KfW Contract Lifecycle Management - 28th February 2018 ... · KfW Contract Lifecycle Management How...

KfW Contract Lifecycle ManagementHow to manage EU compliant multi vendor contract hierarchies in a complex

procurement call-off scenario.

Rüdiger Gnausch, VP Product Management Procurement (P2P)

eWorld Procurement & Supply Conference

London, 2nd March 2016

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Agenda for todays session

eWorld Procurement & Supply Conference / London / 2nd March 2016

1 KfW-Group at a Glance

2 Challenges and Project Target

3 Project Delivery and Next Steps

4 Lessons Learned and Success Factors

5 Summary and Take Away

KfW-Group at a Glance

4

65 years of KfWFinancing with a public mission

› Balance sheet total 2014: EUR 489.1 billion

› Financing volume 2014: EUR 74.1 billion

› 5,518 employees (2015) 1

› Best long-term rating: AAA/Aaa/AAA

1) The average number of employees including temporary staff but

without members of the Executive Board and trainees


› Promotional bank of the Federal Republic of

Germany

› Established in 1948 as Kreditanstalt für

Wiederaufbau

› Shareholders: 80% Federal Republic,

20% federal states

› Headquarters: Frankfurt am Main

Branches: Berlin, Bonn and Cologne

› Representative offices: 80 offices and

representations worldwide

5

KfW-Group at a GlanceA bank with a wide array of functions

We promote

development:

Promotion of

developing and

transition countries.

International business

We promote Germany:

Promotion of housing construction and

refurbishment, improved accessibility

and education.

Financing of municipal infrastructure

and global loans.

Promotion of SMEs,

business founders,

start-ups.

Domestic promotion

We support

internationalisation:

International

export and project finance.

Promotion of environmental and climate protection

Mittelstandsbank Communal- and private clients

Bank/Credit institutions

KfW IPEX-Bank KfW Development Bank,

DEG


Challenges and Project Target

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ChallengesNeed for Action for KfW-Group

Situation before start of the project

› Contract (XFT-Contract file) and purchasing (SAP® SRM) are two

different systems.

› Leak of transparency about utilization of contracts (EU/NON-EU).

› Missed lead time for placing extension tenders (EU/NON-EU).

› High manual effort for monitoring contracts (Excel).

› High manual effort for controlling contracts.

› No link between contracts and PO‘s.

› Missing data / information for reporting:

› Time of performance

› Role

› Contract assignment

› No overview about utilized skill-mix, seniority and e.g. average

daily rate.


Implement contract

lifecycle management

and start with the main

commodity code for

“consulting” services!

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Project TargetHigh-Level functional and technical Requirements

Requirements to contract lifecycle management

› Easy and flexible process as well as user interface.

› All different contract types (single, frame, …) must be supported.

› Only “Two-man rules” for creating or changing a contract.

› Create a contract hierarchy with max. two contract levels and one basis contract level.

› Development of an own call-off calculation with SRM and ERP data.

› Usage of one single system (not two).

› Migration of all Purchase Orders from 2015.

› Creating Reporting possibilities within BW/BI to get transparency for procurement as well as all

internal and regulatory authorities.


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Project Target

› Basis contract automatically receives a no vendor.

› The basis contract target value defines the value for the whole

contract hierarchy.

› Release value will be calculated automatically.

› Subcontract can be created within a contract, with or without own

value/volume.

› Possible to assign a subcontract to an existing contract hierarchy.

› Subcontract automatically receives the necessary data from the

prime contract.

› Not possible to make a call-off to the basis contract.

› Only released contracts will be decreased by the available value.

› Assignment to a purchasing Group.

› Contract approval process.

Contract hierarchy

Vendor 1

Target value: 10,000 €

Release value: 8,500 €

Target value: 3.000 €Release value: 1,500 €


Vendor 2 Target value: 3.000 €Release value: 500 €

Target value: 0 €

Vendor 3 Target value: 3.000 €Release value: 0 €


Basis contract


Contract hierarchy

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Project Target

› Only one contract can be assigned within a purchase order (depending on the commodity code).

› Complex call-off logic:

› Initial PO block value immediately.

› Change PO version with increase block value immediately.

› Change PO version with decrease release blocked value after approval (safety principle).

› Call-off calculation with ERP data.

› Call-off calculation with different currency possible.

Call-off


Call-off/Commitment process

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Vendor 1

Project TargetHierarchy with call-off

Basis contractTarget value: 10,000 €


Target value: 3.000 €



Vendor 2Release value: 2,000 €

Target value: 0 €

Vendor 3Release value: 1,500 €


Vendor 1Release value: 0 €

Target value: 700 €







PO: 2,000 €

Not possible, because PO

will exceed the contract.

PO: 300 €

Rele

ase v

alu

e

+ 3

00 €

PO: 550 €PO: 200 €

Rele

ase v

alu

e

+ 2

00 €

Rele

ase v

alu

e

+ 1

,500 €

PO: 3,000 €

PO: 1,500 € PO: 1,500 €

Rele

ase v

alu

e

+ 1

,500 €


› If a contract has no own value/volume the

upper hierarchy will be checked.

