Going Where No Company Had Ever Gone Before: The World’s Largest Procurement BPO Engagement Realizes Its Vision | Article
16th Annual Outsourcing Excellence Awards—Best Financial Services: Deutsche Bank and Accenture
“Working as one cohesive team, we over-delivered on our business case and we’re still on an upward trajectory. Eight years after initiating the largest procurement BPO engagement in the world, we’re here, we’re successful and it’s working.”
Ken Litton, Managing Director, Chief Procurement Officer, Deutsche Bank
“Rather than us articulating a problem for Accenture to fix, we’ve created a culture where they come to us with proactive solutions to problems we didn’t know we had.”
Mark Loring, Global Head, Procure-to-Pay Operation, Deutsche Bank
Back in 2004, Deutsche Bank was at a crossroads. This global financial services giant had grown substantially through a series of major acquisitions. The problem was its procurement environment was now a mass of islands. Purchasing was decentralized with no standardized processes across locations. Not only was this environment inefficient and inconsistent, but this disparate structure made it impossible for the bank to leverage its consolidated purchasing power.
At the time, nine in-country procurement operations were responsible for 85 percent of the company’s spend. If these could be centralized with consistent, streamlined processes, the financial and productivity gains would be enormous.
So, Deutsche Bank executives made a gutsy move. Knowing they didn’t have the internal resources to orchestrate such a transformation solo, the company engaged Accenture to embark on a first-of-its-kind program that, at the time, was the largest outsourced procurement operation in the world.
And chances are, you haven’t heard a thing about it until now. That too was part of the master plan.
“We were new; it was massive. As soon as people heard about what we were doing, we had pundits on the street saying that we would fail,” explained Ken Litton, chief procurement officer of Deutsche Bank. “We didn’t talk about anything we were doing until this year when we entered the Outsourcing Excellence Awards. We didn’t want to declare victory prematurely.”
After all, they were writing their own history: lifting and shifting 350 procurement people; creating a new, single platform for electronic procurement across nine countries; and adding modern-day strategic sourcing, including e-auctions and other innovations.
It took a combination of teamwork, truth and tenacity to make it all work.
Starting Off Strong
“One of the key ingredients to our success has been the active participation of the upper management of both Accenture and Deutsche Bank,” Litton said. “It’s not unusual for that level of leadership to be involved in the beginning on a project like this, but typically the attention wanes as the project progresses. That’s not the case here. Eight years later, we still have that senior-level commitment.”
This senior-level engagement, particularly on the client side, was essential to driving internal adoption and compliance to what was a sweeping change.
Equally important was getting everyone moving in the same direction from the onset.
“For this kind of relationship to work, you have to have a ‘one team’ mindset. Instead of finger-pointing, the entire team has to be made responsible for finding the root cause and rectifying the issue,” Litton said. “When you get rid of the ‘us’ and ‘them,’ and incentivize the whole team to do great things—that’s when great things actually happen.”
Litton is quick to point out that it’s also a benefit to work with a partner who is true to who they are and what they do best.
“Accenture is extremely disciplined in performing business in the areas of their expertise,” Litton said. “So, I believe Accenture’s honesty and discipline have advanced our vision and helped us prevent setbacks along the way.”
Working Through the Rough Spots
Of course, in the beginning everything didn’t just sail along perfectly.
In 2004 and 2005—what Litton refers to as “the adrenaline years—” Deutsche Bank involved a church of people in the design of its post-and-pay accounting and pay responsibility platform. The resulting system was so cumbersome that it was too costly for Accenture to manage.
“When we went to update the technology in 2008, we went the other way. While we were ripping out what we had, we overcompensated and went to an off-the-shelf solution, chosen with limited user involvement, because we were concerned about repeating our past mistakes,” Litton said.
That experience resulted in regular user forums, involving key players—not too many, not too few, but the optimum amount—to get enough input to be successful but to eliminate the quest to be all things to all people.
“These forums serve as our crucible; a means for gathering information from the key players, all bred from lessons learned about change management,” Litton said.
