How to Align with Finance and Procurement to Demonstrate Business Impact

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BravoSolution, VP, Strategic ServicesMickey North Rizza

“Moneyball: How to Align with Finance and Demonstrate Business Impact”

BravoSolution


Moneyball - Session EC

“Moneyball: How to Align with Finance andDemonstrate Business Impact”

Session EC



A bit about this session……It is NOT about balls of money actually appearing, but……..

It borrows thought provoking leadership concepts from Billy Beane

It will provide steps to align Procurement and Finance

It teaches best practices to measure maturity, performance & alignment

It leaves you with the capabilities that can deliver business impact



Who is Billy Beane?Former Professional Major League Baseball Player

1984-1989 Outfielder for NY Mets, Minnesota Twins, Detroit Tigers & Oakland Athletics

General Manager & Minority Owner of the Oakland Athletics

Introduced Sabermetrics to MLB

Utilizes selective objective recruitment



Its focus is the team's analytical, evidence-based, sabermetric approach to assembling a competitive baseball team, despite Oakland's disadvantaged revenue situation.

Source: Wikipedia



The film is based on Michael Lewis’s 2003 book of the same name, an account of the Oakland Athletics baseball team’s 2002 season and their general manager Billy Beane’s attempts to assemble a competitive team.

In the film, Beane (Brad Pitt) and assistant GM Peter Brand (Jonah Hill), faced with the franchise's unfavorable financial situation, take a sophisticated approach towards scouting and analyzing players, acquiring pitcher Chad Bradford (Casey Bond) and former catcher Scott Hatteberg (Chris Pratt). This team went on to win 20 consecutive games, an American League record.

Columbia Pictures bought the rights to Lewis's book in 2004. The film was featured at the 2011 Toronto International Film Festival and was released on September 23, 2011 to a box-office success and positive reviews. The film was nominated for six Academy Awards including Best Actor for Pitt, Best Supporting Actor for Hill, and Best Picture.

Source: Wikipedia



Source: Dictionary.com plus MoneyBall: The Art of Winning An Unfair Game

Sabermetrics or SABRmetrics …….is the statistical and mathematical measurement of baseball statistics.

Originated from Bill James and fellow ‘SABRmetricians” in 1980-85 ; S(ociety for) A(merican) B(aseball) R(esearch) + -metrics

Looks at the performance of each player such as on base % and slugging % - recognized they were undervalued predictors of runs scored.

A quantitative objective review of performance of each contributing team member.



The Procurement & Finance Challenge

Operating Margin 8.4%

ROIC 8.5%

Operating Margin 14.6%

ROIC 12.8%

The more mature the organization, the greater the opportunity for increased value, business impact& financial performance.



Sources: Mike Blanchard, Sydney Trains; CPO Research

It Takes A Team

Procurement Core Values ProfessionalReliableTake OwnershipBe CollaborativeUnitedResponsiveEngagingMotivatedEthicalNoteworthyTrustworthy

Share the Same Vision

Healthy Team Culture

Cleary Defined Roles & Expectations that EncourageExcellent Performance

Everyone is Held Accountable

Leader of the Team Acts By Example



Source: AMR Research; KJ Yan

Centralized Decentralized

Disadvantages Advantages Advantages Disadvantages

Center-Led

Teams Come In Many Varieties



Source: Increasing Alignment with Finance/CIPSSA

Two Views: Finance & Procurement

Different Perspective

Finance ProcurementWe need to look at opportunities that take cost out of the business whereever possible

We need to look at all of our Spend & Supplier Data to uncover more benefits

We need transparency and accountability for the delivery of cost savings We need a scorecard to show the value we bring to the bottomlineWe can save more money on our contracted spend by improving our relationships with our key suppliers

We need an SRM solution so we can manage all suppliers consistently across the organization.

We must engage our suppliers to contribute significantly to product innovation so we can meet our revenue targets

We need a new product introduction and supplier development process to pull the right stakeholders and our suppliers together so we can contribute to revenue

We need more strategic value from our Procurement teamWe need a strategic procurement plan that looks at people, process and technology so we can bring more value to the organization

We need to free up cash flows to reduce debt We need a better procure to pay process

We need procurement to bring more synergies We need to more strategic and bring more to the merger and acquisition process

“Our Procurement team focuses onsavings, working capital and some of our supplier relationships.

