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I n t e g r i t y - S e r v i c e - E x c e l l e n c e Headquarters U.S. Air Force Be America’s Best…War-Winning Capabilities, on Time, on Cost Strategic.

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Presentation on theme: "I n t e g r i t y - S e r v i c e - E x c e l l e n c e Headquarters U.S. Air Force Be America’s Best…War-Winning Capabilities, on Time, on Cost Strategic."— Presentation transcript:

1 I n t e g r i t y - S e r v i c e - E x c e l l e n c e Headquarters U.S. Air Force Be America’s Best…War-Winning Capabilities, on Time, on Cost Strategic Sourcing Tools and Implementation Feasibility Analysis Final Report November 2009

2 Strategic Sourcing Tools Analysis Page 1  Executive Summary  Introduction and Background  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

3 Strategic Sourcing Tools Analysis Page 2 The Air Force is interested in understanding the technology available to support its Installation Acquisition Transformation (IAT) initiative and Strategic Sourcing Model PROJECT BACKGROUND  The Air Force has developed an iterative Strategic Sourcing Model that is currently supported by various manual process steps  Through the IAT initiative, the Air Force is aiming to better coordinate strategic sourcing efforts across the 71 installations  An enterprise strategic sourcing group consisting of ~240 acquisition personnel is being established to centralize the sourcing of common supplies and services across installations  Similarly, major commands within the Air Force are establishing centralized sourcing teams to help meet specific MAJCOM needs PROJECT GOAL Gain a high level understanding of the various Strategic Sourcing technology* vendors and tools currently available in the marketplace that can support IAT and the Air Force Strategic Sourcing Model * Note: Strategic Sourcing technology is often referred to as Spend Management technology in industry

4 Strategic Sourcing Tools Analysis Page 3 Three key takeaways were identified during the project KEY TAKEAWAYS 1.The end-to-end Air Force Strategic Sourcing Model can not be completely addressed by technology 2.The Strategic Sourcing technology marketplace is a growing and maturing market from both a vendor as well as a user perspective 3.The Strategic Sourcing technology vendor market consists of 4 distinct segments varying by capability depth and customer focus The key takeaways are explained in further detail on the following slides…

5 Strategic Sourcing Tools Analysis Page 4 The Air Force Strategic Sourcing Model was put into a linear format to show the overlap of industry capabilities Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management

6 Strategic Sourcing Tools Analysis Key Takeaway – Functionality and Capabilities Page 5 KEY TAKEAWAY/FINDINGDETAILSIMPLICATIONS TO THE AF 1 The end-to-end Air Force Strategic Sourcing model can not be completely addressed by technology  Supply Market Analysis and Demand Management/Planning technology components are not available  The following five functional components are available from Strategic Sourcing technology vendors: o Spend Analysis components - Typically help organizations collect and analyze historical spend data o E-Sourcing components - Typically enable eRFx, auctions, negotiations, and sourcing optimization o E-Procurement components - Typically support the entire procure-to-pay process o Contract Management components - Typically support the contract lifecycle from creation to close-out o Supplier Management components – Typically support all aspects of supplier relationships from on-boarding to performance management and reporting  The Air Force will not be able to purchase tools for Supply Market Analysis or Demand Management and Planning, rather, it will have to rely on higher level analysis and synthesis conducted “off tool”  The Air Force will want to prioritize its requirements and needs and decide which Strategic Sourcing functional components it wants to implement to support its sourcing model KEY TAKEAWAYS – FUNCTIONALITY AND CAPABILITIES

7 Strategic Sourcing Tools Analysis Strategic Sourcing functional components available through technology vendors can support most of the Air Force Strategic Sourcing Model Page 6 AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Strategic Sourcing Functional Components provided by Technology Vendors Not Available through Technology Vendors There are no Strategic Sourcing technology tools that cover the end-to-end AF Strategic Sourcing Model, as no functional components are available to fully support Supply Market Analysis and Demand Management/Planning

8 Strategic Sourcing Tools Analysis Key Takeaway – Strategic Sourcing Market Growth Page 7 KEY TAKEAWAY/FINDINGDETAILSIMPLICATIONS TO THE AF 2 The Strategic Sourcing technology marketplace is a growing and maturing market from both a vendor as well as a user perspective  The market is expected to realize a 10% Compound Annual Growth Rate (CAGR) through 2012  There is a growing emphasis from vendors on adding additional basic levels of analytics and reporting capabilities  A number of organizations are changing the way they are adopting and enhancing their use of Strategic Sourcing tools The Air Force should understand the market trends to ensure their path forward is in line with market best practices KEY TAKEAWAY – STRATEGIC SOURCING MARKET GROWTH

9 Strategic Sourcing Tools Analysis Page 8 The Strategic Sourcing technology marketplace is a growing and evolving market GENERAL MARKET TRENDS  Steady overall market growth: The overall market is expected to grow at a 10% Compound Annual Growth Rate (CAGR) through 2012  Strong viability amongst medium to larger vendors: Medium to larger vendors have strong financial positions and their viability is currently not a concern  Limited consolidation activity: Consolidation in the market has been limited in the past 24 months, but is expected to heat up in the 4 th quarter of 2009 and 1 st half of 2010 STRATEGIC SOURCING MARKET REVENUE ( EST) STRATEGIC SOURCING MARKET REVENUE ( EST) Source: AMR Research, 2008

10 Strategic Sourcing Tools Analysis Key Takeaways – Vendor Landscape Page 9 KEY TAKEAWAY/FINDINGDETAILS IMPLICATIONS TO THE AF 3 The Strategic Sourcing technology vendor market consists of 4 distinct segments varying by capability depth and customer focus  Segments that typically provide commercially-focused capabilities: 1.Strategic Sourcing Full Suite Vendors (9 identified vendors) Provide a broad range of functionality in a single integrated package Many vendors do not have significant Federal experience; however, vendors are placing a heavy emphasis on moving into the Federal space and are considering providing Federally-focused capabilities within their tools 2.Limited Suite/Point Solution Vendors (57 identified vendors) Provide overall solution depth in targeted areas CANNOT cover the entire AF strategic sourcing model  Segment that provides both commercially-focused and Federally- focused capabilities: 3.ERP Vendors (3 identified vendors) Have commercial and federal experience and provide broad coverage Two vendors – SAP and Oracle – can provide both commercially-focused and Federally-focused solutions There are significant functional depth variations within their capabilities  Segment that provides Federally-focused capabilities: 4.Federal Government-Specific Tool Vendors (3 identified vendors) Have tailored solutions that may cover some AF-specific contracting processes well Generally do not provide a full range of capabilities compared to commercially-focused vendors; however, vendors are beginning to build out their capabilities, specifically within analytics and reporting  When choosing a Strategic Sourcing technology vendor, the Air Force will want to deliberately decide between: o Vendors who provide commercially-focused capabilities and/or Federally-focused capabilities o Vendors who provide a full suite of functional components or a set of point solutions KEY TAKEAWAYS – VENDOR LANDSCAPE

11 Strategic Sourcing Tools Analysis Page 10 To provide the defined functionality, the Strategic Sourcing technology vendor market consists of four distinct segments varying by capability depth and customer focus STRATEGIC SOURCING FULL SUITE VENDORS Definition: Vendors who provide a full suite of Strategic Sourcing functionality (at least 4 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 9 Examples: Ariba, Emptoris, Global eProcure LIMITED SUITE/POINT SOLUTION VENDORS Definition: Vendors who provide only targeted Strategic Sourcing functionality (at least 1 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 57 Examples: Zycus, Procurra ERP VENDORS Definition: Enterprise Resource Planning (ERP) vendors who can provide at least basic capabilities for most or all of the Strategic Sourcing functional components Identified Vendors: 3 Examples: SAP, Oracle, PeopleSoft FEDERAL GOVERNMENT- SPECIFIC TOOL VENDORS Definition: Vendors who focus solely on providing functionality tailored to Federal-specific contracting processes with varying levels of capabilities Identified Vendors: 3 Examples: Compusearch, Distributed Solutions STRATEGIC SOURCING TECHNOLOGY MARKET SEGMENTS Typically Provide Commercially-Focused Capabilities Provide Federally- Focused Capabilities Can Provide Both Commercially-Focused and Federally-Focused Capabilities Many Commercially-Focused Vendors are placing an emphasis on working with Federal clients and some are considering developing Federally-focused capabilities within their tools

12 Strategic Sourcing Tools Analysis In addition to vendors and capabilities, there are a number of other major drivers that can affect the cost and time required for the AF to implement Strategic Sourcing technology tools Page 11 DRIVERS OF COST/TIMELINEDESCRIPTION Vendor(s) Selected/Functional Components (Tools) Implemented The type of vendor(s) selected and number and types of functional components that will be implemented Implementation Scale/Approach The scale (# of users, # of organizations, etc.) and roll-out approach (phased vs. non- phased, timing, etc.) for implementing tools in the AF environment Amount of Data/Content Required The amount of internal (e.g., spend data, specification level, etc.) and external (e.g., # of suppliers, # of catalogs, # of catalog items, etc.) data and content required Customization vs. Configuration Required The amount of customization (changes to code) versus configuration (changes to business rules without changing code) needed to meet AF requirements Deployment/Hosting ModelThe deployment hosting model required by the AF License ModelThe license model used by the AF (lease vs. buy) Integration with Current Systems Required The number of touch points and complexity of integration required to connect to current AF systems SecurityThe ability for tools to adhere to AF security requirements Training RequiredThe amount of training required for users to utilize the tools Page 11 COSTS/TIMELINE DRIVERS AND DESCRIPTION

