Unlocking the potential of procurement to reduce costs and add strategic value lies in shifting existing procurement functions from a largely transactional focus to a more holistic approach. Putting the right people, skills and processes in place are all essential to successful transformation programs. And another increasingly critical factor in taking procurement functions to the next level is the right technology.
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Technology has played a key role in accelerating the procurement transformation journey for Paysafe, an industry leader in specialized payments platforms.
Employing over 3,000 people and operating globally, Paysafe handled just shy of $100 billion in transactions in 2019. The company experienced rapid growth, both organically and through acquisitions, which resulted in fragmented operations and a disparate procurement function that operated at a mainly transactional and reactive level.
To support its ambitious growth plans, Paysafe engaged Efficio in 2018 to identify and deliver cost savings in several key categories and introduce best practice in procurement. This resulted in a strategic sourcing program that delivered an average of 15% annualized savings on addressable third party spend.
Achieving the potential of procurement to generate significant additional value depended on transforming the capability of the procurement team. As a result, Efficio was tasked with designing and building a world-class procurement function. This would be implemented over a two-year period via a managed service model, after which a high-performing and self-sufficient procurement function would be ‘handed back’ to Paysafe.
Creating a world class procurement operation involved organizational design, recruitment of high-performing team members, upskilling existing staff, and the design and implementation of new best-practice processes. But central to the program was the rollout of eFlow, Efficio’s market-leading digital procurement platform, to both enhance and accelerate the transformation journey.
“The ability to incorporate digital applications with a holistically designed program that leverages data and business partnerships has been hugely significant in the success of the program,” says Paysafe’s Group CFO Peter Smith.
“Our procurement function today has transformed in terms of the value it adds and the way it now operates as a true business partner with internal stakeholders. Since we started this journey, we’re on track to significantly reduce procurement cost by over three years. I don’t think we could have achieved so much, so quickly, without the strategic process, category plans and digital tools we now have at our disposal.”
Bringing it all together – all the data, all in one place
Paul Brooking, Paysafe’s former Group Financial Controller, who has overseen the procurement transformation from Paysafe’s side, elaborates, “For example, we now have a single digital repository of all spend data. That means we have on-demand access to complete category and supplier spend visibility across all our business units and geographies.
The application classifies spend based on pre-defined rules and visualizes it so we can analyze it in different ways to identify opportunities for improvements,” says Paul.
“Importantly, it also means we can present our analysis and insights to the business in a much more accessible way, based on fact-based decision making. Now, our procurement function allows us to effectively evaluate and champion new opportunities for better results that are supported by leadership.”
Spend visibility is a major issue for many procurement functions, according to Efficio’s Simon Whatson, who leads the transformation work.
“Collecting, classifying and updating spend data requires significant time and effort – not to mention discipline. That’s why it’s difficult for many procurement teams to stay on top of it. Yet without that, and the visibility it provides, it’s difficult to identify trends, issues and opportunities. The eFlow platform gives Paysafe easy access to accurate and complete spend data, refreshed monthly, while freeing up the procurement team to spend time on value-added activities rather than data collection.”
“Having access to that level of data and insights has really changed the way we work with the business, and the way they perceive procurement,” says Paul.
“For example, in our business managing risk is critical. We spend a lot of money on software that allows us to assess new customers in terms of the level of risk they pose. What we found was that different areas across the company were all using different software for what is essentially the same process – so there were some obvious opportunities to reduce costs and implement best practices.
Just as importantly, we were able to demonstrate this to the business in a way that made a very compelling case for change.”
The spend data repository is also linked to a contract management repository, which provides analytics and notifications of upcoming contract expiry.
That gives Paysafe’s procurement team awareness of contracts coming up for renewal, suppliers being used, areas of spend to address, and more – in effect providing an automated, ongoing pipeline of procurement initiatives.
Getting suppliers on board
One of the primary responsibilities of procurement functions is effective supplier management. For Paysafe, it is critical that its suppliers meet regulatory compliance requirements, such as data privacy standards, to ensure that customers’ information is secure. Previously, this involved managing a mountain of paperwork and documents and took significant time and effort. Efficio deployed a supplier onboarding and registration tool that allowed suppliers to access guidance on required documentation and upload it themselves. The tool, which is part of the eFlow platform, has given Paysafe the ability to readily control this process and speed up supplier onboarding.
The eFlow technology has given us the time and space to closely partner with our stakeholders to really understand their needs and work on these kinds of initiatives
Adding strategic value
“Obviously, cost reduction is very important and helps support Paysafe’s growth trajectory, but we’ve increasingly been able to add additional strategic value,” says Paul Brooking.
“For example, we work in a fast-moving industry where innovative new suppliers with new solutions are emerging all the time. By using our knowledge of the supply market, we’ve been able to identify potential suppliers that have the capacity to help our stakeholders achieve their business goals. The eFlow technology has given us the time and space to closely partner with our stakeholders to really understand their needs and work on these kinds of initiatives.”
Being able to demonstrate to the business and senior management that procurement initiatives are delivering tangible bottom line value is immensely powerful.
Access to expertise
Identifying and delivering opportunities is simplified through the use of eFlow’s content-enabled guided sourcing capability. It provides access to curated category knowledge from Efficio’s subject matter expert user base, including category strategies, category pricing structures, commercial models, RFP category templates and the ability to run common analyses quickly and easily.
The tool is in the initial stages of rollout at Paysafe but, once fully deployed, will minimize the requirement amongst the sourcing team to reinvent the wheel when going out to market for services that have been procured previously. With a sourcing platform of useful content, the team will no longer need to create bid sheets and supplier long lists from scratch.
Tracking initiatives and benefits
One of the perennial issues for procurement teams is ensuring that the benefits identified actually reach the bottom line.
“In our experience, tracking benefits is often not done very well because of the difficulty and effort involved,” says Efficio’s Simon Whatson, “but it’s essential in terms of building credibility with the business.
“That’s why we’ve put a lot of focus on this at Paysafe. Our methodology gives Paysafe the ability to record, track and monitor both procurement initiatives and savings. It provides visibility of initiatives, activities and risks and importantly, enables accurate forecasting and monitoring of benefits for financial reporting.
“Being able to demonstrate to the business and senior management that procurement initiatives are delivering tangible bottom line value is immensely powerful. It’s key to moving the perception of procurement from an order-taker to a source of real strategic value.”
While Paysafe’s transformation journey continues, the results so far have exceeded expectations. Since the start of the managed service contract, the procurement function has delivered almost double the targeted cost savings, and reduced procurement costs significantly to the end of 2020.
“Our success is the result of a lot of hard work by everyone involved, from both the procurement function and the business,” says Peter Smith, “Efficio brought solutions and insights that helped us significantly improve our procurement function end-to-end.”