BREAKING THE MOULD OF PROCUREMENT
PROJECT PARTNERS
ACCENTURE
HOW ACCENTURE IS CHANGING THE FACE OF PROCUREMENT
Kai Nowosel, Accenture’s Chief Procurement Officer, on his approach to an everevolving and increasingly vital business function Written by ANDREW WOODS Produced by RICHARD DURRANT
ACCENTURE
“ THE DEFINITION OF PROCUREMENT IS NOT ‘AM I A BETTER NEGOTIATOR?’ IT IS MORE, ‘AM I THE BETTER ECOSYSTEM MANAGER?’” — K ai Nowosel, Chief Procurement Officer, Accenture
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AI NOWOSEL, A HIGHLY experienced procurement professional – formerly of Sanofi and Deutsche Bank – is currently the Chief Procurement Officer (CPO) of global professional services giant Accenture, and he has a burning ambition. “I want to break the mould of traditional procurement,” he says. We caught up with Nowosel at Accenture’s 04
Kronberg office, roughly a 20-minute cab ride from Frankfurt, where he sets out a detailed vision for the very future of procurement. His ambition is to see it transformed from a traditional back office function into an area much more closely aligned with the top line. “Where I want to really take the procurement function at Accenture
Click to watch our talk with Kai Nowosel, Accenture’s Chief Procurement Officer, on his approach to an ever-evolving and increasingly vital business function.
is very clear. I want to transform it into a full business enablement function,” he says, easing back into his seat. “But to do that, I need to understand what’s out there. What is on their (the businesses’) mind every day and how can I support them to become more competitive? “We have heard a lot, and have read a lot, about business partnering,” he
says, ‘but for me, it’s really not a single point of content or contact. It’s a single knowledge pool of understanding. It’s about translating procurement and supply market opportunities in order to correlate them into business. That is business partnering, for me. So, it’s not like I am a caretaker. No. I want to sit at the table and have creative input on the commercial side of supporting w w w. a c c e n t u re . c o m
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The Intelligent Edge for Strategic Procurement: Third Party Risk Management By Lee Kirschbaum Senior Vice President Product, Marketing, and Alliances, Opus
A simple definition of the word “procure” is “to obtain by particular care or effort.” Ask any strategic procurement leader, and he or she is likely to agree: particular care or effort is exactly what it takes to manage suppliers in today’s challenging financial and regulatory climate. Business is increasingly interconnected, with unprecedented levels of global trade and capital flows. The potential for corruption and data breaches escalates daily. Regulations like the General Data Protection Regulation (GDPR) demand compliance, and financial viability is an ongoing concern. And there’s the constant need to reduce risk and maximize value across suppliers. Underlying all these challenges is the intense reliance on third parties, such as traditional suppliers, vendors and contract manufacturers, agents, brokers, distributors, resellers, franchisees, affiliates and more. Far beyond the remit of traditional procurement, companies today depend on hundreds, often thousands, of third parties to complete core business functions, delivering 60% or more of a typical company’s revenue. Third parties are a major engine of growth, yet also pose major risks: • 56% of businesses experienced a third-party data breach in 2017 • 60%+ of all data breaches are third-party related • 75% of all anti-corruption enforcement actions are due to third parties To drive value and performance while optimizing costs, strategic procurement professionals must not just manage spend and onboard third parties, but also have a plan to address these risks — from bribery and corruption to performance to information security to financial health to reputational risk and beyond — across all their third parties. It’s a tall order, yet ultimately a company — and by extension procurement — is responsible for the actions of its third parties. That’s why forward-looking strategic procurement teams are taking their supplier and third-party risk management seriously. Through systems and processes to actively monitor third parties, strategic procurement can lower costs, drive value and improve overall performance.
Third Party Management: A Risk-Based Approach Third party risk management helps answer a few seemingly simple yet critical questions: who am I doing business with, what risks do they pose and how do I successfully manage those risks?
