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Over the course of a decade filled with transformational change, Accenture pursued a radical restructuring of procurement practices with the help of Accenture’s internal IT team. The results of this transformation are impressive. Spend under management at Accenture went from less than 10 percent in 2002 to more than 60 percent in 2010. Procurement systems that existed in only two countries before now reach into 35 countries. IT initiatives in the procurement area between 2004 and 2009 that cost approximately $15 million to implement delivered $150 million in benefits.
Accenture enjoyed rapid growth during the 1990s while operating as a global collection of country-based businesses. But Accenture’s successful entrepreneurial culture made smart procurement a challenge.
Spend under management in the typical enterprise is controlled through a purchase order system and contract management, but Accenture’s decentralized structure enabled virtually anyone in our global workforce to contract for services from suppliers. Another key challenge was the presence of different financial systems across countries, which made tracking and management of spend virtually impossible.
A limited Ariba implementation in two countries had left most of the global network without the technology to underpin this vital business process. The decision was made to transform the process by bringing more spend under Accenture Procurement’s control. For help in transforming the procurement function, Accenture’s Procurement leadership turned to Accenture’s internal IT team.
From 2002, Accenture’s Procurement function began collaborating with Accenture’s internal IT organization to transform the function in its entirety, pairing procurement professionals possessing financial and process skills with IT specialists possessing technical and application management skills.
After developing a core vision for managing spend through a program based on policy, people and technology, Accenture Procurement instituted a core procurement policy and began analyzing data to identify opportunities for improvement, which in the early days were not hard to find.
Manual processing was eliminated, aided by Accenture’s migration to a single SAP enterprise resource planning platform. Business practices and terms and conditions that varied from country to country were standardized. Multiple contracts with the same vendors were for the first time consolidated and negotiated.
Over a multiyear transformation process, specific IT-enabled procurement initiatives included improving procurement with IT, accounts payable, subcontractor services, procurement portal, procurement spend data management, and contract repository and sourcing.
The introduction of each new procurement tool featured strong implementation support after deployment to ensure rapid adoption. Joint procurement-and-IT teams in Dublin and Chicago were backed by Accenture IT resources in Manila and Madrid.
Accenture’s procurement functions are also supported by Accenture Procurement BPO Services, which leverages category management expertise, market insight and economies of scale to help clients achieve sustained cost savings of between 15 and 35 percent.
The Accenture Global Delivery Network makes these services scalable to shifting business needs, assuring clients access to skills and innovation when and where they need them.
Accenture’s study of procurement mastery, which is part of our acclaimed High Performance Business research initiative, documents that procurement “masters” save almost 10 times as much as it costs them to operate their procurement organizations. Accenture now saves 7.8 percent of every dollar of managed spend, while the cost of procurement as a percentage of spend managed is only 0.8 percent, placing Accenture Procurement squarely in the “masters” classification. In fiscal year 2010, Accenture Procurement generated savings of $355 million at a cost of $36 million.
In summary, Accenture’s high-performance procurement capability was built through a long-term partnership between Accenture’s Procurement function and Accenture’s internal IT organization that delivered world-class procurement and supply chain management systems. Leveraging an electronic purchasing solution built around SAP and Ariba, and a best-practice data warehouse, these systems are reducing Accenture’s total cost of purchases (requisition to payment), and increasing compliance in dealings with preferred vendors.
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