2024 GLOBAL SRM RESEARCH REPORT
CASE STUDY: MICROSOFT - HARNESSING SIZE AND SCALE
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“The core of SRM is to grow total economic value for Microsoft. Segmenting relationships is critical to ensure we are aligned and
2. Risk and compliance: “This is also ground zero,” he says. “Suppliers need to comply with our requirements, such as our supplier code of conduct, data protection requirements, financial health and more.” 3. Relationship: This is about nurturing customer-centric relationships, through effective governance, at different tiers in the organisation. “This is critical as we strive to achieve ‘customer of choice’ benefits [the advantages gained by being a chosen client].” The required level of governance depends on the relationship. For enterprise-wide suppliers a number of quasi ‘communities of practice’ operate where the SAM brings together contract owners across the company to share their experiences with each other and explore opportunities. This is part of the business’s ‘One Microsoft’ approach which aims to break down silos and foster collaboration and alignment across the company. 4. Value: Focuses on driving outcomes beyond contractual terms; for example ESG acceleration; continuous improvement, and innovation, including ‘customer zero’ solutions (see box out). Actions and aims for SRM “From where we started, SRM is now a core and valued function within procurement at Microsoft,” says
connected.” “We want rounded procurement professionals, so we ensure we develop them and try to fill any skills gaps, but also ensure that we have coverage and backups in place.” The core of SRM, says d’Orgee, is to grow total economic value for Microsoft. “Segmenting relationships is critical to ensure that we are aligned and connected. It ensures that decisions that could adversely impact the relationship and ultimately destroy value are not made in splendid isolation.” For instance, he says, it would be less than ideal to tell a supplier they were unsuccessful in a bid, the day before a significant 360 engagement. Effective account plans are highly focused, concentrating on the top three or four outcomes for impact instead of a long wish list. Progress The value delivered as a result of properly managing one’s most strategic suppliers can be varied and vast. Benefits can include anything from financial or commercial returns, to access to specific innovation, supplier talent or top staff, access to scarce resources, improved resilience, and customer of choice benefits. Microsoft measures various Measuring return on value
to plan and changes are tracked through governance with each group represented. Four basic areas for SRM The four key areas for SRM are supplier performance; risk and compliance; relationship; and value, says d’Orgee, who describes each in turn: 1. Supplier performance: This concerns suppliers delivering the quality of service and product that’s expected. A “get out of bed metric” where performance is assessed at contract level vs SLAs through its supplier performance tool. If performance drops below expectations the SAM partners with both the supplier and contract owners to remedy the situation and “get to green”. Scorecards have broad visibility up to the company’s executives who frequently share feedback: “Knowing this drives both quality of input and accountability with our suppliers.”
‘Customer zero’: Go-to-market partnering in action As part of its multifaceted relationships with some suppliers, Microsoft may work with some providers on solutions that it needs or could use and then jointly take them to market. One example of this in action is its work with travel management technology provider Amadeus, a strategic partner for Microsoft, as d’Orgee explains. “As part of our strategic alliance, we partnered on a customer zero project for Cytric Amadeus’ Online Booking Tool on Microsoft Azure with Microsoft Teams integration for around 70,000 US-based Microsoft employees. “As customer zero we were able to secure key functionality into the current Cytric booking tool together with future roadmap commitments, and as a go-to-market partner we will gain value through the revenue associated with the Azure consumption.”
d’Orgee, yet the work is ongoing. “We must constantly iterate and challenge our norms to drive even greater impact and outcomes.” He says if he could “wave a wand for SRM” he’d like to advance and automate even more data and end-to- end processes. Tier 2 data, for instance, is a challenge to unravel quickly, he adds, be that via resellers or semi limited integrations. He would also like to be able to automate supplier performance inputs and outputs, including even the proof of execution for invoicing and also guided buying capabilities. There are a number of different listening systems in place with suppliers, ranging from governance engagements to Supplier Advisory Boards and supplier surveys, and d’Orgee says there is the opportunity to further expand and improve with a more continuous survey-based approach. “SRM has grown as a strategic asset for the company,” he says, “aligning the multifaceted relationships to drive total economic value; as this continues to mature, we’ve found that resilience is critical and the drive to One Microsoft is relentless.”
• Hard savings • Soft savings • Cashflow
• Delivery to sustainability targets • Adherence to accessibility target • Diversity spend • And some elements of innovation, such as the number of ‘customer zero’ solutions that have been implemented with suppliers, and the level of AI adoption across outsourced services for key processes.
• Compliance to ‘standard’ or preferred contractual terms. • Revenue that’s been enabled through a 360-degree approach • Maintain 360 - ie. how vested suppliers are as customers • Security and compliance issues and the remediation cycle time
aspects of its supplier relationships including:
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