Everest Group PEAK Matrix for PO Service Providers

Transcription

1 Everest Group PEAK Matrix for PO Service Providers Focus on Accenture September 2015 Copyright 2015 Everest Global, Inc. This document has been licensed for exclusive use and distribution by Accenture EGR E-1589

2 Introduction and scope Everest Group recently released its report titled Procurement Outsourcing (PO) Service Provider Landscape with PEAK Matrix Assessment This report analyzes the changing dynamics of the PO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group updated its classification of 18+ service providers on the Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for PO into Leaders, Major Contenders, and Aspirants. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of PO service providers based on their absolute market success and delivery capability. Everest Group also identified three service providers as the 2015 PO Market Star Performers based on the strongest Year-on-Year (YoY) forward movement demonstrated on the PEAK Matrix. Based on the analysis, Accenture emerged both as a Leader and a Star Performer. This document focuses on Accenture s PO experience and capabilities. It includes: Accenture s position on the PO PEAK Matrix Accenture s YoY movement on the PO PEAK Matrix Detailed PO profile of Accenture Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit. 2

3 Everest Group distinguishes between the Source-to- Contract (S2C) and Procure-to-Pay (P2P) processes Procurement pyramid (non-core spend) Strategy S2P strategy Judgment-intensive Transaction-intensive 1. Spend data management 2. Strategic sourcing 3. Vendor management 4. Requisition to PO 5. Invoice processing 6. Accounts payable and T&E 7. Procurement systems 8. Performance management Everest Group s analyses include multi-process PO contracts with a minimum of three procurement processes, over US$1 million in ACV, and a minimum contract term of three years. Typically, the managed spend is greater than US$50 million Everest Group s analyses include all multi-process PO contracts signed as of

4 Market success (Revenue, clients, and growth) 25 th percentile 75 th percentile Everest Group PEAK Matrix 2015 PO market standing Performance Experience Ability Knowledge Everest Group Performance Experience Ability Knowledge (PEAK) Matrix for PO 75 th percentile High Leaders Accenture Major Contenders IBM Leaders Major Contenders Aspirants Star Performers GEP Proxima Tech Mahindra Aspirants Aegis Genpact HP WNS HCMWorks Capgemini Infosys Xchanging TCS Wipro Aquanima Optimum Procurement HCL Low Low 25 th percentile PO delivery capability 1 (Scale, scope, technology & innovation, delivery footprint, and buyer satisfaction) High 1 Service providers scored using Everest Group s proprietary scoring methodology Source: Everest Group (2015) 4

5 Accenture is a PO Star Performer based on the strong forward and upward movement over time on the Everest Group PEAK Matrix Market success in 2014 Accenture registered the highest number of new contracts wins in In total, it signed 25 new multiprocess contracts worth over ~US$400 million in TCV It also had the highest ACV growth in absolute terms among all service providers Europe was the key growth region for Accenture, followed by North America Accenture witnessed high growth in the CPG & retail and travel & tourism industries, while manufacturing also registered significant traction Capability enhancements in 2014 Accenture extended its partnership with SAP to deliver cloud-based solutions for procurement and F&A It made several in-house investments to improve S2P technologies and tools, and started development of over 14 applications for Accenture Insights As a part of its digital initiative, Accenture invested in several technologies including RPA, mobility, and cloud. It opened RPA centers in India, Philippines, China, Mauritius, and Italy 5

6 Accenture (page 1 of 5) PO service capabilities Key PO leaders Mike Salvino, Group Chief Executive BPO Kristin Ruehle, Procurement BPO Offering Lead PO service suite S2P services across all indirect spend categories including transformational change management Sourcing & category management-related services: Category governance & category planning, strategic sourcing, e-auctions, spot-buys, contracting, supplier performance management, compliance management, and spend, savings, and compliance analytics Transactional procurement services: Requisition processing, invoice processing, payment processing, Time & Expense (T&E) processing, payment accuracy & controls, procurement enablement, technology management, vendor master data management, and P2P and compliance analytics Scale of operations Number of PO FTEs 1 over time 1, FTE mix by process scope Source-to-Contract (S2C) 2,900+ 3,300+ >500 FTEs FTEs <100 FTEs Procure-to-Pay (P2P) Category expertise IT/telecom, contingent labor, marketing, facilities / real estate, MRO, HR services, travel services, professional services, capital projects, logistical services, and energy & utilities Spend managed for external clients More than US$95 billion Key PO-related developments Year 2014: Expanded its partnership with SAP/Ariba to deliver cloudbased solutions for procurement and F&A BPO services Year 2013: Acquired Procurian, a leading provider of procurement business process solutions, for US$375 million Year 2013: Procurian launched "Procurian Insights" a proprietary dashboard solution built on the QlikView BI platform 1 Does not include accounts payable and SCM FTEs Source: Everest Group (2015) 6

