© 2015 IBM Corporation

IBM Smarter Asset Management Procurement End-to-End Solution as a Service

Paul Nash

Domenico Merlino

Elizabeth Koumpan

Agenda

• Introductions and Purpose

• Existing Challenges

• IBM Value Proposition

• Conceptual Architecture

• Additional References

1

Existing Challenges

Key drivers of asset management

Increase asset service levels at a lower cost

Improve financial results

Improve budget forecasting

Transfer knowledge of an aging workforce

Meet regulatory requirements

3

Source: Reliabilityweb.com Research Report on Asset Management Practices, Investments and Challenges 2014-2019. www.reliabilityweb.com

Increase system reliability

Suppliers are vital to your organization’s success, regardless of industry

On average, 50 percent

of revenue is now spent

with suppliers

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Controlled

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enta

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f re

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ue

0%

70%

SOURCE: CAPS Research, Cross-Industry Report of Standard Benchmarks, June 2012.

4

On average, 25 percent

of revenue is spent on

Asset Based spend

A Real World Example

Current Process

Analysis/

Request

(PR)

Bid

Package Contract

Maximo

Work

Order /

Purchasing

Job

Inspection

Completion

Supplier Management

Challenges • Limited information collected from the supplier

• No approval workflow or means to collect assessment data

• Inability to check outside information like D&B

• Disruptions caused by unreliable suppliers

• Poor visibility into supplier spend and performance

• Costs incurred as a result of inaccurate or conflicting supplier information

• Risk to company and brand because of supplier actions or policies

7

Grow qualified supplier base • Capture & evaluate qualification data to ensure suppliers meet

statutory company & category requirements

Obtain complete view of supplier performance across organizations and categories

• Classify suppliers across multiple categories and company organizations

• Capture survey and transaction data to evaluate performance • Have a standard process for onboarding and qualifying new

suppliers • Define and manage supplier development programs

Remediate suppliers that pose supply chain risk • Identify supplier risks across numerous company criteria • Define programs with goals and track progress

Bids and Solicitations

Challenges • Managing virtually all categories—simple to complex— using the same process and system

• Optimizing supplier bids to obtain the best value, not just the best price

• Running large events, complex events or both

• Providing an interface for suppliers to access the bids

• Managing virtually all categories—simple to complex— using the same process and system

• Optimizing supplier bids to obtain the best value, not just the best price

• Running large events, complex events or both

8

Efficiency in the sourcing process with need for

• Central repository and access

• RFx Wizards and Templates

• Complete configurability

Accelerate the decision process with

• Optimized analysis

• Gain control without manual tasks

Manage pipeline of sourcing events

• Create & execute sourcing events for complex and basic categories

• Monitor & manage event pipeline across categories

Contract Management

Contract Management helps companies structure more profitable contracts, streamline the contracting process and improve compliance. Execute on negotiated time and materials against demand from requisitions or work. Track warranty details against assets for improved recovery.

Provide Enhanced Process Automation, Document Controls Capability, Enhance Terms and Conditions Management, Enhanced External Communications, Expanded Process Transparency, Enhanced Overall Contracts Language Management, Storage and Retrieval.

9

Challenges • Inability to produce an actual contract document to be signed by both parties

• No control over the process or approval workflow

• Limiting exposure to risk and understanding the impact of marketplace

events

• Missing savings opportunities and ensuring delivery of obligations

• Enforcing compliance with standards and government regulations

Supplier Performance and Risk

Challenges • Disruptions and cost overruns caused by unreliable suppliers

• Poor visibility into supplier spend and performance

• Costs incurred as a result of inaccurate or conflicting supplier information

• Risk to company and brand because of supplier actions or policies

10

• Identify Risk Earlier

• Analyze Risks in real time

• Mitigate Risks via Advanced Decision support where

KPI’s are integrated as an

• early warning system

• Facilitate suppliers’ compliance with relevant

regulations and social norms

• Evaluate supplier performance and support

compliance with contractual terms

• Identify and measure likelihood and impact of

supplier risk

• Manage supplier development programs to improve

compliance and performance or to mitigate risk

Spend Data Analysis

Challenges

• Lack of visibility into spend across the enterprise

• Spend data housed in different systems and differing formats

• Lack of control over savings programs

11

Enrichment (aggregation and cleansing) of spend from

different categories and systems

Accurate spend classification, down to the line-item level

with automated feedback

Real-time dashboards and analysis

IBM Value Proposition

The Smarter Way…

Analysis/

Request

(PR)