Elevating Collaboration to an Art Form
In the past 18-to-24 months, the companies have been focused on driving improvements—with a strategy that ensures every party benefits.
“We have developed a transparent innovation framework where there are shared benefits for both Accenture and ourselves. It’s a joint effort where we both get credit for reducing costs or increasing efficiency,” explained Mark Loring, global head of Procure-to-Pay Operations for Deutsche Bank.
According to Loring, this structure, including joint innovation forums, fueled the flow of great ideas.
“We created e-invoicing, which eliminates paper. Then through the innovation forum, we really looked at the next tier down,” he said. “Now a supplier can email a PDF, which goes to an electronic mailbox and from there is automatically ingested into the system—that’s the innovation.”
Not only does this step cut down on lost invoices and reduce Deutsche Bank’s carbon footprint, but it provides fast, reliable, on-time vendor payments.
“The innovations our joint team created have reduced the number of Accenture people needed on our account. They commercialized higher service levels and took out cost,” Loring said.
This dynamic changes everything—for the better.
“This is how you continue to encourage a proactive approach. Rather than us articulating a problem for Accenture to fix, we’ve created a culture where they come to us with proactive solutions to problems we didn’t know we had,” Loring said.
Tweaking as You Go
Even today, the companies continue to fine-tune how they work together.
“As the relationship evolves, people change, circumstances change and needs change. So the engagement model has to change as well,” Loring said. “If something’s not working, stop doing it.”
For example, a variety of meetings were designated in the engagement’s original contract, some of which have been discontinued over the past year or two.
“Don’t look at the contract and have meetings because they’re there,” Loring said. “Instead, ask yourself, what do we need to communicate; what do we want to achieve, and what’s the best vehicle to accomplish what we need to do?”
It’s also important to stay cognizant of that simple fact that there are only so many hours in the day.
“Our innovative forums have brought us some of our greatest ideas,” Loring said. “However, when we came to a point where we realized that we already had too much on our plates, we decided to put these sessions on hold for a while. Otherwise, we’d be spending time coming up with more ideas that we didn’t have time to execute.”
According to Loring, it’s that openness and honestly that give Accenture and Deutsche Bank the flexibility to work together in the way that makes the most sense.
“The ideal joint partnership requires continual tweaking,” he said. “We continually redefine the way we work together.”
Eight Years Later: The Payoff
When you look at what Accenture and Deutsche Bank have accomplished over the past eight years, there’s only one thing to say to the pundits that didn’t believe that this could be done. And that is: “How do you like me now?”
Today, Accenture employees provide procurement and accounts payable support in seven languages to more than 50,000 Deutsche Bank employees in 10 countries—processing 1,500 purchase orders a day, managing tens of thousands of vendors, and processing an average of 400,000 travel and expense claims each year.
Every hub in nine different countries has a standardized procure-to-pay process. As Deutsche Bank grows, as it did recently with the acquisition of Postbank in Germany as well as expansion in India and Brazil, each acquisition adopts this standardized, proven global platform.
A global e-invoicing initiative has reduced the number of paper invoices by 400,000, not only decreasing costs but making a positive environmental impact. At the same time it has improved contract compliance of more than 70 percent for purchase order matching.
Deutsche Bank has also achieved a 27 percent sourcing saving through e-auctions, which enabled open, transparent and competitive bidding between multiple, pre-qualified suppliers on the Web.
The net-net? The simplification of Deutsche Bank’s procurement operations, significant cost efficiencies and improved controls enabled the bank to achieve its business case within four years of the original seven-year deal. By anyone’s standards, a rousing success.
“When we started, we had disparate operations that spanned over 30 countries. We successfully industrialized and standardized processes everywhere in the world. Now when we do sourcing or an e-auction, it’s the same process and the same SLA, so our output is repeatable,” Litton said. “Eight years after initiating the largest procurement BPO engagement in the world, we’re here, we’re successful and it’s working.”
And it’s going to keep getting better from here.