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SU MMIT

2014

The Emerging Profession of Vendor

Management & Governance and

the Automation Driving

Measurement

Next Up:

Western Union

Timothy Langley-Hawthorne

Alsbridge

Craig D. Nelson

SirionLabs

Claude Marais

www.sig.org/eval

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2014

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Optimizing Your Print Environment - The Huge Unknown.

Next Up: The Emerging

Profession of Vendor

Management & Governance

and the Automation Driving

Measurement

Presenters:Timothy Langley-Hawthorne, Western Union, VP Technology GovernanceCraig D. Nelson, Alsbridge, Managing Director, VM&G ServicesClaude Marais, SirionLabs, President & Co-Founder

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Session Objectives

Vendor Management & Governance (VM&G) are the nerve centers for optimizing the value exchange between an enterprise outsourcing buyer and their provider(s). Join Western Union, SirionLabs and Alsbridge in this session, to hear from thought leaders at the forefront of implementing VM&G Centers of Excellence, gain insights into emerging VM lifecycle automation tools and their relative capabilities and understand how VM&G organizations operate and how they are being positioned inside the enterprise. Participants in this session will receive a copy of a recently completed analysis of VM lifecycle automation tools. Alsbridge will share their research and insights as well as how to remain on the cutting edge of successful VM&G.

You will learn: • More on the emerging focus on multi-sourcing vendor management• The recent regulations impacting compliance and risk management• About enterprise vendor management tools for VM lifecycle automation

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Corporate Virtualization – Trends to 2020

Very little will be done solely within the four walls of any company

• We need improved efficiency with the right processes, tools, & talent

• Optimized obligation management & supplier performance is key

• Reduced redundancy in the supplier portfolio is needed

• Operational VM know-how is in increasing demand

• A complex multi-supplier eco-system is now the standard

• Shared services now invariably includes third party suppliers

• Vendor Management value must be measureable

• VM Governance is now a certified profession

• Supplier governance costs are increasing

• Third Party Management is required by law

• Work-flow automation is needed

• CFOs want VM analytics

• VM innovation is needed

Any Global Business

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Poll 1 – Does Capability Matter – Where are we Invested

1. What would you estimate the size of your human resource

department to be:

A. 1-25 FTEs

B. 26-50 FTEs

C. 51-100 FTEs

D. 101-150 FTEs

E. > 151 FTEs

2. What is the size of your vendor management function:

A. 1-5 FTEs

B. 5-15 FTEs

C. 16-25 FTEs

D. 26-50 FTES

E. > 51 FTEs

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Business Case for VM Professionalization

Results from 2,000 corporations shows a 1% reduction in labor costs produces 0.7% improvement in EBITDA…

Conversely a 1% reduction in non-labor/supplier related cost improves EBITDA by 4.1% - SIX TIMES HIGHER

70% of revenue is spent buying goods and services from suppliers

Vendor management has a SIX TIMES greater impact on EBITDA than focusing solely on labor cost reductions.

Source: Proxima 2013

69.9%of Revenue on Supplier Costs

12.5%of Revenue on Labor

Costs

6%%8

Supplier costs as a % of revenue

have increased…

Labor costs as a % of revenue have decreased…

0.7%

Reduce labor cost by…

Improves EBITDA by…

1%

4.1%

Reduce supplier cost by…

Improves EBITDA by…

1%

$$

Supplier Management vs. Labor Management

Six Times Greater Impact

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VM Capability Impact on Value RealizationA 5 year study of business case value realization on managed services relationships shows the median value erosion is 35% of the annual contract value (ACV) with VM&G capability defining the difference between value erosion and value optimization

a) 8-12% of ‘hard’ value erosion, comprised primarily of invoicing errors;

b) 7%-8% of ‘soft’ value unrealized performance gains (e.g. not meeting contracted service levels);

c) 2% - 5% of relationship value erosion, due to strategic and operational misalignment

Ve

nd

or

Man

age

me

nt

Cap

abili

ty

AC

V E

rosio

n

Dep

th o

f Im

pa

ct

Duration of Impact

Three to Five Year Deal Life Cycle

Higher Capability

Performance Baseline

Low Capability

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Market Demand in Governance Technology

Cross Supplier/Functional Governance

• End-to-end visibility

• Insight into all disciplines of governance

• Need to assess suppliers across functions, regions in a consistent manner

• Insight into state of governance processes by supplier, contract, region, function

• Relationships matter more – but need to be measured/assessed objectively

• Insight into OLAs performance

Comprehensive, agile governance tools required to meet demands of real time

analytics

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Increased Efficiencies/Effectiveness

• Increased need for an obligation driven approach

• Need for rapid transition from contract signature to effective governance

• Logistical challenge – Near real time integration of obligations, actions, issues, performance, financials and relationship data

• Governance productivity – require 30 – 60% improvement just to maintain an acceptable level of governance

Manual approach no longer practical - requires technology to facilitate this

level of change

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Consistency• Clients demand consistency in

tools across the supply base for:• Common processes• Common capabilities• Analytics• Insights