7 Accenture (page 2 of 5) PO client portfolio Major PO clients Microsoft, Diebold, Glencore Xstrata, a diversified chemical company, a global banking and financial services company, an aerospace manufacturer, a leading global financial services group, an automotive parts company, a large APAC bank, and a multinational pharmaceutical company Recently-announced multi-process PO engagements Time of signing Client Contract details Q Q Q Education publisher Multinational food & beverage company High-tech manufacturer Five-year program to centralize and manage S2C process for this global industry leader across all categories of indirect spend, assisting efforts to fuel expansion in strategic growth markets Selected to provide an end-to-end, S2P solution across a range of indirect spend for five years. Complex delivery requirements include addressing the needs of stakeholders across seven operating companies and providing procurement operations and tail-spend services to more than 130 locations Awarded a five-year S2P program designed to capture significant savings across a broad range of indirect spend in North America, Europe, and Asia Pacific for a large and rapidly-growing global player in a highly competitive industry PO revenue geography mix (2014) Latin America (0-5%) Middle East and Africa (MEA) (0-5%) PO revenue industry mix (2014) PO revenue buyer size mix (2014) Others Asia Pacific Manufacturing Healthcare 5-10% 10-15% 15-20% and pharma 5-10% North Energy & 5-10% CPG and 50-55% 10-15% 35-40% America utilities (E&U) Europe retail BFSI 30-35% 10-15% Hi-tech and telecom Small- and Medium-sized Businesses (SMBs) (0-5%) Midmarket 25-30% 65-70% Large buyers Note: Based on contractual information as of 2014 Source: Everest Group (2015) 7

8 Accenture (page 3 of 5) PO delivery locations Pittsburgh King of Prussia London Prague Bratislava Bucharest Dalian San Antonio San Jose Delhi Bangalore Noida Hyderabad Chennai Shanghai Shenzhen Sao Paulo Belo Horizonte Buenos Aires Johannesburg Source: Everest Group (2015) 8

9 Accenture (page 4 of 5) PO technology solutions Sourcing solution P2P solution Process-agnostic solution Solution description Strategic sourcing and spend analytics Tactical buying / RFX management Continuous analytical capability to feed sourcing and process benefits realization Order execution and management, contract management, supplier & catalog management, and operations Vendor portal to support self-service Buyer portal to drive compliance and purchasing processes Accenture BPO Navigator is a dashboard-based tool that provides a near real-time view across all areas of service delivery Insight derived from high-level rolled up data down to subprocessspecific Process scope Opportunity analysis, spend analysis, strategic sourcing, quoting / low-dollar sourcing, savings baseline & calculation, and supplier performance management Requisition approval and purchase order management Procurement support, invoice and payment processing, working capital management, analytics, and control and compliance Cross process, providing a dashboard view across procurement including sourcing, spend savings, PO processing, reconciliations, invoice processing, workflow, and query management Technology leveraged Radix, BravoSolutions, and Accenture Insights Ariba and CombineNet Emptoris and IQ Navigator Category-specific sourcing: Telecom and transportation Radix PTP, Ariba, SAP, Coupa, MS Dynamics AX, and IQN Leverage ERPs including SAP, Peoplesoft, Oracle, and JD Edwards Accenture Buyer Portal Accenture Supplier Portal Accenture P2P analytics, Accenture transaction compliance, and analytics tool Platform developed by Accenture, designed for cloud and on-premise deployment Connected to transactional platforms through an integration hub Delivery model and pricing Hosted, single-client, and multi-client Up front implementation fees, pay-per-transaction, license fees, bundled-in FTE pricing, and performance-based pricing (gainshare) Hosted, single-client, and multi-client Up front implementation fees, pay-pertransaction, license fees, bundled-in FTE pricing, and performance-based pricing (gainshare) Hosted, single-client, and multiclient Up front implementation fees, payper-transaction, license fees, bundled-in FTE pricing, and performance-based pricing (gainshare) 9