Bid

Package Contract

Maximo

Work

Order /

Purchasing

Job

Inspection

Completion

Delivering strategic supply and

contract management solutions that

enable your company to maximize

financial performance and reduce

commercial risk

IBM Solution delivers value to the supply chain

14

Gain contract

lifecycle

visibility

Define

and manage

risk

Accelerate

time to

closure

Ensure

compliance

Plan & Analyze

Improve

Productivity Increase Savings

Mitigate Risk

• Standardization of

procurement processes

• Increase source to

contract cycle times

• Improve resource

utilization by automating

processes

Contract Manage &

Execute

How does our solution deliver value?

• Create multi-year

savings programs

• Identify more savings

opportunities

• Negotiate higher savings

for events and contract

negotiations

• Track spend and SLAs

against the contract

• Increase use of

preferred, top

performing suppliers

• Minimize activity with

high risk suppliers

Centralized Data Management

360 Dashboard Reporting and Visibility

15

Program & Request Management

16

Supplier Qualification

Supplier Discovery

Web based, logic driven supplier registration

Detailed category assessments

Automated approval workflow

Value

Maintain one portal for all suppliers

Quickly identify and onboard new suppliers

Enforce compliance with corporate standards

Conduct market analysis to find the best suppliers

Strategic Supply Management Supplier Qualification

Source Classify

Suppliers Contract

Execute

Orders

Evaluate

Supplier

Risk & Perf.

Analyze

Spend

Plan & Analyze

Qualify

Suppliers

Program & Request Management

17

Sourcing Capabilities

Buyer Survey, RFI, RFQ, RFP, Auctions

Best Practice Category Templates

Automated scoring & ranking

Easy to use online and offline bidding interface

What-if bid comparison & savings analysis reporting

Value

Streamline RFx creation – run more events

Analyze RFx results faster and more efficiently

Track savings by category, business unit and RFx type across organization

Strategic Supply Management Sourcing

Source Classify

Suppliers

Qualify

Suppliers Contract

Execute

Orders

Evaluate

Supplier

Risk & Perf.

Analyze

Spend

Contract

Strategic Supply Management Contract Management

18

Program & Request Management

18

Contract Management

Logic driven ―Interview Wizards‖

Standard Template library & Pre-Approved clauses

MS Word Integration with real-time data sync

Conditional and clause level workflows

Proactive alerts and automatic task creation

Value

Reduce contract cycle times

Identify and eliminate process bottlenecks

Realize negotiated benefits to capture more savings

Source Classify

Suppliers

Qualify

Suppliers Contract

Execute

Orders

Evaluate

Supplier

Risk & Perf.

Analyze

Spend

Contract

Strategic Supply Management Supplier Evaluation & Risk

19

Program & Request Management

19

Supplier Evaluation & Risk

User defined scorecards and surveys with ability to link to

contracts

Risk modeling with sophisticated calculations

Integrated KPIs, traffic light system graphics, and

proactive alerting

Value

Supplier risk data is centralized and easily accessed

Manage more suppliers with automated evaluation processes

Proactive alerting to identify risks earlier

Source Classify

Suppliers

Qualify

Suppliers Contract

Execute

Orders

Evaluate

Supplier

Risk & Perf.

Analyze

Spend

Manage &

Execute

Strategic Supply Management Spend Analysis

Program & Request Management

Source Classify

Suppliers

Contract Execute

Orders

Evaluate

Supplier

Risk & Perf.