13 Strategic Sourcing Tools Analysis As next steps, the AF should focus on understanding its high- level needs and requirements and collecting additional information prior to an acquisition decision Page 12 HIGH-LEVEL NEXT STEPS 1Communicate and brief assessment internally to AF stakeholders 2Reach out to other DoD organizations that have implemented Strategic Sourcing technology tools to discuss lessons learned, implementation successes and challenges, and overall experience* 3Develop an understanding of high-level needs and requirements 4Develop and send out a Request For Information (RFI) to collect more detailed information from vendors around capabilities, costs, etc. aligned with the high-level needs and requirements 5Develop a business case to evaluate the effectiveness of Strategic Sourcing solutions based on an understanding of total costs and calculation of a Return on Investment (ROI) 6Decide whether to move forward with an acquisition of Strategic Sourcing technology tools Page 12

14 Strategic Sourcing Tools Analysis Page 13  Executive Summary  Introduction and Background  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

15 Strategic Sourcing Tools Analysis Page 14 The Air Force is undergoing an Installation Acquisition Transformation (IAT) initiative focused on improving the acquisition of supplies and services PROJECT BACKGROUND  Through the IAT initiative, the Air Force is aiming to better coordinate strategic sourcing efforts across the 71 installations  An enterprise strategic sourcing group consisting of ~240 acquisition personnel is being established to centralize the sourcing of common supplies and services across installations  Similarly, major commands within the Air Force are establishing centralized sourcing teams to help meet specific MAJCOM needs

16 Strategic Sourcing Tools Analysis Page 15 The Air Force has developed an iterative Strategic Sourcing Model that is currently supported by various manual process steps AIR FORCE STRATEGIC SOURCING MODEL The AF model currently has… Limited visibility into spend, demand, requirements, and processes Limited information sharing and collaboration Limited usage of standalone technology tools that support the various sourcing steps (e.g., SPS for contract writing)

17 Strategic Sourcing Tools Analysis Page 16 As part of the IAT initiative, the Air Force is interested in implementing Strategic Sourcing technology tools that can address one or more steps in the AF Strategic Sourcing Model BENEFITS OF STRATEGIC SOURCING TECHNOLOGY* Strategic Sourcing technology tools can help the AF improve its Strategic Sourcing Model by:  Automating processes  Enabling greater supplier transparency  Providing greater process visibility  Driving information sharing and collaboration * Note: Strategic Sourcing technology is often referred to as Spend Management technology in industry

18 Strategic Sourcing Tools Analysis Page 17 Censeo is helping SAF/AQC understand the current landscape of technology tools that can support the Air Force Strategic Sourcing Model KEY OBJECTIVES  Identify key functional components and capabilities available in the Strategic Sourcing technology marketplace  Identify Strategic Sourcing technology trends, vendor market segments, and vendor landscape  Identify drivers of cost and timeline that the Air Force should keep in mind if/when selecting and implementing tools  Provide guidance on next steps the Air Force should take prior to an acquisition decision  Identify various Strategic Sourcing technology options available for the Air Force  Compare key capabilities, experience, and implementation considerations of select vendors GOAL Gain a high level understanding of the various Strategic Sourcing technology vendors and tools currently available in the marketplace that can support IAT and the Air Force Strategic Sourcing Model PROJECT GOAL AND OBJECTIVES

19 Strategic Sourcing Tools Analysis Page 18  Executive Summary  Introduction and Background  Technology Marketplace  General Market and Technology Trends  Functionality and Capabilities  Vendor Landscape  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

20 Strategic Sourcing Tools Analysis Key Takeaways Page 19 KEY TAKEAWAY/FINDINGDETAILSIMPLICATIONS TO THE AF 1 The Strategic Sourcing technology marketplace is a growing and maturing market from both a vendor as well as a user perspective  The market is expected to realize a 10% Compound Annual Growth Rate (CAGR) through 2012  There is a growing emphasis from vendors on adding additional basic levels of analytics and reporting capabilities  A number of organizations are changing the way they are adopting and enhancing their use of Strategic Sourcing tools The Air Force should understand the market trends to ensure their path forward is in line with market best practices 2 The end-to-end Air Force Strategic Sourcing model can not be completely addressed by technology  S upply Market Analysis and Demand Management/Planning technology components are not available  The following five functional components are available from Strategic Sourcing technology vendors: o Spend Analysis components - Typically help organizations collect and analyze historical spend data o E-Sourcing components - Typically enable eRFx, auctions, negotiations, and sourcing optimization o E-Procurement components - Typically support the entire procure-to-pay process o Contract Management components - Typically support the contract lifecycle from creation to close-out o Supplier Management components – Typically support all aspects of supplier relationships from on-boarding to performance management and reporting  The Air Force will not be able to purchase tools for Supply Market Analysis or Demand Management and Planning, rather, it will have to rely on higher level analysis and synthesis conducted “off tool”  The Air Force will want to prioritize its requirements and needs and decide which Strategic Sourcing functional components it wants to implement to support its sourcing model KEY TAKEAWAYS (PAGE 1 OF 2)

21 Strategic Sourcing Tools Analysis Key Takeaways (Cont) Page 20 KEY TAKEAWAY/FINDINGDETAILS IMPLICATIONS TO THE AF 3 The Strategic Sourcing technology vendor market consists of 4 distinct segments varying by capability depth and customer focus  Segments that typically provide commercially-focused capabilities: 1.Strategic Sourcing Full Suite Vendors (9 identified vendors) Provide a broad range of functionality in a single integrated package Many vendors do not have significant Federal experience; however, vendors are placing a heavy emphasis on moving into the Federal space and are considering providing Federally-focused capabilities within their tools 2.Limited Suite/Point Solution Vendors (57 identified vendors) Provide overall solution depth in targeted areas CANNOT cover the entire AF strategic sourcing model  Segment that provides both commercially-focused and Federally- focused capabilities: 3.ERP Vendors (3 identified vendors) Have commercial and federal experience and provide broad coverage Two vendors – SAP and Oracle – can provide both commercially-focused and Federally-focused solutions There are significant functional depth variations within their capabilities  Segment that provides Federally-focused capabilities: 4.Federal Government-Specific Tool Vendors (3 identified vendors) Have tailored solutions that may cover some AF-specific contracting processes well Generally do not provide a full range of capabilities compared to commercially-focused vendors; however, vendors are beginning to build out their capabilities, specifically within analytics and reporting  When choosing a Strategic Sourcing technology vendor, the Air Force will want to deliberately decide between: o Vendors who provide commercially-focused capabilities and/or Federally-focused capabilities o Vendors who provide a full suite of functional components or a set of point solutions KEY TAKEAWAYS (PAGE 2 OF 2)

22 Strategic Sourcing Tools Analysis Page 21  Executive Summary  Introduction and Background  Technology Marketplace o General Market and Technology Trends o Functionality and Capabilities o Vendor Landscape  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

23 Strategic Sourcing Tools Analysis Page 22 There are a number of general trends related to the overall Strategic Sourcing technology market, technology provided, and usage by customers TREND AREADESCRIPTION General Market TrendsGeneral trends related to the Strategic Sourcing technology industry including revenue growth, viability, and consolidation activity General Technology TrendsGeneral trends related to the tools that are being provided by Strategic Sourcing technology vendors including new functionality/capabilities, types of solutions offered, etc. General Adoption/Usage/Management Trends General trends related to the way organizations are using and managing Strategic Sourcing technology The following slides show the current trends in the Strategic Sourcing technology marketplace… STRATEGIC SOURCING MARKETPLACE TRENDS

24 Strategic Sourcing Tools Analysis Page 23 The Strategic Sourcing technology marketplace is a growing and evolving market GENERAL MARKET TRENDS  Steady overall market growth: The overall market is expected to grow at a 10% Compound Annual Growth Rate (CAGR) through 2012  Strong viability amongst medium to larger vendors: Medium to larger vendors have strong financial positions and their viability is currently not a concern  Limited consolidation activity: Consolidation in the market has been limited in the past 24 months, but is expected to heat up in the 4 th quarter of 2009 and 1 st half of 2010 STRATEGIC SOURCING MARKET REVENUE ( EST) STRATEGIC SOURCING MARKET REVENUE ( EST) Source: AMR Research, 2008

25 Strategic Sourcing Tools Analysis Page 24 There are a number of general trends in the marketplace related to the tools that technology vendors are offering GENERAL TECHNOLOGY TRENDS  Increased emphasis on User Interfaces (UIs): Vendors are placing an added emphasis on developing UIs. Good UIs are becoming more than just a "nice to have” – vendors are increasingly selling their tools based on the quality of their interfaces  Shift to Software as a Service (SaaS)/On-Demand/Cloud solutions: Vendors are shifting towards providing more SaaS/On-Demand solutions for many Strategic Sourcing technology areas; also becoming known as “cloud” solutions  Focus on analytics, Business Intelligence (BI), and dashboards: Vendors are placing a greater emphasis on adding additional levels of basic analytics, BI, and reporting/dashboard capabilities as part of their technology tools beyond just spend analysis.  Emphasis on providing value-added solutions/services: Solutions that combine and integrate proprietary and/or third-party supply market and supplier content are becoming more common – no longer are vendors competing on just technology, but are also focused on their ability to deliver integrated solutions including content and market intelligence in certain areas Source: SpendMatters

26 Strategic Sourcing Tools Analysis Page 25 Furthermore, a number of organizations are changing the way they are adopting, using, and managing Strategic Sourcing technology tools GENERAL ADOPTION/USAGE/MANAGEMENT TRENDS  Increase in procurement data capture: Organizations are collecting more and more types and quantities of procurement-related information (e.g., supplier diversity data) through technology tools. Yet, few organizations are capable of fully rolling-up and distributing this information to key decision makers and other users  Usage of full functionality is low: While demand and adoption are technically rising for Strategic Sourcing technology, the average organization uses < 50% of the capabilities in the solutions they chose  Investment in monitoring supply risk: Organizations are beginning to invest more and more in technology and content to monitor supply risk in their supply bases  Purchasing of point solutions on the rise: Organizations are often purchasing different types of Strategic Sourcing technology from a diverse vendor set (e.g., buying Contract Management functionality from one vendor and E-Sourcing from another)  Increasing influence of IT: CIOs and IT organizations are starting to become more influential in buying decisions (based on needs, security, integration, architecture, etc.) despite the general dominance of external (SaaS/on-demand) deployment models Source: SpendMatters

