Q&A: Steve Turpie
Steve Turpie has worked as a senior executive in Financial Services and Telecoms for two decades within Global Services, Finance & Operations. He was most recently Group Head of Sourcing and Procurement for Zurich Insurance. We caught up with Steve ahead of an Editor’s Roundtable on procurement, in association with Accenture, to get his thoughts on how Zurich has leveraged the outsourcing model to drive transformation and improvements within its sourcing and procurement function; and more broadly to get his perspective on some of the trends driving change and evolution in the procurement space today.
Outsource: Steve, can we get an introduction to you and your most recent role?
Steve Turpie: So up until very recently I have been running group sourcing and procurement for Zurich insurance. My background is very aligned to global shared services and integrated business services. I’m an accountant by trade; I’ve been in a lot of finance roles across different industries and have subsequently broadened that out around shared services, most recently sourcing and procurement for Zurich.
Within my remit was $3bn of spend in 17 countries across all the normal categories you would expect: IT, travel, professional services, marketing, facilities and office supplies. Everything from pencils to power stations as we would describe it.
O: Zurich work with Accenture as an outsource provider: what’s the nature of this relationship?
ST: Accenture bought a company called Procurian last December; they completed the transaction in March. Zurich originally outsourced its procurement to Procurian a couple of years ago. So the nature of this relationship specific to Procurement was that by default Accenture became the outsource partner for procurement activities. Zurich also has a significant IT relationship with Accenture, so it’s not like it was a brand new relationship for them; in fact it’s been a very good thing to have those strong relationships inside Accenture.
O: Can we get a bit more detail on that?
ST: Parking procurement for a minute: in any outsourced relationship, it is the relationship which is the most important aspect. It’s important to have a good contract; it’s important to refer to that contract – some people think it’s OK to leave it in the bottom drawer and not refer to it, and it’s just about the relationship, but I don’t agree with that, it’s important to have a strong contract – however, how you behave around that is based on the relationship you have with people. So for us the strong relationships – the good positive healthy relationships we had with Accenture when they bought Procurian made the integration of Procurian into Accenture, and what that meant for us, much easier than if it had been an organisation we either didn’t know or didn’t have a relationship with. Accenture listened very carefully to everyone’s views. I’ve been in this situation a few times and actually I think they’ve been very good at doing things, which some smaller organisations would struggle with.
O: What are the main day-to-day challenges of running a function like yours – and how does the utilisation of outsourcing make those easier to overcome?
ST: Inside FS there has been a bit of a wake-up over the last five or six years on the value that procurement can bring. It’s not just about cost-savings – that’s table-stakes for procurement these days. In times of austerity it’s been important for procurement functions to step up and support the strategies of the organisations they serve. And that brings a whole host of challenges. For example, we did not have enough visibility of our spend or individual projects and our own teams had to go through a steep learning curve in order to better work together with the rest of the organisation. It’s not that people don’t want to work together; it’s just having visibility. By outsourcing, we’ve got more visibility than we’ve ever had of what our money’s being spent on, which suppliers, whether the deals we have are any good or not… The hardest part has been helping educate and support our internal stakeholders. And that has meant starting at understanding their priorities at a detailed level.
Change management is a wonderful thing, and it probably the most important thing in an outsourcing process whatever it is, but even more so in procurement because of the nature of what it is you’re outsourcing. There’s a huge amount of commerciality. If you get it wrong it can have a very negative impact on the business. So the biggest challenge has been the change management aspect of outsourcing. I always think the communication can be better and this would be no different.
O: And how have Accenture specifically helped with that?
ST: At the very beginning, we were outsourced to Procurian; they were – and most of the people are still there – a very talented group of individuals with fantastic category expertise, and what Accenture have brought to the party is their own version of that, plus a deeper capability around managing large organisations, large-scale transformation, transitions and the discipline around change management. If you look at the totality, what they’ve now been able to bring to the table is the ability to manage large-scale change, in addition to the ability to provide capability around all parts of the source to pay process. They also have great relationships with the likes of Ariba, and SAP, organisations which is very helpful.
O: Is one of the dangers implicit in outsourcing procurement that many of the people in the erstwhile internal team have strong relationships with suppliers and those relationships may be lost when outsourcing? And are you saying that in this case there’s actually been a net gain in that area because of the strengths of Accenture’s relationships?
ST: If you’re talking about the people inside Accenture and Zurich then yes I think there’s been a net gain. If you’re talking about the thousands of other suppliers, it’s been interesting to work through the detail in terms of working out who has responsibility for each relationship. A lot of discipline has been put in place around how we choose suppliers, how we manage suppliers, and having an independent function – which sourcing and procurement inside Zurich is – has helped us to do that. Ultimately however, our job is to help the business achieve its strategy; there’s a huge amount of trust placed in the function to do that and there’s still a lot of work to do!
O: What are the key drivers of change for the evolution of procurement outsourcing?
ST: Flexibility is one thing. Speed – the need to do things faster – is another. There is something about getting access to capability that you don’t necessarily have today – so different models of buying things. Then obviously cost is always there. As I said earlier cost savings are table-stakes, but if you don’t do that you don’t get to do any of the other things. And I think something that can often get forgotten is user experience. Everyone now expects to have a buying experience that’s like Amazon – we get it at home, why can’t we have it at work? It’s a challenge for procurement because there’s a customer experience piece that’s absolutely necessary. When you’re focussing on cost savings and cost savings only, you definitely forget it.
O: And across all of those, how important is technology?
ST: My view on technology is that it’s an essential part of all outsourcers’ armories. It’s very difficult to find anything significant going on that doesn’t have a technology element attached to it. It might be small, but for procurement it’s fundamental to having a successful set of outcomes. Whether it’s access to benchmark data faster than anything else; whether it’s how you run the contract management process, or allow suppliers to access your organisation through punchouts and the like; whether it’s how you interface procurement systems into the ERP: it is so fundamental to everything you do in a procurement function now. The technology underpins the processes. The organisations that can best leverage technology for the benefit of their clients are the ones that will win out.
And I want to add something about people. I would say that the sourcing and procurement space is becoming more and more professional; I think there’s a real need for this – and it’s starting to happen. It’s happened with accountants since Year Dot. Procurement and sourcing folk have some of that but we could do more; if you want to win and retain great people as a profession you have to offer them some kind of structure within which they can further their careers, not just sitting at a desk on the end of a phone negotiating with suppliers. The professionalisation of the function, including professional qualifications, is going to be crucial to this kind of development – and the overall development of the sourcing and procurement functions.