Tech selection requires evaluating a lot of procurement software vendors before making a choice, and our coverage typically focuses on the early part of the process to help companies buy a solution that’s the right fit for their needs. But we wanted to talk with a company well after its tech selection to gain insights on the process.
The strategic business enabler Tecom Group and its parent company, Dubai Holding, have gone through two rounds of tech selection to find a spend analytics firm to help them analyze high value transactions, find common spend areas, save money and add visibility for new business strategies.
To find out more about the tech selection process and its results, we did a Q&A with Cory Thwaites, Tecom’s executive director of procurement, about his efforts to bring in a spend analytics firm.
“I was like the most hated guy in the office for a while,” Thwaites said about trying to convince the staff that Tecom needed to know more about its spend.
He said that all changed once his team started seeing the dashboards that showed the actual state of Tecom’s spend.
The results of the spend analytics firm hired by Tecom went so well that Dubai Holding wanted a spend analytics solution for its eight other divisions. Dubai Holding turns over about $5 billion in revenue a year, and the global company operates in 10 countries and employs more than 20,000 people in its 200+ business units. So that’s no small task to find a vendor to help it.
In the Q&A, Thwaites will take us through the developments over the last three years that led his organization to choose Simfoni as its spend analytics provider and how Simfoni later won Dubai Holding’s bid, which required consolidating procurement efforts across the eight divisions, finding shared areas of spend and creating a common taxonomy for businesses as diverse as construction, hotels and radio.
“Once the (Dubai Holding) business entities saw the power of the tool” being used at Tecom, Thwaites said, he knew it wouldn’t “be long before they said, ‘Oh, we should have it as well.’ ”
Spend Matters: Cory, how did your tech selection start three years ago at Tecom?
Cory Thwaites: We looked at all of the usual players, Zycus, Jaggaer and Oracle BI, which we already had but it just didn’t give us the granular detail that we required. A few other vendors didn’t respond.
After a competitive tender, we chose Simfoni.
At Tecom, we started by just doing quarterly refreshes with Simfoni, but it was good enough for us to start understanding the value of analytics, such as tail spend where we had many high value transactions that we could consolidate.
Then my team was asked to manage the procurement at Dubai Holding. They didn’t have any sort of spend analysis, so if you wanted to find out what we were spending on travel it was basically an email to eight entities in Dubai Holding, then you would have someone send you an email with the details of their travel, which isn’t good.
Can you tell us more about Dubai Holding?
Dubai Holding is a conglomerate with diversified holdings such as Meeras Construction, Jumeirah Hotels Group, and even Virgin Radio. There are loads of entities under this one umbrella — and all of them have their own procurement departments.
So one of the things we’re looking for is how to create value across the group. Previously Dubai Holding tried to get data dumps from the account systems and just do pivot tables, but they realized pretty soon that wasn’t possible. So I said, “Look guys, we use Simfoni to do our analytics but let’s do a tender. Let’s go out to the market and see what vendors there are today, and let’s see if we can do a wonderful exercise to do detailed analysis for all of these entities under Dubai Holding.”
Simfoni won by quite a margin.
And who else did Dubai Holding consider?
We went to E&Y, Sievo, Visual BI, Genpact, AnyData Solutions, Tejari (now Jaggaer) and SpendHQ.
Did the technology like automation, AI or machine learning influence your decision to choose Simfoni?
For the machine learning, we found the Simfoni system is good. It usually ramps up with the refreshes we’ve done. It is picking up more and more unclassified data, so we were impressed with that.
What I really like about Simfoni is the dashboards they can create, the flexibility, the way the system can be tailored to your requirements. We found that was useful. But what I really thought was the key thing is that they also have the procurement expertise to sit down with you and look at the opportunity part.
For this particular project, Dubai Holding wanted someone to say “OK, based on our expertise these are areas where you can save money.” Simfoni helped us with the opportunity analysis.
The way most vendors work is this: They’re going to give you the tour, you’re going to put the data in — but you’ll have to make your own conclusions from that data.
But with Simfoni they’ve got experts; they’ve got guys there who have worked in the industry, worked in procurement that can actually say: “Look, you’re paying too much for this in our experience. You’ve got the opportunity to save 10 to 15%.”
Dubai Holding was the original focus. Now I think what’s come off that are multiple spinoff initiatives by its business units, such as Arab Media Group. AMG have already started discussions with Simfoni to implement regular refreshes of their own data. Which I knew would happen once the business entities saw the power of the tool. It wouldn’t be long before they said, “Oh, we should have it as well.”