27 Strategic Sourcing Tools Analysis Page 26  Executive Summary  Introduction and Background  Technology Marketplace o General Market and Technology Trends o Functionality and Capabilities o Vendor Landscape  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

28 Strategic Sourcing Tools Analysis Strategic Sourcing functional components available through technology vendors can support most of the Air Force Strategic Sourcing Model Page 27 AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Strategic Sourcing Functional Components provided by Technology Vendors Not Available through Technology Vendors There are no Strategic Sourcing technology tools that cover the end-to-end AF Strategic Sourcing Model, as no functional components are available to fully support Supply Market Analysis and Demand Management/Planning

29 Strategic Sourcing Tools Analysis Page 28 Supply Market Analysis and Demand Management/Planning require a higher level of analysis and synthesis that must be conducted “off tool” WHAT MAKES SUPPLY MARKET ANALYSIS AND DEMAND MANAGEMENT/PLANNING DIFFERENT? While many sourcing and procurement activities are repetitive and can be enabled through technology, Demand Management and Planning and Supply Market Analysis require a higher level of analysis and synthesis and are mostly conducted “off tool” AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors DEFINITION OF SUPPLY MARKET ANALYSIS AND DEMAND MANAGEMENT/PLANNING  Supply Market Analysis - Developing an understanding of the supply market including market trends, segmentation, cost drivers, etc. in order to identify commodity-specific sourcing implications and opportunities  Demand Management/Planning - Managing demand for supplies and services including planning/forecasting of forward looking demand/requirements

30 Strategic Sourcing Tools Analysis Collect Raw Market Data and Information Extract Key Sourcing Insights Synthesize/ Analyze Insights and Findings Identify Sourcing Implications and Opportunities Page 29 Supply Market Analysis is conducted through “off tool” analysis based on market data and information available Supply Market Analysis goes beyond collection of market data and information…significant synthesis and analysis of key insights is required to identify sourcing implications and opportunities SUPPLY MARKET ANALYSIS PROCESS Identify market data and information sources* Collect data/information across multiple sources Identify relevant data and information related to sourcing of a specific commodity/service across all sources: o Market growth o Market trends o Market segmentation o Value chains o Cost drivers o Etc. Synthesize and analyze key sourcing-related findings and insights identified in the market data and information sources Identify the key implications or “so-whats” from the findings and insights Identify potential sourcing opportunities based on analysis * A segmentation of market data and information sources and examples of each are provided in the Appendix “Off Tool” Analysis

31 Strategic Sourcing Tools Analysis Page 30 Similarly, while some functional components can provide input data necessary for Demand Management and Planning, higher level “off tool” analysis is required DEMAND MANAGEMENT/PLANNING Demand Management and Planning is typically process-driven and requires a higher level of analysis and synthesis to understand: o Forward looking demand and requirements primarily through collaboration with internal stakeholders o The trade-offs between cost and performance for different specifications of certain commodities/services through detailed cost modeling Some input data required for Demand Management and Planning is available through technology components such as Spend Analysis (to understand historical spend patterns) and E-Procurement (real-time transactional data) With the exception of ERP providers, the Strategic Sourcing technology vendors who are in scope of this analysis typically do not provide Material Requirements Planning (MRP) tools that enable manufacturing organizations to manage and plan for materials purchasing and usage The AF will need to rely on manual processes such as stakeholder collaboration and Office productivity tools such as Microsoft Excel for the higher level analysis/synthesis required for Demand Management and Planning

32 Strategic Sourcing Tools Analysis Spend Analysis components typically help organizations collect and analyze historical spend data Page 31 CAPABILITIES  Data extraction and aggregation  Data cleansing and classification  Data enrichment and content (e.g., parentage, diversity, risk, CSR)  Data analysis/Online Analytical Processing (OLAP)  Data reporting and dashboards  Strategy development and savings opportunity identification SPEND ANALYSIS CAPABILITIES AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors KEY BENEFITS  Provides visibility into spend across an organization through analytics, reporting, and dashboards  Classifies disparate spend data into meaningful categories of spend  Helps identify savings opportunities within an organization

33 Strategic Sourcing Tools Analysis E-Sourcing components typically enable eRFx, auctions, negotiations, and sourcing optimization Page 32 CAPABILITIES  Supplier registration and management  Category and user workbench/portal  Knowledge management and templates/libraries  Document management and exchange (with suppliers)  RFx automation  Negotiation and event management (auctions, sealed-bid, optimization)  Post-event analysis (cost breakdowns, total cost calculations, post-bid optimization)  Contract award and integration E-SOURCING CAPABILITIES AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors KEY BENEFITS  Provides category-level management including visibility into all activities  Streamlines the bidding, negotiation and award phases of a procurement  Potentially reduces overall procurement costs by supporting various event formats such as auctions, etc.  Helps organizations identify ideal award scenarios based on uniquely defined criteria

34 Strategic Sourcing Tools Analysis E-Procurement components typically support the entire procure to pay process Page 33 CAPABILITIES  Supplier on-boarding and enablement  Catalog and content management  Search (catalog and non-catalog)  Requisitioning, PO and order management (including workflow)  Document exchange and management  Invoice automation and supply chain finance  Services procurement  Analytics/reporting E-PROCUREMENT CAPABILITIES AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors KEY BENEFITS  Through reducing maverick spending, often yields among the most rapid, tangible savings and cost avoidance of any Strategic Sourcing functional component  Potentially reduces costs by reducing off-contract purchases, lowering purchase volume in general, improving operating efficiency and increasing purchase order (PO) throughput per FTE  Enhances purchasing and payment controls and drive organization-wide and supplier compliance

35 Strategic Sourcing Tools Analysis Contract Management components typically support the contract lifecycle from creation to close-out Page 34 CAPABILITIES  Contract authoring  Full contract life-cycle desktop integration (Office, legal platforms)  Workflow/management (e.g., clause libraries, scoring, exception management)  Contract repository and search  Compliance management  Performance management (including reporting and analytics) CONTRACT MANAGEMENT CAPABILITIES AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Management Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors KEY BENEFITS  Provides visibility into the contract lifecycle beginning from contract development to close-out  Potentially reduces process-related costs by creating efficiencies  Supports compliance by storing templates, standard language, and contract clauses within libraries

36 Strategic Sourcing Tools Analysis Supplier Management components typically support all aspects of supplier relationships from on-boarding to performance management and reporting Page 35 CAPABILITIES  Supplier portal and registration (self-service)  Workflow, forms and data collection  Systems/ERP integration (push/pull)  Supplier performance management  Supply risk management  CSR/sustainability  Dashboard/analytics/reporting SUPPLIER MANAGEMENT CAPABILITIES AIR FORCE STRATEGIC SOURCING MODEL Opportunity Assessment Current Strategy Review Market Research Sourcing Strategy Development Requirements Definition Strategy Execution Performance Management Spend Analysis E-Procurement E-Sourcing Contract Management Supplier Manage ment Demand Management/Planning Supply Market Analysis Functional Components provided by Technology Vendors Not Available through Technology Vendors KEY BENEFITS  Provides a repository for information related to all suppliers used by an organization  Reduces organizational risk and enhances overall supplier compliance  Can be used to drive and administer specific programs (e.g., supplier diversity)  Supports the tracking and management of supplier performance

37 Strategic Sourcing Tools Analysis Page 36  Executive Summary  Introduction and Background  Technology Marketplace o General Market and Technology Trends o Functionality and Capabilities o Vendor Landscape  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

38 Strategic Sourcing Tools Analysis Page 37 To provide the defined functionality, the Strategic Sourcing technology vendor market consists of four distinct segments varying by capability depth and customer focus STRATEGIC SOURCING FULL SUITE VENDORS Definition: Vendors who provide a full suite of Strategic Sourcing functionality (at least 4 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 9 Examples: Ariba, Emptoris, Global eProcure LIMITED SUITE/POINT SOLUTION VENDORS Definition: Vendors who provide only targeted Strategic Sourcing functionality (at least 1 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 57 Examples: Zycus, Procurra ERP VENDORS Definition: Enterprise Resource Planning (ERP) vendors who can provide at least basic capabilities for most or all of the Strategic Sourcing functional components Identified Vendors: 3 Examples: SAP, Oracle, PeopleSoft FEDERAL GOVERNMENT- SPECIFIC TOOL VENDORS Definition: Vendors who focus solely on providing functionality tailored to Federal-specific contracting processes with varying levels of capabilities Identified Vendors: 3 Examples: Compusearch, Distributed Solutions STRATEGIC SOURCING TECHNOLOGY MARKET SEGMENTS Typically Provide Commercially-Focused Capabilities Provide Federally- Focused Capabilities Can Provide Both Commercially-Focused and Federally-Focused Capabilities Many Commercially-Focused Vendors are placing an emphasis on working with Federal clients and some are considering developing Federally-focused capabilities within their tools

