Proxima & Activision Blizzard achieve sourcing success How to build or

Proxima & Activision
Blizzard achieve
sourcing success
How to build or
enhance a sourcing
function
Bertrand Leroux, Activision Blizzard
John Mathew, Proxima
© Proxima 2013. All rights reserved.
www.proximagroup.com
About Activision Blizzard
The company
Activision Blizzard is a leading publisher of video games and a
distributor of interactive entertainment
Revenue
$4 billion+ in Calendar 2012
Employees
7,000+
Ticker
“ATVI”
Did you know?
Call of Duty has been one of the most significant entertainment
events of each of the last six years. Call of Duty Black Ops 2 grossed
$1b in worldwide retail sales in 15 days"
Total sales for the Call of Duty franchise have exceeded worldwide
box office receipts for “Harry Potter” and “Star Wars” – the two
most successful movie franchises of all time
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Proxima / Activision engagement
3
Engagement
scope
Activision Blizzard selected Proxima in 2012 under a multi-year
engagement to provide:
• Strategic sourcing
• On site change management
• Category expertise
• Sourcing administration support for indirect spend
Major areas of
indirect spend
•
•
•
•
•
•
•
Marketing
Video production
Media
POS
HR
Information technology
Professional services
www.proximagroup.com
About Proxima
What are we?
We are an alternative sourcing
partner
What do we do?
We improve companies’ productivity
by aligning supplier spend with
business objectives
We manage over $10bn worth of spend across
the full spectrum of non-core spend
Areas such as facilities management,
professional services, marketing, travel, IT,
MRO and so on
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Far beyond price we ask why money is spent
We look at how it can address needs, effect
behavior, and impact risk, transparency and
innovation
We act as a catalyst to bring corporations and
suppliers together, changing the behaviors of
both so that each gets more out of the
relationship by engaging with each other more
constructively and creatively
We have been creating value for money
– by turning suppliers from enemies
into assets – for 20 years
www.proximagroup.com
Aims: What will you get from this session
Hear lessons learned from building a sourcing function in a
highly creative no-mandate environment
Understand how the sourcing organization has enabled
rather than hindered success
Learn what the wider business impact has been on
Activision Blizzard
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Environment before transformation
1. Spend/ categories influenced was small
2. Responsibility for sourcing sat with
managers along with day job
Commercial
Technology
Innovation
1. Limited spend data visibility and
analytics
2. Lack of information in place to track and
trap requirements
1. No systematic approach to reap
innovation from suppliers
2. Little involvement in business planning
led to increases
Measurement/Control
1. Inappropriate suppliers used for
operationally critical services
2. Inability to ensure supplier delivered
contracted business outcomes and savings
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Drivers for sourcing transformation
1. Evolution of gaming industry and price
points require quicker reaction time
2. Digital impact on gaming business
3. Integration commitments
External pressures
Organization impact
Internal pressures
1. In order to maximize value, company
adopted a centralized structure
2. Management recognized collaboration
with stakeholders as key to long term success
1. Cost management a key aspect of culture
2. Improve supplier costs and service levels
3. Free up valuable resources in Marketing,
IT and HR to focus back to core functions
Opportunity
1. Management saw significant opportunities
for improvement, in both financial and nonfinancial terms
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Activision Blizzard target state
Extending sourcing’s
influence:
2014+
2013
Into new categories
Across geographic
borders
Across business units
Across functions
•
2012
• Sourcing activity devolved
across business units
• Undertaken in an inconsistent
manner
• Limited efforts to consolidate or
leverage spend
• Loss of value
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•
• Significant savings
delivered and taken
to the bottom line
• Balance of power
shifted from
suppliers to
Activision Blizzard
•
•
•
Sourcing viewed as a trusted
business partner aligned with
BU success
Protection and enhancement of
the reduced cost base
Openly seeking innovation from
suppliers
Professional category
management approach through
engaging sourcing
Suppliers become allies
www.proximagroup.com
The Challenge: closing the gap in a no-mandate environment
Starting point
Target State
Activision Blizzard environment
No mandate for sourcing involvement
A creative environment with
purposefully independent decision
making
Limited centralization of functions
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www.proximagroup.com
Answering the challenge
Without a mandate we needed to create a pull for procurement’s
involvement
Three key success factors:
1. Category expertise
2. Customer intimacy
3. Management support
Creating a step change
in the breadth and
depth of category
expertise
Driving procurement
transformation through a
“customer intimate”
approach
Enabled us to provide
stakeholders with
insights and ideas
Rather than through the
standard procurement
strategic sourcing game plan
Internal sponsorship and
know-how to shepherd the
program through the
Activision Blizzard
organization and around
the existing land mines
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www.proximagroup.com
Key success factor #1
1. Category expertise
2. Customer intimacy
3. Management support
Creating a step change in
the breadth and depth of
category expertise
Driving procurement
transformation through
a “customer intimate”
approach
Internal sponsorship and
know-how to shepherd
the program through the
Activision Blizzard
organization and around
the existing land mines
Enabled us to build a
bridge to stakeholders,
providing them with
insights and ideas
11
Rather than through the
standard procurement
strategic sourcing game
plan
www.proximagroup.com
Credibility on day 1 through category expertise
Providing effective sourcing
and valuable insights to
stakeholders required deep
expertise across 200+ spend
categories
It’s not affordable to have this
in-house
With Proxima, we tap into the
experts we need, when we
need them
Thereby leveraging the
power of multiple resources
at the cost of far fewer
The model was put to the test
on day 1 when we kicked off
several large and complex
Marketing projects… with
immediate success
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Scalability, knowledge & leveraged delivery model
www.proximagroup.com
Key success factor #2
1. Category expertise
2. Customer intimacy
3. Management support
Creating a step change in
the breadth and depth of
category expertise
Driving procurement
transformation through
a “customer intimate”
approach
Internal sponsorship and
know-how to shepherd
the program through the
Activision Blizzard
organization and around
the existing land mines
Enabled us to build a
bridge to stakeholders,
providing them with
insights and ideas
13
Rather than through the
standard procurement
strategic sourcing game
plan
www.proximagroup.com
The CPO's dilemma
What procurement wants
What the business wants
Sourcing process
Business solutions
Savings
Value for money
Centralization across BUs,
geographies, business functions
Speed to contract
Maximize spend under
management
Reliable suppliers and positive
relationships
Keep to the process time line
Minimized risks: Personal…
Delivery… Business continuity
Create a competitive threat and
switch to lower cost supplier
Long term trusted supplier
relationships
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The solution…
Our need to build a bridge to the business in a no-mandate environment meant that we could
not take the standard approach and base our new procurement operation on “what
procurement wants”
We needed to find a way to satisfy the basic requirements of the procurement function but
shift the focus to providing the business with what it wants
However, this proved to be a much bigger challenge than we anticipated...
