Procurement Telkom: Procurement transformation transformation and & communication communication Project Partners
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Telkom: Procurement transformation and communication Ben Van Zyl, Chief Procurement and Contracts Officer, discusses a significant procurement journey for Telkom, and how the internal stakeholder sits at the very heart of it...
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D al e Bent on Hey kel Ouni
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T
he challenge in any procure-
But the reality is that change is neces-
ment transformation is one
sary and procurement has transformed
of enacting true, tangible
significantly.
change. As many organisations seek to
Take Ben Van Zyl for example, Chief
realign their procurement and supply
Procurement and Contracts Officer of
chain functions, to make them more
OpenServe and Telkom. Van Zyl, who
strategic and key drivers of growth, the
has built a 20-year career in strate-
journey that’s required is one defined by
gic sourcing, procurement and supply
constant change and increasing pres-
chain management for leading finan-
sure to deliver. This is in part, thanks
cial and telecommunications organisa-
to often antiquated views that see it as
tions around the world, was tasked with
merely a cost centre and a back-office
lending his expertise to deliver a true
function designed to sign the invoices
procurement transformation for Telkom.
and in some cases, police spending.
One thing that he acknowledges as
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a common concern for procurement
delay them.”
professionals in his position is communi-
“That’s how you create resistance
cating the true value of procurement to
because they have objectives and in
an organisation. “I think when you listen
their performance plan, there isn’t a
to the business, you can really translate
dependency on procurement. Whatever
what their vision and strategy for their
I bring forward has to have a client focus
business is and approach it in a way that
in mind to talk to how we are going to
will enable them to realize that,” he says.
enable them.” Van Zyl beams that he has
“It’s about getting the language right.
been blessed to be in a business made
You do not say that you’re going to come
up of people and a board that under-
in and implement new control because
stands the critical role procurement
honestly, what really scares people is the
plays and welcomes the changes he has
idea that you are here to police a policy
recommended.
and put in new processes that’s going to
Van Zyl had already worked with Open Serve for a number of years but was tasked with a specific goal for Telkom; to “fix” procurement and supply chain issues that had arisen within the business. The bottom line for procurement first and foremost is one that focuses on the bottom line and to streamline and tighten up a number of performance issues around cost reduction. But, as is a common question raised by many procurement professionals, why stop there? Van Zyl very quickly came on board and resolved a number of issues presented by previous failed implementations and misfires or in his own words he “steadied the ship” but even he acknowledges that really, it was only the beginning for procurement. “We were w w w . c p o s t r a t e g y. c o m
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under pressure from a cost perspective,”
very cumbersome supplier onboarding
he says. “I was asked to come in and
process that was in place,” says Van Zyl.
steady the ship but also to try and take
“Alongside this was a focus on identi-
our procurement and supply chain envi-
fying any big opportunities from a cost
ronment to the next level.”
savings perspective and the key deals
Defining that next level was crucial in
that the business required to enable
order to make lasting and meaningful
them with their business objectives and
change for the business going forward
the business strategy and realizing that.
and so the first steps were to look inward
It was a challenge but I think listening to
and engage with stakeholders in order
the stakeholders and sharing with them
to identify the real pain points that the
to say this is where we are, here are the
business had and outline the “building
things that are critical and this is going
blocks” that would enable that change.
to my approach and my timeline - which
Running parallel alongside this initial
they approved - was key to getting things
assessment was a dedicated maturity
started.”