There is no direct traceability of their efforts to our financial performance.“

CFO, A&D



Source: BravoSolution & PL Financial CPO – 260 Procurement Executives – US & UK

Know What Numbers MatterOrganizations that utilize Finance as an integrated and aligned stakeholder have more visibility & credibility in the organization.

VALUE is derived and delivered.

PL



The Best Procurement Teams deliverOperating Margin and ROIC 3.4% and 2.4% higher than their industry peers.

Source: BravoSolution

Know What Numbers Matter



“Strategy 101 – It’s All About Alignment”

“A sustainable business balance can only be realized through the pursuit of alignment.”

Larry Myler

Uncover What is Holding You Back

65% of organizations have an agreed-upon strategy

14% of employees understand the organization’s strategy.

< 10% of all organizations successfully execute the strategy.



"People who are aligned around

a common goal but lack the discipline of a well-designed process

will go nowhere ...

likewise the best-designed process has no chance of survival

when people aren't aligned around the

processand its goals.”

Mike Hammer, The Agenda

30% of Misalignment isdue to the data

65% of Misalignment isdue to different definitions

5% of Misalignment isdue to different drivers

Source: BravoAlign



"Alignment Optimization

enables any group to rapidly translate their thoughts into

the best coordinated action

around a shared topic.”

Michael Taylor


Source: BravoAlign



“Knowing the cause of

misalignment is the core component to

resolving it.”

Michael Taylor


Source: BravoAlign



“Fostering and sustaining high

alignment is a core leadership skill.”

Michael Taylor


Source: BravoAlign



“There are too many stars…..

to wait for them all to align...”

Barry Grimes


Source: BravoAlign



Leaders worldwide believe the one

competitive advantage that will make a difference between a great company and its imitators are the

people.


Source: BravoAlign



“Change the game, don’t let the game change you.”

Mackelmore

Change Your Game Plan



“Take nothing on its looks; take everything on evidence. There’s no better rule.”

Charles Dickens

Its All About the Data

Source: Bravo Spend, Category Management & Sourcing Assessment



“There are only two forms of competitive advantage:1.The ability to learn more about our customers faster than the competition2.The ability to turn that learning into action faster than the competition.”

Jack Welch

Its All About the Data

Source: Bravo Spend, Category Management & Sourcing Assessment



“You’ve got to eat while you dream. You’ve got to deliver on short-range commitments, while you develop a long range strategy and vision and implement it. The success of doing both. Walking and chewing gum if you will. Getting it done in the short-range and delivering a long-range plan, and executing on that.”

Jack Welch

Create a Plan & Follow it

Source: BravoAlign

Time to Value



“The Essence of Strategy is choosing what NOT to do.”

Michael Porter

“What we need to do is always lean into the future; when the world changes around you and when it changes against you – what used to be a tail wind is now a head wind – you have to lean into that and figure out what to do because complaining isn’t a strategy.”

Jeff Bezos

Create a Plan & Follow it

Source: BravoAlign



Impact: Measure of the tangible and intangible effects (consequences) of one thing's or entity’s actions or influence upon another.

Driving Impact: Capabilities

Source: BravoAlign



“No matter how successful you are, change is always good. There can never be a status quo. You have to always be upgrading. If you challenge the conventional wisdom, you will find ways to do things much better than they are currently done.”

Michael Lewis

Find Your Champion

Source: Fox Business


RecapIt Takes A Team

There are many teams in your business: We focused on Two - Procurement & Finance

Teams Come in Many Varieties

Know What Numbers Matter

If You Can’t Compete Today, Think Out of The Box & Change Your Plan

Uncover What Is Really Holding You Back

It’s All About the Data

Create a Plan tied to the Business Strategy & Follow It

Find Your Champion




SummaryMoneyball is an approach that aligns people, process & technology to performance

Billy Beane’s leadership concepts have delivered results

Alignment of Procurement and Finance Isn’t Easy But Can Be Done

Methods to measure performance, maturity & alignment were communicated

The capabilities that can deliver business impact were conveyed



Mickey North RizzaBravoSolution

Email: [email protected] Phone: (978) 834-6813

Twitter: @MNorthRizza

mailto:[email protected]

How to Align with Finance and Procurement to Demonstrate Business Impact

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