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Cap Gemini Ernst & Young Business Benefits and ROI from Oracle 11i iProcurement Cap Gemini Ernst & Young UK ~ No 1 Forge End, Woking Surrey GU21 6DB Tel: 44 20 74 34 21 71 ~ www. cgey. com One of the world’s largest consulting firms providing world class

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cap gemini ernst young

Cap Gemini Ernst & Young

Business Benefits and ROI from Oracle 11i iProcurement

slide2

Cap Gemini Ernst & Young UK ~ No 1 Forge End, Woking Surrey GU21 6DB

Tel: 44 20 74 34 21 71 ~ www.cgey.com

One of the world’s largest consulting firms

providing world class

management consultancy, IT design and integration and

systems outsourcing services

on a global basis.

CGE&Y has over 6,500 employees based in

UK & Ireland.

slide3

Services

    • Management and technology consulting
    • Systems transformation
    • Systems management (outsourcing)
    • Local professional services
  • Competitive Advantages
    • Customised Services and Solutions
    • Industry Experience & Documentation
    • Seamless approach to strategy, operations, and information technology
  • Revenues: €1.1bn
slide4

“Our culture is one which

encourages people

to aim high,

to exceed expectations,

and

to have fun while doing it!”

executive conclusions
Executive Conclusions

“CGE&Y’s initial project with Oracle 11i Financials was extremely successful. We have continued this progress with the Procurement and HR modules. This has made CGE&Y a more effective organisation, better able to deliver superior solutions to our clients.”

Brian Bodsworth, CIO

CGE&Y, UK & Ireland

slide6

PROJECT

RAINBOW

executive conclusions7
Executive Conclusions
  • “CGE&Y had four strategic requirements to improve our sourcing operations
  • Reduce the cost of our external purchases through strategic sourcing
  • Use highly integrated systems to support the simplification of our purchase to pay processes
  • Produce management information to monitor and enforce compliance for sustained cost savings
  • Web enabled technology for low maintenance cost, whilst allowing access for all staff to allow de-centralised purchasing processes.”
          • Brian Bodsworth ,CIO
  • CGE&Y, UK & Ireland
cap gemini ernst young uk ireland procurement challenges
Cap Gemini Ernst & Young UK & Ireland Procurement Challenges
  • Develop Strategic Sourcing Expertise
  • Improve Relationships with Suppliers
  • Eliminate Localised Procurement Process
  • Correct Inefficient Procurement Systems
    • Not integrated
    • Manual workarounds
  • Achieve a Competitive AdvantagedCost Structure
cap gemini ernst young uk ireland procurement challenges9
Cap Gemini Ernst & Young UK & Ireland Procurement Challenges
  • Develop Strategic Sourcing Expertise
  • Improve Relationships with Suppliers
  • Eliminate Localised Procurement Process
  • Correct Inefficient Procurement Systems
    • Not integrated
    • Manual workarounds
  • Achieve a Competitive Advantaged Cost Structure

Solution:

Strategic Sourcing &

Business Process Change

iProcurement

Enabled

System to Sustained Process Improvements

Oracle 11i

responses to procurement challenges
Responses to Procurement Challenges

Oracle 11i

Solution :

iProcurement

  • One Stop Shop for all Procurement
  • Web enabled Application
  • Offers spend Analysis and Supplier performance tracking
  • Increases strategic focus by automating and simplifying

routine transactions

  • Enables discipline around the purchasing process

eliminating non preferred vendor spending

  • Control & Visibility of Spend before Commitment is made
procurement pre oracle 11i
Procurement Pre-Oracle 11i

Resulted In

Various Prices Realized

Discounts Based on “Local Volume”

Economies of scale lost

Manual Administration Effort

Low account focus and priority

Poor Supplier Management: Loss of leverage through proliferation of products & service standards driven by supplier variances.

  • Disparate Systems & Processes
  • Localized Buying
  • Manual Purchasing & Approval Processes
  • Poor Service
  • Lack of Standardisation

NO Visibility of Spend before Commitment was made!!

post oracle 11i procurement business process re engineering
Post-Oracle 11i - Procurement & Business Process Re Engineering

Results!