Contract level 1

Contract level 2

Basis contract

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Project Target

Incomplete approval

When an approver is not available (vacation, sickness), the contract can be approved by a substitute.

› It is not possible for the same approver to approve the contract twice “Two-man rule”.

Overview over the call-offs of a contract.

› A list over all call-offs is provided by within BW/BI.

Unregulated exceeding contracts

› There is a report that checks the contracts. If there is an exceeding contract, the system will send a notification

to the responsible purchasing group.

Early warning

› Responsible purchasing group will receive early warning with the contract usage statistic up front exceeding.

Issue handling


Issue handling

Project delivery and Next Steps

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Project method – Approach of agile software development usedKey facts and figures


KfW-Group Software development process (SWEP)

High level

concept

incl.

project-

request

project

decision

Project

preparation

phase

Testing and

acceptance

of the

project

(application)

Deployment

and Rollout

Using pieces of agile development

approach Increments

Development

Test preparation

Detailed

functional

concept

Test of

Increments

Technical design

IT-Demand Management

Ongoing information about project status and functional target achievement

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Project method – Approach of agile software development usedKey facts and figures


Project Duration:

› September 2015 until beginning of February 2016

(6 months).

Acceptance tests:

› November 2015 until end of January 2016.

Go Live:

› A half day for deployment in production including

migration.

Project duration and team size

Team:

› KfW internal: 4 FTE

› External Core Design & Development: 5 FTE

(apsolut Group & Scheer-Group)

› BW/BI Design & Development: 7 FTE

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Next StepsEnhancements

Core:

› Include user-feedback from daily business.

› Extend the solution to other commodity groups.

› Porting parts of the solution to SAP Fiori® for mobile usage (approval) and early warning

› .

› Deeper the link between XFT-Contract file and the contract lifecycle management.

› Prepare a possible integration with VMS.

Reporting:

› Extend for new KPI’s needed by procurement.

› Migrate the BW/BI solution to SAP® BusinessObjects™.


What comes next?

Lessons Learned and Success factors

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Lesson learned and Success factors

Customer processes

› Simplification of the processes, easy to use system and interface.

› Very high numbers of different functional scenarios within testing possible plan sufficient time.

› Some of these scenarios have been found late during functional testing need a strong

baseline.

› Redesign of the overall concept needed because of new scenarios build a flexible baseline.

Call-off calculation

› Calculate the call-offs only with approved documents (PO, Contract).

› Don‘t break the SAP® standard ground rules, it‘s become quite complex very fast within the core

system as well as in Data Extraction and reporting.

› Consider maintenance tools for call-off-calculation correction within production.

BI-Reporting

› Use BW/BI for statistic and reporting do not try to push to the core system.

› LIS data extraction and extension quite old technology and complex (high number of OSS).

› Modern and State-of-the-Art BW/BI frontend and dashboards should be provided to dept.

General

› Project schedule was very tight, should be live before turn of the year 2016.

› Going Live early with 80% of functional target achievement is better than 100% later.

› Choose high skilled external resources for technical design and development.

› Mixed project team from IT and functional department is the key for success.

A

B

C

D


Summary and Take Away

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Summary

› It’s possible to manage all different contract types within one system.

› It’s possible to assign various vendors to one contract hierarchy and budget.

› Achieved complete transparency and compliance about the contract hierarchy:

› Contract utilization on demand as well as early warning.

› Central Contract Management in SAP® SRM / Link to XFT Contract file.

› Link between contract and all related objects (e.g. PO).

› Overview about utilized skill-mix, seniority and e.g. average daily rate (BW/BI).

› Implementation of individual calculation (value as well as volume) for call-offs.

› Providing all information for daily reporting for regulatory authorities and compliance.

› Considerable reduction of manual effort for monitoring and controlling within procurement dept.


What we have achieved with the project

Project

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Summary

› When: Start now, transparency is the first step before you can optimize.

› What: One system with easy to use and flexible process and interface.

› How: Fast development and deployment to production with the right consulting partner.

› Going Live early with 80% of functional target achievement is better than 100% later.

› Why: Reduction of manual effort within operative procurement free up resources for strategic.


If you have similar challenges with your contract management – start your journey now!

Take away’s

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Harmonized interaction of process and IT consulting.

Distinguished SAP® expert in electronic procurement.

Healthy and continuous growth of the company.

Individual assessment of your processes.

Efficient project planning based on Best Practice, experience and expertise in add-on solutions.

Long-standing partnership with SAP AG in purchasing and “Global Strategic Service Partner” to Ariba.

Successful process and IT projects with over 250 satisfied, prestigious customers in the purchasing field.

SummaryWhy is apsolut the right partner?

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Rüdiger Gnausch

VP Product Management SAP® BI, Procurement

(P2P) and Process Integration Solutions.

Contact personsKfW-Group and apsolut Group

KfW-Group

Palmengartenstrasse 5–9

60325 Frankfurt am Main

: +49 (0)30-20264-6100

: [email protected]

Marc Osswald

Manager

apsolut Group

Nikolaus-Dürkopp-Str. 2 B

33602 Bielefeld

: +49 (0)521-163-909-0

: [email protected]


Please feel free to ask your questions now.Thank you for your attention!

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