It’s the process by which organizations select, onboard and monitor their external relationships with third parties for risk. New risks emerge regularly, so it’s also important that businesses and procurement teams keep a constant eye on their third parties. Companies and procurement teams without a program in place for monitoring third parties for risk expose their organizations to significant regulatory, financial and reputational repercussions. They’re also at a significant disadvantage when it comes to growth opportunities. Effective third-party risk management programs establish a comprehensive view of all third parties and manage each based on risk levels. This includes maintaining an inventory of all third parties and keeping track of documentation, such as contractual agreements, workflows, risk audits and assessments. The goal is to identify potential threats before they occur. Start by determining the most pressing sources of risk and then direct the bulk of your effort toward mitigating those risks, beginning with these fundamental questions: • Who are your third parties? • What services do they provide? • Which introduce the most risk and are most important, what are their specific risks, and how can any risks be mitigated? Once you have identified your company’s risks, another risk management best practice is to develop an up-to date, realtime inventory of all your company’s third parties. The inventory details the nature of each relationship and its risks, such as third parties with access to sensitive information who are sharing your data with their own contractors. The inventory must also be monitored — risk isn’t static, and neither are your relationships. Identifying all relationships across your organization, gathering necessary information on each and effectively assessing their risks can be extremely time-consuming and complicated if done manually. An automated technologybased approach, such as that provided by Opus, allows your business to free up its resources so that you can focus on what you do best. Nothing worth doing in life comes without risk. It’s how you manage your risks that can make or break your business. By making third-party risk a business priority, strategic procurement teams can drive value from third parties, reduce risk and safely guide their organizations into new areas.
Case Study: Intelligent Third Party Management in Action at Accenture Operations As a case in point, the gold standard in strategic procurement, Accenture, turned to Opus for support managing third party risk. Accenture Operations — a business function of the leading global professional services company serving clients in more than 120 countries — is reinventing business operations through industrialized business process expertise, technology, applied intelligence and data. Procurement is one of the Business Processing Services (BPS) offered by Accenture Operations, reinventing procurement from source-tosettle — embedding robotics process automation, market intelligence and analytics, and exceptional business process expertise into the process and augmenting existing resources, so Accenture and its clients can move first in the market and accelerate results. The Procurement BPS team helps operationalize supplier management functions to facilitate continuous improvement, drive compliance and mitigate risk. The BPS team manages more than $168 billion in spend, 23,400+ projects and 87,300 contracts per annum across 380+ Procurement BPS clients and Accenture. Because of this, Accenture works with literally thousands of suppliers and third parties, and needed a robust, automated, reliable technology solution to help identify, assess, manage and monitor third party risk. As a result, Accenture is partnering with Opus, leveraging their award-winning third-party management SaaS platform, Hiperos 3PM, to support their Procurement BPS services. Accenture selected this solution for its: • Comprehensive functionality • Offering maturity • Financial services and industry expertise • Ease of client and technology integration Most important was Opus’s ability to create turnkey functionality called accelerators — such as a banking, GDPR or ABAC (anti-bribery / anticorruption) accelerator. The key to strategic procurement is efficiency. By offering templates and models that could be reproduced quickly, Hiperos promised quick time to value. Today, Accenture is actively managing its third parties and recently added functionality to bolster third-party compliance with the General Data Protection Regulation (GDPR), going into effect in May 2018. As the organization helps its clients prepare reinvent business processes with “intelligent operations” that harness talent, data, and intelligence to deliver the right information where and when it’s needed, it also can rest assured it’s covered one of its most significant risk factors — and opportunities — third parties. Now that’s, well, intelligent.
