PROCUREMENT OPTIMIZATION BLOG

In 2012, Blackstone–one of the world’s largest alternative asset management companies–set out to streamline its procurement processes with the implementation of the Coupa Procure to Pay (P2P) platform. While the challenges Blackstone faced are somewhat unique, the approach the company followed offers useful insights for any organization that seeks to drive savings to the bottom line through a procurement transformation initiative.

Our latest case study, Blackstone Transforms Procurement to Streamline Spend Management, provides a detailed overview of Blackstone’s goals, challenges, solution and results.

Here, we’ll explore 5 steps that the Blackstone team took to help ensure success–steps that you can apply to any technology-enabled procurement initiative:

1. Define your goals in clear and simple business terms. Don’t make the mistake of simply defining your procurement objectives. To be effective, your transformation initiative needs to include a value proposition that resonates with your business stakeholders. Here’s how Scott Whitehill, SVP Procurement, defined Blackstone’s goals:

“Our goal from the outset was to help deal professionals spend less time processing paper and more time making decisions based on the increased spend visibility we can obtain through the P2P platform.”

2. Itemize the business challenges you face. Be clear up front about the hurdles that lie ahead. This will help stakeholders understand the need for change. Among those cited by Blackstone were:

• Delays in payables processing due to manual, paper-based approval flows
• Lack of spend visibility to drive strategic sourcing
• Achieving effective change management in a highly entrepreneurial culture

3. Define the business outcomes you seek to achieve. All too often procurement professionals focus on process changes as outcomes. Processes are only a means of achieving an end result. People resist change unless they understand the benefits. Here are a few examples of the opportunities Blackstone targeted:

• Reduce friction, hassle and delays associated with manual processing and invoice approvals
• Increase spend visibility and savings across all business units in order to proactively manage prices paid for goods and services through better sourcing
• Provide suppliers with faster payment terms and easy online access to invoice status information

4. Create a detailed change management plan. Recognize that your procurement priorities are not a first priority for the business stakeholders whose behavior you seek to change. Blackstone selected champions within each business unit, followed a train-the-trainer model, and held frequent training sessions to ensure broad participation.

5. Define success metrics and track them. Finally, how will you define success over the course of your transformation initiative? These metrics should represent the business outcomes you defined in step 3. Monitor progress against these goals throughout the project lifecycle, and be prepared to sense and respond to any challenges that occur along the way.

By following these steps, Blackstone was able to achieve approximately $5M in annualized savings and bring 80% of its addressable spend under management while also reducing procurement operations costs. Download Blackstone Transforms Procurement to Streamline Spend Management to learn more.

Reach out to info@theshelbygroup.com for more information on how Shelby can partner with your team to optimize results from procurement initiatives.

Jim Kandilas, CPA
EVP, Principal
jkandilas@theshelbygroup.com