  • Information Available to
  • Negotiate Lowest Price
  • with Key Vendor

Lower Prices for Products & Services

1 Instance

Complete

Procurement

Information

Spending diverted (Controlled) to Preferred Vendors

  • P.O. Mandatory

Administrative savings with automated business process enabled by iProcurement

  • Automated Purchasing
  • & Approval Process
executive conclusions13
Executive Conclusions
  • “Strategic sourcing in CGE&Y has been enabled by Oracle iProcurement. We now have better visibility into our detailed spend, commitments & supplier contracts.
  • CGE&Y is now enabled to strategically source, leveraging our expenditures through fewer suppliers improving terms. Supplier consolidation promotes our technology governance strategy, whereby we determine the best technological solution to a particular type of problem.
  • We use these products and services wherever possible rather than starting with a ‘clean sheet of paper’ on each project.”
          • Wendy Irvin, Chief Purchasing Officer
          • CGE&Y, UK & Ireland
slide14

PROJECT

RAINBOW

Strategic sourcing delivers benefit but

eProcurement sustains benefit over time

eProcurement must be implemented as part of a Sourcing Transformation

programme in order to deliver sustainable benefit

Typical benefits achieved (as % of prices)

  • Using eProcurement as part of an Sourcing Transformation project
  • Increase benefit
  • Increase speed to benefit

Plus 40-50% of the cost of buying the goods/services

The total opportunity for large companies could be around $1bn +

  • Total Cost Management, e.g.

Lifecycle costing/total cost of ownership

Transaction costs (requisition, order, approve, pay)

Payment terms management

Tax / customs optimisation

3-5%

Sourcing Transformation

  • Demand Management, e.g.

Standardised items

Reduced contract “leakage”

Visibility of contracts

Policy compliance and measurement

Item substitution

Requirements and specification management

Additional value

5-10%

Benefit

Commodity/

Supplier Management alone

Speed

  • Supply Base Management, e.g.

Volume leverage/redistribution

Bid-based re-negotiation

Price/performance benchmarking

Enhanced competition

Supply base consolidation/preferred suppliers

5-10%

eProcurement alone

Source: CGE&Y

Time

procurement delivered cost reduction

PROJECT

RAINBOW

2002 2003 2004

Actual Forecast Forecast

0%

-2%

-4%

-6%

-8%

-10%

-1.1%

External

Spend

-4.8%

-8.7%

Procurement Delivered Cost Reduction

These are REAL Benefits, not contracts. These savings are DELIVERED, IN PLACE and are CONSISTENTLY MONITORED

Savings are extracted to the P&L or used to selectively to Drive Revenue Growth

executive conclusions16
Executive Conclusions
  • “Before iProcurement we did not have a formal procurement team and much of the purchasing was done locally, in an uncontrolled manner.
  • With Oracle 11i, procurement is now centralised. The system has excellent management information, enabling a more disciplined process
  • which allows us to consolidate purchases with key vendors to acquire lower prices. Our purchase order mandatory process achieves compliance with approved vendors.”
          • David Strickland
    • Purchasing Consultant
    • CGE&Y, UK & Ireland
slide17

PROJECT

RAINBOW

2002

€4.8M

2004

€ 36.9M

2003

€ 20.1 M

Procurement Contract Yearly Savings

Delivered to P&L

Savings are Cumulative

Enabled byOracle11i iProcurement

slide18

PROJECT

RAINBOW

IT

71%

Other

29%

Procurement - Where have we

received the Benefit?

2002

€4.8M

100%

Communications

80%

60%

Print

40%

Cleaning

20%

Electricity

Couriers

Stationery

0%

2002

slide19

PROJECT

RAINBOW

Other

17%

IT

62%

Flex Resourcing

21%

Procurement - What Benefits are

Forecast and Targeted?

2003 Cumulative Gains

€20.1M!

100%

Data Comms

80%

Print

60%

Cleaning

40%

Pensions

20%

Electricity

Office Consumables

Couriers

0%

2003

slide20

PROJECT

RAINBOW

Procurement Areas of

Contract Savings

2004 Cumulative Gains

€ 36.9M

-6%

Cost

Reduction

Flex

Resourcing

11%

IT

60%

Other

29%

-11%

Cost Reduction

-7%

Cost Reduction

executive conclusions21
Executive Conclusions

“When CGE&Y-UK &I made the decision to implement a strategic sourcing process using purchasing best practices, Oracle's iProcurement module was an enabler and allowed us to pin down the change.