20

Spend Analysis

Superior data enrichment with guaranteed accuracy

Cognos powered dashboard views and reporting

Analytics to source and rationalize supply case

Compliance Management to track contracted vs. actual

Value

Increase global spend visibility

Drive more business to preferred suppliers

Improve compliance & reduce leakage spend

Identify more opportunities for savings and rationalization

Plan & Analyze

Analyze

Spend Qualify

Suppliers

21

Virtual Supply Master - Centralized Data Management

360 Dashboard Reports & Analytics

360 view of cross suite supply chain activities from one

interactive dashboard report

Preassembled workspace content – drag and drop assembly

Accessible online or on mobile tablets / iPad

Value

Increase visibility to savings and rationalization opportunities, demand aggregation, compliance issues and supplier risk

Use supply chain intelligence to increase corporate competitiveness

Strategic Supply Management 360 Dashboards Reporting & Analytics

Program & Request Management

Source Qualify

Suppliers Contract

Execute

Orders

Evaluate

Supplier

Risk & Perf.

Analyze

Spend

Classify

Suppliers

360 Dashboard Reporting & Analytics

Strategic Supply Management

Smarter Asset Purchaser

e

Integrated

Sourcing

Application

Integrated

Contract

Management

Supplier classification

defining supplier

strategies

Supplier evaluation

managing supplier

performance

Integrated

Spend

Analysis

Supplier onboarding

and discovery

processes

Integrated supplier

data sources

and self service

Supplier risk

online tracking and

monitoring

Supplier qualification

to assess and

approve suppliers

Supplier master data

management and

synchronization

Collaboration and

knowledge sharing

between purchasers

22

Mobile enablement

Mobile Capabilities Drive Adoption

Conceptual Architecture

Logical Architecture

25

Cloud based Solution as a Service

Purchase

Order

Goods

Receipt

Invoice

Receipt Payment

Requisition

Budget and GL Postings

Contract

Management Spend Analysis

Sourcing and

Negotiations

Transactional: Improve Usability,

Workflow,

Flexibility,

Employee and

Supplier self

service

Strategic: Cost Savings,

Risk Mitigation,

Productivity

Improvements

E-invoicing

Program Management:

Develop Portfolio Strategy - Category Analysis (Internal-External) - Implementation - Performance Monitoring

Supplier Lifecycle Management – Qualification/Classification/Evaluation/Risk/Development

Master

Data

Supplier

Network Catalogues

Purchase

Requisition

Goods

Receipt or

Time Entry

Invoice

Receipt

Requisition Approvals Approvals

26

Interaction with other systems

27

Smarter Asset Management

Procurement Solution

Vendors

ERP Systems

Email System

Active Directory/LDAP

Project Control Systems

Enterprise Service Bus

Commercial Reporting Tools

Financial Systems

Tax Services

Existing Applications

ECM Systems

3-d Party Data

Banking Systems

Engineering Systems

Suppliers

Vendor Management System

HR Systems

Internal Users

Buyer Users

System Administrators

Contract Users

Sub Contractors

Integration support, messaging

Engineering Design and Scheduling

Accounts Payable

Contract, Bid, Procurement,

Supply, Project, Risk Management

Bidding, contracts, purchase orders

Projects with child project/work orders/

with tasks that all have scheduled times

Scoring models; best bid compasrison

Update VSM Master Suppliers with data from the third party provider

Contracts, Orders, Invoices,

Configuration Tools for creating

and changing database objects

and attributes to perform other customizations

Supplier registration,

vetting and approval,

supplier management

( Purchase order, invoices),

bidding,risk and compliance

Provide alerts and notifications, such as alert users

to purchased items becoming due for

shipment or those that are overdue shipment or delivery.

Correspondence and email communication

Support Financial, including

Project accounting services

User authentication and authorization

Update purchase order shipment

weight, volume, and item details

Data Exchange with existing applications

Exchange Vendor Data

Search and retrieve documents stored

in external ECM repositories.

Exchange purchasing and financial data

View reports generated by external tools within the application

Suppler Validation;

Get Tax Identification Number

Retrieve 'Master' data for all information related to HR

Products that Enable this Solution

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• IBM Emptoris - is used for strategic supply, category spend, and contract management. It helps procurement organizations

improve performance, capture sustainable cost savings, and mitigate risks.

• IBM Maximo supports processes for inventory management, invoice and work order generation, inspection assignments, and

accounts payable. It enables multiple assets to be managed on a single software platform, with automated interval-based,

meter-based, or event-driven purchasing that helps you order the right parts and services at exactly the right time.

