How to Sell
The PeopleSoft
Source to Settle
Solution
Show Me the Money!
• Strong Value Proposition in a Slow or
Recovering Economy
• Modules are a strong entry with lots of
add-on opportunity
• Shorter Sales Cycles
• Compelling and Proven Customer ROI
Page 2
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Some 2003 SRM Goodness
• After completing its first anniversary of
its merger with Compaq, who looked
for more ways to reduce costs?
• As part of their relentless pursuit of
customer service, which electronics
retailer sought to automate their
source-to-settle process?
• Which building materials company
looked to us to help build up their
supply chain efficiencies?
• Which commuter rail line sought our
help to keep their trains running and
on time?
• Which major appliance and cleaning
equipment company asked us to help
tidy up their spend?
Page 3
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
PeopleSoft Showed Me the Money
“PeopleSoft allows us to evaluate and target suppliers that have high-
volume transactions with Sprint, then negotiate a more
strategic deal to reduce our costs.”
- Andrew Spidle
Sprint
“PeopleSoft will help us prove to our tax payers that we’re spending
their money effectively and efficiently.”
- Jeff Weiler, CFO Gwinnett County Schools
“We recently rolled out our PeopleSoft solution to several off-site
clinic locations. The savings we have realized from just that limited
group of locations has already offset our entire investment in the
solution — handheld devices and software included. “
Head of Materials Management Information Systems Dartmouth-Hitchcock Medical Center
“
Page 4
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
PeopleSoft SRM Garners Industry Awards
FIRST AND ONLY
SRM provider certified by the
Hackett Group for embedding
best practices
business process.
Page 5
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Topics for How to Sell SRM Session
• SRM Introduction
• SRM Solution Overview
• Case Studies
• Selling Strategies & Tactics
• Competitors
• Summary
•Q&A
Page 6
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
SRM Introduction
Corporate Imperatives
Cost
Management
Page 8
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Greater
Control of
Spending
Why SRM?
• Manual, labor intensive processes
• “Silo” supply solutions and processes
• Lack of visibility and control over all
categories of spend
• No single integrated insight into activity, performance,
or spend
• Inability to leverage spend and supply base for
volume discounts
• Lack of cost effective sourcing and security of
supply
• Inefficient communication with suppliers resulting
in lengthy processes, high error rates and costly
transactions
• Limited access to current supplier performance
data to make well-informed decisions
Page 9
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Spending Growth Increases the Importance of SRM
Purchase $ / Sales
64.6%
Metals
In asset intensive and continuous
Chemical Companies
61.3%
process
(e.g. oil production),
Beverageindustries
Companies
51.7%
indirect
materials
associated
with
Computers
& Office Equipment
Co.
50.8%
Automotive Companies
47.2%
maintenance
represent the bulk
of
Electronics Companies
45.6%
external expenditures. Gartner Sept 2002
Communications Companies
35.6%
Pharma Companies Purchase % of Sales
34.0%= 22.6%
Utilities
Food Companies
33.8%
Utilities
22.6%
MRO ~ 65% of Expenditures
“Cost of goods in relation to revenue is increasing across all industries.
The median will rise by 45% by 2005.”
Gartner Group 2001
Page 10
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
The Truth About Where $$ Is Spent
Page 11
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
SRM Results: Profitability
• Improve Revenue - Reduced customer
delivery cycle times for goods & services, improved
quality, increased margins/ competitiveness
• Reduce Cost - Eliminate non-value added layers
and processes, leverage spend for volume discounts,
streamline payment processes
• Improve Efficiency - Reduce administrative time,
standardize processes, and compress goods and services
sourcing and procurement cycles
• Increase Visibility - Track and utilize resources,
monitor supplier effectiveness, and leverage historical
information
• Ensure Production – Optimize sourcing and
procurement of critical material, meet customer needs,
respond to market changes and prevent stock-outs
Page 12
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Duke Energy
Duke’s Challenges
• Decentralized procurement systems and
processes across divisions
• Separate inventory systems across business units
 HQ in Charlotte, NC
 One of the 10 largest
energy production and
marketing companies
worldwide
• No integrated end-to-end procurement process
 #14 in Fortune Most
Admired Co.s for 2001
• High MAVERICK SPEND
 2001 Revenues: $59 Billion
 25,000 Employees
The PeopleSoft Solution
• $3 Million/year savings from inventory
consolidation
• Price reductions of 10-30% from supplier
leverage and centralization
• 24 catalogs with over 500,000 line items
Page 13
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Solutions Implemented
PeopleSoft 8 SRM
PeopleSoft 8 Financials
Process
Automation
Average Payment
Cycle Time
Increased 25%
Deployment
Task Efficiency
Improved 50%
Contractor
Responsiveness
Reduced from
30% to 2%
Decreased 6%
Page 14
Decreased 95%
Improved from
28 days to 10 days
Maverick Spend
Frequency
IT Contracting
Spend
Invoice
Reconciliation
Improved
Performance
Measurement
Improved
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
What Difference Can SRM Make?