assessment that allowed Van Zyl to paint a clear picture as to the challenges that procurement and supply chain as well as the wider business faced and how the two went hand in hand. This, he notes, allowed the business to expose the gaps and design a plan to achieve key objectives and targets. On top of this there was an audit coupled with the pain points raised by suppliers enabled a prioritizing of required actions moving forward. “My initial focus was on getting the basic building blocks in place like a center of excellence, operating model, a new procurement governance framework and policy and then at the same time fixing the big pain points like the 8
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One of those building blocks, a center
“ This model also allows for improved knowledge management so that you can create step changes in the skills of the team” — B E N VA N Z Y L , C H I E F P R O C U R E M E N T A N D C O N T R AC T S O F F I C E R
of excellence, was the key to all of this. Successfully establish and implement this at the very heart of this journey and the road ahead will look that little bit easier. But what is meant by a center of excellence? Well, a core team of procurement experts that play a holistic procurement role within the organization that can drive scale and repeatability and best practice. Van Zyl highlights an example of this in action where the business has multiple ERP systems and processes which this team of experts can take on the responsibility for and advise on the implementation and the use of new technology. “They can also provide knowledge base services across the different procurement processes, platforms and standards designed to drive that scale and focus on delivering that value added performance throughout the procurement organization to enable the growth strategy,” he says. “This model also allows for improved knowledge management so that you can create step changes in the skills of the team.” This is of particular interest to Van Zyl as there is a notable shortage of sourcing talent and so knowledge management is critical. Talent comes and goes and the people within the business, w w w . c p o s t r a t e g y. c o m
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Deliver the extraordinary
Plan now for 5G, says Nokia Communications service providers must ensure that they have the right foundations, or transport in place to take full advantage of 5G. This is the view of Mark Baptiste, director of the IP and optical business for Africa at Nokia. “There are so many moving parts at the moment,” he says. “You have your transport or the mechanism to carry your traffic which includes Optic’s, IP and Microwave on the one side, but then we have things like virtualisation, public and private cloud, automation, software-defined networking (SDN) and security that are also fundamental to the network operations. That is why it is not only critical to get the transport right at the outset, but also to build it so that it can deliver today, while also catering for the requirements of the future.” The CSPs have massive investments that they have made over the past 20 years, and this is not something they can just switch off. Baptiste believes this is where transport becomes so important. “From a transport perspective, we do not distinguish between the existing and the future. What we are saying is that we must build networks that can operate securely, handle massive scale, and provide seriously high performance,” he says. “The biggest challenge for CSPs is balancing the present while investing in the future. We all know that 2G and 3G will be around in Africa for a long time. For operators in Africa, it is about striking that balance between keeping existing customers happy, while looking at the business case for 5G, because everyone wants to be the first to make it a reality.” Baptiste says the most important thing for CSPs right now is to get a strategic blueprint in place that determines how they evolve their network from where they are today, to cater for the requirements of 5G and their network evolution. “Here Nokia is strategically positioned to work with CSPs to build this end-to-end architecture where we would look at each of these elements, firstly holistically, and
then we would strip them down in isolation to determine how we build each of these elements to meet their specific requirements. Then we would put it all together again in terms of a blueprint that provides the CSP with the Future X solutions Nokia always talks about.” Nokia has recently revolutionised data centre networking by launching our new Data Centre switching fabric. Our DC Fabric provides generational steps in data centre networking; new operating system, tools and gives cloud builders unprecedented ability to adapt, automate and scale keeping up with the increasing demands from 5G. “Nokia’s DC Fabric also redefines openness, application development flexibility, robustness and operational tools for rapidly building and confidently operating data centre networks at scale. This puts Nokia in a unique position completing our end-to-end portfolio for 5G,” he says. Baptiste concludes that CSPs must focus on getting the basics building blocks of their transport platforms right early on. “If you have an under dimensioned transport platform, it does not matter what you build, it will have a serious impact on your ability to deliver at scale on the rapidly evolving requirements of networking. So, the key thing is to build that transport platform that can address security, massive scale, high performance and gives you all the automation and end-to-end requirements that you need. Nokia is proud to be a partner of Telkom in South Africa and, together, we look forward to building next generation transport networks, which are the bedrock for enabling digital services for consumers, enterprises and the public sector in South Africa.”