• All the moving parts demand integration of the different disciplines in governance

• Increasingly more important for clients and suppliers to have a single source of data across the supply base

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Supplier Management Model | End-To-End Integration

Service Level ManagementObligation Compliance

Work Order ManagementCustomer Survey Management

Invoice Management Credits and Earnbacks

Spend Pool ManagementChargebacks

Financial Analysis & PlanningValue Assurance

Governance Process HealthIssue Management

Action Item Management360 Surveys

Forecast & DemandConsumption Analysis

Operations Consumption ComplianceDemand Forecast Analysis

Document RepositoryObligations Capture

Document Change Management Contract Interpretations

SUPPLIER MANAGEMENT

Supplier Performance

Financial Management

Supplier Risk

Relationship Management

Consumption Management

Contract Management

Performance RiskPolicy ComplianceRegulatory Compliance

Supplier Audits

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Poll 2 – Who Believes VM Complexity is Changing

1. How would you describe the complexity of your vendor management eco-

system

A. Simple to manage among a few vendors

B. Moderately complex with multiple vendors

C. Complex with multiple vendors and functional dependencies

D. Highly complex with multiple vendors, business units with many functional dependencies

2. How would you describe your future need for improved vendor management

processes, tools and automation:

A. The tools and processes we have are inadequate

B. The tools and processes we have are adequate

C. The tools and processes we have include limited automation or may be considered point solutions

D. The tools and processes we need should be automated and operate across multiple disciplines of vendor management

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There are Questions and Growing Confusion Regarding: TPM –

GRC - VM&G - What Is It? / Who Owns What?

Governance Risk Compliance

Strategy / Planning

Due Diligence / Selection

Contract Negotiations / Benchmarking

Contract Management

Performance Management

Financial Management

Relationship Management

Risk Compliance

$

Contract Manager

RelationshipManager

Direct BU Operational Functions (ITO, BPO, HRO, LRO, PVO) Vendor Management Office

VM Support & Administration

Co

rpo

rate

Su

pp

ort

Fu

nct

ion

s

Audit / Compliance

Finance

Procurement /Sourcing

Legal

Global Business Services

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TRM / GRC

Category

Programs and Process Requirements

Strategy / Planning TPM / GRC Policy, Process and Program Management

Due Diligence

Legal and Regulatory Compliance

Financial Condition / Resilience

Certificates / Insurance / Security

Diversity

Contract

Negotiations

Performance Measures and Benchmarking

Foreign Based Third Parties

Governance Risk

Compliance

Risk

Management

Issue Management

Action Item Management

Performance Risk Management

Compliance Risk Management

Third Party Management & Governance Risk Compliance

$

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Third Party Management / GRC Processes

Strategy / planning

Contract Negotiation

DueDiligence

Termination

Segmentation / Monitoring

Third Party Management GRC

Life Cycle

Key Termination Activities:• Implement established transition

plan• Manage disposition of data, IP, and

assets• Discontinue and monitor all access

points• Evaluate need to address

reputation risk

Key Monitoring Activities:• Obligation Capture and

Assignment• Performance SLA/KPI

Monitoring• Risk Compliance Monitoring• Issue and Action Item

Management

Contract Terms:• Key Performance Indicators (KPI)• Service Level Agreements (SLA)• Compliance Requirements• Use of Information, IP, and Technology• Confidentiality and Integrity• Conflicts of Interest• Sub-contractor Requirements• Termination Terms

Key Planning Processes:• Volume of Activity• Nature of Risks• Use of Sub-contractors• Information Security • Regulatory Requirements• Contingency Plans

Due diligence Processes:• Compliance and Risk

Management• Financial Condition and Resilience• Experience and Reputation• Company Principals• Information Security and Systems• Incident Management and

Reporting• Human Resource Management• Conflicts of Interest

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Strategy / planning

Contract Negotiation

DueDiligence

Termination

Segmentation / Monitoring

Third Party Management GRC

Life Cycle

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Automation in the TPM Space

Alsbridge

ABCD Vendor View: 2013 VM&G Solutions(Advanced, Breadth, Customer, Depth)

Bre

ad

th o

f T

PM

F

un

cti

on

ality

Na

rro

w

Advanced Technology & Solution PlatformLow High

Bro

ad

Top quartile

2nd quartile

3rd quartile

4th quartile

Depth of Support &

Services

Customer Base

Large

Medium

Small

Hiperos

EMC RSA

IQNavigator

IBM Open Page

IBM EmptorisBeeline

Fieldglass

Thompson Reuters

MetricStream

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VM&G Category Programs and Process Options and Requirements

Contract

Management

Contract Document Repository

Obligations Capture

Contract Change Management

Contract Interpretations

Performance

Management

Service Level Management

Obligation Compliance

Work Order Management

Customer Survey Management

Financial

Management

Invoice Management

Service Credits and Earnbacks

Financial Analysis and Planning

Relationship

Management

Governance Performance Health Check

Issue Management

Action Item Management

Risk

Management

Regulatory Compliance & Continuous Monitoring

Policy Compliance

Supplier Audits

Vendor Management & Governance

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Complex Contract Management Processes

