Ariba’s North American Conference Ariba LIVE 2012 was held last week at Caesars Palace in Las Vegas. What I said last year about the event still holds true that “Ariba’s history, its solution footprint, its client base, its marketing/event prowess, and its position as the largest “pure play” solution provider in the space combine to make the Ariba LIVE conference one of the must-attend events each year in the supply/spend management world.”
To that, I would now add that Ariba LIVE has become one of the only conferences where buyers and suppliers alike can come to collaborate, share best practices, and find new trading partners. The event is also one of the industry’s largest with a reported 1,900 in attendance. [Sidebar: Speaking of collaboration, here I am discussing Collaborative Sourcing at last year’s event if you have 4 minutes to spare].
The two-day conference was a blend of mainstage presentations from leading Chief Procurement Officers, other C-level types, and Ariba executives and a series of breakout sessions that focused on the buy-side, the sell-side, managing cash, commerce collaboration, cloud, and customer-themed sessions. Today, the first of two highlights from a CPO on the Rise at Ariba LIVE:
Procurement by the Book:
Cliff’s Notes SparkNotes on the Transformation at Reed Elsevier
While there were many other procurement executives who presented at Ariba LIVE, I decided to highlight Leslie Campbell’s (CPO at Reed Elsevier) presentation. Leslie, who delivered a Main Stage presentation on Day Two of the conference, is clearly a CPO on the Rise and shared a great story of the procurement transformation at Reed. Here are some highlights from her speech, that she delivered in a unique book format/structure.
Prologue – 2008
Leslie began at Reed Elsevier in 2008 when the procurement organization was highly decentralized, with 120 FTEs located across 28 global locations. Procurement was managed at the local level with no global policies, processes, or tools and disparate AP systems and disparate data sources. The group managed less than 20 sourcing events and had an unvalidated savings pipeline of $12 million.
Campbell’s story begins when she came to the realization, while trying to implement a centralized, global procurement organization, that not everyone thought that it was a good idea, even some within procurement. So, in an attempt to affect what she calls some “climate change,” she and her team chose to do something different – go on a road trip and meet with people to discuss the idea. Leslie and her executive team met with (1) procurement staff to understand their orientation and aspirations and (2) stakeholders to understand their priorities. Cleverly, while on the road trip, they also prioritized an “Ariba Spend Analysis project, developed a sourcing a pipeline and began running eAuctions.”
The team hit its first year target and exceeded its second year target. Some key takeaways for Leslie from the road trip were that you should expect to be surprised, listening is more powerful than talking, and familiarity breeds familiarity (i.e. it’s a good thing).
As the transformation progressed, Leslie’s team continued to outperform, exceeding targets each year. In the second stage of the the process, Leslie offered a few more key takeaways:
- Learn from your critics, they just might be right
- Leave the data with stakeholders so they can come to their own conclusions, instead of forcing your ideas on them. They may have better ideas than you too.
- Don’t go too fast on everything – you have to vary the pace on different things to get the highest response [Sidebar: this one is along the lines of the saying that “when everything is an emergency, nothing is an emergency”].
In year three the team exceeded savings targets in all regions and for all categories. Just when it appeared that they were on a great trajectory and were honing in on a happy ending, Leslie decided on a new beginning…. and decided to do a major procurement reorganization.
Leslie began recruiting her new team from unusual places – finance department, subject matter experts across the company, warehouse and sales staff – none with a strong background in procurement. The key takeaways here were that diversity in an organization is hard, but can really, really work, and above all else, trust your gut when it comes to hiring people.
By this point, in aggregate, Leslie and team had expanded procurement’s traditional role and absolutely crushed their savings targets. By this point, they were delivering business value along many different paths and to many different functions including:
- Compliance & Demand Management
- M&A and Divestment Support (with executives)
- Product Development Work (with the business)
- Cash Management (with treasury)
- Risk Mitigation (with legal)
- Revenue Generation via Balance of Trade
- Software Asset Management (with IT)
Since Leslie wrote her own Epilogue, we’ll let it do all the talking.
Epilogue – 2012
- ~$100 million validated annual cash savings last 2 years
- $384 million validated P&L savings in first 4 years
- 1,300 sourcing projects completed
- 10% smaller staff (110) in 25% fewer locations (21, instead of 28)
- Reduced operating budget by 14%
- Improved employee satisfaction scores (net promoter score doubled)
- 90% of procurement spend captured by Ariba Spend Visibility
- 12,000+ contracts managed electronically by Ariba Contracts
- eInvoicing has been launched
And so, they transformed, happily ever after.