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By Alex Klein, COO at Efficio


In part one of this series, I made the case for a solid, well conceptualised procurement transformation plan – the importance of which cannot be understated in any attempt to reduce cost. But, it’s equally important to note that this is only step one. After all, a plan without action is just a speech, and you can have the most revolutionary idea for your organisation, but without buy-in to facilitate that plan, nothing will happen.

For this reason, the Chief Procurement Officer (CPO) must pitch transformation to the board as a business proposition – something along the lines of, “If you give me X, I will bring you Y in savings.” And that begins with a baseline savings plan.

The hardest part is deciding where to start – which part of third party spend to attack first, with so many enticing options on offer. For example, you could approach it by business unit, or you might do it supplier-by-supplier. With the first option, you’ll forgo any scale opportunity and the advantage of leveraging spend across the business; but with the second, you’ll have no competition in play. The best, most effective way to go, however, is to implement it by category. Travel expenses could be one; and devices, laptops and desktops could be another.

This method of plotting out spend into categories – that include the annual spend, an estimate of addressability and a potential savings range, divided into “sourcing waves,” – paves the way for a clear, direct, and focused and savings plan. This plan can then be used as a skeleton to flesh out your approach to spend, addressing five to 15 categories at a time.

By addressing spend in this way, you are provided with a natural portfolio effect that works by spreading risk across categories, since you are attacking many different categories with different budget-holders and suppliers at once. Some of these categories may not generate the outcome you’d hoped for, but another couple could provide a hefty 25% saving, which would counterbalance the shortfall of another. Whilst this is certainly a simple enough logic, in order to make it a success, there are a number of factors that must be taken into account first:

  • Measuring spend on the addressability scale

First on the agenda is addressability. Failing to factor this in and declaring that “we can deliver 10% savings across 100% of the spend” is a classic mistake. The problem is not the 10%, it’s the erroneous assumption that 100% of the spend will be addressable. Not only will you never include the various one-off purchases in your tail spend, but spend will also ‘disappear’ on you as you progress down the sourcing process. We jokingly call this Shrinking Spend Syndrome (SSS).

For example, you have a big outsourcing contract with IBM for 10 years that can’t really be touched, business unit X has pulled out of the effort, and it turns out that about 30% of the purchases in your category are bought on behalf of customers on a pass-through basis, therefore lowering savings. These situations will creep up on you, and you still end up saving the projected 5-10% – but on a hopelessly smaller base. To account for addressability, this risk should be anticipated at the start by discounting each category by at least 25%.

  • Category prioritisation

There will be as many as 40-50 categories for most businesses, so where do you start?

Enter the “category bubble chart”. By plotting categories on a chart based on savings potential and implementation difficulty, CPOs can have a clear view of the categories easiest to pursue, while also providing the biggest rewards. These rewards – or rather ‘savings potential’ – should be based on several factors, including the addressable spend, the current state of procurement sophistication, the competitiveness of the supply market, and the existence of concrete supply and demand-side improvement opportunities. For the other axis of the chart, to determine the implementation complexity, the CPO must consider the following:

Are there credible supplier alternatives?

How complex and costly is it to switch suppliers?

Are there any internal obstacles that must be overcome to push this through?

In addition to picking high-value, quick-win categories in the first instance, it is also important to consider the categories that have strong budget-holder buy-in and iterate your chart depending on business priorities.

  • Managing expectations

Finally, timing is a crucial consideration when building a sourcing savings plan. Often, the time it takes to execute such a plan is vastly underestimated. On average, it takes six months to strategically source a category, two months for developing the baseline and agreeing the strategy, and four months to issue the RFP, conduct negotiations, and select suppliers. There is no denying it is a lengthy process, and it needs to be thorough – cutting corners or rushing simply isn’t an option. Yes, you will have push-back from the wider business during this time, and yes, you will have to fight your corner. But if a transformation doesn’t feel uncomfortable, then is it really transformation?


Building a procurement investment business case

Once your sourcing savings plan is in place, you need to estimate the level of investment required in the procurement function to achieve those desired outcomes. When building such a business case, you must consider the various costs associated with hiring additional strategic procurement resources, upskilling, or training existing employees, new IT systems or tools – and, finally, any external consultancy support that might be needed.

The procurement transformation business case then consists of pledging to deliver a specific savings target in return for these investments. If your spend is of reasonable magnitude, then the return on investment (ROI) should make for an attractive proposition.


Ensuring program structure and governance

Delivering on a procurement transformation plan is a cross-functional effort – it requires engagement at all levels, and this is where a solid programme structure is essential. The transformation programme is typically divided into several workstreams. On one side, there are the sourcing teams responsible for executing the new strategic sourcing process. On the other side, there are the functional improvement workstreams – organisation and operating model redesign, recruitment, sourcing, supplier management and P2P process design, roll out and training, as well as IT system partner selection and implementation. The sourcing teams, in particular, should be well resourced and truly cross-functional in nature. The most successful transformation projects are co-driven by the business, rather than just procurement driven.