Aberdeen research indicates that SRM has the
potential to deliver the following benefits:
• Shorten sourcing cycles by 25% to 30%
• Lower material costs by 10% to 20%
• Cut inventory costs by 25% to 50%
• Reduce time-to-market cycles by 20%
• Increase responsiveness to customer demands and
market dynamics“
Aberdeen Group, Supplier Relationship Management:
Unlocking the True Potential of the Extended Enterprise
Page 15
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
SRM Solution Overview
Source to Settle Process Flow
Page 17
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Only PeopleSoft SRM Controls 100% of Spend
Direct
Materials
Resource-based
Services
Indirect
Goods
Deliverable-based
Services
Assets
Page 18
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
What is Total Spend Management?
PeopleSoft SRM
Purchasing
Type of Spend
Page 19
Primary Challenge
PeopleSoft
Solution
Indirect Goods
Efficiency and Compliance
eProcurement
Direct Goods
Lower costs and integration
with Financials and SCM
Purchasing
Services
Highly decentralized and
compliance
Services Procurement
Direct, Indirect
and MRO
Leverage spend and long
sourcing cycle
Strategic Sourcing
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Source to Settle Solution From PeopleSoft
Analyze
Source
Engage
Strategic
Sourcing
Portal
Procure
Settle
Plan
Supplier Rating
System
Supply Chain
Warehouse
Inventory
eProcurement eSettlements
Services
Procurement
Purchasing
Page 20
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Payables
Challenges with Analysis
• Benefits:
Scant information on supplier
performance unless provided by

Select
best suppliers based upon
the
supplier
Analyze
•
Plan
of spending trends
 Suppliers receive real-time
Products
Supply Chain Warehouse
Supplier Rating System
Demand Consensus
Customer Owners
Procurement
Finance
Page 21
current supplier performance
Incomplete
or just high level view
data
access savings
to performance
rating
• Unseen
opportunities
Supplierslink
ablebetween
to be proactive in
•
Disjointed
meeting buyer
needsand execution
purchasing
strategy
 Continuously identify savings
opportunities
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Today’s Spend Analysis Challenges
Analyze
Analysis Opportunities
Use of master supplier file & commodity coding
60%
Supplier performance improvement through measurement
Sources: Hackett and Aberdeen Research
Page 22
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
100%
26%
SPRINT: Analysis
Sprint’s Challenges
•
•
•
Sprint
Strategically manage purchasing
spend across
global organization
Identify areas for improvement in supplier
selection, negotiation and management
Improve timeliness of purchase history data
The PeopleSoft Solution
•
•
•
Page 23
Centralize procurement and identify cost-savings
opportunities from 75,000 purchase orders per
month
Constantly monitor performance of all suppliers-from providers of PCS towers to pencils
Reduced data latency from 45 days to 1 day
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Leader in wireless PCS
and broadband
communications services.
“PeopleSoft 8 SCM allows
us to evaluate and target
suppliers that have highvolume transactions with
Sprint, then negotiate a
more strategic deal to
reduce our costs.”
-- Andrew Spidle
Solutions
Implemented
• PeopleSoft 8 SRM
• PeopleSoft 8 Analytics
Challenges of Sourcing
•
•
•
•
Source
Products
Strategic Sourcing
Spend Analytics
Customer Owner
Manual paper based processes
Long sourcing cycles
Bloated vendor masters
Inadequate resources and
infrastructure
• Inconsistent sourcing and analysis
methodologies
Director of Sourcing
Supply Manager
Page 24
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Why Source Strategically?
Decrease
Product Costs
Reduce
Time-to-Market
Streamline
Sourcing Cycle
Apply Leverage to
More Commodities
Standardize
Sourcing Practices
Improve
Operating Profits
Create Perfect
Supplier Portfolio
Page 25
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Retain Knowledge
Challenges of Sourcing
Benefits:
 Shorter Sourcing Cycles Including
Source
Bid Analysis
 Enhanced Leverage of Total Spend
Products
Strategic Sourcing
Spend Analytics
 Improve Negotiations and Reduce
Customer Owner
 Standardize Processes
Director of Sourcing
Supply Manager
Page 26
Costs of Goods and Services
 Simplified Collaborative Analysis
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Improvements Can Be Dramatic and Very Profitable
Source
Strategic Sourcing
Use of Master Supplier File & Commodity Coding
60%
Sourcing Cycle Time Reductions in Weeks
15
% of Long-Term Contracts
37%
Sources: Hackett, Aberdeen
Page 27
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
100%

5
75%
Why PeopleSoft Strategic Sourcing?