39 Strategic Sourcing Tools Analysis Strategic Sourcing Full Suite Vendors provide most or all functional components; however, their primary focus is on the commercial sector CHARACTERISTICS AND TRENDS Most Strategic Sourcing Full Suite Vendors tend to be larger in size and have a significant amount of mostly commercial experience Suites typically consist of a set of integrated functional components/modules with a common data set shared throughout; however, all vendors surveyed can provide these components/modules individually Some Strategic Sourcing Full Suite Vendors such as Ariba, Emptoris, and Global eProcure have Federal experience (often limited in scope) However, the Strategic Sourcing Full Suite Vendors are placing a heavy emphasis on moving into the Federal space and are considering providing Federally-focused capabilities within their tools STRATEGIC SOURCING SUITE VENDORS Strategic Sourcing Full Suite Vendors can potentially provide a broad range of functionality to the AF in a single integrated package and many have market leading capabilities Page 38 STRATEGIC SOURCING FULL SUITE VENDORS Definition: Vendors who provide a full suite of Strategic Sourcing functionality (at least 4 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 9 Examples: Ariba, Emptoris, Global eProcure

40 Strategic Sourcing Tools Analysis Limited Suite/Point Solutions Vendors can provide only specific functional components CHARACTERISTICS AND TRENDS Most Limited Suite/Point Solutions Vendors tend to be smaller in size, potentially impacting their ability to maintain an installation timeline and provide overall maintenance upkeep While vendors mostly have commercial experience, some vendors such as Zycus have Federal experience Many vendors offer the strongest possible capabilities in their targeted solution areas LIMITED SUITE/POINT SOLUTIONS VENDORS Limited Suite/Point Solution Vendors can provide overall solution depth in targeted areas; however, they cannot support the end-to-end AF strategic sourcing model; the AF would require integration of multiple tools to cover its model Page 39 LIMITED SUITE/POINT SOLUTION VENDORS Definition: Vendors who provide only targeted Strategic Sourcing functionality (at least 1 out of the 5 functional components) with varying levels of capabilities Identified Vendors: 57 Examples: Zycus, Procurra

41 Strategic Sourcing Tools Analysis ERP Vendors can provide a full set of Strategic Sourcing components including some that are Federally tailored; however, the depth of their capabilities varies CHARACTERISTICS AND TRENDS Vendors can provide a suite of components that cover all or most aspects of Strategic Sourcing and can be integrated with other ERP modules ERP Vendors are large vendors with fairly significant market traction in the commercial and government marketplaces with their full ERP package Functional components are typically integrated with a common data set shared throughout; however, vendors can provide these components/modules individually Overall implementation costs are often significantly higher than Strategic Sourcing Full Suite Vendors SAP and Oracle can provide Federal versions of their commercially focused suites ERP VENDORS ERP Vendors bring both Commercial and Federal experience and have broad coverage; however, there are significant functional depth variations within their capabilities Page 40 ERP VENDORS Definition: Enterprise Resource Planning (ERP) vendors who can provide at least basic capabilities for most or all of the Strategic Sourcing functional components Identified Vendors: 3 Examples: SAP, Oracle, PeopleSoft

42 Strategic Sourcing Tools Analysis Federal Government-Specific Tool Vendors can address the unique Federal contracting process; however, currently are limited in the full range of capabilities CHARACTERISTICS AND TRENDS Vendors provide tools that address the uniqueness of Federal contracting including processes, regulations (FAR, DFARS, etc.), and document structure (RFP documents, etc.) Vendors only support public sector organizations (Federal, State, and Local) and related organizations (Aerospace and Defense) Currently, Federally-focused solutions generally do not provide the full level of capabilities that can be provided by commercially- focused vendors; however, vendors are beginning to build out their capabilities, specifically within analytics and reporting Federal Government-Specific Tool Vendors often team with commercial tool vendors to close the gap on functionality/capabilities FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS Federal Government-Specific Tool Vendors have tailored solutions for the Federal acquisition processes; however, they do not generally provide the full range of functional component capabilities available through commercially-focused vendors Page 41 FEDERAL GOVERNMENT- SPECIFIC TOOL VENDORS Definition: Vendors who focus solely on providing functionality tailored to Federal-specific contracting processes with varying levels of capabilities Identified Vendors: 3 Examples: Compusearch, Distributed Solutions

43 Strategic Sourcing Tools Analysis Vendor NameSpend AnalysisE-ProcurementE-Sourcing Contract Management Supplier Management AECSoftXXXX AribaXXXXX EmptorisXXXX Global eProcureXXXXX Oracle (ERP)XXXXX SAP (ERP)XXXXX BaswareXXXXX BravoSolutionXXXX IastaXXXX KeteraXXXXX PeopleSoft (ERP)*XXXXX PerfectCommerceXXXXX NO IDENTIFIED FEDERAL EXPERIENCE IDENTIFIED FEDERAL EXPERIENCE Page 42 STRATEGIC SOURCING SUITE/ERP VENDOR LANDSCAPE BREADTH OF OFFERING STRATEGIC SOURCING SUITE/ERP VENDOR LANDSCAPE BREADTH OF OFFERING Of the 12 Strategic Sourcing Full Suite and ERP vendors, only 6 have identified Federal experience * PeopleSoft is owned by Oracle A high level comparative analysis of these vendors has been included in the Appendix

44 Strategic Sourcing Tools Analysis Page 43 Federal Government-Specific Vendors have primarily focused on Contract Management; however, they are building out broader capabilities FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS LANDSCAPE BREADTH OF OFFERING FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS LANDSCAPE BREADTH OF OFFERING A high level comparative analysis of these vendors has been included in the Appendix; in addition, a list of the 57 identified Limited Suite/Point Solution Vendors has been included in the Appendix Vendor Name Spend Analysis E- Procurement E-Sourcing Contract Management Supplier Management CACI X Compusearch X Distributed Solutions X

45 Strategic Sourcing Tools Analysis Page 44  Executive Summary  Introduction and Background  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

46 Strategic Sourcing Tools Analysis In addition to vendors and capabilities, there are a number of other major drivers that can affect the cost and time required for the AF to implement Strategic Sourcing technology tools Page 45 DRIVERS OF COST/TIMELINEDESCRIPTION Vendor(s) Selected/Functional Components (Tools) Implemented The type of vendor(s) selected and number and types of functional components that will be implemented Implementation Scale/Approach The scale (# of users, # of organizations, etc.) and roll-out approach (phased vs. non- phased, timing, etc.) for implementing tools in the AF environment Amount of Data/Content Required The amount of internal (e.g., spend data, specification level, etc.) and external (e.g., # of suppliers, # of catalogs, # of catalog items, etc.) data and content required Customization vs. Configuration Required The amount of customization (changes to code) versus configuration (changes to business rules without changing code) needed to meet AF requirements Deployment/Hosting ModelThe deployment hosting model required by the AF License ModelThe license model used by the AF (lease vs. buy) Integration with Current Systems Required The number of touch points and complexity of integration required to connect to current AF systems SecurityThe ability for tools to adhere to AF security requirements Training RequiredThe amount of training required for users to utilize the tools Page 45 COSTS/TIMELINE DRIVERS AND DESCRIPTION

47 Strategic Sourcing Tools Analysis Within each driver, there are a number of specific considerations for the AF that can drive cost and timeline Page 46 DRIVERCONSIDERATIONS FOR THE AF Vendor(s)Selected and Functional Components Implemented  Type of vendor(s) selected: Strategic Sourcing Full Suite Vendor, ERP Vendor, Federal Government-specific Tool Vendor, and/or Limited Suite/Point Solution Vendors  Number and types of functional components (spend analysis, etc.) that will be implemented (Note: some functional components such as E- Sourcing are more “standalone” and do not require integration) Implementation Scale/Approach  Number of end users who will be using the tool  Number of organizations (offices, MAJCOMs, etc.) with unique processes/requirements that will be using the tool  Phased rollout vs. Full rollout based on: o Functionality o # of end users o Depth of internal information/processes Amount of Data/Content Required  Amount of internal information and content required to meet AF requirements and needs (e.g., spend data, etc.)  Amount of external information and content required to meet AF requirements and needs (e.g., # of suppliers, # of catalogs, # of catalog items, etc.) Page 46 CONSIDERATIONS THAT AFFECT COST/TIMELINE DRIVERS (PAGE 1 OF 3)

48 Strategic Sourcing Tools Analysis Page 47 DRIVERCONSIDERATIONS FOR THE AF Customization vs. Configuration Required  Amount of customization (changes to code) that is required to meet AF- specific requirements and processes  Amount of configuration (changes to business rules, basic look and feel, etc. without changing code) that is required to meet AF-specific requirements and processes  Amount of configuration that can be done by AF end users after sufficient training versus configuration that must be done by the vendor implementation team Deployment/Hosting Model  Deployment/hosting model used: o Multi-tenant Software as a Service (SaaS) or Cloud o Single tenant on demand (hosted by vendor or 3 rd party partner) o License with 3 rd party hosting o Hosted behind the AF firewall License Model  Options available for o Lease licenses with maintenance updates only o Lease licenses with both maintenance and upgrades included o Lease licenses with additional value-added content included o Buy licenses (perpetual) with options to purchase maintenance and upgrades Page 47 CONSIDERATIONS THAT AFFECT COST/TIMELINE DRIVERS (PAGE 2 OF 3) Within each driver, there are a number of specific considerations for the AF that can drive cost and timeline (cont)

49 Strategic Sourcing Tools Analysis Page 48 DRIVERCONSIDERATIONS FOR THE AF Integration with Current Systems Required  Previous vendor experience with integration to Federal, DoD, and/or AF-specific systems  Number of touch points required with existing AF systems such as SPS, AFWay, ConWrite, data repositories, etc.  Availability of pre-built interfaces from vendors with SPS, Federal systems, ERP systems, etc. that can be leveraged during an implementation  Availability of integration methods/technologies such as XML, web services, etc. from vendors that can be used for integration and data transfer Security  Ability of the vendors to meet AF security requirements o Do the vendors have to go through AF-specific security certification processes? o Do the vendors have existing security certifications that meet AF requirements? Training Required  Amount of training required by AF staff to use a) basic capabilities resident in the tools once implementation has taken place and b) advanced and power user capabilities CONSIDERATIONS THAT AFFECT COST/TIMELINE DRIVERS (PAGE 3 OF 3) Within each driver, there are a number of specific considerations for the AF that can drive cost and timeline (cont) Page 48

