Value in procurement transformation
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Value in procurement transformation WRITTEN BY D a l e B e n to n PRODUCED BY H ey ke l O u n i
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LISTEN TO MARTIN LEE’S PODCAST ON THE DIGITAL INSIGHT’S OUTPUT CHANNELS BELOW
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Martin Lee, CPO of KPMG, explores how a procurement transformation, centred around spend control, brings value for KPMG
H
istorically speaking, procure-
of procurement and invested heavily
ment has often been seen as
into transforming it. Procurement can
a mere cost centre and the
truly bring great value to an organisa-
part of the business where buying was
tion, if the organisation recognises that
done. In recent years however, procure-
procurement can be a trusted partner
ment has taken a dramatic shift as
to the business. This certainly forms
more and more businesses around the
the foundation procurement transfor-
world, from large scale global organi-
mation... in which one of the UK’s lead-
sations to smaller and younger compa-
ing providers of professional services,
nies, have redefined their understanding
including audit, tax and advisory
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KPMG
specialisms - delivering integrated solu-
purchasing space and a key focus on
tions to its clients’ issues – is trans-
procure to pay (P2P) implementation,
forming its procurement processes in
Martin feels his experience and passion
order to bring visibility, control and influ-
for procurement has prepared him well
ence across an increasing proportion of
for this next evolution of procurement
spend to drive informed decision-mak-
at KPMG. “I definitely think it’s one of
ing for the business. Spearheading
the best jobs going, with an unparal-
this transformation journey is Chief
leled involvement in helping an organi-
Procurement Officer, Martin Lee.
sation to ensure trust and deliver value
With over 20 years in the sourcing and
and growth,” he explains. “You touch home .k pmg/uk
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everything from marketing, to the
transformation strategy and so the
running of our buildings, through to the
CPO now has to communicate to each
services we deliver to our clients. It’s
and every part of the business a little
such an impactful role. Gone are the
differently than it did in the past. More
days of buying; it’s about how you work
so, the demands, expectations and skill
with the business to impact how they
sets – and ultimately the very role of
invest and leverage themselves in the
the CPO – has changed too and this is
marketplace to get the right solution, at
something that feeds into this transfor-
the right value and risk profile. With the
mation. “Historically, buying was quite
executive sponsorship and appetite,
simple. Now you’re trying to work people
the platform for procurement is set, like
around, ‘what’s their business case?’
never before, to be value creators.”
What are their change drivers?” he
The broader evolution of procurement has certainly played its part in KPMG’s
says. “It’s less about being a reactive service, but more proactive, working
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to understand what they’re actually trying to achieve and how you might bring the supply base and commercial models to that.” As CPO, Martin is tasked with looking at how procurement, as a trusted partner, can bring information to the table, to help people understand the art of the possible from the marketplace. This, he feels, is something that has developed increasingly in recent years. “Data is key to everything now and you need to be able to provide that data in a way that people can use and understand,” he says. “There is now an expectation of the ease of use as a business, all the way through from the people on the ground delivering services through to the executive board who want to know how they can consume data in a way that gives them an actual insight.” In early 2019, KPMG set out a procurement strategy, one that would ultimately see procurement play a key role in seeing the company increase its UK business to £3bn by 2022. A key enabler of achieving this is through greater spend control, changing how KPMG buys goods and services across KPMG UK, and through a new procurement organisation and operating model, including the implementation of a new P2P tool. “As an 8
KPMG
“ Historically, buying was quite simple. Now you’re trying to work people around, ‘what’s their business case?’ What are their change drivers?” — MARTIN LEE CPO, K P M G
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organisation we really wanted to build upon an already successful strategic sourcing team,” explains Martin. “Over time we built a program to implement procurement technology, the opportunity to control, visibility and influence our spend across our supply chain. Technology is at the heart of the change. It’s about creating efficiencies for how we transact, creating the visibility of our spend and our third-party engagement, allowing strategic sourcing decisions with our business stakeholders to be more innovative while delivering greater value, at the same time enhancing the ownership of the solution through an effective controlled purchasing environment.“ A key part of the transformation saw KPMG work closely with IBM to extend its sourcing capabilities. This has seen the building of a hybrid across multiple locations, delivering strategic, tactical
did not have at that stage,” says Martin.
