Sourcing Secrets from Jim Schnyder (SourceCon Sourcing Grandmaster 2011)
DITS WEBINAR: STRATEGIC SOURCING SECRETS
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Transcript of DITS WEBINAR: STRATEGIC SOURCING SECRETS
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Strategic Sourcing Secrets: Best Practices, Trends, and Money Saving Advice
Presenter: Leo Berz, Director Professional Services, Telecom - Ecova Date: 9/25/2013
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Overview
Strategic Sourcing
Industry Trends and Issues
Unique Procurement challenges
Bidding Secrets
Strategic Partnership secrets
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Industry Trends
The dominant enterprise trend is to reduce the quantity of vendors, fewer carriers overall.
Incumbent carriers receive preference when new contract are sourced – 77% of enterprises grant preference to the incumbent.
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Issues & Problems
Amount of time to perform requirements gathering
Subject matter expertise in telecom sourcing
Evaluating carriers and comparing carrier offerings to one another
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Issues & Problems cont…
Evaluating total cost of services versus actual cost
– Too many dependencies, variables, taxes, surcharges, fees
Gaining confidence in the reliability of carrier performance
– Experiences influence expectations
Managing carrier performance after the contract is signed
– High effort is the perception
Quickly changing landscape
– Technology
– Heated M&A activity
– Regulatory uncertainties
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Survey Question
How is Telecom procurement handled within your organization?
– Initiated and led by Procurement
– Initiated and led by IT/Telecom
– Initiated and led by Process Improvement of Cost control group
– Internal partnership between IT/Telecom, Procurement and or PI
– Don’t know
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Positioning for Success
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Strategic Sourcing Perspective
Integral function of Telecom Expense Management (TEM)
It’s a Process; not just a procurement event
The more you put into it, the more you get out of it
Think long term
Cost is only one factor
Secret: Indentify Strategic Partners and work with them as such
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Selecting the Right Tool
•Evolving technology
•Industry education
Request for Information
•Commodities
•Vendor capabilities are well known
Request for Quote
•Solution already identified
•Expect variations between providers
Request for Proposal
•Extremely short timeframes
•Working with strategic business partner
Direct Negotiations
•Adding services to contract
•Market pricing considerable below contract
Mid-term Amendments
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Timing
When to go to market
Control the clock
New business opportunities
Evaluating new technology
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Bidder Communications
One voice, one message
To E-mail or not to E-mail
Identify deal breakers up front
Never award contract untilterms and conditions are complete
Secret: Ask for something you don’t really care about that will be problematic for the bidders; makes for a great bargaining chip
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Know the Carrier’s Playbook
Burning the clock
Hold your telecom spend hostage
Bypass your process
Limit their liability
Blame it on regulatory bodies
Obfuscate their pricing
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Survey Question
How do you determine when to go to bid?
– Corporate policy that all contracts go to bid
– Corporate policy based on contract value
– Corporate policy based on contract age
– Individual cased based decision
– Don’t know
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Secrets for Success When Bidding
Never get pressured into an agreement; if time is short ask for a 6 to 12-month extension
Include meaningless contract requirements that the providers don’t want to agree to as a bargaining chip
Never commit more than 60 to 80% of potential spend
Term contracts are always preferable
Bidders become invested over time
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Secrets for Success With Strategic Partners
Identify your Strategic Partners and treat them as such
Get your Strategic Partners to identify additional savings opportunities to you as they become available
Mid-term amendments are always available
Schedule standing Stewardship meetings
Fair accountability
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Successful sourcing requires effort but it is worth it
We can achieve significant savings without sacrificing quality
Planning activities in advance offers better control of the outcome
Service agreements must be looked at holistically
Changes to the technology and regulatory landscapes can be leverage
Healthy strategic partnerships are critical
Lessons Learned
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Q&A
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Thank You for Attending