• The IBM FileNet P8 is an enterprise content management platform for capturing, classifying, managing, and storing business-

related digital assets with centralized, secured access and control. It provides the ability to link procurement-related documents

(such as invoices, vendor data, and purchase orders, inspection instructions, contract attachments, and so on) to

corresponding business processes.

• IBM Sterling is a portfolio of commerce solutions and includes IBM Sterling B2B Integrator, a transaction engine and toolkit

that allows you to define, create, implement, and manage business processes involving trading partners, including suppliers. It

automates the complete buy-sell-ship-pay process, supporting communication with anyone, in any way, and regardless of

protocols, data formats, and preferred communication methods.

• IBM Cognos Business Intelligence is used to deliver business intelligence capabilities, such as reporting, dashboards, and

scorecards. You can analyze shipping and freight payment data, perform program monitoring using dashboards, and prepare

contract status reports to track key milestone activities.

• IBM Watson Explorer is a platform for developing and deploying enterprise information navigation and search applications.

Data Explorer’s 360-degree view pushes data, in-context, to the user based on their role in the organization, providing a

unified view of data from any customer or business entity. Data Explorer virtually integrate the data so insights can be made

that would otherwise not be possible looking at data from a single data silo. For example, Watson Explore supports custom

(federated) searches that return data regarding supplier activities, news, credit information, blog data, and chat insights that

can be useful in supplier negotiations. Data from multiple reports can be fused into single view to show relationship between

the different data points, such as viewing performance data alongside cost savings data.

Why IBM

• Industry analysts such as Forrester Research and Gartner, Inc., have

recognized IBM as a leader in enterprise asset management, supplier

management, sourcing and vendor management, business

intelligence and analytics, and enterprise content management.

Further, the SaaS-based Smarter Asset Management solution fits

perfectly into IBM’s clearly defined cloud, social, and big data strategy,

in which critical technology and business processes are increasingly

delivered to clients as digital services rather than physical assets.

• The Forrester Wave™: VMS, Q1 2014 (2014)

http://w3-03.ibm.com/software/analyst/articles/forrester/forvms.html

• Magic Quadrant for Energy and Utilities Enterprise Asset Management

Software (2014)

http://www.gartner.com/technology/reprints.do?id=1-

22DOTKA&ct=140929&st=sb

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Contract Management

Xcel Energy standardizes procurement across enterprise and realizes significant savings

Business Challenge: Xcel Energy, an investor-owned utility based in Minneapolis that

provides energy-related products and services, wanted to move to a sustainable

savings model to drive down costs and understand supplier economics through spend

analytics and repeatable sourcing and contracts processes. The company also wanted

to reduce contract risk, increase competitive bidding, manage key supplier

relationships, lessen the impact of turnover, improve controls and reduce maverick

spending.

The Smarter Commerce Solution: Xcel Energy centralized its sourcing function by

implementing common methods, best practices and tools. This expanded the

company’s sourcing bandwidth and reduced the impact of turnover. As a result, the

company’s supply chain costs remained flat for three years, it increased sourcing

savings by increasing the number of events competitively bid and it implemented a

supplier relationship management program with 32 tier I supplier/category relationships.

100% of contracts were managed in new process

100% of spend was classified via spend analytics

6,000+ suppliers were registered and managed successfully

100% of $3 billion spend was managed by sourcing and procurement

Sourcing

Telecommunications leader creates global procurement platform; achieves greater

transparency and substantial savings

Business Challenge: A leading telecommunications company that serves customers

in more than 50 countries experienced a dramatic decrease in profits because of

operational inefficiencies that included limited visibility and manual processes.

The Smarter Commerce Solution: replaced multiple legacy sourcing systems with

one end-to-end solution that provides global category management and transparency,

resulting in company-wide cooperation and best-practice sharing. Now the

telecommunications company manages supplier performance against contracted

service levels and targets. A greater percentage of its spend is under control, leading to

economies of scale.

$5 billion+ competitively awarded each year

4,000+ sourcing projects per year

IBM Red Guide

32

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