
LADDS monthly reporting
Savings Report:
• Total Savings in USD
• Total Savings in Local
Currency
• Total Savings in Rands
• Spend in vendors/courses not
approved
LADDS
Data Output
Post Contract Management Relationships
14
Initial Delivery
Refining
Ongoing Delivery
Continuous ImprovementBusiness Development
Extension
Completion
Latent Termination
Final Termination
Supplier & Customer Positioning
CUSTOMER POSITIONING
15
Critical
KEY
Security
Transactional Profit
DEVELOP
EXPLOITNUISANCE
KEY ACCOUNTA
t
t
r
a
c
t
i
v
e
n
e
s
s
High
Low Relative value of account High
Managing Supplier Relationships Model
16
Supplier Performance Management
Organisational benefits achieved
Governance model design and development
Scope redefined and no. of vendors further reduced
Benefits tracking (TCO model)
Cross-functional teaming
Change management and communication through out the project
GFA standardisation and SLA design
© 2009 Accenture. All rights reserved. 17
Organisational benefits achieved (Cont)
1st vendor conference as a great success
• Purpose of the conference:
– Sharing of strategy and the operating model & Knowledge sharing and integration
– Discussing Administrative issues
– Intellectual property clarification
– Progress management and meetings
– Country protocols
– SLA workshop and development
– Performance management
– Communication channels & Collaboration
– Introduction of the Academy's Operational Manuel - Project Charter standardisation
– Tax and Withholding Tax
• Twenty vendors invited
• Awards given to the five best Academy partners
• Procurement manager awarded "The Best Internal Support 2010".
© 2009 Accenture. All rights reserved. 18
Organisational benefits achieved (Cont)
Business case targets achievements:
• Well-exceeded the business case targets, 26.82% vs. 20% savings
• 92% vs. 50% vendors reduction for the in scope competency clusters
• The estimated number of attendees for the in-scope courses showed
that MTN expected to train 49% more people than in the previous year
• The total training costs would actually reduce in real terms.
• The quality and consistency of courses being delivered has increased
and stabilised respectively
© 2009 Accenture. All rights reserved. 19
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