gain visibility and achieve efficiencies managing …...nigel wardropper: director –procurement...

Gain Visibility and Achieve Efficiencies Managing

Your External Workforce:

How SAP Fieldglass helped the ATO achieve substantial savings on their external ICT

labour costs within 12 months.

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Internal

Introductions

Nigel Wardropper: Director – Procurement and Supply Australasia

Toni Jackson: Director, APAC – SAP Fieldglass

Chris Scullin: Program Manager, IT Contractor Procurement Reform – Australian

Taxation Office.

Overview of SAP Fieldglass


What is an External Workforce?

Contingent Labour = Contract Worker -Skill-based / Labour Hire Company/Time and Material

• White collar -Administration, Call Centre, Personal Assistant

• Blue collar -Electrician, Welder

• Grey collar –Engineers, IT Programmer, Business Analyst

Scope of Work (SOW)*= Contract Worker -engaged to deliver an outcome either Independently or

through a Vendor

• IT Off-Shore Services

• Consultants

• Catering, Cleaning

• Maintenance Shutdowns

• Facilities Management

*Includes Time and Materials and Fixed-Price engagements


Fundamental Shift in Composition of Workforce


Why the growth in External Workforce?D

rivers

and R

isks

Globalisation

and employee

behaviour

Contribute to the rapid growth, increased outsourcing, mobile and

telecommuting workers, and a need for organisations to have a

more flexible workforce to remain competitive.

Scalability and

flexibility

The contingent workforce acts as a variable workforce for

organisations to select from to perform specific projects, backfill

permanent positions, or access difficult-to-find expert skills.

Reduced costOrganisations also see the opportunity to reduce obligations

by engaging the contingent workforce, but there is risk involved

in avoiding these costs if an employee is improperly classified.

But risk remains

Organisations have statutory and legal, industry, and local

workforce obligations to a contingent worker similar to that

of their own employee –safe workplace, health and safety,

training and induction, logistics, performance management, and

compliance tracking.


A fast-growing external workforce reveals big gap in HR

and procurement

Non-payroll labour is largest spend

category ……but still poorly managed

Spent annually on non-payroll

labour (contingent and

statement of work (SOW) –

one-third of total workforce

In contingent workforce

spending in past five years

New jobs created since

January 2014 are temporary

positions

Higher labour costs

Increased regulatory and

compliance risk

Fragmented, inefficient

labour spend and

performance controls

Overpayment

US $

3.3T

41%

67%

55%


Single Platform for the Management of an Organisation’s

External Workforce

SAP Fieldglass Vendor Management System allows organizations to better procure,

manage, and optimize their global flexible workforces, including contingent labour,

services managed through SOWs, and independent contractors.


Local Experience


Benefits to Customers

Australian Taxation Office

VMS Case Study.


Program Overview

implementing a VMS?

So we could….

• Improve transparency on contractor rates

• Remove unnecessary administrative overheads

• Improve project outcomes and deliverables

• Reduce cost


Current State Vs. Future State.


The Scale of Our Project

• $75M estimated spend (FY17) just within ICT Contractor panel

• $11M of IT Contractor spend went to ‘capability fulfilment’ (FY15)

• The total number of IT Contractors engaged has grown from 180 to 360+


The Results

• Hard savings of approx. 3.2% our of total budget achieved within 12 months

• Further avoided costs of approx. 5%+ of our total total spend.

More than $5M in savings and avoided cost achieved

• Total reduction in effort for P2P cycle.


Implementation Program

• Intensive 12 week implementation for our IT Contingent workforce

• Ongoing continuous improvement program (FG Account Services)

• Mandated solution (panel & VMS)

• Supplier funded model

• Live for 12 months in July

• SoW going live in August/September


Primary Benefits

• No more spread sheets

• RCTI process and savings in Accounts Payable effort

• Significantly improved transparency and accountability

• Reporting timeframes reduced from days to hours

• Strategic insights

• Improved supplier management

• Strong hiring manager support

• Strong support from suppliers


Then and now… IT Contractors

• Manual engagement and on/off-boarding

• Complex PO management, payment and

• invoicing process

• Limited reporting and accountability

• 48 Service Providers

• No set management fee (average 13%)

• No visibility on contractor pay rates

• Complex, iterative business process

• No service levels on suppliers to manage

• IT Contractor quality and engagement

• Manual/duplicate time recording and

invoicing process

• Online SAAS procure to pay vendor management

solution

• PO and RCTI process with SAP

• Analytics available at each managers desktop

• Spend analysis by skills, cost centre

• Forecasting

• 13 Service Providers (5 generalist & 8 specialist)

• Fixed management fees (average 6.5%)

• Full visibility on contractor pay rates

• Simplified workflow driven business process

• Service Level Agreements in place

• Candidate quality

• Management and escalation of performance

• 3 days for CV submissions (24hrs for urgent)


The Future…

- What’s next….

- Expansion across categories

- Implementation into SoW program.


Questions?

Thank youContact information:

Toni Jackson

Director- APAC

[email protected]

0420 961 110

mailto:[email protected]

gain visibility and achieve efficiencies managing …...nigel wardropper: director –procurement...

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