Crossing the Borders Between Core F&A & Procurement

Crossing the borders between Core F&A & Procurement: The synergies are too great to ignore

Shared services and Outsourcing week 2012 - Amsterdam Terje Kløvås – Global ERP Program Telenor ASA

Sources: The Hackett Group, KPMG, Infineon technologies, ING, Mattel, Accenture, SAP and Oracle

Telenor is one of the leading international telecommunication companies and has 146 million mobile subscriptions. Our Largest markets # of subscribers Uninor India 31,5 mill Grameene Bangladesh 37,6 mill Telenor Pakistan 29,3 mill DTAC Thailand 23,4 mill

Total workforce 30 700

Master your Master data

Employees Legal and department structure

Suppliers Global – Regional – Local

Authority Matrix Approval hierarchy

Item categories

How to serve and attract the organization?

Be a partner – get involved as early as possible in the decision making process

Move beyond cost savings. Category-, demand-, supplier relationship-, and risk mgmt

Operating model. Centralize strategic procurement and merge transaction related procurement with F&A processes

Reduce supply chain risk. Where do your suppliers produce their core components? Thailand flooding stops Honda and Toyota Nov.-11

Japan stops Mach-11

Iceland stops airfreight 6 days April -10

Palm oil, Indonesia and Unilever April -08

Leverage system and technology

Questions to ask yourself to assess your Procurement maturity

Is the Procurement function organized to deliver optimal value to the organization by focusing on outcomes rather than cost?

Are key organizational stakeholders fully engaged in the development of Procurement’s strategy, and does this reflect the wider organizational strategy?

Is all spend managed through category management and strategic sourcing processes, with a competitive sourcing process mandated?

Does Procurement actively lead SRM and SPM including the id of strategic suppliers, the setting of metrics and follow-ou of non performance?

Does the Procurement function influence in excess of 80% of spend?

Questions to ask yourself to assess your Procurement maturity (cont.)

Does the Procurement function lead or get actively involved in demand management initiatives in your organization?

Is risk management an integrated part of day to day operations and the contract management process?

Are Procurement processes automated including an integrated e-auction an web supplier portal?

Is there a consistent benefits tracking framework (capture, realized & reported)?

Is procurement policy used as a mechanism for driving behavioral change throughout the organization, with non compliance being exceptional?

Change the business landscape to meet the requirements of a coordinated and collaborative response Obtain full spend visibility Control your cash outflows with accuracy Discover why you should integrate a mail system and vendors with your ERP system Coordinate local, regional and global Finance and Procurement production in a SSC perspective

Where to focus first?

• Evaluate processes

– Look for value to business v’s implementation complexity

– Synergies with other Key Business Initiatives

• Look for less visible benefits

– Reduced admin time for managers and procurement

– Simplified flows to eliminate waste

– Transparency in financial data

Sustainable Shared service support centres

Embracing the easy wins by reducing Purchase to Pay cycle

time

10

10 10

Value Drivers Shared Services create value for

Reduced unit costs of

administrative services

Appropriate quality of

administrative services

Improved internal control

and transparency

Increased organizational

flexibility

Business units through Group Management through

Minimise errors On time

Governance of common services

Business units focus on core

Increased speed and reduced risk in green field rollouts

Scale Common processes Common platform Labour arbitrage

Reduces risk Group policies Standardisation Common account

string

Call off under existing contract

Procurement Process in a shared service perspective

Vendor selection

Contract &

Catalogue registration

RFI, RFQ

Reversed auction

Vendor search

Delivery acceptance

Call off Approval

& authorization

Reconciliation AP/GL Posting Payment Invoice

entry Reporting

Sustainable Shared service support centres

Closing Remarks

What is difficult?

• Supplier adoption in different markets

• To many allowed access in core systems

– Use Help Desk, Web forms and workflow systems instead

• Accept that some processes are extremely costly to automate – then don’t

• Deny supplier registration and move to reimbursement of personal expences

What is less dificult?

• Local Scanning of invoices

• Personal order ID

– Mine is: TN BC 540944

• One common account string

• One common IT platform

• Do not sell process without system support

• Do not sell IT systems without process governance

Cross-centre training Meetings & visits International job opportunities

Performing work in projects Special assignments

People Power Motivation

QUESTIONS?