William Gregoricus, Senior Project Manager Governor

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(No Transcript)
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Aligning Your Vendors To Be Your Trusted Partners
in Spend Management Projects
Session 1802 William Gregoricus, Senior Project
Manager Governors Office of State Planning
Policy, State of Tennessee (Formerly Governors
Director of Performance and Accountability,
State of New Mexico)
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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Presentation Objectives

• This presentation will explain how to
• Align your project objectives with vendors to
  ensure successful results
• Structure vendor performance measures to promote
  partnership
• Leverage third parties to objectively measure
  spend management success against performance
  metrics

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Save Smart New MexicoProject Background

• Governor mandated project to reform spend
  management in government
• Governor wanted to create sustainable
  accountability within project through
  performance-based metrics
• NM chose CGI to run project after competitive
  bidding process

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Save Smart New MexicoProject Mission
To foster an environment of collaborative
procurement in State agencies to achieve the best
combination of quality, service and price for
purchased goods and services
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Save Smart New MexicoProject Goals

• Create and realize cost savings on purchased
  expenses
• Identify and implement process improvements to
  drive efficiency
• Increase staff procurement knowledge, skills
  capabilities through training
• Foster statewide buying cooperation
• Improve local vendor diversity

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Save Smart New MexicoProject Scope
Phase 4 Compliance Savings Monitoring
Phase 3 Extension of Phase 2
Phase 2 Sourcing, Process Improvements,
Training
Phase 1 Opportunity Assessment

• Phase 1 identified the opportunity using spend
  analysis
• Phases 2 3 applied strategic sourcing to create
  cost savings and improved procurement
  organizations processes and knowledge base
• Phase 4 ensured the savings are realized

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Save Smart New MexicoProject Results

• 169 million annual baseline spend addressed
• 60 new contracts
• 91 million contract-length savings
• Overall compliance rate of 86 for executive
  agencies
• Project ROI of 111

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Save Smart New MexicoProject Recognition
National Association of Chief Administrators
2005 Outstanding Program Award
New Mexicos Save Smart New Mexico finds
innovative ways to meet challenges facing every
state government In addition to reducing
taxpayer dollars the project increases the
states share of business with local vendors, and
assists small, local businesses with state
procurement processes NASCA
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Save Smart New MexicoProject Recognition
(continued)
Save Smart puts common-sense principles to work
to drive down costs for state government on every
day items and make more available to improve
education and promote economic development
Edward J. Lopez, Jr. Former Cabinet Secretary,
General Services Department

• These are real savings that will make state
  government more efficient and save taxpayers
  money. By cutting costs today, we can make
  long-term investments in New Mexicos economic
  future
• Governor Bill Richardson

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Aligning Spend Management Objectives with Vendors

• Establish your spend management objectives
• Save Smart project objectives
• Generate realized cost savings
• Create positive project ROI
• Minimize project risk
• Create accountability and sustainability within
  project

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Aligning Spend Management Objectives with Vendors
(continued)

• Know your vendors objectives
• CGIs objectives for Save Smart
• Create recognized value for NM
• Contain investment risk
• Strengthen relationship with NM
• Receive payment

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Aligning Spend Management Objectives with Vendors
(continued)

• The key to achieving project success is aligning
  client / vendor objectives
• Create and sustain win-win attitude so that
  when one party succeeds, all parties succeed
• Consider client project risk along with vendor
  investment risk

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Structuring Performance Measures

• Align project objectives and address each in the
  contract to ensure they are met

NM Objective CGI Objective How It Was Addressed
Generate Realized Cost Savings Receive Payment Payment Based on Realized Savings
Create Positive Project ROI Create Value for NM 21 ROI Warranty
Minimize Project Risk Contain Investment Risk Free Phase 1 Assessment
Create Accountability Within Project Strengthen Relationship with NM Independent Audit of Project Results
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Structuring Performance Measures (continued)

• Actively manage project progress against
  contractual obligations
• Strong NM project sponsorship
• Alignment of roles between CGI and NM
• Regular leadership update meetings
• Active stakeholder involvement (e.g., category
  user groups)

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Use of Third Party Auditors to Measure Performance

• Third party auditors provide objective
  verification of performance measures
• Auditors should be included in contract scope and
  be given autonomy in work
• For the Save Smart project, the auditor validated
  the savings created by CGI

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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Key Takeaways

• Determine your and your vendors objectives
  before starting project
• Align objectives and use performance metrics in
  contractual requirements to ensure they are met
• Create internal project management team to follow
  through

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Key Takeaways (continued)

• Use third party auditors for independent
  verification that objectives are met
• Consider your project risk along with vendor
  investment risk
• Always be a fair partner with vendor

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Agenda
Presentation Objectives
The Save Smart New Mexico Project
Aligning Objectives with Vendors
Structuring Performance Measures
Use of Third Party Auditors to Measure Performance
Key Takeaways
QA
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QA