•Spend Analysis
Fully Integrated Solution
•Goods and Services
Sourcing
Robust Functionality
•Private and Public
Events
No Subscription, Transaction, or
Supplier Fees
•Competitive, Blind, and
Sealed Bids
•Bidder Self Service
Standalone Capabilities
Registration
•Sourcing Templates
Page 28
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Adobe Systems: Strategic Sourcing
 HQ in San Jose, CA
 Leading maker of
Challenges
• Renegotiate and lower costs for complex
voice/data contract
• Attain true market pricing
• Reduce the lengthy RFP process taking 6 – 9
months
Benefits
• Saved $1.8 Million (33%) of Total Telecom
Spend
• RFP event completed in 4 weeks with 6
suppliers
• Response analysis completed in 48 hours
Page 29
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.


software solutions for
network publishing,
including Web, print and
video.
3,400 employees
19 locations around the
world
Solution Implemented:
Strategic Sourcing
Challenges of Supplier Enablement
• Disjointed communications
• Expensive and complex catalog
management
Engage
• Undefined trading partner
Products
SCM Portal Pack
eProduct Management
eSupplier Connection
Collaborative Supply
Management
Catalog Management
interactions
• Non-existent supplier self service
Customer Owners
IT Manager
Supply Manager
Engineering Mgr
Page 30
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Challenges of Supplier Enablement
Benefits:
 Flexible and Scaleable
Collaboration
Engage
Products
SCM Portal Pack
eProduct Management
eSupplier Connection
Collaborative Supply
Management
Catalog Management
 Easily Manage Supplier
Content
 Enable Supplier Self-service
Customer Owners
IT Manager
Supply Manager
Engineering Mgr
Page 31
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Boise: Supplier Enablement
Challenges
• Implement commerce system to improve
utilization of preferred suppliers
• Enable buyers to focus on developing strategies
for more leveraged purchasing
 International
Distributor of
Paper Products
Packaging
Building Materials
 24,000 employees
• Allow on-line access to inventory items
 Ranks 241 in the
Fortune 500
Benefits
• Automated purchasing fully, connecting directly
 Corporate Purchases
account for over $60M
annually
• Streamlined tactical purchases – freeing up
Solution
Implemented
to preferred supplier websites
buyer time for more strategic activities
• Provided full employee on-line access to
inventory items by integrating with Maximo
Page 32
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
• PeopleSoft 8 SRM
• PeopleSoft 8 Financials
Challenges of Procurement
• Direct goods
•
•
•
•
Procure
• Indirect goods
Products
Purchasing
eProcurement
Services Procurement
Buyer Workstation
Customer Owners
• Director of
Sourcing/Procurement
• Supply Manager
• HR or IT Outsourcing
Mgr.
Page 33
Increasing inventories
Long order cycles and lead times
Inconsistent product quality
Disjointed link between supply and demand
• Manual request to check process
• Rampant maverick spend or low contract
compliance
• Bloated vendor masters
• Services
•
•
•
•
Highly fragmented and widely distributed
Unique specifications for each request
Excessive hidden costs
Complex procurement and management cycles
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Challenges of Procurement
Procure
Products
Purchasing
eProcurement
Services Procurement
Buyer Workstation
Customer Owners
Benefits:
Leverage suppliers for
additional cost savings
Accelerate procurement
cycles
Reduce shortages
Improves supplier
collaboration
• Director of
Sourcing/Procurement
• Supply Manager
• HR or IT Outsourcing
Mgr.
Page 34
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Results bring more dramatic benefits…..
Procure
Procurement Opportunities
Premium paid for Maverick Spend transactions
Cost per Purchase Order
$121  $33
Cycle time from request to purchase order (hrs)
50.2
1.4
Inventory Turns
10.4
200+
Source: Hackett Best Practices, 2002,CAPS
Page 35
40%
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Challenges of Procurement
• Direct goods
•
•
•
•
Increasing inventories
Long order cycles and lead times
Inconsistent product quality
Disjointed link between supply and demand
•Indirect goods
Procure
• Manual request to check
• Indirect goods
Products
process
• Manual
request to check process
•• Rampant
maverick
spend or low
contract or
Rampant
maverick
spend
eProcurement
compliance
low contract
compliance
• Bloated
vendor masters
Customer Owners
• Director of
Sourcing/Procurement
• Supply Manager
• HR or IT Outsourcing
Mgr.
Page 36
• Bloated vendor masters
• Services
•
•
•
•
Highly fragmented and widely distributed
Unique specifications for each request
Excessive hidden costs
Complex procurement and management cycles
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Why Indirect Goods Require a Different Tool
Characteristics indirect goods that
determine the best procurement tool:
Every employee is a “buyer”
• Easy to use interface for adoption
• Automate compliance
• Approvals are distributed and contingent
upon division
• Catalog for 1,000s of items
• Homogenized products
• Large # of suppliers
•
Page 37
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Aquila: Procurement
 HQ in Kansas City, MO
Challenges
• Limited ability to track purchasing spend
• Fragmented buying practices
• Unenforceable strategic sourcing activities
Benefits
• Saved over $14M (7%) of spend in the first year
• Request to payment cycle reduced from 45 to
10 days
• Invoice processing costs drastically reduced
 Fortune 500 with 5000
employees
 Provides electricity & gas
to over 1.3M customers
“PeopleSoft is the best
win/win solution in the
supply chain space —for
our suppliers as well as
for us.”
