Customer focused procurement
02
Procurement transforming the Fannie Mae way WRIT TEN BY
ANDRE W WOODS PRODUCED BY
DENITR A PRICE
03
w w w.fa nni e m a e. com
We speak to Rajeev Karmacharya, Managing Director, Strategic Sourcing and Category Management at Fannie Mae, on how he aligns procurement with business at Fannie Mae…
A
number of companies struggle to establish the bridge between their business aspirations and priorities and the procurement space. However,
procurement is undergoing a sea of change at the moment with many businesses no longer viewing this
04
service as merely a back-end function. Rajeev Karmacharya, Managing Director, Strategic Sourcing and Category Management at Fannie Mae, sees his role in procurement as much more business facing. “A lot of times procurement organizations tend to be too focused on the cost,” he explains. “However, that’s often not what the businesses are really looking for. Obviously everyone wants to be competitive with price, but there’s more to be had from procurement.” Karmacharya has over two decades of experience in procurement, supply chain and technology roles and has seen the procurement function evolve over time. He worked as a management consultant for over 12 years, including as a Principal for AT Kearney, a global management consulting firm. He consulted for a number of leading Fortune 500 firms where he often worked just as closely with the CIO as the CFO. “I really got to see how
05
w w w.fa nni e m a e. com
Passion. Execution. Results.
The world of work is irreversibly changing. Never in the history of mankind has there been a more selective workforce, borne from a society that is more interconnected and technologically dependent than ever before. With millennials expected to make up 50% of the workforce by 2020, the traditional idea of a ‘workplace’ has been fundamentally challenged and is increasingly open to interpretation. Xyster Consulting addresses these challenges by creating Smart Workplaces to attract and retain talented employees in a shrinking pool, where the modern workforce demands increased flexibility, mobility, pervasive amenities that enhance the quality of life, and a greater focus on sustainability and employee wellness; all in a corporate environment where security vulnerabilities are being aggressively exploited and data privacy breaches are rampant. What differentiates Xyster as a Technology Consultant is our unique understanding of corporate facilities and the important role technology plays as an enabler of the Smart Workplace of the future. Please contact us to learn more about our service offerings and how Xyster can help your organization effect change through automation and innovation‌
Our Projects
Our Services
Contact us
Visit our site
the priorities and perspectives could
function here and what I found talking
sometimes be different between the
to senior executives across the
two groups,” he explains.
company was that they didn’t see
Fannie Mae is a U.S. government-
value in procurement that does just
sponsored enterprise (GSE) that
transactional work. Obviously, there
supplies financing to mortgage
are trade-offs with minimizing cost,
lenders. Fannie Mae celebrated its
minimizing risk and speed of delivery.
80th birthday in 2018. Karmacharya
This interesting dynamic gave me a
joined the company in 2013 and has
perspective on how you should really
been working on transforming the
design a procurement organization.
procurement space through a more
How can a group be really effective?”
business-facing function rather than a
08
traditionally administrative process.
FUTURE PROCUREMENT
“When I joined Fannie Mae, we didn’t
Fannie Mae was keen to recruit
have a category management type of
procurement experts that could supply
$109.9bn Approximate revenue
1938
Year founded
7,200
Approximate number of employees
market insights and industry knowl-
to a model where we are the category
edge to the organization. “Our busi-
experts. Our category managers
ness stakeholders are not expecting
have a full understanding of their
procurement to tell them whether they
categories, including historical spend,
should buy this product or that product,
contractual terms, key sourcing levers
but they certainly wanted us to bring in
as well as industry knowledge – more
insights as to what was happening in
than anyone else in the company. This
the marketplace. What are the trends?
creates a partnership, and even though
Who are the key and emerging players?
the organization may change on the
What types of innovation are happen-
business side, it enables us to provide
ing in the industry?
continuity as well as an enterprise
“Obviously, the transactional part is important, as is the supplier manage-
perspective.” Fannie Mae’s sourcing and procure-
ment and all the traditional procure-
ment transformation journey is about
ment functions, but we have moved
customer service. “For us, our internal
w w w.fa nni e m a e. com
09
The Procurement Empowerment Platform Realize the possibilities
Supplier Management Sourcing Contract Management Procurement Invoicing Strategy & Analytics
Smart Capacity to plan Actionable insights at your fingertips Improved data quality
Collaborative
Agile
Effective internal & external stakeholder engagement
Quick process / system deployment
Deep, workflowenabled collaboration
Easy configurability for unique or evolving requirements
Robust program management
Great experience on any device
Learn more about the possibilities on ivalua.com
Planning a Successful Procurement Transformation Journey Wayne Gretzky once said that “a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” The same can be said for procurement leaders planning their organizations’ digital transformation. At Ivalua, we’ve had the opportunity to work with hundreds of the world’s leading companies on their journeys. The most successful have consistently been those that keep their eye on where they want their organizations to be many years down the road and plot their course accordingly. While people ultimately are the ones that deliver value and bring successful transformations to fruition, technology is a critical enabler. It frees capacity, provides necessary insights, enables collaboration at scale and much more. Successful procurement transformation journeys involve several core phases, and technology must be able to support each one when you are ready to progress.