Fueled by 10+ years of success in strategic sourcing, procurement’s focus in the US has
shifted completely to support this process. A narrowly focused operating model has evolved
– activities, skill set, objectives.
To overcome the CPO’s dilemma and be successful in a no-mandate
environment, we realized that a completely different paradigm was needed
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The solution… (continued)
We needed:
A different approach to de-emphasize the standard sourcing process
A new set of objectives and metrics
And most importantly - a different skill set
A deep bench of category experts
The key question then became:
…or…
Prohibitive
Proxima
• Due to the cost and complexity of building and
maintaining this model internally
• A complete operating model based on a customer
intimate approach to procurement. This allowed us to
immediately deliver on “what the business wants”
• We decided, if it was available in the market, to
tap into an existing capability. This led us to
Proxima, who had built their reputation on
success in no mandate environments
• Their approach was to focus simply on understanding
our customers’ true business issues and bringing the
total power of the supply market to solve for these
needs
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www.proximagroup.com
Key success factor #3
1. Category expertise
2. Customer intimacy
3. Management support
Creating a step change in
the breadth and depth of
category expertise
Driving procurement
transformation through a
“customer intimate”
approach
Internal sponsorship and
know-how to shepherd
the program through the
Activision Blizzard
organization and around
the existing land mines
Enabled us to build a
bridge to stakeholders,
providing them with
insights and ideas
17
Rather than through the
standard procurement
strategic sourcing game
plan
www.proximagroup.com
Solidifying our success through a strong program sponsor
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Select a key sponsor who understands
organization fabric
Bertrand was part of the senior team for
mergers with Vivendi and Blizzard. He
had an established key working
relationship as CIO
Establish ‘tone for working with
business units’
- “Collaborative” vs. combative
Key to success would be to adopt a
customer intimate approach with
stakeholders and focus sourcing
approach around their needs
Communicate early
Momentum and quick wins were
important. We openly announced key
successes with both Senior Management
and at operating groups
www.proximagroup.com
Results to date
In 12 months delivered multi million dollar savings across all key category
areas
Including challenging areas such as marketing, production, customer
service, and IT
Taken to the bottom line and measured at P&L level
Reinvestment of hard savings into the business
Goal is to drive even more in year 2
Sourcing viewed as a trusted business partner and engaged proactively at
the start of most initiatives
Actively monitoring deals with the business to meet savings targets
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www.proximagroup.com
Value beyond ‘savings’
C-Suite & upper
management see
strategic
sourcing as a
valuable tool to
drive business
performance
A sourcing
function with
defined
expertise by
category
A rigorous way
of engaging
with suppliers/
partners
Improved
understanding
of supplier cost
structures &
commercial
terms
Sourcing is a
trusted partner
including in
critical areas
like Marketing
A workflow
system for
logging BU
needs &
allocating
sourcing &
legal resources
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Mandates tied
to thresholds
for engaging
sourcing and
bidding
Supplier due
diligence and
assessment of
potential risks
Support when
stakeholders
want to avoid
difficult
supplier
conversations
(good cop, bad
cop)
www.proximagroup.com
Key takeaways
•
1. Category expertise
•
•
2. Customer intimacy
•
•
3. Management support
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Creating a step change in the breadth and depth of
category expertise
Enabled us to build a bridge to stakeholders,
providing them with insights and ideas
Driving procurement transformation through a
“customer intimate” approach
Focus on the business needs rather than through the
standard procurement strategic sourcing game plan
Internal sponsorship and know-how to shepherd the
program through the Activision Blizzard organization
and around the existing land mines
www.proximagroup.com
Thank you
John Mathew
Vice President, Client Services - Proxima
[email protected]
© Proxima 2013. All rights reserved.
www.proximagroup.com