and a procurement operations model to
“And so, it has allowed us to grow our
enable KPMG to influence spend across
strategic sourcing together with their
the entire firm. “The relationship with
breadth and depth of market knowledge
IBM has allowed us to deliver a lever-
and commercial impact. That was a very
aged procurement model across multi-
positive thing from a strategic sourcing
ple locations of onshore, near shore and
point of view.”
offshore from an efficient cost model
The challenge then for KPMG and
and from a skill sets and capability
IBM became one of identifying a way of
perspective that procurement in KPMG
moving towards a more transactional
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KPMG
way of operating, particularly when it came to deploying procurement feeds from 15,000 users across the business which in turn expanded procurement’s interaction with the business significantly. For Martin, IBM was integral in this regard and a reflection of how the
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relationship between the two companies far exceeds a simple project delivery relationship. “The relationship is an home .k pmg/uk
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“ The relationship is an opportunity to provide an agile operating model that we can adjust to how our business evolves” — MARTIN LEE CPO, K P M G
w w w.th e in te r fa ce . n e t
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opportunity to provide an agile operating model that we can adjust to how our business evolves. It gives us a way of getting to skill sets that we didn’t have and thanks to the many clients that they work with in a similar capacity. It creates a useful network,” says Martin. “I can tap into the knowledge and insights from this network and their own procurement capabilities to know whether it validates what we are doing, or to help stretch and challenge my team through insights that create the credibility to be able to help my business.” The very idea of change, particularly in an organisation the size of KPMG, can understandably be very fearful in many respects and so it’s important that the drivers (in this case the procurement team) work to help the business understand what that change means. Martin stresses that one of the biggest early learnings and advantages for his team was utilising the capabilities that existed across KPMG, encompassing Change, Communications, Programme Management and Systems Implementation. The team built out a change journey, engaging with business stakeholders to determine their P2P understanding and readiness. Early understanding of P2P was relatively immature and the team had to help them understand the impact, and the opportunity it provided. “I think we’ve realised that throughout that period, we’ve had to put more direct effort into certain groups to help them understand what the opportunity is and understand how they can adapt to that change,” he says. “Our role as leaders is to help support people, understand and appreciate what the opportunity for them is and where they can learn new skills or adapt to roles, or in fact take on 14
KPMG
Martin Lee CPO, KPMG As CPO of KPMG’s UK Member firm, Martin leads a team responsible for over £1/2bn of indirect spend. He has a passion for Procurement and transformation, having been in the industry over 20 years, with significant leadership, sourcing and P2P experience. Over the past year, Martin has led the Procurement transformation at KPMG, creating a new Procurement operating model, expanding the scope and influence of the team, and implementing the Coupa platform to over 15k users, helping to realise enhanced spend control and a step change in value delivery for the firm. home .k pmg/uk
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“ It’s about making sure that people understand what we are trying to achieve and communicate the vision, so they could understand, appreciate and get excited about that” — MARTIN LEE CPO, K P M G
new accountabilities in that process. It’s
The main procurement transformation
about making sure that people under-
began in early 2019 and so, as Martin
stand what we are trying to achieve and
admits, KPMG is still at the very begin-
communicate the vision, so they could
ning of this journey. The first 12 months
then understand, appreciate and get
will be seen as laying down the founda-
excited about it. Of course, through-
tions for future growth, with the imple-
out that process, you will find people
menting of the technology, and the new
that have to take time to learn about
operating model focused around creat-
what that change means for them and
ing a platform and new ways of work-
their function.”
ing. 2020, as Martin describes, is about
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heavily influence a transformation. The trick for an organisation is to be flexible and proactive enough to be able to evolve with the shifting landscapes, whatever they may be. “Throughout the journey we’ve had to make a few adjustments. Whether they were parts of our business that had changed how they operate, or in effect the relationships that we brought in, it was about learning what they were going to do differently to perhaps what we first thought,” says Martin. “One of the things you have to do is be very clear about what you’re trying to achieve. We had a governance model so that we could operate it with consistency with decisions and make sure that each of those changes was something that considered and made a formal decision against, rather than just meandering through a journey.” Ultimately, the key to successfully “leveraging that platform to grow our
navigating a journey is understanding
visibility over the supply base, under-
that changes will happen, whether they
standing how our business is going to
are foreseen or not. More important, is
work with us through those systems,
taking key learnings from these changes
and helping us unlock the opportunities
and using the knowledge or the data
the visibility creates”.