The system prevents employees from reverting back to the old way of doing things over time. The sourcing gains will continue, and not be a one time occurrence.”

Jeff Clarke, Project Manager

CGE&Y, UK & Ireland

slide22

PROJECT

RAINBOW

Example of Process Improvement

World Class end-to-end automated flexible

resource process for our external contractors!

“Before Oracle iProcurement, each business would cut its own deals,

clearly not an optimal situation.

An additional benefit enabled by

Oracle Technology is the Self Billing function for our Flexible Resource Process. We eliminated a weekly invoice for each contract worker

saving €670k annually.”

Nicholas Mabin

Director Recruitment & Resourcing

CGE&Y, UK & Ireland

flexible resource self billing improvement

PROJECT

RAINBOW

16,200

Flexible Resource Self BillingImprovement

Administrative Savings of

€ 670k per year!!

Yearly

Invoices

0

Pre Oracle

Post Oracle 11i

Self Billing via Timecard

360 contractors

45 invoices/Yr

using the benefits achieved to direct business growth
Using the Benefits Achieved to Direct Business Growth

In today’s extremely competitive marketplace,

pricing flexibility with the lower cost structure

enabled by the Oracle Implementation and

outstanding execution gives CGE&Y the ability to be more aggressive in obtaining profitable new business.

strategic procurement strategies with our key it suppliers have fuelled growth

PROJECT

RAINBOW

Strategic Procurement strategies with our key IT Suppliers have fuelled growth

“We developed an innovative contracting approach which is allowing us to drive incremental growth and increased earnings of €10.4m across 4 years. 

This is a complex contract process and Oracle eProcurement allows us to manage and monitor progress. Top-notch execution and Oracle have allowed us to achieve a competitive edge..... enabling us to win extra business”

€15M

Revenue

12..0

Shareholder Value Impact

+ € 7.7M

€10M

9.0

6.0

4.2

€5

Earnings

3.0

3.1

2.1

1.0

€0

2003 2004 2005 2006

iprocurement initiative

iProcurement Initiative

Financial Summary

financial performance measures iprocurement initiative
Financial Performance MeasuresiProcurement Initiative

Project NetPresent Value

(Increase in Shareholder Value) = € 118.1M

IRR >500% infinite

ROI >100% (6515%)(Oracle Definition)

Pay Back Period <1 Year

productivity growth benefits npv m iprocurement initiative

NPV

€ 118.1

Productivity & Growth Benefits NPV (€M)iProcurement Initiative

€ (M)

Incremental

Growth

Cost

Productivity

Project Costs

economic value measures total business value effect
Economic Value Measures Total Business Value Effect!

Economic Profit

Change vs. Base Case

€ 45M

33.1

32.4

31.7

€30M

17.9

€ 15M

Successful Strategic Sourcing Upfront Effort

enabled Project to be Self Funding

2.9

€ 0M

2002 2003 2004 2005 2006

Economic Profit is a complete measure that takes into account earnings, as well as the assets employed to generate those earnings.

iprocurement

iProcurement

Executive Conclusions

executive conclusions31
Executive Conclusions

“The strategy of implementing

Oracle 11i iProcurement

really paid off. The low system implementation cost meant that we were more than able to fund the whole project, including strategic

sourcing and process simplification,

 from year one savings alone!”

Brian Bodsworth , CIO

CGE&Y, UK & Ireland

executive conclusions32
Executive Conclusions
  • “The Rainbow initiative was led by the
  • Uk & Ireland Purchasing Team, But the real key to success was facilitated to all of the areas of the business in a joined up way.
  • Rainbow touched every facet of CGE&Y. We used cross functional teams from many disciplines (PRM, consulting, accounting, legal, facilities...). Without this teamwork we would not have achieved these sizable gains so quickly.”
          • Wendy Irvin
        • Chief Purchasing Officer
          • CGE&Y, UK & Ireland