-- Brett Carter, VP Shared
Services
Solution
Implemented
PeopleSoft 8 SRM
PeopleSoft 8
Financials
Page 38
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Challenges of Procurement
• Direct goods
•
•
•
•
Increasing inventories
Long order cycles and lead times
Inconsistent product quality
Disjointed link between supply and demand
•Services
• Highly fragmented and
Procure
• Indirect
goods
widely
distributed
Products
• Manual request to check process
• Rampant maverick spend or low contract
• Unique specifications for
sProcurement
compliance
• Bloated vendor masters
Customer Owners
• Director of
Sourcing/Procurement
• Supply Manager
• HR or IT Outsourcing
Mgr.
Page 39
each request
• Excessive hidden costs
• Services
• Highly fragmented and widely distributed
Complex
procurement
•• Unique
specifications
for each request
• Excessive
hidden costs
and management
cycles
• Complex procurement and management cycles
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Service Procurement Has A Big Impact On Profits
54% Services
20% Indirect
Materials
26% Direct
Materials
Source: Aberdeen Group
Page 40
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
…And Is Incredibly Difficult to Track And Control
Legal Services
IT Services
Transportation Management
Warehouse Management
Facilities Maintenance
Accounting
Marketing/Advertising
Printing/Copying
Page 41
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Construction
Telecommunications
All Services Are Not The Same
Resource Based Services
Providing Resources to
Meet Specific Functional
or Skills Based Needs
• C++ programmer
• Q/A Engineer
• Driver
• Event Staff
Page 42
Deliverable Based Services
Rate Based or Unit
Based Services that
Include Milestones or
Result in a Specific
Deliverable
• Construction
• ERP implementation
• Facilities Mgmt
• R&D
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Example of Customer Business Process
SPro - Services Procurement
Maintenance
SPro Module
panel
w/ mod
panel
new
new
panel
panel
Sm.2
Supplier Scoring
Rules
Sm.1
Business Unit
system
or offline
Sm.3
Requestor
Defaults
Sm.4
Coordinator
Defaults
Sm.5
Supplier
Information
Sm.6
Logistical Tasks
Sm.7
Bid Factors
Over Ringi Est
Warning
Message
Displayed
ePro Reqs
G
Request
Services
S.1.1
Initiate Requisition
R.1.4
R.1.4
View Ringi
Status
View
Ringi Status
Graph
Graph
S.2.2
Bid Factorby Req
Line (optional)
S.2.3
Suggest Vendor
(optional)
Sm.8
Service Types
Sm.10
Workflow Rules
S.2.1g
S.2.1g
Input Variance
Input
Variance
Codes
Codes
(shared
ePro/sPro)
(shared ePro/
sPro)
Y
Is Ringi over
revision %
Sm.9
Supplier by Region
Message 'Save
as Draft or Edit
to Reduce Req
$'
over revision %
over warning %
Service or
Good
S
R.1.1
Provide Ringi # or
Select Other
S.2.1
Input Req
Information
Is Ringi over
warning % or
over revision %
S.2.1c
Input Supplier
Information
S.2.1d
Input Sourcing
Preference
S.2.1e
Save & Submit
Req for Approval
S.2.4
Review and
Approve
Req
S.2.1f
Initiate Work
Requests
Approve d
Y
S.2.5
Service
Coordinator
Selects Suppliers
S.2.1b
Input Job Details
over revision %
Stop Req Process
S.8a
Create Work
Order
Evaluate
Responses
&
Create WO
S.3
Send Email to
Suppliers
S.4
Respond to
Request
S.6
Review
Requisitions &
Bids
S.5
Send Email to
Toyota
S.7
Evaluate Supplier
Responses &
Select Winner
S.9
Approve Work
Order
OR
S.11
Initiate Task Work
Requests
Required
Tasks
Complete
Y
S.12
Release Work
Order
S.8b
Create Work
Order
Supplier
S.10
Service Work
Order Task List
N
Submit
T&E
S.13
Manage Time &
Expense
S.14
Create Time &
Expense Report
S.15
Create Time &
Expense Details
A
S.16
Submit Request
for T&E Approval
(to Toyota)
S.17
Review and
Approve T&E
(Toyota)
Yes
(back to Variance Reason
panel table to store)
No
Y
N
S.18c
Review Invoice
Details
S.18
Generate Invoices
(scheduled)
(agg by Supplier)
Page 43
S.19
Email Supplier
(optional)
S.20
Supplier Invoice
Approval
(optional)
Project Manager
C:\temp\S_SPro Flow_5_29\S_SPro Flow_5_29.vsd
Next time the Ringi Detail
Panel in Projects is
opened for ringi, user
must complete WO to req
variance reason.