Mark Baptiste
critical procurement experts, may leave and leave an organisation with key information within the hard drive. “Then you end up having to redo and relearn the same things that that individual learned when he was there and you have to do everything from scratch,” adds Van Zyl. “Again, what’s critical for us as well in the center of excellence model, is that it helps us with improving our knowledge management along with everything else.” When discussing procurement transformation, it’s not long before we fall victim to subscribing to the notions of trendy buzzwords that professionals like (and dislike) to hear. Flexibility and agility are two of the biggest and oft used words, but why? What do they mean to a business? “I’ll be honest. These were not words that’s normally associated with procurement for Telkom,” Van Zyl boldly states. “It used to be an organization with structured and strict procurement processes and gateways, so those words were not normally associated with the whole procurement process environment.” There is sound reasoning for this. Telkom has a number of unique and different business units within its portfolio. These include but are not limited to: a fixed line business and mobile business, a mast and tower, a property business, a commerce platform business with some financial services and an IT outsource business. Each unit has its own strategy, size and cost plans. For Van Zyl and procurement, it was vital to acknowledge that one-size-fits-all process was out of the question. “A standard recognized procurement process with no flexibility that is unable to respond to the individual business unit will become unnecessarily controlling 12
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and restrictive. It would create a direct
ultimately will never be ‘perfect’.
negative impact on the individual busi-
Improvements have been made but this
ness units that would struggle to achieve
is an ever evolving journey and so he
and maintain a competitive advantage
and his team will continue to acknowl-
in the open market,” he says. “We really
edge any emerging gaps in order to be
had to consider that in our development
able to adapt fast.
of the new procurement governance
Procurement is a numbers game. It
framework policy and processes, as well
always has been. The numbers and
as the selection of our digital tools that
indeed the successes count now more
we would like to implement. It allows us
than ever when undergoing significant
to be more flexible and more holistic in
transformation. Van Zyl can already point
our approach to shorten that timeline
to the addressing of the control envi-
for either the contracting process or that
ronment through the design and imple-
transaction.”
mentation of a new procurement policy,
Easier said than done and Van Zyl admits that this is a process that
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governance framework and processes that enables the business to move
faster and provide flexibility. Elsewhere,
of the CFO and in turn the CEO? These
by building a spend queue system it
are, ultimately, the key stakeholders for
allowed for a far greater understanding
procurement. Van Zyl has implemented
of spend and analysis by creating dash-
a supply chain financing platform to free
boards for performance, cashflow views,
up cash flow and reduce working capi-
and savings reports in order to track
tal. A very important focus for the group
real savings. “It sounds like basic stuff,”
CEO and CFO, this changed the payment
says Van Zyl. “But we had some contra-
terms for suppliers from 30 to 90 days,
dicting views on the spend. Depending
the industry standard for telco companies
on whether you look from a supplier
in South Africa. “By implementing the
perspective or contracts perspective
supply chain financing platform it allows
or business perspective you could get
the suppliers and even the small supplier
different numbers so we had to fix that so
to immediately trade their invoice at a
that. Now, there’s only one version of the
low interest rate where they could imme-
truth that can allow you consistency to
diately get the cash injection,” he says.
make the right decision as well as track
“That was also very helpful during this
deliverables.”
COVID period and a great achievement
But what of the successes in the eyes
in terms of our year-end result.”
“ The procurement function is able to develop and create innovative business models and become a valuable strategic business partner” — B E N VA N Z Y L , C H I E F P R O C U R E M E N T A N D C O N T R AC T S O F F I C E R
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Success is one thing, but failure is
process we’re engineering may succeed
another and admitting that things haven’t
due to acceptance of the solution, but
gone according to plan is often the place
the human factor too. Dramatic change
where real change is found. Van Zyl
brings tremendous resistance and it
recognizes this as an incredibly impor-
requires ongoing change management
tant part of any journey. “It’s a journey
to ensure that success.”
and there’s always room for improve-
Technology and process digitaliza-
ment,” he says. “It’s critical to contin-
tion play a real key role in the procure-
uously review and evaluate the new
ment transformation journey. Established
processes and tools that you implement.