50 Strategic Sourcing Tools Analysis Page 49  Executive Summary  Introduction and Background  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

51 Strategic Sourcing Tools Analysis As next steps, the AF should focus on understanding its high- level needs and requirements and collecting additional information prior to an acquisition decision Page 50 HIGH-LEVEL NEXT STEPS 1Communicate and brief assessment internally to AF stakeholders 2Reach out to other DoD organizations that have implemented Strategic Sourcing technology tools to discuss lessons learned, implementation successes and challenges, and overall experience* 3Develop an understanding of high-level needs and requirements 4Develop and send out a Request For Information (RFI) to collect more detailed information from vendors around capabilities, costs, etc. aligned with the high-level needs and requirements 5Develop a business case to evaluate the effectiveness of Strategic Sourcing solutions based on an understanding of total costs and calculation of a Return on Investment (ROI) 6Decide whether to move forward with an acquisition of Strategic Sourcing technology tools Page 50 * Reference slides in the Appendix for examples of implementations within the DoD and Points of Contact information

52 Strategic Sourcing Tools Analysis The AF should immediately understand its high level needs and requirements to drive the rest of the Strategic Sourcing technology assessment Page 51 UNDERSTAND HIGH-LEVEL NEEDS AND REQUIREMENTS  The AF should move forward with understanding its needs and requirements at a high level, including: o Functionality/capabilities: Prioritized list of functionality and high level capabilities based on needs and funding availability o Processes: High level AF acquisition and sourcing processes o Scale: The organizations and # of users that may potentially use the sourcing tools o Security: Security requirements and certifications that may be required for the sourcing tools to fit into the AF environment o Deployment/Hosting Model: Potential deployment/hosting models that the AF would consider Page 51

53 Strategic Sourcing Tools Analysis A Request For Information (RFI) will help the AF develop a more detailed understanding of the market required to move towards an acquisition decision Page 52 This assessment only provides the AF with the foundational knowledge necessary to further engage with vendors…a deeper understanding of their tools, specific capabilities, and costs is required prior to a future acquisition A detailed RFI can be sent out by the AF to the vendor community prior to a formal acquisition of sourcing tools to understand the sourcing tools and capabilities in greater detail based on high level AF requirements REQUEST FOR INFORMATION (RFI) OBJECTIVES Page 52

54 Strategic Sourcing Tools Analysis The RFI should address a number of key topics and questions Page 53 TOPICSUB-TOPICS/QUESTIONS Understand vendor capabilities in detail and relative to AF needs and requirements  What functional components can the vendor provide based on AF needs/requirements?  What capabilities and detailed sub-capabilities within each functional component can the vendor provide based on AF needs/requirements?  What are the trends in the vendor marketplace? What capabilities is the vendor building out in the future that will help it meet AF needs/requirements?  How does each vendor tool address specific AF business process scenarios? Understand DoD/Federal experience in detail  What DoD/Federal agencies has the vendor implemented its’ Strategic Sourcing tools in? Which specific organizations/offices?  Which functional components and capabilities have been implemented by the vendor within each DoD/Federal agency?  What was the scale of each implementation (# of organizations/offices, # of users, # of integration points, etc.)?  Which DoD/Federal systems were the tools integrated with during each implementation?  What were the implementation challenges that were faced and overcome and lessons learned that could be applied to an AF implementation? SAMPLE RFI TOPICS (PAGE 1 OF 2) Page 53

55 Strategic Sourcing Tools Analysis The RFI should address a number of key topics and questions (cont) Page 54 TOPICSUB-TOPICS/QUESTIONS Understand potential implementation timeline in detail  Based on high level AF needs/requirements, what is the anticipated timeline for implementing tools within the AF environment? Understand integration capabilities with AF systems in detail  Does the vendor have a detailed understanding of AF-specific systems?  What level of customization vs. configuration may be required based on high-level AF needs/requirements?  What integration tools/techniques/methods can the vendor leverage to limit the time and costs associated with integration to AF systems?  What deployment/hosting models can the vendor support? Understand costs in detail  What licensing/pricing models does the vendor support?  What are the Rough Order of Magnitude (ROM) costs for each functional component that can be provided based on high level AF needs/requirements? SAMPLE RFI TOPICS (PAGE 2 OF 2) Page 54

56 Strategic Sourcing Tools Analysis Following an RFI, the AF business case will evaluate an investment in Strategic Sourcing tools Page 55 SAMPLE BUSINESS CASE TOPICS  Highlight and prioritize AF needs, including which functionality is required and when, based on a high level understanding of requirements and processes and RFI responses (detailed understanding of the market, vendors, and capabilities)  Examine and quantify trade-offs based on the different types of solutions (e.g., implement full suite all at once vs. implement individual functional components as needed, etc.) and various deployment/hosting models  Understand potential savings/cost avoidance that can be achieved  Outline potential total costs based on RFI responses and drivers of cost/timeline including software (e.g., tools, database, etc.), implementation, hosting, etc.  Make a justification of needs by calculating an Return On Investment (ROI) Based on the business case, the AF should be able to decide on moving forward with an acquisition of Strategic Sourcing tools

57 Strategic Sourcing Tools Analysis Page 56  Executive Summary  Introduction and Background  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix Contents

58 Strategic Sourcing Tools Analysis The AF has a number of options to consider for the Strategic Sourcing tools it wants to implement and how they are deployed Page 57 OPTION AREADESCRIPTION Vendor/Tool Options Vendor and tool options available for the Air Force to address almost all steps of its Strategic Sourcing Model Deployment Model Options Deployment model options available for the Air Force to deploy Strategic Sourcing tools to its users License Model Options License model options available for the Air Force to acquire licenses of Strategic Sourcing tools for its users There are a number of other decisions for the Air Force to make regarding Strategic Sourcing tools based on its specific needs/requirements…the following slides provide options available for the Air Force in several key areas… OPTIONS FOR THE AIR FORCE TO CONSIDER

59 Strategic Sourcing Tools Analysis The AF has to decide the level of coverage it wants before selecting specific Strategic Sourcing vendors and tools Page 58 Pros: Cover almost all aspects of the AF sourcing model and meet most of the AF needs; can acquire a full integrated suite upfront; greater negotiating leverage with vendors Cons: Some functionality may not be used right away or at all Scenario 1: Cover Almost All Steps of the AF Sourcing Model Pros: Allows the AF to prioritize its needs and invest in those tools that are most critical upfront, allowing for a phased integration of Strategic Sourcing tools Cons: Additional needs identified at a future point must be met by either investing in the remaining components from a full suite vendor or integrating with tools from other vendors; will continue to require mostly manual processes/existing tools to cover the remaining steps of the AF sourcing model Scenario 2: Cover One or Some Steps of the AF Sourcing Model Based on Prioritization The following slides lay out the vendor/tool options for Scenario 1… SCENARIOS FOR VENDOR/TOOL OPTIONS

60 Strategic Sourcing Tools Analysis While no single vendor can meet all of the AF needs, the AF has many options to consider when choosing Strategic Sourcing vendors to cover most of its sourcing model Page 59 VENDOR/TOOL OPTION DESCRIPTIONPROSCONS Full Suite from Strategic Sourcing Full Suite Vendor Choose all functional components from a Strategic Sourcing Full Suite Vendor  Provides all functional components in a single integrated suite  Many vendors have market leading capabilities  May provide a fully integrated data model that can directly share and integrate data across functional components (dependent on specific vendors)  Currently, functional components are primarily based on commercial procurement processes  Overall vendor federal experience is limited (implementation experience with the full suite is almost non-existent) Full Suite from ERP Vendor Choose all functional components from an ERP Vendor  ERP Vendors such as Oracle and SAP provide Federally-focused solutions and have experience implementing them within DoD (Oracle has implemented within the AF)  Provides all functional components in a single integrated suite  May provide a fully integrated data model that can shared across functional components (dependent on specific vendor)  There are significant comparative functional depth variations within their capabilities and the individual modules  Overall implementation costs are often significantly higher than Strategic Sourcing Full Suite Vendors SCENARIO 1 VENDOR/TOOL OPTIONS (PAGE 1 OF 2) Page 59

61 Strategic Sourcing Tools Analysis While no single vendor can meet all of the AF needs, the AF has many options to consider when choosing Strategic Sourcing vendors to cover most of its sourcing model (cont) Page 60 VENDOR/TOOL OPTION DESCRIPTIONPROSCONS Suite from Federal Government- specific Tool Vendor Integrated With Additional Capabilities Choose all functional components from a Federal Government-specific Tool Vendor and supplement with additional capabilities available from commercially-focused vendors as necessary  Vendors can provide Federally- tailored solutions and have experience implementing them within DoD  Capability limitations in the Federal Government-Specific Tools can be supplemented by tools from commercially-focused vendors (e.g., Auctions, Spend Analysis, etc.)  Requires integration between Federal Government-specific Tools and other commercially-focused tools  May lack a common data model across components  Lack of key enabling functionality in specific areas Integrated Suite of Individual Functional Components from Multiple Vendors Choose select functional components from Strategic Sourcing Full Suite Vendors, ERP Vendors, Federal Government-specific Vendors, and/or Limited Suite/Point Solution Vendor and integrate  Allows the AF to choose best-in- class functional components from multiple vendors  Requires integration between functional components  Lacks a common data model across components  Not “one throat to choke” in the event of technology problems SCENARIO 1 VENDOR/TOOL OPTIONS (PAGE 2 OF 2) Page 60