A
S.9.a
Requestor Enter
variance reason
code
N
Do nothing
(panel to be
defined in
Projects)
Y
S.18b
Review Generated
Invoices and
Submit for
Approval
HR
S.22.
Adjust Invoice
Approved
optional
Invoice
Internal Project Team
Rngi Line
variance ?
Approved
S.21
Toyota Invoice
Approval
PeopleSoft
Proprietary
Eng Admin
- Control and Confidential © Copyright 2002 PeopleSoft, Inc.
Group
Service Coordinator
External Project Team
Accounting
Approved
Purchasing
Y
S.22
Interface to AP
Supplier
S.23
Pay Vendor
Senior Mgt
Accounting 2
07/10/03 10:13 PM
IS
Commonwealth Bank of Australia:
Services Procurement
 2002 Net Profit:
Challenges
• Gain control of maverick services spend
• Improve efficiency and integration of sourcing
and management process
• Gain visibility and insight into suppliers’
performance
$2.1B
 2002 Total Assets:
$37B
 35,000 employees
 1,000 Branches
and Multiple
Worldwide Offices
Benefits
• Payback of 21 months with ROI 218%
• Processes streamlined and aligned according to
Solution
Implemented
• Automatic invoice reconciliation for early
PeopleSoft 8 Services
Procurement
business needs
payment discounts
Page 44
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Challenges of Settlement
• Benefits:
Paper intensive reconciliation
•
Settle
Products
Payables
eSettlements
Customer Owners
Supply Manager
Accounts Payable Mgr.
Page 45
•
•
•
•
process

Streamlined payment
processes
Inability
to realize early payment

Reduced errors
discounts

Quickly
identify and resolve
Error
prone
issues/disputes
Complex dispute resolution
 Realize early payment
Disjointed
discountssupplier interactions

Improve
cash flowsharing with
Manual
information
suppliers
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Today’s Settlement Challenges
Settle
Settlement Opportunities
Reduction in Payment Days
39  10
Reduction in Invoice Processing Costs
$20 to $10
Early Payment Discount Off of Invoice
1 – 2%
Sources: Gartner and Celent
Page 46
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
City of Los Angeles: Settlement
 2nd Largest City
Challenges
• Purchasing distributed across 40 agencies each
using different processes

Manages $800 million
annual spend
• No consolidation of buying power due to
multiple contracts with common suppliers
• Late payments and lengthy manual paper
transactions with over 10,000 suppliers
Benefits
• Saved $76M (9.5%) in annual spend by
consolidating contracts
• Reduced payment cycle time from 42 to 7 days
• Saved additional $4M annually from early
payment discounts
“The integrated functions
between purchasing,
receiving and accounts
payable have given users
much improved procurement
analysis capabilities and
greatly reduced the procureto-pay time.”
Flora Chang, SMS Director of
Systems
Solutions Implemented
PeopleSoft SRM
PeopleSoft Financials
Page 47
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
SRM Case Study
Boise – Background
• Headquartered in Boise, Idaho
• Owns more than 2M acres of US timberlands
• International Distributor of
• Paper Products
• Packaging
• Building Materials
• Over 24,000 employees
• Ranks 241 on Fortune 500
• Corporate MRO Purchases account for over $60M
annually
• Assemblies, scientific equipment, IT assets, etc.
Page 49
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Boise – Company Situation
Lead Source
• Account team led
Critical Business Issues
• Decentralized procurement process
• Maverick spending
• Tactical buyer focus
• Unable to leverage supplier base
Desired Benefits of Solution
• Streamline Procure to Pay Process
• Reduce maverick spend
• Tighten relationship with suppliers
• Lower transaction costs
Notable Points
• Brought in PeopleSoft SRM experts to
move sale along
• Leveraged existing PeopleSoft
position
Page 50
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Boise – The Sales Process
• Major Obstacles/Hurdles To Overcome?
• Boise had a specific strategy for working with
suppliers that they wanted to follow.
• Needed to show that we could on-board
suppliers through Direct Connect.
• Boise needed to feel comfortable that they
would be able on their own to on-board
suppliers.
• Initial cost concerns over cost of complete
solution, including implementation.
Page 51
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Boise – Why We Won
• Seamless extension to other applications
• No middle layers for integration
• Big lever for going with PeopleSoft
• Flexibility in methods to connect to suppliers
• Could prove ability to connect via multiple methods with
quickly developed demos
• Most other competitors told them direct connect was a big
mistake
• Outstanding customer support
• Responsiveness to help in demoing and implementing new
functionality
• Our commitment to make Boise successful
• Our financial viability compared to other point
solution vendors
Page 52
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Boise – Why They Lost
• What Competitive Tactics should we repeat?
• To beat niche solutions… Expand the scope of business requirements
to include the benefits of out-of-the-box integration with financial
applications
• Build high level executive and IT relationships early
• Find and leverage existing relationships between customer and
PeopleSoft
• Highlight our financial viability
• Memorable Quotes from the customer/selection committee?