and emerging technologies enable
We will implement new processes and
businesses like Telkom to become far
tools, which should bring significant effi-
smarter and more scalable.For Van Zyl
ciencies but let’s create checkpoints and
and procurement, digital innovation
evaluate and make improvements where
will enable a move away from a repet-
necessary. The procurement or the
itive manual task environment to a mix
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of more analytical and creative thinking
a people and relationship oriented
roles that’s focused on driving a compet-
function. This is nothing new, but as
itive advantage and strategic value. “The
we discuss transformation through
procurement function is able to develop
processes and digital tools one can
and create innovative business models
be forgiven for forgetting that they are
and become a valuable strategic busi-
worthless without the right people strik-
ness partner,” he says. “We become a
ing the right relationships. “The people
partner backed by real time access to
in your team are the biggest asset that
data and market trends to advise and
you can ever have,” he says. “If you
support strategic decision making in the
don’t have experienced, reliable, strate-
business, but also significantly improve
gic sourcing professionals, and not even
on timeline for contracting and transact-
only strategic sourcing, really in every
ing and approvals. That’s what digital
corner of the value chain, whether it’s
procurement means to us.”
somebody that focuses on analytics that
Procurement and supply chain is
can drive the insight for you, or whether
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the person actually needs to look at your procurement operations environment, you rely so much on them.” With the right people, the right process and ongoing discussions with the suppliers, the relationships between both Telkom and said suppliers can evolve and take on new and more fruitful forms. Through a contract and supplier relationship management program that allows Telkom to navigate geopolitical tensions and restructuring of the global trade dynamic. As well as individual supply management account plans based on the supplier risk segmentation and joint balance performance scorecards, Telkom can continuously assess performance across multiple factors. Van Zyl points to substantial improvement of raw supply performance and noteworthy reductions in contract value leakage. “It also opened the communication between us, the suppliers and the internal business partners, because everybody is now seeing that value,” he says. “We’re also doing an annual supplier survey, to really understand their experience in dealing with us. So we’re looking at the entire process from onboarding, the RFP process, the engagement with the procurement team, transaction right through to the payment process. That helps us identify and address the pain points and to make the interactions with Telkom as seamless as possible.”This model truly enables Telkom to continue to improve the supplier experience because, as Van Zyl notes, Telkom wants to be viewed as the customer of choice, and thereby gaining access to the best offers from the best suppliers in the market. In early 2020, the world stood still as the COVID-19 pandemic swept the globe. Even now, the ramifications w w w . c p o s t r a t e g y. c o m
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are still being felt, but through adversity
where there are single points of failure
comes opportunity and Van Zyl, along
on critical supply material or equipment.
with many procurement professionals,
In acting fast, Telkom were able to put
this crisis has highlighted the call for a
alternative sources in place where viable.
new approach where agility and change
Thanks to business continuity plans in
are not only essential but unavoidable.
play for its strategic suppliers and the
Telkom were able to identify concen-
suppliers where there’s significant risk,
trated risk with certain key suppliers, and
and the work that Van Zyl has been
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doing these past few years, Telkom was
understanding of our suppliers and the
able to thrive.
supply networks allowed us to make
“We were quite fortunate in that, thanks
sound decisions based on a comprehen-
to what we had in place, the disruption
sive understanding of the current poten-
to our business was actually not that
tial future supply sources, and develop-
significant,� he says. “Our analytical capa-
ing trends, all supported by detailed cost
bility and the role of analytics will play a
and risk analysis.
more important role, as a more detailed
Given the tumultuous path that 2020 w w w . c p o s t r a t e g y. c o m
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has put many on, how much has that changed the road ahead? Many can and have speculated that we will see a new world of procurement and supply chain thanks to a rethinking of what is truly effective and strategic in light of COVID-19. For Van Zyl and Telkom, the road ahead remains one of continued strategization. Cash flow will continue to be managed, cost reductions and further seamlessness in the process remain the core targets and further implementation and development of the analytics and automation of reporting and insight developing too. But what will be key for Van Zyl in order to succeed? “If you always look for that opportunity to provide more value to the business, then you’ll earn your seat at the table,” he says, acknowledging this oft used expression. “It doesn’t take away that you need to be competent, and you need to execute well. But unless you have a seat around the table, you don’t even get the opportunity to deliver value, and you remain a support function to a support function. Seek that opportunity to provide value to the business, have a blind focus and you can do your job and deliver value.”
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