We’re already seeing a discussion directly with one of the entities about integrating the tool, and I know for example that, for Jumeirah Hotels, the data has created a spinoff exercise where they’ve done an amazing job on a really deep dive into the food & beverage category. Also some areas have now spun off a separate project where there are a lot of opportunities to identify but that was all due to the work that Simfoni had done by giving us the visibility of that spend — which, when you’re running a report in Excel, you simply don’t have that visibility.
Spend Matters: That’s the way you hope it works, that if you can do a good job, interest in analytics grows across the business.
Cory: You get a massive amount of resistance from some of the internal entities: “Why are you doing this? We know what we’re spending! We know our data! We know the opportunity! I just tendered this the other day! No, we’re not going to save any money.”
I was the most hated guy in the office for a while! But once they start seeing the dashboards and how you can drill down and see the transactions and see the commonality between entities. You’ve got 15 management companies doing independent bits of work across the whole group. Why? All of that data; the way that Simfoni visualize it really makes it easy to make those decisions.
To get a little more granular on this I was wondering if you could talk about the areas of common spend across the nine entities of Dubai Holding?
We looked at the very vast different businesses. The opportunities are in the categorization of IT, marketing, professional services and general services. General services are things like travel consultancy. So those are the areas we focused on. There are lots of opportunities for specific stuff like for Jumeirah Group, there’s a lot of F&B so a lot of food, a lot of uniforms, but at a group level it was mainly around IT spend: hardware, software, the marketing spend. Another big area was media buying, so that was an area where we were looking to consolidate spend. And also, some of the engineering services.
For a company of our size, we all think we’re doing the best but I think we don’t realize. If you bring things together, you start to consolidate massive opportunities. We’re seeing 10%, 12%, up to 15% savings annually from the targets we have, but there’s massive opportunities by just bringing spend together that we didn’t see before.
And that 10 or 15% savings is across Dubai Holding?
Between all the different entities, I have a target of 10% a year. I’ve been doing 11%, sometimes 13%. But now that we’ve got that visibility across all of the spend, it changes again. For example our desktops and laptops — Tecom might be buying 300 a year — but you start looking at the group and we might be buying 13,000! The smaller entities that might be buying 200 a year are now going to benefit from the spending power of the whole group, which before we never got as a group. We always bought as individual businesses. We are nine businesses. Dubai Holding may be a parent company but they don’t do procurement on behalf of anyone else. So every entity has its own procurement department: They run their own deals, they’re all separately run businesses.
In the past I might have reached out to a guy in Jumeirah and asked, “How much are you paying for this?” But there were no projects that we did together until this came about.
How challenging was it to create the common taxonomy across all nine entities?
When we started just looking at spend, before we created the working group, identifying opportunities was very difficult. Tecom had its own spend categorization, everyone had their own. It was quite a novel concept; we started off using UNSPSC as a base layer for the first round of data analysis but then what Simfoni shared with us for specific categories was a bit more detailed coding, so you can imagine the stuff I’m buying — marketing and IT general services or you may have other entities buying chemicals, you’ve got others buying across such a vast company.
So we started off with UNSPSC and then identified the gaps that Simfoni shared with us in the initial analysis. Then we targeted the areas where we needed more information, such as software where we need to go down to a more detailed level. We then tailored the UNSPSC to meet the business requirements. There were further detailed categorizations done, for example meat, pork, beef, different cuts of meat. It ends up being quite granular. But using a base of UNSPSC, now we actually can see where the spend is per category, which we never had before.
That’s the category-level approach that we used as the base and then provided some feedback and Simfoni’s team tailored it slightly.
They tailored it so the first output we got was: “This is where we think spend is categorized, can you review it?” Simfoni went through it and told us what is missing or wrong. Chemicals are here and should be there, and then they came back with a taxonomy that represented our requirement, which covered all of the groups.
In a big-picture view, how has spend analytics changed your insight into your business?
From a pure perspective as a Director of Procurement, you’ve got a team of people working for you and everyone is working on specific projects requested by the business. I think what this has enabled us to do is we now are being more proactive in driving more projects to the business.
We know more about the business spend than the business does now. Which we didn’t know before.
For example, this year we all have had challenges in facilities management where you have one request for painting a building and then three weeks later we have another request for painting from elsewhere. Now we are going to the business using the data to say, “OK, based on the historic spend patterns, we think that you are going to be doing three or four projects on painting.” So we’ve had a lot of opportunities to consolidate demand by using the spend data.
