Centralize to capitalize: Transforming procurement at Comdata
Following its acquisition in 2015 by private equity firm Carlyle, Comdata embarked on a mission to implement a new, harmonized procurement operating model to improve visibility and control over spend, and subsequently reduce costs and achieve savings.
Comdata was growing, inorganically, through acquisition of companies in similar lines of business, which led to a largely fragmented IT landscape with limited visibility and control over spend. In view of this, Comdata launched a program across its legal entities, “The Comdata Way” in 2019, to centralize the company, harmonizing processes, procedures, and practices across the group. Procurement was a target area, so Carlyle engaged Efficio for its strong analytical background and collaborative team working culture to help tackle the challenge.
Comdata is a leading, innovative, global service provider in Customer Interaction and Process Management with 30 years' experience. The company combines an international footprint with strong local expertise, with more than 50,000 passionate employees working in 30 languages, across 4 continents and 22 countries.
The company offers a full range of services, from outsourcing of customer interactions and processes to customer experience consulting – all achieved with a smart blend of people, processes and technology. Headquartered in Milan, Comdata delivers global revenues of approximately €1Billion with more than 670 clients, including some of the biggest names in Telecom, Energy, Banking, Industry, Retail and E-commerce.
With Comdata’s vast operation span, objectives to harmonize spend processes across the company was set to be a challenge. A centralized Procurement department did not exist. Instead, countries were operating independently with procurement being mainly driven by business - and where geographies did have a procurement department, the segregation of duties with other functions, e.g. Facilities Management or Administration, was unclear.
Realizing the existing model was not yielding the aspired savings and visibility, Comdata sought to develop a centralized procurement department to ensure governance and alignment between the procurement and corporate strategy, as well as run Strategic Sourcing activities on initiatives at global level. To implement this, Comdata required development in several areas.
Firstly, to improve its spend data accuracy and visibility. With Comdata’s inorganic growth rate, operating companies were still using the ERP system used before the acquisitions occurred. Sources of spend data were multiplied and not consolidated, which led to a cumbersome process to gain visibility over Group spend as well as opportunities, globally.
Secondly, to take a more strategic approach to sourcing. Comdata’s procurement teams would apply a tactical, transactional approach to purchasing, mainly because the department was usually involved in the final stages of the process. The reason being that Procurement was not viewed as a strategic and value-adding partner.
A mindset shift was needed. To achieve objectives, cross-company functions needed to collaborate effectively with procurement to achieve common goals, but first, procurement needed to prove itself to the business as a department that could add value.
Efficio did a perfect job. The stakeholders were satisfied, and we operated as one team. It raised in us the need for a dedicated Group Procurement team, which we are putting in place now with resources in Italy, France and Spain. I personally have learnt a lot more about strategies and sourcing processes.
Over the course of two months, Efficio ran an Opportunity Assessment with the twofold goal to identify savings opportunities and detect operating model improvements. As a result, the team were able to identify between 9-18% in potential savings and 11 operating model improvements, pivoting around three areas: People and Organization, Strategy and Processes, and Technology and Reporting.
Key recommendations included creating a centralized procurement function that would act as a global sponsor for strategies and global initiatives, to define and align the procurement strategy with the corporate strategy while ensuring flexibility to fit local requirements, and adopting a reporting process and tool that would foster spend visibility at group level.
The success of these assessments demonstrated the real value that procurement could bring, which led to Comdata leveraging additional support from Efficio with the strategic sourcing stream. The project focused on three workstreams:
- Network and Telecoms: To align Network solutions across the main geographies through the implementation of SDWANsolution
- End User Computing: To optimize the workstation to the most technologically advanced and cost-effective Virtual Desktop Infrastructure (VDI) model
- Facility management services: Improve services in the cleaning and building maintenance area and source alternative methods to deliver a physical security and control solution through CCTV cameras instead of guarding
The joint team exceeded all objectives in both savings, collaboration and visibility. Despite the addressable spend reduced by 50% from the OA, due to the cancellation of the Real Estate stream, the team still managed to achieve a total of 32% of savings against the original target of 9-18. In addition, a Group procurement team was established, with a Group CPO and three additional FTEs based in Italy, France and Spain, to act as a central coordinator for definition and implementation of procurement strategies and run procurement activities on a global scale.
Local procurement teams were able to enhance their visibility within the company and the relationship with business stakeholders, especially IT, improved dramatically, as Procurement reestablished itself as capable of driving the sourcing process, showing technical knowledge while keeping an eye on savings.
Collaboration improved in cross-company functions, globally. The tangible results of the project enabled the business stakeholders and the C-Suite to deepen its trust of Procurement and shifted the mindset to consider it as a value creator instead of a barrier. Additionally, the importance of data availability and control was recognized as a key priority across the company.