• From Mike Giusti “PeopleSoft was committed to our success…”
• Unaddressed business issues?
• Lowered user training costs
Page 53
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Boise – Realized Benefits
• Simplified purchasing system offers employees easy request
processing and a 360º view, anytime, anywhere
• Easy to use with minimal training required
• Provides an automated purchasing solution that invites
access and exposes preferred suppliers
• Buyers now focused on strategic activities such as analysis,
sourcing and supplier negotiations
• Suppliers get immediate feedback on what works and what
does not
• Tighter relationship between employees and suppliers
• Transaction cost and time savings dramatically reduced
“We would go with PeopleSoft again, no question”
Page 54
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SRM Selling Strategies and Tactics
Who To Target
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
• SRM Plays EVERYWHERE
• Horizontal/Vertical Industries
• Installed-base/New Deals
• Targeted Vertical Industries
Services
•Financial Services
•Education & Government
•Healthcare
•High Tech
•Energy
• Consumer Products
• Professional Services
Page 56
Manufacturing/Distribution
• Wholesale Distributors
• Industrial Manufacturing
• Asset Intensive [Paper/Chemicals]
• Food
• Construction
• Real Estate
• Automotive
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
New Prospects
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
• New Prospects – Sweet Spots
•
•
•
•
•
•
•
Targeted Industries
No or “Homegrown”/Fragmented SRM solutions
Highly competitive market
Narrow Margins
High Corporate Spend as Percentage of Sales
Fragmented Supply Base and Many suppliers per category
Working to have Key Strategic Supplier Relationships
• New Prospects – “It’s Been Done”
• Oracle or SAP backend (Nextel, BNP Parabas)
• Not in Targeted Industry
• Poor or Missing Process Controls or Accountability
Page 57
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
CLOSED/
TRANSITION
The Truth About Where $$ Is Spent
Page 58
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
New Prospects
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
CLOSED/
SELECTION NEGOTIATION
& CONTROL
TRANSITION
Sales Revenue $650M
Spend Categories
Purchases as
Industry Purchases
a%
Sales
asof%
of
Sales)
Industrial
55.3%
Electronics
54.4%
Construction
52.8%
Electronics 54.4
%
Chemicals
50.1%
CPG
43.9%
Life Sciences
33.7%
Utilities
32.9%
22.6%
Page 59
Direct
Purchases
Direct
($M)
$
232
$
255
$
151
$ $225
185
$
132
$
128
$
69
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Indirect
Purchases
Indirect
($M)
$
67
$
45
$
83
$4565
$
$
66
$
92
$
-
Services
Purchases
Services
($M)
$
61
$
54
$
108
$ $54 75
$
88
$
$
126
New Prospects
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
CLOSED/
SELECTION NEGOTIATION
& CONTROL
TRANSITION
Sales Revenue $650M
Savings Potential (5% Savings)
Purchases as
a % of Sales
Industrial
Electronics
Electronics
Construction
Chemicals
CPG
Life Sciences
Utilities
Page 60
55.3%
54.4%
52.8%
50.1%
43.9%
33.7%
32.9%
$
$
$
$
$
$
$
Direct
11.60
$12.7M
12.75
7.55
9.25
6.60
6.40
3.45
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
$
$
$
$
$
$
$
Indirect
3.35
$2.2M
2.25
4.15
3.25
3.30
4.60
-
$
$
$
$
$
$
$
Services
3.05
$2.7M
2.70
5.40
3.75
4.40
6.30
Existing Customers
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION NEGOTIATION
CLOSED/
TRANSITION
• Existing Customers– Sweet Spots
•
•
•
•
•
•
•
Targeted Industries
No or “Homegrown” SRM solutions
Successfully control one type of spend (e.g. Direct Goods)
High Corporate Spend as Percentage of Sales
Fragmented Sourcing and Purchasing activities
Merger and Acquisitions
Working to have Key Strategic Supplier Relationships
• Existing Customers – “It’s Been Done”
• Best of Breed SRM point solution - Nextel
• Multiple stakeholders disparate processes ….Services Procurement
Page 61
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Ample Opportunity In The PeopleSoft Customer Base
SRM
62%
• 38% penetration of all customers
• Most only have Purchasing
Page 62
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Qualify – Who Do You Call?
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
CEO
Responsible to shareholders,and primary focus
is on top line revenue growth.
CFO
Concerned with opportunities to reduce costs and
manage spend across the enterprise.
Responsible for ensuring Sarbanes Oxley
compliance with published guidance to
investment community.
VP Purchasing
VP of Supply Chain
CIO
Director of IT
Page 63
PRE-QUALIFY
Both are looking to explore how supplier
collaboration can increase efficiency and reduce
costs.
Looking for IT projects with quick ROI that will
leverage existing investments in technology.
Looking for way to make the enterprise more
agile and responsive to change.