Put the strategic in strategic procurement. Free your business from third party risk. Global business today depends on third parties, from suppliers to contractors to vendors and more. As reliance on third parties increases, so do the risks — from data breaches, corruption, compliance and financial health and more. But so do the opportunities. Free your business to manage the risks and realize the opportunities. Learn more at opus.com/procure Free Your Business®
ACCENTURE
“ … WE SHOULD NEVER FORGET ABOUT THE RELATIONSHIP COMPONENT, AND THE HUMAN COMPONENT” — K ai Nowosel, Chief Procurement Officer, Accenture
the business. That’s one vision. “The second vision is linked to the moment you’re sitting with the business and identifying new opportunities and optimising current initiatives and delivery,” he explains. “But to do that, you also need to understand what is currently delivered. So, you need to get much closer to the business. At Accenture, we call it ‘rotating to the New’. If you want to be more agile, you
need to be faster. You need to be smarter in anticipating things, because just running a process faster doesn’t make you better. To anticipate what’s happening, and to already include that into your process, makes it much easier to work with a procurement function – you already have a solution before the concrete demand really happens. So, I want to drive my function into something of understanding and
prediction rather than reaction.” The third vision in Nowosel’s procurement manifesto lies in the collation and utilisation of big data. “And that is where I need technology and digital. I need the co-worker. I need the data, and I need, last but not least, access to the right content at the right point. That is probably one of the biggest things. Today a lot of effort is spent creating static content, and that is
where I want to move away and say: ‘Our differentiator is not creating that content. Our differentiator is giving access to the right content.’ So, you need to understand the business to have the right access to the right content and, you need to have the right data understanding to really correlate and identify the right content by basically enabling it with the right rules, and with the right channels.” w w w. a c c e n t u re . c o m
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ADDING VALUE OF DIVERSITY & INCLUSION IN SUPPLY CHAINS
For over 10 years, we have been dedicated to the mission of improving diversity in entrepreneurship and driving inclusive procurement. We believe that supplier diversity is an economic and moral imperative. Innovation comes from a diversity of perspectives, so when we limit who can contribute, we in turn limit what problems we can solve. Join our global network of diverse entrepreneurs, supply chain leaders, thinkers and doers and realise the power of differences. Look out for more as we expand into Europe with Germany as first stop in 2018!
TRANSFORMING SUPPLY CHAINS THROUGH INNOVATION & INCLUSION We prefer “variety” in our pastimes, “biodiversity” in our ecosystems and “diversified” holdings in our portfolios, yet we unconsciously resist diversity in our social and professional communities. This has become a liability in today’s marketplace, costing companies talent, growth & innovative solutions. From your workforce to supply chains; diversity & inclusion of people and ideas are critical drivers for further growth in your organisation. We must move past the tick box exercise, truly embrace diversity, and commit to applying it. Looking out at the business landscape today, it’s clear that diversity is increasingly being valued in its true sense by companies that thrive to improve productivity and profits — and outperform the competition.
WHY YOUR SUPPLY CHAIN IS RIPE FOR DISRUPTION? As we embrace the new digital world that is driven by technological advancement, innovation takes centre stage in every corporate strategy. There is strong evidence that innovation mostly comes from small businesses and individuals, which makes diversity a critical factor to bring new solutions, breakthrough technology and disruptive businesses to market. Diversity within supply chains can not only bring new ideas and solutions to your organisation, but it also brings competitiveness, and boosts market growth. Beyond these commercial benefits, there is the BIG social value supplier diversity brings -
reducing socio-economic inequality and creating stronger, more stable communities. With many global business leaders finally waking up to the positive impact it brings, businesses that understand how to use this to their advantage will stand to gain a competitive advantage and genuinely make positive contribution to a more fairer society. At MSDUK we are delighted to be working closely with Accenture - and especially delighted that we share similar core values. Together our mission is to rewrite the book on inclusive procurement and encourage diversity as a catalyst for innovation and growth. In partnership with Accenture, we are launching the Innovation Hub – a launchpad for ethnic minority businesses that have an innovative idea, solution or product to bring to the market. And through our extended ecosystem of the Knowledge Hub and Growth Hub, we offer an integrated programme of activities, processes and networks to bring those ideas to life and help these businesses scale-up and access global markets. We all have an opportunity right now to embrace diversity as a competitive advantage, examine our own unconscious biases and proactively look for ways to bring different voices to our team and into our decisions. Let your supply chain be the gateway to innovation, embrace diversity and inclusion to unlock hidden potential and give opportunities to the business leaders of tomorrow that represent modern Britain as it is today; multicultural & diverse!
TO FIND OUT MORE, VISIT US AT WWW.MSDUK.ORG.UK OR EMAIL DIVERSITY@MSDUK.ORG.UK VISIT WWW.GSDA.GLOBAL TO LEARN MORE ABOUT OUR GLOBAL NETWORK
INNOVATION | KNOWLEDGE | PROCUREMENT | BENCHMARKING
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MAN AND MACHINE Nowosel can see a day when man and machine will work as one. “We need to rethink the way we use systems,” he says. “It’s not just the user interface. The intelligence in the system needs to recognise me. It needs to say: ‘Hey, I know you have already purchased something. I know you’re sitting in this type of business. I guess you’re currently looking for these types of buys. This is what’s relevant for you to be
successful.’ So, it’s less anticipating the right product and much more anticipating the right demand by understanding the business. And that is a very different user interface than just making it a little bit more web-based and smartphone enabled. And for me that is one of the biggest things I would really like to break and move away from. I want to take a very traditional process flow and transform it into something that is an
Click to watch Kai Nowosel talk about his approach to work with partners and business enablement within Accenture including their use of new technologies.