Turning a plan into action

If you’ve followed the above steps, then congratulations – you’re ready to embark on your procurement transformation journey. All the aspects should now be lined up, ready to pull into an 18-month programme timeline. Most crucial to its success, however, will be executive sponsorship – not only with  regards to financial sponsorship, but in C-suite time and effort.

Making sure that every player is in agreement – the CEO, CFO, COO, CIO, and the various business unit heads – you can proceed with a united front towards your goal, ensuring the necessary approval en route. This is what facilitates true engagement.

But you can’t relax just yet. Once your plan has received sign off, you’ll need to act quickly – it’s not enough for your plan to be revolutionary, it must be detailed in the extreme so that you can get off the start line without hesitation. Delivering the plan to any success will rest upon buy-in and visibility across the business, which, ultimately, will depend on cross-functional alignment. Once this is in place, the true profit potential of procurement and can reached.



Dissecting the expansion of online checkouts




Daniel Kornitzer, Chief Business Development Officer


Card payments have long existed as the preferred payment method for online consumers. But in recent years we have begun to see a rise in the use of alternative payment methods. Although card payments continue to serve the majority, it is becoming increasingly clear that consumer preference is diverging rather than reaching a consensus. Across the globe local preferences have developed as eCommerce has grown, and across the global digital payments landscape card payments are being passed over for new ways to pay.

Alternative payment methods are on the rise as they address several of the hurdles which have prevented cards from achieving total rule over consumer preference for online payments. Here are four key reasons for this:

  1. Alternative methods offer a superior consumer experience, particularly when it comes to mCommerce. With the rise of new regulations such as Strong Customer Authentication and developments in Open Banking, alternative payment methods can be faster and easier to use for consumers.
  2. New payments methods such as crypto are growing in popularity thanks to a more attractive offering to consumers such as lower cross border payment fees.
  3. With the digitalisation of services forcing many customers to pay online for the first time and many experienced online shoppers looking for more secure ways to pay, the security of financial data is a major concern. Alternative payment methods can protect customer details by removing the need to share bank details at the checkout.
  4. Not all consumers have bank accounts or a debit card. By offering alternative payment methods businesses are enabling these customers to join the digital economy.

Daniel Kornitzer

Businesses have been watching these trends closely and are constantly looking to improve their checkout experience for consumers accordingly.


The impact of COVID-19 on online payments

The need for businesses to expand their online checkout to meet changing consumer expectations is not a new trend. However, it has certainly been accelerated by COVID-19. The majority of businesses agree the pandemic has shifted consumer payment preferences, with alternative payment methods gaining in popularity.

Research shows businesses have seen more alternative methods chosen at their online checkouts with a greater percentage of consumers choosing digital wallets (57%), mobile wallets (39%) and eCash (28%). This has caused businesses to reconsider the way they understand payments, looking beyond traditionally methods to newer consumer friendly alternatives. With this is mind, reports suggest more than 60% of businesses are now making improving their checkout a top priority to fulfil the new high standard of consumer expectations.


Businesses are actively expanding their online checkouts

If we compare data from 2020 to 2021 on the payment methods offered or planned to be offered by businesses in the next one to two years, the trend is clear.

The number of businesses not offering or not intending to offer alternative payment methods is falling, as more and more start to recognise the importance of offering choice at the checkout. In the last year alone the increase in the adoption of alternative payment methods has risen dramatically, particularly crypto and eCash. As businesses begin to understand the urgency of upgrading the checkout experience, it is clear that alternative payment methods will play a key role in making this a reality.


Establishing crypto as a key player

One of the most interesting areas of payments which businesses should be watching is crypto. Research shows businesses are already backing this trend with almost half considering adding crypto as an alternative payment method as an immediate priority, believing it will help them reach new markets, and more than 50% already have confidence in crypto as the future of payments.


Diversifying the checkout as a form of defence

As well as offering a better customer experience and reaching new markets, businesses are expanding their checkouts with alternative payment methods to combat other familiar problems.

Most businesses see their current levels of cart abandonment as an issue, with research showing almost half have experienced an increase in levels of abandonment at the checkout in 2021.  Businesses consider two of the most significant causes of this to be card declines and absence of the customers’ preferred payment method. Offering alternative payment methods is an effective way of tackling these problems at the checkout.

The rise of fraudulent transactions is also becoming a more pressing concern for businesses, with the number of fraudulent transactions increasing since the start of the pandemic. Diversifying the checkout with alternative payment methods can be used as a valuable strategy to lower fraudulent transactions.


Looking to the year ahead

2022 looks set to be another year where we will see businesses continue to adopt new payment methods at their online checkout in a bid to keep up with consumer expectations.

By working with a leading payments partner, businesses can benefit from access to a range of payment methods through a single API integration, allowing ambitious plans to become a reality in the year ahead.

All data from this article is taken from our recent research report Lost in Transaction: Finding competitive advantage at the checkout.