Get up and running quickly Typical Objectives
Technology Requirements
Generate ROI
Digitize the full Source-toPay process Manage 100% of spend
Adopt industry best practices
Bing your best ideas to life Establish agility for evolving requirements
Improve data / strategic insights
Rapid deployment, adoption & onboarding Industry configurations
Complete suite
Powerful configurability
Unified data model
Industry-leading capabilities
Getting Started
Best-in-Class
Competitive Advantage
Procurement Digital Transformation Journey
If getting started, ensure technology can deliver rapid ROI and deliver best practices. But remember that even if you are only digitizing part of your process now, when you are ready to build a truly best-in-class procurement organization you’ll want to digitize the full Source-to-Pay process, in which case an integrated suite to automate all activity will be needed, and a unified data model will be critical to ensuring 360 degree supplier visibility or generating process-wide insights from the latest artificial intelligence applications. Fannie Mae was able to onboard nearly 100% of their suppliers and achieved visibility into 100% of spend. Their team made it happen, empowered by technology. You should insist on best practice capabilities and configurations, but realize that as you mature you will inevitably find that some requirements are truly unique or have evolved. Be sure your technology has the flexibility to accommodate them through configuration. And remember that best-in-class does not create a competitive advantage. Top talent will want to innovate and do a few strategic activities differently, better than the competition. Technology should empower them to do so and bring their best ideas to life. Fannie Mae maintains better insight into cyber security threats than its suppliers, so implemented a unique process to automatically notify at-risk suppliers of threats, thereby reducing risk better than others. Every company’s journey is unique, but by keeping their eye on where they are headed, procurement leaders can achieve their goals.
To learn how Ivalua can accelerate your procurement digital transformation, visit ivalua.com
12
“Like many internal operations, procurement has undergone a digital recalibration of both its architecture, functionality and efficiency as Big Data, machine learning and AI start to filter into the procurement space� — Rajeev Karmacharya, Managing Director, Strategic Sourcing and Category Management
13
w w w.fa nni e m a e. com
Smarter IT sourcing starts here
Smarter IT sourcing starts with NPI. Our transaction-specific price benchmark, licensing and negotiation insights help you get the most value out of every IT purchase and renewal, and reduce buying risk.
NPI Services Portfolio • Price benchmark analysis • EA renewal optimization • Telecom contract optimization • License position analysis and audit defense • IT asset rationalization for M&A and divestitures • IT sourcing transformation consulting
This translates into measurable savings, greater IT flexibility and faster purchasing cycles.
Our website
Make NPI part of your IT procurement transformation strategy.
Contact us
Learn more at npifinancial.com.
CLICK TO WATCH : FANNIE MAE – NATIONAL HOMEOWNERSHIP MONTH 15 business unit stakeholders are our
focus on. Sometimes, that may mean
customers. Some procurement
higher cost for faster speed-to-market,
organizations don’t like to call their
or taking on a slightly higher level of
internal stakeholders ‘customers’. I
risk. We may challenge them from time
think we’ve been very deliberate about
to time if we believe that’s in their best
viewing our business stakeholders as
interest, or the company’s. Ultimately,
customers and really putting them at
we want our customers to have a
the center of everything we do. We
positive experience in their interac-
seek to understand their business so
tions with procurement while knowing
we can see it from their perspective.
that we have their back. That’s the kind
We help our customers achieve market
of model we’re building.”
competitive costs and help identify
Like many internal operations,
and mitigate supplier risks, but our
procurement has undergone a digital
customers’ business objectives and
recalibration of its architecture,
priorities are at the core of what we
functionality and efficiency as Big w w w.fa nni e m a e. com
“I think the key for me is understanding business needs and viewing things from the customer’s perspective” 16
— Rajeev Karmacharya, Managing Director, Strategic Sourcing and Category Management
Data, machine learning and AI technologies start to filter into the procurement space. “We have totally digitized contracts and can do a lot more with contract authoring and contract analytics, among others. We have started to test RPA (robotic process automation) where it makes sense – and I’ll be honest: RPA doesn’t always make sense for smaller scale operations, where there is a lot more thinking versus doing. From a business case perspective, the promised land of true digitization is full collaboration and transparency that enables harnessing the full potential of technologies, such as
machine learning and artificial intelligence. For our customers, that means greater efficiency and better analytics and insights.”