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Importance of SRM to Finance
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
Key Measurements of Success
•Compliance with acct. stds
•Effective cash management
•Bottom line profits
Pain
How SRM solves this
 Sarbanes Oxley Compliance
 Need to prove effective cost
 Powerful workflow & accounting
controls ensures compliance with
spending guidelines
management of enterprise
 Obliged to protect the fiduciary
 Provides seamless links into
budgets and assets for full
visibility of spend
interests of shareholders
 Must relentlessly pursue bottom
line results
Page 64
 Cuts costs thru supplier
collaboration and self service
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
The Importance of SRM to IT
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
Key Measurements of Success
•99.9997% system uptime
•Seamless integration of solutions
•Reduced number of service calls
Pain
How SRM solves this
 Must ensure interoperability of
new applications with existing
technology investments
 Seamless integration to HR,
Finance, and Materials
Management
 Need to centralize procurement
 Enables centralized purchasing
processes to minimize costs
management to reduce costs
 Need to manage complex tasks of
increased outsourced service
personnel
Page 65
 Looking for ways to eliminate the
need for interfaces to point
solutions
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
The Importance of SRM to Executive Management
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
Key Measurements of Success
• Lower costs : streamline and automate
“Source to Settle” business processes
• Increase inventory turns and velocity
• Continued focus on projects with quick ROI
Pain
How SRM solves this
 Lower costs and meet
shareholder expectations
 Increase market share and
reduce costs thru M&A activity
 Foster collaboration with suppliers
and trading partners
 Enable global “real time” visibility
in all areas of supply
Page 66
 Supports trend of centralization of
Procurement, managing all spend
across the enterprise
 Aligns business goals with spend
strategy through real time
intelligence
 Provides instant access to all
operations
 Automates supplier performance
measurements
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
The Importance of SRM to Procurement
QUALIFY
PRE-QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION
NEGOTIATION
CLOSED/
TRANSITION
Key Measurements of Success
•Increased Cost Savings
•Faster procurement cycle
•Reliable supply
Pain
How SRM solves this
 Need to transition from tactical to
strategic role
 Balance process efficiencies
without sacrificing employee
satisfaction
 Need tighter control and
communications with suppliers
 Required to align procurement
strategy with business goals
Page 67
 Automates tactical tasks
 Provides streamlined intuitive
employee and supplier selfservice tools
 Collaborative applications allow
for real-time supplier interactions
and supplier self-service
 Spending trend intelligence allows
for visibility into total spend.
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Discovery – Survey
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION NEGOTIATION
CLOSED/
TRANSITION
 Look for Opportunities to Source More Effectively
 How many suppliers to you have in total, per category?
 How much to you spend with your suppliers in total, per category?
 How do you source new product and service suppliers?
 Look for Services Procurement Opportunity
 How much do you spend on services?
 How long does it take to hire a contractor from time of requisition?
 Do you have a single process to monitor and control services spend?
 Look for eProcurement Opportunities
 How do your buyers spend the majority of their time?
 What percentage of your spend is under contract?
 How many duplicate items are in your catalog?
Page 68
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Discovery – Survey
PRE-QUALIFY
QUALIFY
DISCOVERY
LEAD
& CONTROL
SELECTION NEGOTIATION
CLOSED/
TRANSITION
 Look for Supplier Performance Optimization Opportunities
 Who are your top performing suppliers?
 How do you monitor and rate your suppliers?
 Do you have a single place to go for full spend visibility?
 Look for Supplier Enablement Opportunities




How do you communicate with your suppliers?
What % of your supplier transactions are handled electronically?
What % of your suppliers are electronically enabled?
How do you manage supplier content?
 Look for Integrated SRM Opportunities
 Does your sourcing process automatically create contracts in
procurement?
 Do you share supplier performance metrics with your suppliers?
 Do your transaction systems feed a single data repository?
 Are you fully integrated with your financial systems?
Page 69
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Competitors
The Players
N.A. Revenue
Declining?
Page 71
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Fading Fast!
Lead & Control – Competition – Enterprise Vendors
Competitor Weaknesses
• Late to market – reaching parity
• Product are not industry leading
• Immature sPro, contracts, scorecarding
•Incomplete SRM value proposition
• TCO – SAP, Oracle higher
• Lack of integration – open architecture
PeopleSoft Strengths
• PSFT has a best-of-breed SRM solution
• Total “Source to Settle” solution with technology
and integration
• SAP/Oracle has lost SRM market share while
PSFT has gained in 2003.
• PSFT built integration to SAP/Oracle
• PSFT has a lower TCO and higher customer ROI.
Page 72
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Lead & Control – Competition – SAP
SAP Weaknesses
• Product late to market
• mySAP SRM 3.0 – Released Q2 2003 not GA.
• Not industry leading – filled in gaps from 1st release.
Still missing functionality
• sPro, Strategic Sourcing, Supplier Scorecard new and
untested
• Old & Complex Technology / architecture –
NetWeaver not complete solution yet.