RelationshipManagement

ContractManagement

FinancialManagement

PerformanceManagement

ComplianceManagement

Vendor Life Cycle Management

Invoice Management Credits and Earnbacks Spend Pool ManagementChargebacks Financial Analysis & Planning

Value Assurance MonitoringInnovation Pool Management

Governance Process ManagementIssue Management

Escalation ManagementAction Item ManagementCommunication Management

Document Library ManagementObligations TrackingDocument Change Control

Contract Interpretations

Service Level ManagementObligation Management Work Order Management

Service ManagementVoice of the Customer

Financial RiskPerformance RiskContractual RiskPolicy Compliance

Regulatory ComplianceSupplier Audits

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Automation in the Vendor Management Space

Alsbridge

ABCD Vendor View: 2013 VM&G Solutions(Advanced, Breadth, Customer, Depth)

Bre

ad

th o

f V

M F

un

cti

on

ality

Na

rro

w

Advanced Technology & Solution PlatformLow High

Bro

ad

Top quartile

2nd quartile

3rd quartile

4th quartile

Depth of Support &

Services

Customer Base

Large

Medium

SmallIBM Open Page

Service Now

EquaSiis

SirionLabs

IQNavigator

PowerSteering

Janeeva

Enlighta

IBM Emptoris

RelationshipManagement

ContractManagement

FinancialManagement

PerformanceManagement

ComplianceManagement

Vendor Life Cycle Management

Hiperos

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Concluding Thoughts - Discussion and Questions

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Presenter Companies

Alsbridge’s history dates back to the earliest innovations in outsourcing and the nascent development of shared services. We are well known in the sourcing world and quoted extensively as experts in the trade press. Our next generation leaders are poised to expand our capabilities and help redefine businesses’ products and services. Alsbridge’s leadership team has created some of the most innovative and wide ranging sourcing relationships and vendor management & governance structures to help business leaders optimize the value of their outsourcing services.

SirionLabs helps businesses simplify the management of key suppliers and lower the cost of governance by delivering critical intelligence on demand and automating the full spectrum of contracts, performance tracking, invoice processing, risk, relationship alignment, and consumption on a single, integrated platform. SirionLabs’ goal is simple – to automate traditional governance processes end-to-end and deliver real-time, data driven analytics, allowing our clients to redirect focus to supply chain value, while reaping productivity gains, improving performance visibility, and forecasting future usage and performance across their global enterprise.

The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of June 30, 2014, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of over 500,000 agent locations in 200 countries and territories and over 100,000 ATMs. In 2013, The Western Union Company completed 242 million consumer-to-consumer transactions worldwide, moving $82 billion of principal between consumers, and 459 million business payments.

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Presenter Backgrounds

Claude Marais, President & Co-Founder SirionLabs: Claude has been a leader in the global sourcing domain for over two decades. Prior to SirionLabs, Claude pioneered ISG-TPI's supplier governance solution. Claude has held leadership roles in the Procurement and IT organizations at The Coca-Cola Company and Elf Atochem North America, Inc. as the Director of Processing Services and at Andersen Consulting. He is a co-founder and past National Chair of the Society for Information Management IT Procurement Working Groups, and a founding member of the ICEX Outsourcing Forum. He is a Fellow and Honorary Vice Chairman of IACCM - International Association of Contract and Commercial Managers.

Craig Nelson, Alsbridge, Managing Director: Craig has more than 30 years as asenior executive, consultant and sourcing advisor. Before entering advisoryconsulting he managed $2.65B of sourcing spend as Global Head of SupplierManagement for IBM and was COO of MetaSolv Software (now Oracle). He ledErnst & Young’s Risk & Compliance Services Division and was a Principle withMercer Consulting His background in vendor governance and risk andcompliance provides a unique blend of operational, transformational andsupplier management expertise giving him a strategic perspective on riskmitigation effectiveness.

Timothy Langley-Hawthorne, VP Technology Governance Western Union:Tim has over twenty years global experience in the Information Technology industry and has advised public and private sector organizations undertaking IT strategy, benchmarking, sourcing, renegotiation and other strategic IT change initiatives. Tim also has significant experience with change program implementation and advising on IT governance activities including service delivery, financial management, and contract management. Tim’s strong financial background allows him to aggregate and summarize detailed information and present it with a business focus.

SirionLabs503 Pelican AvenueNew Orleans LA 70114Mobile: +1.313.300.0588Email: [email protected]

Alsbridge, Inc.3535 Travis Street, Suite 105Dallas, TX 75204Mobile: +1.214.476.5206Email: [email protected]

Western Union12510 E. Belford AvenueEnglewood, CO 80112Mobile: +1.720.326.6084Email: [email protected]

mailto:[email protected]



DE

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ER FALL

SU MMIT

2014

Session #8

Next Up: The Emerging Profession of Vendor Management &

Governance and the Automation Driving Measurement

Speakers:

Claude [email protected]

Craig NelsonAlsbridge, [email protected]

Timothy Langley-HawthorneWestern [email protected]

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