10 Accenture (page 5 of 5) Everest Group assessment Market success assessment Global multi-process PO market share 1 Percentage 20-25% Number of contracts Global multi-process PO market share over time 1 Percentage share by ACV YoY growth 20-25% 25-30% 25-30% 25-30% ACV TCV 5-10% Managed Spend (MS) 25-30% 25-30% Delivery capability assessment 1 Assessment dimension Rating Remarks Scale Scope Technology and innovation Delivery footprint Buyer satisfaction Best-in-class Very high High Medium high Medium Medium low Low Not matured Global major with more than US$30 billion in revenue Strong capabilities in end-to-end S2P services, serves clients across diverse geographies and industries, exposure to wide buyer segment, and high category expertise Robust technological capabilities across sourcing (Radix TM ) and P2P (Radix PTP); made several in-house investments to bolster RPA, mobility, cloud, social media, and analytics capabilities Global delivery footprint with centers across all geographies and leveraging an adequate shoring mix Clients have cited concerns over communication gaps, especially between on-site teams and buying center associates, and over too much churn created after the acquisition of Procurian Key strengths One of the two service providers with global end-to-end S2P capabilities that enable it to service a wide range of client requirements Strong expertise across industries and categories, enabling it to efficiently execute transformational agenda for clients Capability to execute multi-tower BPO and ITO deals Accenture has strong analytical capabilities and proprietary technologies, significantly bolstered through the acquisition of Procurian Note: Based on contractual and operational information as of 2014 Source: Everest Group (2015) Areas of improvement Ease of accessibility and communication with key executives. Some clients have noted that due to Accenture s large and matrixed structure, they find it hard to navigate through the organization Accenture needs to quickly address any lingering issues/concerns faced by its clients since integration with Procurian It needs to proactively engage with second- or third-generation clients to create additional value for the engagement, or risk losing them to competition 10

11 Appendix 11

12 Traditionally, PO has been limited primarily to a function-focused definition 1 2 Strategy (implemented in-house) Mission strategy / corporate strategy Business strategy Geographic strategy Technology strategy Spend data management Baseline analysis Data cube construct Opportunities definition Strategic sourcing Sourcing strategy Vendor selection Contracting Sourcing implementation Category management Procurement pyramid (non-core spend) S2P strategy 1. Spend data management 2. Strategic sourcing 3. Vendor management 4. Requisition to PO 5. Invoice processing 6. Accounts payable and travel & expense (T&E) 7. Procurement systems 8. Performance management Strategy Judgment-intensive Transaction-intensive 3 Vendor management Vendor relationship management Contract administration Service level/standards monitoring 4 Requisition to PO Approval workflow Material requisition Purchase order Expediting/ troubleshooting 5 Invoice processing Material/invoice receipt Invoice payment 6 Accounts payable and T&E Master data maintenance Process payment request T&E claims processing EDI / P-card 1 administration Month-end closing Vendor inquiries Reporting 7 Procurement systems E-auctions Catalog management Solution hosting 8 Performance management Financial performance Compliance management Policies and procedures Performance and results reporting 1 Refer to Appendix 12

13 Beyond the process dimension, PO contracts also have a procurement-spend category dimension High prevalence of third-party outsourcing Low prevalence of third-party outsourcing Source-to-Pay (S2P) cycle Source-to-Contract (S2C) Procure-to-Pay (P2P) Direct spend Core spend Non-core direct spend Goods and services that are key ingredients to manufacture/deliver the final product/service They are proprietary or specific to the organization For example: Iron ore for a steel manufacturer and rubber for a tyre manufacturer Goods and services that are commonly required to manufacture/deliver the final product/service They are commodities in that industry For example: Lubricants, packaging, and Maintenance, Repair, & Overhaul (MRO) Indirect spend Non-core spend Non-production goods and services that are not required to manufacture/deliver the final product/service but are required to operate the organization For example: Spend categories such as facilities, office supplies, travel & logistics, marketing / sales-related spend, and IT/telecom 13