62 Strategic Sourcing Tools Analysis Furthermore, there are a number of advantages and disadvantages for each tool deployment model option that the AF must consider Page 61 DEPLOYMENT MODEL DESCRIPTIONPROSCONS Multi-tenant Software as a Service (SaaS) or Cloud Model of deployment where the vendor leases a complete capability on a per-seat basis (not per server or another measure) for the tool to the AF for use as a service on demand with other customers  No investment in technology infrastructure required from the AF  Tool is maintained and upgraded as needed by the vendor – valued-added content also often included  Tools are accessible anywhere within the AF  Most prescribe to SAS-70 security audit standards  May not meet AF-specific security requirements  Multi-customer technology stack - shared platform for tools and data across organizations Single tenant on demand (hosted by vendor or 3 rd party partner) Model of deployment where the AF purchases or leases licenses and the vendor (or partner) hosts a specific instance on behalf of the AF  No investment in technology infrastructure required from the AF  The AF does not share the tool with other customers  Most prescribe to SAS-70 security requirements  May not meet AF-specific security requirements  Potential costs incurred for software maintenance and upgrades  Data resides on vendor infrastructure DEPLOYMENT/HOSTING MODEL OPTIONS (PAGE 1 OF 2) Page 61

63 Strategic Sourcing Tools Analysis Furthermore, there are a number of advantages and disadvantages for each tool deployment model that the AF must consider (cont) Page 62 DEPLOYMENT MODEL DESCRIPTIONPROSCONS License with 3 rd party hosting Model of deployment where the AF purchases or leases licenses and a 3 rd party vendor hosts an instance on behalf of the AF  No investment in technology infrastructure  The AF does not share the tool with other customers  Most prescribe to SAS-70 security auditing standards  May not meet AF-specific security requirements  Potential costs incurred for software maintenance and upgrades  Data resides on 3 rd party hosting vendor infrastructure  Value-added content is not provided by tool vendor Hosted behind the AF firewall Model of deployment where the AF purchases (common) or leases (uncommon, under this approach) licenses and hosts the tool in its own environment  Meets AF security requirements  AF has “control” over the tool and technology infrastructure  Greater customization capability over other models  AF is responsible for maintenance and upkeep of technology infrastructure (servers, etc.)  Potential costs incurred for software maintenance and upgrades  Value-added content is not provided by tool vendor DEPLOYMENT/HOSTING MODEL OPTIONS (PAGE 2 OF 2) Page 62

64 Strategic Sourcing Tools Analysis In addition, there are a number of License Model options available for the AF to consider LICENSE MODEL OPTIONS Page 63 LICENSE MODEL OPTIONDESCRIPTION TYPICAL DEPLOYMENT MODEL* Buy Licenses (Perpetual) with options to purchase maintenance and upgrades AF purchases the right to use a set of tool licenses for an indefinite period of time and has the option to purchase maintenance and upgrades for a period of time Hosted behind the AF firewall Lease Licenses with maintenance updates only AF purchases the right to use a set of tool licenses for a limited period of time and only receives routine software maintenance updates Hosted behind the AF firewall or License with 3 rd party hosting Lease Licenses with both maintenance and upgrades included AF purchases the right to use a set of tool licenses for a limited period of time and has the right to upgrade to newer versions that are released during the lease period Multi-tenant Software as a Service (SaaS) or Cloud Lease Licenses with value added content AF purchases the right to use a set of tool licenses for a limited period of time, has the right to upgrade to newer versions that are released during the lease period, and has value added content (e.g., detailed supplier information such as diversity etc.) Multi-tenant Software as a Service (SaaS) or Cloud NOTE: The Deployment Model(s) shown is the model typically associated with each License Model; however, each License Model is not limited to the Deployment Model(s) indicated; not every vendor provides each of the license models listed above

65 Strategic Sourcing Tools Analysis Page 64  Executive Summary  Introduction and Background  Methodology  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix o Methodology o Market Data and Information Providers o Limited Suite/Point Solution Vendors o Vendor Comparative Analysis o DoD Implementation Examples Contents

66 Strategic Sourcing Tools Analysis Identify Vendor Landscape Conduct Comparative Analysis Identify Key Takeaways and Next Steps Page 65 The team used a 4 step process to conduct the Strategic Sourcing technology research and analysis STRATEGIC SOURCING TECHNOLOGY RESEARCH AND ANALYSIS METHODOLOGY Research and identify basic market trends Research and identify market segments Identify functional components and key capabilities available in the marketplace Setup and conduct vendor presentations and demos Identify landscape of Strategic Sourcing technology vendors Identify those vendors with Federal government experience Identify select vendors for detailed comparative analysis Identify criteria for detailed comparative analysis of select vendors Identify vendor strengths and weaknesses Compare vendors Summarize key takeaways for the AF Identify next steps and provide follow up guidance on an RFI and business case Conduct Market Research

67 Strategic Sourcing Tools Analysis Page 66 The team leveraged a number of information sources for its research and analysis SOURCEDESCRIPTION Industry Analysts Subject Matter Experts (SMEs) with a deep understanding of the Strategic Sourcing technology market Vendor Websites and Brochures Websites, product brochures, and marketing materials available from vendors Vendor Presentations/Demos In person or web conference-based presentations/demos for a subset of vendors Market Research Reports Research reports from Gartner, AMR, Forrester, IDC, and other research sites INFORMATION SOURCES

68 Strategic Sourcing Tools Analysis Page 67  Executive Summary  Introduction and Background  Methodology  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix o Methodology o Market Data and Information Providers o Limited Suite/Point Solution Vendors o Vendor Comparative Analysis o DoD Implementation Examples Contents

69 Strategic Sourcing Tools Analysis Page 68 Market data and information providers can be segmented into 5 primary areas of focus; however, many vendors provide research across multiple segments Supply Market Research can also be found through trade publications, blogs and industry associations Industry- Focused Market Research US Market Research pertaining to a specific industry including major players, key statistics, and industry trends Forrester Gartner Yankee Group AMR Cross-Industry Market Research Market Research, facts and trends on a broader scale possibly with a global perspective focusing on multiple related industries IBISWorld PIU Frost & Sullivan Company Profile and Risk Assessments Research on specific companies usually includes a profile of the company, financial statements, outlooks, and risk assessments Duns & Bradstreet Thomson Hoovers I-Bank General Industry research with particular emphasis on industry and company economics and financials Goldman Sachs JP Morgan Scotia Bank MARKET DATA AND INFORMATION PROVIDER SEGMENTS Segment Definition Provider Examples

70 Strategic Sourcing Tools Analysis Page 69  Executive Summary  Introduction and Background  Methodology  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix o Methodology o Market Data and Information Providers o Limited Suite/Point Solution Vendors o Vendor Comparative Analysis o DoD Implementation Examples Contents

71 Strategic Sourcing Tools Analysis Vendor NameSpend AnalysisE-ProcurementE-Sourcing Contract Management Supplier Management AravoX BellwetherX CombineNetXX CVM SolutionsXX D&BXX EndecaX ePlusX Experian/EquifaxX InforXX JD EdwardsX Siemens SAS/DataFluxX VenDigitalXXX Versata/NextanceX ZycusXXX Page 70 LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE – WITH VERIFIED FEDERAL EXPERIENCE LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE – WITH VERIFIED FEDERAL EXPERIENCE 15 Limited Suite/Point Solution Vendors with some Federal experience have been identified that are capable of providing at least one of the five functional components VERIFIED FEDERAL EXPERIENCE

72 Strategic Sourcing Tools Analysis Vendor NameSpend AnalysisE-ProcurementE-Sourcing Contract Management Supplier Management Hiperos X iMany X MFG.com X Moai X Mashik X Newtron X Rosslyn Analytics X Selectica X Spend Radar X SupplierForce X SupplierSoft X Symfact X Trade Extensions XXX Vendormate X Verian X NO VERIFIED FEDERAL EXPERIENCE Page 71 LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE – WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 1 OF 3) LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE – WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 1 OF 3) In addition, many other Limited Suite/Point Solution Vendors without Federal experience exist and are capable of providing at least one of the five functional components

73 Strategic Sourcing Tools Analysis Vendor NameSpend AnalysisE-ProcurementE-Sourcing Contract Management Supplier Management Birchstreet X BIQ * XX Browz X CoExprise XXX Coupa Software XX eBreviate XXX EC Sourcing Group XX Elcom XXX Enporion XX Epiqtech XXX FullStep XX HedgeHog XXX IonWave XXX JVKelly XXX MetricStream XX Page 72 In addition, many other Limited Suite/Point Solution Vendors without Federal experience exist and are capable of providing at least one of the five functional components (cont.) LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE - WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 2 OF 3) LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE - WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 2 OF 3) NO VERIFIED FEDERAL EXPERIENCE

74 Strategic Sourcing Tools Analysis Vendor NameSpend AnalysisE-ProcurementE-Sourcing Contract Management Supplier Management Portum XXX Procurra Sourcing XX PurchasingNet XXX Scanmarket XX SciQuest XXX Software Solutions (SSI) X Symphony Spend Management Solutions XXX Synertrade XXX Quadrem XX Upside Software X Source One (WhyAbe) XXX Xcitec * X Page 73 In addition, many other Limited Suite/Point Solution Vendors without Federal experience exist and are capable of providing at least one of the five functional components (cont.) There are 100s of other Limited Suite/Point Solutions also available in the marketplace NO VERIFIED FEDERAL EXPERIENCE LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE - WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 3 OF 3) LIMITED SUITE/POINT SOLUTION VENDOR LANDSCAPE - WITH NO VERIFIED FEDERAL EXPERIENCE (PAGE 3 OF 3)