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How bug bounty programs can help financial institutions be more secure




Rodolphe Harand, Managing Director at YesWeHack


Financial services have been one of the most heavily targeted industries by cybercriminals for several years. One alarming stat from the Boston Consulting Group found these firms to be 300x as likely as other companies to be targeted by cyberattacks.

Furthermore, the pandemic has led to a significant increase in the number of cyberattacks targeting financial institutions (FIs), with around 74% experiencing a spike in threats linked to COVID-19.

With FIs holding some of the largest collections of sensitive and private data, it’s clear they will remain an attractive target for malicious actors, especially as any data stolen can be used for fraudulent activities. This leads to the reputational damage of the financial entity that was compromised and has a knock-on effect in terms of monetary and reputational damage to affected customers.

For CISOs at FIs, the conundrum faced is how do you protect intellectual and customer data, and ensure accountability and transparency for clients and stakeholders, at a time when the pandemic has created budget constraints. Research from BAE Systems found that last year alone, IT security, cybercrime as well as fraud and risk departments had their budgets cut by a third.

Below we look at how bug bounty programs can help to address these pressing issues.


Protecting valuable data

Protecting customer and intellectual data has always been a top priority for FIs. However, as opportunistic cybercriminals have a lot to gain by stealing this valuable data, there is a constant evolution of threats, which means FIs must stay on their toes. By deploying a bug bounty program, FIs can work with ethical hackers that have a wealth of experience and unique skills when it comes to identifying security weaknesses within a FI’s defence, thus helping to implement effective security measures to help prevent data breaches.

Building trust among various stakeholders such as customers, suppliers and investors is critical for achieving business goals. By deploying a bug bounty program, FIs send out a message that they care about protecting the security of the data of those they work with – which in turn can have a cascading effect resulting in better business performance.


Improving accountability  

For FIs to win customers and keep them happy, amidst the growing threat of neo banks and customer-centric fintech organisations, speed of innovation is crucial. As such, many FIs have adopted an agile approach to build, test, and release software faster to bring online and mobile banking solutions to market quicker. However, this can create frictions between development and security teams. Security mandates are deemed to be unnecessarily intrusive and a cause of delayed application development and deployment.

Yet, with DevOps teams needing to build and deploy applications faster than ever before, an epidemic of insecure applications has emerged. According to Osterman Research, 81% of developers admit to knowingly releasing vulnerable applications, while research from WhiteSource found 73% of developers are forced to cut corners and sacrifice security over speed.

With developers often not having the time, tools, skills, or motivation to write impeccably secure code, there is an evident need to provide developers with more support when it comes to building applications securely Fortunately, bug bounty programs can provide a “fact-based” financial implication of inherent security flaws within the process. This makes it possible to hold development teams and service providers accountable for creating or delivering insecure products, thus addressing inherent security gaps within the business units and helping to drive continuous improvement.

Moreover, security awareness and education of developments teams can be improved significantly for those developers that are directly involved with the management of vulnerability reports for their bug bounty programs. This is because, the mere fact of exchanging information with ethical hackers, or assimilating the thinking of a potential hacker and having proof of concepts of vulnerability exploitation on their application components, naturally accelerates consideration of security early in the development stage and provides ongoing learning.


Get more return on your investment

According to Gartner, 30% of CISOs effectiveness will be directly measured on their ability to create value for the business. When security budgets are challenged, CISOs need to demonstrate business value through initiatives designed to enhance efficiency whilst stretching the dollar.

This is where bug bounties can help tremendously. Compared to conventional penetration testing, bug bounty offers a fast, complete, and measurable return on your security investment, with businesses only paying out for successful discovery of vulnerabilities. Equally, businesses get access to hundreds of ethical hackers that can test their programs, each with their own unique skillsets as opposed to only one skilled researcher testing the network. This results-driven model ensures you pay for the vulnerabilities that pose a threat to your organisation and not for the time or effort it took to find them.

Bug bounty programs also deliver rapid vulnerability discovery across multiple attack surfaces. With this approach, organisations receive prioritised vulnerabilities and real-time remediation advice throughout the process to accelerate the discovery of, and solution to vulnerabilities.

Another appeal of bug bounties is that due to the continuous nature of testing, more vulnerabilities are found over time as opposed to pen-testing. This is key to financial institutions that require agility to keep up with the continuous roll-out and updates of applications.


The cornerstone to a successful security programme

The risk posed to financial institutions by cyber threats will only continue, as evidenced by the number of data breaches seen in recent times. The COVID-19 pandemic has only exacerbated these risks, especially with almost all FIs having needed to shift to a remote working environment – which has only widened the attack landscape.

For FIs, a bug bounty program should be considered a fundamental cornerstone of any security strategy, with it being a modern-day cybersecurity solution that is well-equipped to tackle the immediate security challenges they face. In doing so, FIs will not only prove to customers and stakeholders their commitment to data protection and security but this will also be help them to avoid the monetary damages that could be imposed by regulators if a breach was to take place.


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