• Highest TCO of any solution provider
PeopleSoft Strengths
• PIA & AppConnect completely open
• PSFT building integration to SAP A/P
•PSFT has gained market share in 2003 while SAP has
lost market share
• PSFT has a best-of-breed SRM solution
• PSFT has a lower TCO and higher customer ROI.
Page 73
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
We Have Pummeled SAP
State of Florida
Page 74
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Lead & Control – Competition - Oracle
Oracle Weaknesses
• No Service Procurement – Current target Q1
2004
• Never clearly articulated a SRM value
proposition and message
• No customers outside of Oracle install base
• Sourcing disjointed and only in a Oracle
hosting model.
PeopleSoft Strengths
• Total “Source to Settle” solution with
technology and integration
• Full suite SRM leader to manage all aspects of
spend
• PSFT has a best-of-breed SRM solution
• PSFT has a lower TCO and higher customer ROI.
Page 75
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
We Have Clobbered Oracle
Page 76
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Lead & Control – Competition – Specialty Vendors
Competitor Weaknesses
• Breadth of Total Spend
• Not a full SRM solution
• sPro typically non existent
• Analytics lacking or weak
• Integration between apps and with external apps
PeopleSoft Strengths
• Total “Source to Settle” solution with technology and
integration
• Full suite SRM leader to manage all aspects of
spend
• Extend savings beyond silo solution
• Financial stability vs. Venture funded
Page 77
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Lead & Control – Competition - Ariba
Ariba Weaknesses
• Breadth of Total Spend
• No direct procurement – not tied to inventory
• sPro partnership with CascadeWorks (Elance) dead –
truly a 1.0 release
• Newer products are weak such as invoicing, analytics,
contracts and reporting is basic
• Integration between applications & externally
• Larger ERP providers building stronger apps.
• Long term viability
PeopleSoft Strengths
• Total “Source to Settle” solution with technology and
integration
• Full suite SRM leader to manage all aspects of spend
• Extended value – sPro, SCM Portal, eSupplier Connect,
Travel & Expense
• PeopleSoft has history of Procurement solutions
long before Ariba existed.
Page 78
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
We Have Beaten Ariba
Page 79
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
E-Sourcing - E-Procurement Vendor Landscape
Figure 7: E-Sourcing/E-Procurement Vendor Landscape
SSA GT (Baan),
Lawson
SAP,
E-Procurement
Ariba,
PeopleSoft
Oracle,
ICG Commerce
i2
Ketera,
Perfect
Commerce,
ePlus
Elance,
IQ
Navigator
Iasta
E-Sourcing
ATKPS, B2eMarkets,
Emptoris, FreeMarkets, Frictionless,
Global eProcure, Procuri
Spend
Analysis
Softface, Zycus
Direct Materials
Page Source:
80
General Indirect
Giga Research,PeopleSoft
a wholly
owned
subsidiary
of Forrester
Research,
Inc.
Proprietary
and Confidential
© Copyright
2002 PeopleSoft,
Inc.
Services
SRM Summary
Part of A Complete SRM Solution
• Manage All Spend
Assets
• Streamline Complete
Source-to-Settle
• Continually Identify
New Cost Savings
Sourcing
Supplier
Portal
Services
Project
Expenses
Direct
Materials
Travel &
Expense
Indirect
Materials Payables
Supplier Performance Data
Page 82
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Spend Analytics
A Powerful SRM Solution
• Comprehensive process support
• Extensive spend management
Complete
• Customizable process rules
Flexible
• Multiple deployment options
Easy-to-use
Integrated
Page 83
• Standard web browser interface
• Intuitive user experience
• Ability to connect to other enterprise applications
• Integration with other PeopleSoft solutions
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
SRM Results: Do More with Less
• Reduce Cost
- Reduce goods & services
spend, manage budgets, eliminate non-value
added layers and processes across all suppliers,
leverage contracts and discounts, and streamline
payment process
• Improve Efficiency - Simplify sourcing
activities, manage services effectively, reduce
administrative time, standardize processes, and
compress procurement and hiring cycles
• Increase Visibility - Ensure legal
compliance, track and utilize quality resources,
monitor supplier effectiveness, leverage historical
information
• Ensure Production – Optimize sourcing and
procurement of critical material, meet customer needs,
respond to market changes and prevent stock-outs
Page 84
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.
Thank You!
Back Up Slides
Emerging Source To Settle Trends
 Shift to active partnering with suppliers
 Increase collaboration to improve security of supply
 Use technologies to automate transactions for lower costs
 Shift the procurement staff toward strategic activities as
buying specialists not clerical workers
 Implement tools to address market volatility resulting in
shortages and customer dissatisfaction (Lean procurement,
VMI, outsourcing)
Source: Hackett Best Practices, 2003
Page 87
PeopleSoft Proprietary and Confidential © Copyright 2002 PeopleSoft, Inc.