14 Market success (Revenue, clients, and growth) 25 th percentile 75 th percentile Everest Group classifies the PO service provider landscape into Leaders, Major Contenders, and Aspirants on the Everest Group PEAK Matrix Everest Group Performance Experience Ability Knowledge (PEAK) Matrix High Major Contenders 2 nd or 3 rd quartile performance across market success and capability 75 th percentile Leaders Top quartile performance across market success and capability Aspirants 4 th quartile performance across market success and capability Low Low 25 th percentile PO delivery capability 1 (Scale, scope, technology & innovation, delivery footprint, and buyer satisfaction) High 1 Service providers scored using Everest Group s proprietary scoring methodology described on the following page Source: Everest Group (2015) 14

15 Market success Service providers are positioned on the PEAK Matrix based on evaluation across two key dimensions Leaders Measures success achieved in the market. Captured through revenue, number of clients, and growth rate as of December 2014 Major Contenders Aspirants Delivery capability Measures ability to deliver services successfully. Captured through five subdimensions Scale Scope Technology and innovation Delivery footprint Buyer satisfaction Measures the scale of operations through: Overall company revenue PO revenue as a percentage of total company revenue Measures the breadth and depth of scope of services provided across: Processes Industries Geographies Categories Buyer Size 1 Measured through responses from two/three referenced buyers for each service provider Source: Everest Group (2015) Measures the technological Measures the delivery capabilities and innovation in footprint across regions and PO: the global sourcing mix Technology model adoption In-house suite of PO technologies and investments Innovation in PO Service delivery, offerings, and innovative tools Measures the satisfaction levels 1 of buyers across: Goal realization Process delivery Implementation Relationship management Contract terminations were also assessed to gauge satisfaction levels 15

16 Market success Everest Group confers the Star Performers title to providers that demonstrate the strongest forward movement over time on the PEAK Matrix Methodology Everest Group selects Market Star Performers based on the relative YoY movement of each service provider on the PEAK Matrix Year 1 Service provider Year 0 In order to assess advancements on market success, we evaluate the performance of each service provider on the PEAK Matrix across a number of parameters including: Yearly ACV growth Number of new contract signings Number of contract extensions Value of new contract signings Capability 2015 PO Star Performers In order to assess advancements on capability, we evaluate the performance of each service provider on the PEAK Matrix across a number of parameters including: Increase in scope of services Expansion of delivery footprint Technology- / domain-specific investments The top quartile performers on each of the identified parameters are selected and the Star Performer rating is awarded to the service providers with: The maximum number of top quartile performances across all of the above parameters At least one area of top quartile performance in both market success and capability advancement The Star Performers title relates to YoY performance for a given service provider and does not reflect the overall market leadership positions. Those identified as Star Performers may include Leaders, Major Contenders, or Aspirants 16

17 FAQs (page 1 of 2) Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service provider RFIs and Everest Group s proprietary databases containing providers deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings Is being a Major Contender or Aspirant on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the PEAK Matrix position? PEAK Matrix position is only one aspect of Everest Group s overall assessment. In addition to assigning a Leader, Major Contender or Aspirant title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in the market place, and a copy of their own profile that is published by Everest Group as part of the compendium of PEAK Matrix providers profiles 17

18 FAQs (page 2 of 2) What is the process for a service provider to leverage their PEAK Matrix positioning status? Providers can use their PEAK positioning rating in multiple ways including: Issue a press release declaring their positioning/rating Customized PEAK profile for circulation (with clients, prospects, etc.) Quotes from Everest Group analysts could be disseminated to the media Leverage PEAK branding across communications ( signatures, marketing brochures, credential packs, client presentations, etc.) The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement with the designated POC at Everest Group 18

19 About Everest Group Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility, and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problemsolving skills and original research. Details and in-depth content are available at and research.everestgrp.com. Dallas (Headquarters) info@everestgrp.com New York info@everestgrp.com Toronto canada@everestgrp.com London unitedkingdom@everestgrp.com Delhi india@everestgrp.com Stay connected Websites research.everestgrp.com Blog