75 Strategic Sourcing Tools Analysis Page 74  Executive Summary  Introduction and Background  Methodology  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix o Methodology o Market Data and Information Providers o Limited Suite/Point Solution Vendors o Vendor Comparative Analysis o DoD Implementation Examples Contents

76 Strategic Sourcing Tools Analysis The team conducted separate vendor comparative analyses for Strategic Sourcing Full Suite/ERP Vendors and Federal Government-Specific Tool Vendors VENDORS FOR COMPARATIVE ANALYSES Strategic Sourcing Full Suite/ERP Vendors – All identified vendors selected (vendors capable of providing at least 4 of the 5 functional components): o Ariba o Emptoris o BravoSolution o SAP (ERP) o Oracle (ERP) o Global eProcure Federal Government-Specific Tool Vendors – 2 out of the 3 primary vendors selected*: o Compusearch o Distributed Solutions o PeopleSoft (ERP) o Basware o PerfectCommerce o AECSoft o Iasta o Ketera Page 75 Note: A detailed vendor comparative analysis was not conducted for Limited Suite/Point Solution Vendors; however, broad strengths/weaknesses have been identified for each functional component * CACI was excluded from the comparative analysis due to lack of participation from the vendor during the vendor presentations and limited information available on vendor website

77 Strategic Sourcing Tools Analysis The Strategic Sourcing Full Suite/ERP Vendors were compared relative to each other based on their Capabilities, General Experience/Viability, Government Experience, and Implementation Feasibility Page 76 Overall strengths and weaknesses of capabilities provided within each functional component Capabilities Current market traction Viability/financial position Scalability (to take on AF work) General Experience and Viability Federal/DoD experience Federal Government Experience General ability to meet implementation timelines based on configuration vs. customization levels (and additional considerations in each functional area) typically required and integration methods used Implementation Feasibility CRITERIA USED FOR STRATEGIC SOURCING FULL SUITE AND ERP VENDOR COMPARATIVE ANALYSIS CRITERIA USED FOR STRATEGIC SOURCING FULL SUITE AND ERP VENDOR COMPARATIVE ANALYSIS

78 Strategic Sourcing Tools Analysis Based on a rating of Strategic Sourcing Full Suite/ERP Vendors across the four criteria, several have been identified as Tier 1 vendors Page 77 VENDORCAPABILITIES GENERAL EXPERIENCE AND VIABILITY GOVERNMENT EXPERIENCE IMPLEMENTATION FEASIBILITY Ariba AA A A Emptoris AA B B SAP BB A C Oracle BB A C BravoSolution BA C B Basware CA C B AECSoft CC A B Global eProcure CC B B Ketera BC C B Iasta CB C C PerfectCommerce CC C B PeopleSoft CC C C STRATEGIC SOURCING FULL SUITE/ERP VENDOR COMPARISON SUMMARY A further breakdown of the rating including strengths and weaknesses are presented on the following slides… Tier 1 Vendors Tier 2 Vendors Tier 3 Vendors

79 Strategic Sourcing Tools Analysis Amongst Strategic Sourcing Full Suite Vendors, Ariba and Emptoris are functionally the most superior from a capabilities perspective Page 78 STRATEGIC SOURCING FULL SUITE/ERP VENDOR - CAPABILITIES RATING KEY - CAPABILITIES A– Has Significant Capabilities* B– Has Moderate Capabilities* C– Has Limited Capabilities* D- Has Very Limited to No Capabilities* * Across Functional Components VENDORRATINGSTRENGTHSWEAKNESSES Ariba A Broad suite coverage and solid capability in nearly all areas Legacy customers upset over lessening support and maintenance price increases; strong emphasis on migration to SaaS vs. installed Emptoris A Broad suite coverage (except P2P) and strong to leading capabilities in all areas in which they compete New CEO, company in transition; private equity owners may opt to focus on non-organic growth at expense of product SAP B New SRM product a significant improvement and solid capabilities in 50-75% of key product areas Overall costs associated with deployments and limited product capabilities in certain areas Oracle B Strong usability and solid functional capabilities in majority of functional areas Overall expense associated with deployment and limited product capabilities in certain areas Bravo Solution B Very strong capabilities in key product areas as well as enabling event-driven services for complex categories Not as well known in the market as other companies Ketera B Strong UI; Very low cost solutions with broad footprint coverage Questionable business strategy (i.e., marketplace model) Perfect Commerce C Strong eProcurement and sourcing capabilities in a hosted environment Product and solution depth in areas where suite is not strong; Historic service and support issues Global eProcure C An inexpensive solution with a broad footprint Solution depth and breadth; Attempts to push services to drive up the overall "ticket" for each customer Basware C Best-in-class invoice automation capability and solid capabilities in other product areas Not as well known as other providers and fewer success stories given European focus PeopleSoft C Decent usability and moderate product coverage; Solid services procurement capability Limited product depth and overall cost of ownership and deployments AECSoft C Broad product suite outside of P2P; Low costProduct depth and overall capabilities Iasta C Strong core sourcing capability and overall user experience; Organizations like doing business with Iasta Depth in non-core product areas

80 Strategic Sourcing Tools Analysis Amongst the Strategic Sourcing Full Suite Vendors, Ariba, Emptoris, and BravoSolution are considered best in class for General Experience and Viability Page 79 STRATEGIC SOURCING FULLSUITE/ERP VENDOR - GENERAL EXPERIENCE AND VIABILITY RATING KEY – GENERAL EXPERIENCE A– Has Significant Experience and No Viability Issues B– Has Moderate Experience and Limited Viability Issues C– Has Limited Experience and Some Viability Issues D - Has Very Limited to No Experience and Major Viability Issues VENDORRATINGSTRENGTHSWEAKNESSES AribaA Best in class customer and overall experienceNo major weaknesses EmptorisA Best in class customer and overall experienceNo major weaknesses BravoSolutionA Best in class customer and overall experienceNo major weaknesses BaswareA Very strong customer references and overall customer experience Not as well versed in functional integration and business requirements for technology areas not covered by suite (e.g., e- sourcing) IastaB Very strong customer references and overall customer experience Not as well versed in functional integration and business requirements for technology areas not covered by suite (e.g., P2P) SAPB Significant depth and experience implementing P2P and sourcing Experience not uniform across the board; Variable customer experiences based on implementation success OracleB Broad base of experience in most areas of the sourcing and P2P market Experience not uniform across the board; variable customer experiences based on implementation success Global eProcure C Customer orientation -- experience largely built around serving customers as a solutions/services provider Concerns over depth in key areas and overall software experience PeopleSoftC Loyal customers often willing to sacrifice functional depth for staying on the PSFT platform in certain sourcing/P2P areas Experience not uniform across the board; variable customer experiences based on implementation success Perfect Commerce C Customer satisfaction metrics vastly improved in recent years Variable historic references and customer experience AECSoftC Customers often use AECSoft as a highly target provider solving a single problem -- strong customer experience in this scenario Not known for overall depth and ability to serve customers outside of targeted areas; Limited non-automated support structure KeteraC Service levels improved in recent years Variable customer service and support levels in past; Moving away from enterprise software model

81 Strategic Sourcing Tools Analysis Amongst Strategic Sourcing Full Suite and ERP Vendors, Oracle has direct experience implementing Strategic Sourcing tools within the Air Force Page 80 VENDORRATINGCOMMENTS Oracle A Experience within AF (AFWay, ECSS/Log, DEAMS/FM) SAP A Experience within DLA (Procurement for Public Sector suite) Ariba A Experience within the Navy (E-Sourcing) and State AECSoft A Experience within DoD (Army/AF Exchange) and USPS Global eProcure B Experience within DOJ, HUD, HHS, USPS, and Unicor Emptoris B Experience within USPS (E-Sourcing including eRFx, auctions, optimization, and negotiations) PeopleSoft C Local/state experience only Iasta C Local/state experience only BravoSolution C UK government experience only Basware C European/Australian government experience only Ketera C UK government experience only PerfectCommerce C No public sector experience identified STRATEGIC SOURCING FULL SUITE/ERP VENDOR – FEDERAL GOVERNMENT EXPERIENCE RATING KEY – FEDERAL GOVERNMENT EXPERIENCE A– Has DoD Experience B– Has Federal, but no DoD Experience C– No Federal/DoD Experience

82 Strategic Sourcing Tools Analysis Within the Strategic Sourcing Full Suite/ERP Vendors, Ariba tends to be the strongest when implementing the various functional components Page 81 VENDORRATINGSTRENGTHSWEAKNESSES AribaA SaaS and installed models have proven track recordsLimited and sunset support for older installed releases Global eProcure B Manage all aspects of implementation internally assuring process control Limited broad-scale deployment experience compared with competition BaswareB Strong customer references for deployment success (even in customized versions) Limited integrator relationships in some areas KeteraB Very simple deployment for new solutionsDeployments often limited in scope for new solutions EmptorisB Implementation success metrics almost uniformly highPoor customer support for contract management in 2008 Bravo Solution B Strong implementation success (including customized deployments) Strong support but heavily configured (and/or customized) solutions require long implementation cycles Perfect Commerce B Customer experience around implementations improvingLegacy implementation problems AECSoftB Satisfactory deployment/implementation success Deployments often limited in scope (limited base of reference for all but the smallest implementation deals) SAPC* Some strong configuration capabilities without requiring customization/custom development Highly variable implementation success; requires third- party integrators OracleC Can leverage Oracle data model to pull in other modular information sources (e.g., ERP, planning, etc.) Highly variable implementation success; requires third- party integrators PeopleSoftC Solid E-Sourcing Implementation Capability Highly variable implementation success; requires third- party integrators IastaC Leading implementation and support metrics Sometimes requires 3 rd party solutions to implement a full suite of products STRATEGIC SOURCING FULLSUITE/ERP VENDOR - IMPLEMENTATION FEASIBILITY RATING KEY – IMPLEMENTATION FEASIBILITY A– Significant majority of timelines met within expectations B– Most Timelines met within expectations C– Has Significant Challenges Meeting Implementation Timelines * Higher for SAP E-Sourcing, Spend Analysis, and private sector Contract Management (SaaS)

