Session #1802

2. Aligning Your Vendors To Be Your Trusted Partners in Spend Management Projects Session #1802 William Gregoricus, Senior Project Manager Governor’s Office of State Planning & Policy, State of Tennessee(Formerly Governor’s Director of Performance and Accountability, State of New Mexico)

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5. 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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7. Save Smart New MexicoProject Background • Governor mandated project to reform spend management in government • Governor wanted to create sustainableaccountability within project through performance-based metrics • NM chose CGI to run project after competitive bidding process

8. 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

9. 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

10. Save Smart New MexicoProject Scope • Phase 1 identified the opportunity using spend analysis • Phases 2 & 3 applied strategic sourcing to create cost savings and improved procurement organization’s processes and knowledge base • Phase 4 ensured the savings are realized Phase 1: Opportunity Assessment Phase 2: Sourcing, Process Improvements, & Training Phase 3: Extension of Phase 2 Phase 4: Compliance & Savings Monitoring

11. 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 11:1

12. Save Smart New MexicoProject Recognition National Association of Chief Administrators’ 2005 Outstanding Program Award “New Mexico’s Save Smart New Mexico finds innovative ways to meet challenges facing every state government: In addition to reducing taxpayer dollars… [the project] increases the state’s share of business with local vendors, and assists small, local businesses with state procurement processes…” – NASCA

13. Save Smart New MexicoProject Recognition (continued) “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 Mexico’s economic future…” – Governor Bill Richardson “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

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15. Aligning Spend Management Objectives with Vendors • Establish your spend management objectives • Save Smart project objectives • Generate realizedcost savings • Create positive project ROI • Minimize project risk • Create accountabilityand sustainabilitywithin project

16. Aligning Spend Management Objectives with Vendors (continued) • Know your vendor’s objectives • CGI’s objectives for Save Smart • Create recognizedvalue for NM • Contain investment risk • Strengthen relationship with NM • Receive payment

17. 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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19. Structuring Performance Measures • Align project objectives and address each in the contract to ensure they are met

20. 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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22. 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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24. Key Takeaways • Determine your and your vendor’s 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

25. 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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27. Q&A