A PROCUREMENT TRANSFORMATION With any digital transformation, robust technology solutions are key to continued success. “If you looked at the technology solution we had a few years ago, the context diagram of our procurement system and integrations was outdated. This complexity meant higher opportunity for errors and impacted our cycle times. We also didn’t have a good way to tackle approvals outside of Procurement – much of this was done via emails and lacked consistency. We had multiple sources of records for supplier data, but no direct integration between contracts and purchase as they were on different systems. So, we needed an end-to-end solution that was flexible to meet our unique needs, yet scalable to handle our volume. After assessing a number of established players, Fannie Mae chose an innovative, emerging supplier in source-to-pay space. We now have a more user-friendly procurement system that allows for integrated requisition and contract approval workflow and now, along with the adoption of e-signatures and mobile approval capability, we w w w.fa nni e m a e. com
17
WORKPLACE click here to find out more
RESULTS click here to see our projects
A well-designed space is about more than only aesthetics. It’s about creating an environment as functional as it is beautiful, flexible as it is safe, and inviting as it is productive. For 25 years, Bialek Environments has helped our clients to create spaces that are more productive and inviting with full-service office furniture, interior prefabricated construction and design services. With clients in the commercial, education, government, and healthcare sectors, we bring best practices and new ideas from different programs into each client’s project. Bialek’s experienced staff of account managers, designers, project managers, and client representatives take the time to ask the right questions, to listen as answers are given, and to ultimately understand your needs.
LEARN HOW WE CAN HELP YOUR TEAM BE MORE PRODUCTIVE AND ENGAGED.
have cut down cycle-time for standard
We have full spend visibility that really
purchases by 50%.”
enables us to do all the associated
Karmacharya’s team utilizes an
analytics. Catalog management and
end-to-end procurement solution
automatic deal approval with the full
where all of the contracts are in one
workflow is also built into the tool,
contract management system. The
which makes the process very efficient.
key metadata is captured and stored.
Moreover, with the workflow built into
Contract authoring has been piloted
the tool, it is easier for customers to
and the company is looking to expand
see where things are – with increased
its contract authoring and contract
transparency, procurement is becom-
analytics capabilities. “Much of our
ing less of a black box.”
contracting work happens electroni-
Karmacharya believes trusted
cally,” he explains. “Key contract
relationships with suppliers are equally
meta-data is captured and we utilize
important to bring value to internal
e-signature for execution. We continue
customers. The team has worked
to be focused on ensuring data quality,
hard to build strategic partnerships
capturing additional metadata, and
with key suppliers. “We believe
some of the innovative things you can
suppliers can help bring innovation
do with digitalization to drive efficiency.
and best practices with the right
E X E C U T I V E P R OF IL E
Rajeev Karmacharya Rajeev is Managing Director of the Strategic Sourcing and Category Management group in Fannie Mae. Rajeev leads a team of category management, strategic sourcing, contracting, and supplier operations professionals. In addition, Karmacharya currently serves in the Advisory Board of the Sourcing Interest Group, a global industry forum for Sourcing professionals.
w w w.fa nni e m a e. com
19
“From a business case perspective, the promised land of true digitization is full collaboration and transparency that enables harnessing the full potential of technologies, such as machine learning and artificial intelligence” 20
— Rajeev Karmacharya, Managing Director, Strategic Sourcing and Category Management
partnership and accountability. For
supplier pricing models we might not
example, we work collaboratively
normally have.”
with them to drive efficiency and cost
Besides unit cost optimization,
competitiveness. Annually, we work
Karmacharya’s team is also focused
with them to plan out future demand
on managing demand and seeking
so they can plan their resources
out substitution opportunities. For
accordingly and we get the benefit
example, the procurement team
of readily available, qualified resourc-
worked collaboratively with the
es in areas of our greatest need. We
enterprise data team to manage
also work with a company that helps
data purchases and allocation. Prior
us with benchmarks, and on key
to establishing an asset management
hardware and software deals, which
program, budget planning, forecasting
helps bring a unique perspective into
and cost allocation was challenging
more difficult. Sometimes you have to challenge your customer and say, ‘Are you sure you want to do this? Because here’s what the data is telling me.” “There are valuable insights you can draw from analysis of not just spend and buying patterns, but also from trends in the marketplace. What resonates with the customers might not be cost savings. It might be other things you, and the customer, might not be thinking about.” “I think the key is understanding business needs and viewing things from customer’s perspective,” he adds. “On the flip side, by having this analytical insight you really understand what the opportunities are and, in turn, are due to the fragmented nature of the
better able to challenge the customer.
purchase across multiple business
Do you take the easy path, the path of
units. A new data management solution
least resistance, with minimal value or
enabled the company to effectively
would you rather be someone who is
manage its data purchases and reduce
really helping drive the business? I
duplicative purchases.
choose the latter every time.”
It’s Karmacharya’s customer service mindset that is driving tangible value. “I tell my team every day to think about the value we are bringing. You can always take the easy path, or you can take the path that drives the most value even though it may be a little w w w.fa nni e m a e. com
21
Fannie Mae 1100 15th Street, NW Washington, DC 20005, USA T 703-833-7178 | www.fanniemae.com