and insight and turning that into smarter
The challenge for any transforma-
and more informed decisions moving
tional journey revolves around external
forward. This is something that Martin,
factors. Business needs and demands,
despite being at the very start of this
as well as market dynamics, will all
journey, has already begun to do. “We’ve home .k pmg/uk
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built a team around us that are now owning our technology, our processes and our operations. It works on an agile basis, so that if we learn that our approvals aren’t quite right, or we learn that our data isn’t in exactly the right place, we can make quick and easy changes to it,” he says. “Working across our business, we’ve also put in place change agents that enable us to work with key individuals across the business on a more regular ongoing basis to talk about feedback, to talk about new ideas, to talk about change that we’re bringing through and get them to communicate to us about how we can improve and change things.” Looking at the first 12 months of this journey, Martin can already begin to look at key successes that have been achieved and start to plan out how to build on those for the coming years. KPMG has successfully rolled out the initial stage of the transformation on time and on budget. Both the hyper care team and the project team that worked with Martin throughout the journey have now completed their activities and moved on to their next project, leaving Martin in the wonderful position of knowing that his team has delivered the solutions and the operating model in place. “We’re now into the position 18
KPMG
David Braid, Procurement CoE Lead - SRM, Sustainable Procurement and Supply Chain Risk: What were the challenges you faced during the transformation? It often felt like a procurement-only programme, but actually, it was a business-wide programme. It was key to ensure that everybody within the business, came into support and sponsorship of that program and worked together. For many business functions the new technology will become their shop window of products and services to the internal business functions. The transformation teams were able to take away a lot of the pain from us as a procurement team, ensuring that the best practice communications and training was built and delivered. Quite simply, investment in skillful change management pays great dividends.
What will continue to be the key challenges? As you would expect, delivering to business expectations will continue to be our challenge. Perception of the solution delivered in August could inevitably be misconstrued as, ‘Well it’s done now, isn’t it? It’s fixed.’ Actually it’s not, we’ve just started this journey, we learn every day and the work that has to be done now is about ensuring we’re able to continue providing, and improving the service, through measuring the performance and taking action where required. There will be wobbles. The journey so far has been a bit like riding your bike with stabilisers. Now hypercare is finished we’ve taken the stabilisers off and all of a sudden
we’re on our own now. Through being on your own, you build that confidence up and in six months’ time we’ll for sure have forgotten that we even had the stabilisers on at all.
How has the transformation been received on a business level? People know what the big picture is, they know it’s about getting the costs under control, it’s about being able to get the transparency on a supply basis, about being able to take that information and gain increased value. If you’ve got transparency on data, all of a sudden you are a much better partner to the business. Doing the simple stuff really well drives credibility through our business and demonstrating this will deliver on the investments and create greater value going forward. The successful transition has created energy and engagement, so we take that momentum we now have across the business and focus on delivering our own procurement 2020 strategy and goals across five activity pillars of Spend Control, Customer Experience, Value Creation, Delivery Excellence – all underpinned by Enhanced Capabilities and Behaviours.
How will it impact KPMG from an external perspective? It allows us to demonstrate that we are operating a trusted and value generating function, raising the profile of KPMG as a forward-looking procurement activity, whilst also providing our business the trusted licence to operate in our client marketplace.
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where we’re thinking proactively rather than reactively,” he says. “Examples where we’ve been able to take business cases to our board to shift policy. That’s been a real game changer for us, and it’s been positively received by them.” Over the course of the next year, KPMG will look to focus on its pipeline of procurement engagement and projects that will drive the business forward. KPMG will continue to make sure it has the right teams, with the right skill sets and experience in place to succeed. For Martin, this is ultimately the one true key to success both today, and in the future. “Program would have achieved nothing without putting people in who are committed and who understand and are excited about it,” he says. “Without that, we would never have gotten to where we are. In reality, we’re now shifting up a gear and those people are evolving, alongside us, providing new people to further expand our capability to get to where we want to go.”
LISTEN TO MARTIN LEE’S PODCAST ON THE DIGITAL INSIGHT’S OUTPUT CHANNELS BELOW
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