83 Strategic Sourcing Tools Analysis The Federal Government-Specific Tool Vendors were compared relative to each other based on their Capabilities, Federal Government Experience, and Implementation Feasibility Page 82 CRITERIA USED FOR FEDERAL GOVERNMENT-SPECIFIC TOOL VENDOR COMPARATIVE ANALYSIS CRITERIA USED FOR FEDERAL GOVERNMENT-SPECIFIC TOOL VENDOR COMPARATIVE ANALYSIS Overall strengths and weaknesses of capabilities provided within each functional component Capabilities Federal/DoD experience Federal Government Experience Customization vs. configuration typically required Implementation methods used (including pre-built interfaces) Implementation Feasibility

84 Strategic Sourcing Tools Analysis Based on a relative comparison of Federal Government- Specific Tool Vendors across the three criteria, Compusearch has the advantage over Distributed Solutions Page 83 VENDORCAPABILITIES GOVERNMENT EXPERIENCE IMPLEMENTATION FEASIBILITY Compusearch B A A Distributed Solutions C B B FEDERAL GOVERNMENT-SPECIFIC TOOL VENDOR COMPARISON SUMMARY A further breakdown of the ratings are presented on the following slides…

85 Strategic Sourcing Tools Analysis Within the Federal Government-Specific Tool Vendor space, Compusearch can provide greater capability breadth and depth compared to Distributed Solutions Page 84 VENDORRATINGCOMMENTS Compusearch B Some analytics/reporting capability No demand management/ planning No spend classification engine Workflow in place for E-Procurement and Contract Management Does not support vendor catalogs Supports all FAR contract types No auction capabilities built-in Provides basic award optimization capabilities Supports limited vendor profile capture and performance information capture Distributed Solutions C Limited analytics/reporting capability in place currently No spend classification engine No demand management/ planning Roles-based workflow in place for E-Procurement and Contract Management Does not support vendor catalogs Supports all FAR contract types No auction capabilities built-in Provides limited award optimization capabilities User configurable KnowledgeBase in place to capture and share acquisition information Supports limited vendor performance information FEDERAL GOVERNMENT-SPECIFIC TOOL VENDOR - CAPABILITIES RATING KEY - CAPABILITIES A– Has Full Capabilities* B– Has Significant Capabilities* C– Has Limited Capabilities* D- Has Very Limited to No Capabilities* * Across Functional Components

86 Strategic Sourcing Tools Analysis Compusearch has significant Federal experience, including experience within several DoD organizations Page 85 VENDORRATINGCOMMENTS Compusearch A  Experience with implementing part or all of its PRISM suite within 10 Federal departments  DoD experience with: o Army Non-appropriated Fund Contracting (MWR) o Department of Defense: Business Transformation Agency (BTA) o Joint Chiefs of Staff o National Geospatial-Intelligence Agency o Office of Naval Research Distributed Solutions B  Experience within Labor, FEMA, and VA  No identified DoD Experience FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS – FEDERAL GOVERNMENT EXPERIENCE RATING KEY – FEDERAL GOVERNMENT EXPERIENCE A– Has Significant Federal Experience including DoD B– Limited Federal /DoD Experience

87 Strategic Sourcing Tools Analysis Compusearch has experience integrating its tools with a number of legacy and COTS applications and comes with many pre-built interfaces Page 86 VENDORRATINGCOMMENTS Compusearch A  Implementations have primarily been based on configuration of business rules and workflow versus customization (changes to code) to fit customer needs  Experience integrating with home-grown legacy applications and ERP and other COTS applications  Interfaces have been built for Oracle procurement tools, Oracle financial tools, SAP ERP, Oracle/PeopleSoft HR, Momentum Financials, and other systems  Pre-built interfaces with Federal systems such as CCR, ORCA, EDA, WAWF, FedBizOpps, FPDS-NG, and several others Distributed Solutions B  Experience integrating with legacy acquisition, Business Intelligence (BI), financial, and logistics applications  Pre-built interfaces with Federal systems such as CCR, FedBizOpps, FPDS-NG, ORCA, ePLS, and PPIRS  Ability for users to configure business rules and workflow  Configuration versus customization required has typically varied depending on customer requirements  Out of the box functionality can be implemented as quickly as 20 business days FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS – IMPLEMENTATION FEASIBILITY FEDERAL GOVERNMENT-SPECIFIC TOOL VENDORS – IMPLEMENTATION FEASIBILITY RATING KEY – IMPLEMENTATION FEASIBILITY A– Mostly configuration is typically required and/or many pre-built system interfaces exist B– Some customization is typically required and/or some pre-built system interfaces exist C– Mostly customization is typically required and/or limited pre-built system interfaces

88 Strategic Sourcing Tools Analysis Overall, limited Suite/Point Solution Vendors have a number of strengths and weaknesses for each functional component compared to other vendors Page 87 FUNCTIONAL COMPONENT STRENGTHSWEAKNESSES Spend Analysis Classification levels/success often higher Can work with multiple taxonomies, analytics, strategy development, etc. Often require multiple solutions (e.g., classification + BI) vs. stand alone offerings E-Procurement Price Large-scale references (often middle market) Supplier enablement Content management E-Sourcing Price Usability Third-party content/benchmarks/supplier directories (in certain cases) Feature depth Linkages to other modules (e.g., contract management) Contract Management Workflow Configurability Legal/sell-side tie-in (single deployment) Compliance management N/A Supplier Management Configurability Workflow Large scale deployment experience Third-party content integration Push/pull to all systems Still an immature market with limited references (even for top point solution providers) LIMITED SUITE/POINT SOLUTION VENDORS STRENGTHS AND WEAKNESSES

89 Strategic Sourcing Tools Analysis Page 88  Executive Summary  Introduction and Background  Methodology  Technology Marketplace  Drivers of Cost and Timeline  Next Steps/Follow-on Guidance  Options Available for the AF  Appendix o Methodology o Market Data and Information Providers o Limited Suite/Point Solution Vendors o Vendor Comparative Analysis o DoD Implementation Examples Contents

90 Strategic Sourcing Tools Analysis Compusearch has successfully implemented its Federally- focused tools within the Army FMWRC Page 89 COMPUSEARCH STANDARD NON-APPROPRIATED CONTRACTING SYSTEM (SNACS) DoD Customer: United States Army Family & MWR Command (FMWRC) Period(s) of performance: 01/01/1999 – 10/31/2005, 11/01/2005– 10/31/2008 Project Description: Provide the PRISM solution for U.S. Army Family & MWR Command to for use in all procurement offices throughout the U.S. Army Non-Appropriated Funds Division (CONUS/OCONUS) allowing the contract officers/specialists to create requisitions, solicitations, contracts, and modifications as well as track all bids, perform bid evaluation, closeout of awards, and archiving of closed documents Number of applications, users, and locations supported: Approximately 4,300 people, spread over four locations (U.S. CONUS, Germany, Korea, Hawaii). System Integration services provided: Installation and configuration services for both CONUS and OCONUS sites within the FMWRC organization, including supporting the FMWRC database administrators in order to ensure the efficient operation of the PRISM application Government POC: Mr. Andrew Urben Contracting Officers Representative Phone number: (703) Fax number: (703) address:

91 Strategic Sourcing Tools Analysis SAP is implementing its Procurement for Public Sector (PPS) suite at the Defense Logistics Agency (DLA) Page 90 SAP-BASED DLA E-PROCUREMENT SYSTEM DoD Customer: Defense Logistics Agency (DLA) Project Description: Implementing tools including SAP Procurement for Public Sector (PPS), SAP Document Builder, and SAP Records and Case Management. These tools will be integrated with existing SAP products including SAP ERP, SAP Business Warehouse and SAP Enterprise Portal Benefits/ Impact: Tighter Integration with the DLA Electronic Business System (EBS) Reduced operational costs from eliminating maintenance of disparate legacy contracting software Greater ability to more effectively streamline and manage procurement operations by using one system Improved efficiency and accuracy with interfacing to external systems, such as DoD Electronic Document Access (EDA) and the DCMA Mechanization of Contract Administration Services (MOCAS) System Implementation Success Plan: Conduct a two increment Plan/Analyze Phase to identify and document existing business requirements and perform a comparison of those requirements to the proposed software solution Conduct a Test Phase that includes multiple system test passes, a full regression test, an operational test (a clean run of system test cases and scripts), a user test and a performance test Include Go/no Go criteria to confirm that the system is ready to be moved to production Ensure on-going Post-Production Support and Risk Management to monitoring of business and technical performance of E- Procurement software, the core EBS system, and all interfaces to detect and handle any problems as soon as possible Government POCs: Process Lead - (703) Solution Delivery Lead - (215)

92 Strategic Sourcing Tools Analysis In addition, Oracle and Ariba both have experience implementing their Strategic Sourcing technology solutions within DoD Page 91 VENDORDOD CUSTOMER CONTRACT NUMBER(S) DESCRIPTION OF WORK CONDUCTED GOVERNMENT POC Oracle Air Force - AFWAY FA877006F8002 (GS35F0108) Implemented a Web- based system for procuring commercial IT assets and services and automates the purchasing process (AFWAY) Will Bishop Ariba Navy - Naval Inventory Control Point (NAVICP) N DQ082 N CQ423 Implemented E-Sourcing (reverse auction) tool within NAVICP Debra Kessler: Y.MIL EXAMPLES OF STRATEGIC SOURCING TECHNOLOGY IMPLEMENTATIONS WITHIN DOD


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