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intelligent portal solution that really guides people to the right channels, seamlessly and intelligently.” Does Nowosel ever envisage a time in the future where we could have an AI CPO? “When I worked in consulting, I wrote a point of view on the ‘organisation of one’. And yes, it was a provocation, and I don’t think it will ever happen, because in every business you run, whether it’s procurement, whether it’s marketing, whether it’s
sales, whether it’s R&D, we should never forget about the relationship component, and the human component. But will the role, or will the processes that we are currently performing, shift? For sure, they will. Can an artificial intelligence machine negotiate as good as a human being? I’m 100% convinced they can. We’re seeing it already in the stock markets where we already have machines to machines. So why shouldn’t it happen in a quite common negotiation? But that’s why I’m saying that procurement is moving to something else. The definition of procurement is not ‘am I a better negotiator?’ It is more, ‘am I the better ecosystem manager?’ Or, ‘am I the better window to innovation?’.” It is possibly easy to theorise regarding future systems and processes, but is Nowosel currently putting these words into practice as CPO at Accenture? “Absolutely. That’s where our big partnerships sit, and where our benefit – where my benefit – is. I am sitting in a company that basically invents digital solutions for implementation. I have access to all that.” Accenture has just released a new w w w. a c c e n t u re . c o m
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DOING BUSINESS WITH WOMEN IS GOOD BUSINESS
We believe diversity promotes innovation, opens doors, and creates partnerships that fuel the economy. We believe a diverse and inclusive corporate culture integrates women at all levels of the organization, from the C-suite to the warehouse floor. That’s why we are dedicated to fostering diversity in the world of commerce by identifying, certifying, and facilitating the development of women-owned businesses.
The Women’s Business Enterprise National Council (WBENC) is a U.S.-based non-profit organization focused on women’s business development and sustainable economic growth. We are the largest certifier of women-owned businesses and a leading advocate for women-owned businesses in corporate and government supply chains. Our Corporate and Government Members with best-in-class diversity and inclusion programs recognize that partnering with womenowned businesses is not just about equality and fairness – it’s about making better business decisions.
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CERTIFICATION WBENC Certification validates that a business is headquartered in the U.S. and at least 51 percent owned, controlled, operated and managed by a woman or women. Our world-class certification standard is accepted by more than 1,000 corporations representing the world’s most prestigious brands, in addition to many states, cities, and government entities.
OPPORTUNITIES We provide education, programming, events, and networking opportunities for women-owned businesses, diversity and inclusion experts, government and corporate procurement professionals, and other industry and thought leaders. From our signature events to executive education programs, we are dedicated to connecting women-owned businesses and our Corporate and Government Members in meaningful ways, as well as providing the programs and resources that enhance business development and growth.
JOIN FORCES. SUCCEED TOGETHER. Learn more at www.wbenc.org
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RESOURCES To address the challenges many small businesses face in building and growing a business, we provide support and resources through the full life cycle of entrepreneurship. Our goal is to ensure women business owners have access to the education, support, and tools they need to grow and succeed.
ENGAGEMENT Our theme is Join Forces. Succeed Together. because we know that success is only possible when we partner with our constituents toward a set of common goals. We foster healthy engagement through advisory councils, ambassador programs, and a robust recognition and awards program, including our annual America’s Top Corporations for Women’s Business Enterprises award.
WBENC Board Chair Theresa Harrison and WBENC President and CEO Pamela Prince-Eason present Kai Nowosel of Accenture with the 2017 America’s Top Corporations for Women’s Business Enterprises award.
The Women’s Business Enterprise National Council is proud to partner with leading corporations like Accenture to help break the mold of procurement by recognizing and promoting best-in-class diversity and inclusion practices. Because we know supplier diversity is about more than corporate responsibility — it’s a propelling economic force.
Supplier diversity is
Learn more about WBENC and how we partner with the world’s leading corporations at www.wbenc.org
a propelling economic force.