It helps the business in budgeting, so now we can go to the business and say to them “based on the spend analytics you should be budgeting X for laptops, these are your maintenance costs, these are the contracts you’ve got in place, you should be budgeting for those.”
It’s really given us an opportunity to be more proactive.
That’s interesting. That’s what the expectation is so it’s nice that it’s actually playing out that way.
We’ve just started using the analytics for our category planning as well. We have our first review of the category plans we developed and a lot of data has been produced by using the output from Simfoni’s opportunity assessment, which we didn’t have before, so for me it’s been very useful.
And what about the automation part of what Simfoni delivered? What has that done for your business?
When we refresh we provide data on a quarterly basis so there’s no direct link between Simfoni and our ERP system. Our business won’t allow it. So we’re actually sending them quarterly data. Our automation with Simfoni is in classifying the data so what we’re not having to worry about whether people still miscode information in the system. Simfoni’s platform is already going to identify from the machine learning that this is where the data should really be. Really when we’re looking to say how much we’re spending on X we can say we’re fairly sure this is the spend. We identify the outliers where someone has been using a different vendor in one of the sites maybe for a lot lower value but on a consistent basis. We can now bring that into compliance because the system is classifying the data a lot better than we were.
When were using Oracle BI, if someone is miscoding stuff it could go miscoded for a long time. Now when we send the information to Simfoni, and the data we’re getting back is pretty clean.
What would your advice be for others who are looking for a spend analytics vendor?
Look for a company that has spend analytics as its focus. Go to a spend analysis specialist. Don’t go to an e-procurement vendor that has a spend analysis module, because what I find is that they can put your data in there and they can clean it, but that’s all they’re going to do.
If you go to a company where their focus is spend analytics, you’re going to get a lot more value — especially if it’s being run by professionals who have a history of working in procurement. I think your project will be much more successful and there will be more insight because you will be working with practitioners. It’s not just a modular fit on their overall talk, it’s actually their core business. That’s what I’ve found with Simfoni. And go to someone that’s flexible, not someone saying: “Oh, well, this is the module we’ve got, sorry you can’t customize it.”
What I’ve seen with Simfoni is most things I’ve asked for can be done, and if they can’t be done, they develop it. You’re not going to get that if you go to most vendors and say, “Look I want to do this analysis now, can you add these reports or change these dashboards?”
Those ERP solutions of spend analytics have limitations so I think go to a dedicated spend analytics company and work with them rather than just take off-the-shelf spend potential because it’s a lot more than classifying the spend. And I think a lot of people think that all it does is classify the spend.
Is there anything that users should consider about the technology, like the AI?
It’s not foolproof. I’ll give you an example: I was speaking to someone and they said, “Oh we put the data in and looked at it and noticed things that are miscoded or not in the right classification.” Yes, you’re never going to get it right the first time, so be patient.
When you get that first cut of the data and you see things miscoded, yes, the system is learning all the time, so don’t expect the data to be clean and easy to be drilled down the first time. It might take one or two reviews, but once you’ve done that, your regular refreshes should be fine.
Also consider at the back end: garbage in, garbage out. So if you are getting stuff miscoded, you need to consider speaking to finance, speaking with the users and trying to guide them to make things easier as well. You need to have some guidelines in your organization to help improve things and not just rely on the system.
Did Simfoni play a role in training and change management over that process?
In Tecom’s instance, what was really good was that once the data was clean, Simfoni held workshops in each of the categories of spend so we had Simfoni experts in our office taking a deep dive to each of the categories. So IT, FM, general services and the sub-categories beneath these.
Simfoni went through in detail about where they saw opportunities, and we went back and forth around them. They had an opportunity-assessment module, which kind of looked at the spend analysis and in a kind of bubble it said, “Look, based on what the benchmarks are saying, this is what we see as opportunities.” This gave us some ideas on what type of opportunities we are looking at. Is it consolidation, is it re-tendering, is it outsourcing? So now we’re doing that exact thing with the much larger Dubai Holding data.
We’re going to have a total of eight workshops through the entities to help us identify that. Obviously I’m trained on how to use the tool, and now Simfoni is going to guide us on the new data and seeing what opportunities we should be looking at. Which I’ve found very useful and something that none of the other vendors offered.
None of the ERP companies or the procurement consultancies were offering how we can get the best out of the data and then suggesting what approach you should take for these categories.