Benjamin Franklin is attributed with saying “A penny saved is a penny earned.” Well, while Ben was clearly a very smart man – see bifocals, the woodstove, that electricity thing – he got this one wrong, as a penny saved is actually worth much more than a penny earned. Why? I won’t bore you in this blog with explanations around taxes, inflation and the time value of money. Instead, I’d like to make two observations: 1) this expression is even truer today than it was when Ben said it; and 2) one of the best ways to save money within organizations is by optimizing procurement operations, where the pennies are actually spent. Whether it’s in the strategic sourcing area, or through more efficient management of contracts, or by seamlessly automating and integrating procurement processes, there is often a vast amount of value that can be extracted from most source-to-pay cycles.
But what’s the best way to start figuring out where this value lies in what is sometimes a murky, cumbersome process area? The approach I generally recommend (and one that I’ve seen work successfully a number of times) is to start at a high level to get a feel of where the issues and outliers are across major spend categories, then systematically work down into the details. So for example, Capgemini provides a high level (and free!) online assessment that delivers some general guidance on where to start looking within your own procurement domain (Shameless plug – if you’re attending Ariba Live this year, stop by Capgemini booth #27; we’ll be conducting these quick assessments live and will be happy to complete one for you).
Once you know the general areas in which to start looking, the next step is to start diving into the details. For this, I typically recommend a multi-week study that usually leverages actual spend data (often pulled from SAP tables) that can be used to determine both qualitative and quantitative value drivers. Capgemini’s SmartSpend™ offer does exactly this – it’s a quick and affordable study to develop a benefits case and roadmap for driving bottom line savings throughout the procurement domain. In addition, it derives concrete improvement measures and recommendations of technologies to close performance gaps in a prioritized implementation plan.
These first two steps lay out where the savings are and how to get there. Think of it as your savings plan. The next step is all about executing to that plan. For that, we need comprehensive frameworks that focus on driving value through the optimal fusion of organization modifications, process enhancements, and cloud solutions like Ariba. For this, Capgemini has developed our Networked Procurement™ offer. Using Networked Procurement™, any mix of procurement areas such as sourcing, contracting, supply base management, supplier performance analytics, or procure to pay can be improved and supported with the latest cloud solutions. And because we’re executing to our documented savings plan, we know what level of savings to expect and when, and can start to track actual benefits attained against this plan through our procurement roadmap.
If you’d like to learn more about how to develop your own savings plan within your procurement organization, or about Capgemini offers like SmartSpend™ and Networked Procurement™, drop me a line. Or if you’ll be at Ariba Live, come by booth #27, we’ll be happy to help.
This article was written by Tom Cassell from CapGemini: Capping IT Off and was legally licensed through the NewsCred publisher network.