Business Benefits and ROI from Oracle 11i iProcurement

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Cap Gemini Ernst Young

• Business Benefits and ROI from Oracle 11i
  iProcurement

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Cap Gemini Ernst Young UK No 1 Forge End,
Woking Surrey GU21 6DB Tel [phone]
www. cgey. com
One of the worlds largest consulting firms
providing world class management consultancy, IT
design and integration and systems outsourcing
services on a global basis. CGEY has over
6,500 employees based in UK Ireland.
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• 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

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Our culture is one which encourages people to
aim high, to exceed expectations, and to have
fun while doing it!
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Executive Conclusions
CGEYs initial project with Oracle 11i
Financials was extremely successful. We have
continued this progress with the Procurement and
HR modules. This has made CGEY a more effective
organisation, better able to deliver superior
solutions to our clients. Brian Bodsworth,
CIO CGEY, UK Ireland
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(No Transcript)
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Executive Conclusions

• CGEY 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
• CGEY, UK Ireland

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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

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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
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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

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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!!
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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

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Executive Conclusions
Strategic sourcing in CGEY has been enabled by
Oracle iProcurement. We now have better
visibility into our detailed spend, commitments
supplier contracts. CGEY 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 CGEY, UK
Ireland
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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 CGEY
Time
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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 PL or used to selectively to Drive Revenue
Growth
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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 CGEY, UK Ireland
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Procurement Contract Yearly Savings
Delivered to PL Savings are Cumulative
Enabled by Oracle11i iProcurement
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Procurement - Where have we received the
Benefit?
2002 4.8M
100
Communications
80
60
Print
40
Cleaning
20
Electricity
Couriers
Stationery
0
2002
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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
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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
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Executive Conclusions
When CGEY-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 CGEY, UK Ireland
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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 CGEY, UK Ireland
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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
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Using the Benefits Achieved to Direct Business
Growth
In todays extremely competitive marketplace,
pricing flexibility with the lower cost
structure enabled by the Oracle Implementation
and outstanding execution gives CGEY the
ability to be more aggressive in obtaining
profitable new business.
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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
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iProcurement Initiative

• Financial Summary

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Financial Performance MeasuresiProcurement
Initiative
Project Net Present Value (Increase in
Shareholder Value) 118.1M
IRR gt500 infinite ROI gt100 (6515) (Oracle
Definition) Pay Back Period lt1 Year
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Productivity Growth Benefits NPV
(M)iProcurement Initiative
(M)
Incremental Growth
Cost Productivity
Project Costs
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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.
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iProcurement

• Executive Conclusions

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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 CGEY, UK Ireland
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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 CGEY. 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 CGEY, UK Ireland