PROUD BUSINESS PARTNER OF ACCENTURE
ACCENTURE
procurement offering which Nowosel is visibly excited about as a practicing Chief Procurement Officer. “Because this is more than source to pay – which is not all that sexy. We call it Procurement Plus. Procurement Plus gives you a little bit of an indication that our procurement function has a vision that goes beyond a traditional procurement function, that also gives you an understanding about the size of the organisation.” So, what exactly is in the ‘plus’?’ “From a Procurement perspective, I run all venture and acquisitions on a due diligence side and on the commercial synergy side. So, that in itself is already a big team. In the past three years Accenture has completed roughly 70 acquisitions, that is a lot of work to integrate and to bring it into the right process and supplier panel. And we are buying more and more diverse portfolios. So, in the past we bought a lot of IT and now that we own a lot of agencies, we even budget for things like hair, makeup and other logistics for photoshoots and so on – it’s getting quite diverse. So, V&A to M&A is one. I also run all accounts payable, so I really have a P2P responsibility in that logic. 16
“I also run something which is extremely close to the heart of where I see Accenture and the function going, and that is Supplier Inclusion and Sustainability,” continues Nowosel. “So, I run all our corporate social responsibility agendas that are attached to our supply chain. I also run the contractor business – one of the biggest categories I oversee. I basically do all the contractor onboard identification, onboarding, background checking
MANAGING RISK
442,000
Number of Accenture employees globally
1989
Year founded
$34.85bn Revenue
and qualifications – that is something that you typically would not see in a procurement function, but that you could potentially see in an MSP (managed service provider) setup. It’s so close to our core business and is essentially the revenue driver. As a result, my team is larger than the traditional benchmark If you think about what is known as traditional procurement, it’s probably around double the size of a traditional benchmark.”
Nowosel is also keen to pinpoint the safety features of Accenture’s offerings. “It is extremely relevant that all the partners we are working with are following a very rigid process, a very clear playbook on how we assess and handle risk and controls,” he says. “Not only on our side, but with all the parties we are working with. Some of the players are much smaller, and therefore, we had to enhance the risk framework to something that is not just for the ‘big is beautiful,’ but also for the smaller, dynamic startups that probably have a completely different mindset. With regards to the size of the organisation that I’m running, I’m operating in 69 countries, so I can really claim it’s a global function. It’s definitely a global governance model I’m running.” Obviously, the role of the CPO has changed a lot over the years and the issues CPOs are presenting to Nowosel have also shifted. “I would say it’s not just them coming to me, it’s me, coming to them, with all the issues. I think the role of procurement has evolved big time. If you go back a little bit in CPO history, what have we always focused w w w. a c c e n t u re . c o m
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“ THE ISSUE NOW IS HOW DO YOU FIND THE RIGHT PARTNERS IN THE ECOSYSTEM? HOW DO YOU MITIGATE THE RISK? HOW DO YOU PROTECT THE BRAND? HOW DO YOU GET COMPETITIVE?” — Kai Nowosel, Chief Procurement Officer, Accenture
on is how will we put enough control, compliance and negotiation power into the process? And I don’t think that is what the issue is anymore. The issue now is how do you find the right partners in the ecosystem? How do you mitigate the risk? How do you protect the brand? How do you get competitive? And getting competitive is more than having a great negotiated price. It is having the right solution for your customers at the right point. So, I see procurement moving very strongly
away from a control and compliance and into a business function. “One of the biggest discussion points I have with myself, but also with my peers in the market, is: What is our value proposition going forward? What is our reason of existence going forward? And how do we measure our impact?” “I talk a lot to my peers. ‘What’s your experience with this supplier? How do you approach this type of category?’ I don’t find that too exciting. I find it much sexier to think about how we combine w w w. a c c e n t u re . c o m
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ACCENTURE
“ I SOMETIMES SAY THAT PROCUREMENT IS THE TINDER OF INNOVATION… BECAUSE IT MAKES PROCUREMENT SEXY AND I WANT TO GET INTO THAT MODEL OF BEING SEXY INSTEAD OF BEING A BACKOFFICE FUNCTION” — Kai Nowosel, Chief Procurement Officer, Accenture
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categories – how do I manage an ecosystem? How do I manage to come to a solution? I sometimes say that procurement is the tinder of innovation. I like the word ‘tinder’ because it makes procurement sexy and I want to get into that model of being sexy instead of being a back-office function. I want to have an impact, and that’s probably what I talk most to my peers about. How do we really see our repositioning?”
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