The current economic slowdown is inspiring banks of all sizes to seek ways to reduce costs and achieve efficiencies. For Dallas-based Comerica ($60 billion in assets), a recently signed seven-year procurement services contract with Accenture is a key part of this strategy. This business process outsourcing (BPO) agreement is designed to reduce Comerica's costs for purchased goods and services through improvements to supplier relationships, procurement operations and technology, and spend management, according to the companies.
The deal comprises Accenture's typical procurement transformation and BPO service, says Terry Moore, the firm's Atlanta-based managing director, banking, North America. "This consists of strategic sourcing, category management, invoice processing, process modeling and the technology platform on which we run our procurement business," he explains. "It's an end-to-end, source-to-pay solution."
Accenture is partnering with Comerica to drive significant, long-term cost savings at the bank, according to Moore. "We want to ensure our clients can maintain their level of service over time as their businesses change and as commodity prices change," he says.
Moore adds that given current market conditions, banks are seeking cost savings wherever they can find them, including in procurement. But Accenture's BPO service is not just about helping banks save money. "This is also about capabilities enhancement over a long period of time," Moore insists.
"We believe this agreement will reduce our operating expense base, enhance our current procurement capabilities and enable more efficient growth," said Elizabeth Acton, EVP and CFO at Comerica, in a statement.
Accenture's Moore notes that it often is difficult for many banks to achieve such goals on their own. Partnering with a third party such as Accenture can provide financial institutions with access to expertise and economies of scale, he suggests. For example, Accenture can leverage Comerica's data better by looking across several of the professional services firm's clients.
"We have folks here focused on a particular commodity and who understand the marketplace," Moore relates. "We have a broader set of information than an individual organization would. There's value here in incremental cost reduction, which can help fund something like technology enhancements."
A Management Tool Box
Moore explains that Accenture uses a spend analysis tool to help the bank organize and classify its spending. "We have a tool that allows us to do this at the enterprise level and to find commonalities to help reduce redundant spending," he relates. "We also have a transaction processing tool and a contract management tool that centralizes this function for banks."
The contract management function is especially important to banks' compliance management practices, according to Moore. "A solution like this provides the rigor and the structure for banks to get a good handle on their procurement from a reporting and compliance controls standpoint," he asserts.
The Accenture service also provides an overview of when contract renewals are due, along with services such as automated travel and expense management, and electronifying the invoicing process, Moore adds. "This isn't just one tool," he comments. "We've developed this over the course of 10 years, and the platform takes best-of-breed pieces of the puzzle."
The Accenture solution interfaces with Comerica's systems, but Accenture will host the entire service. Accenture also will have people on-site at Comerica.
The initiative will be managed under Comerica SVP and chief procurement officer David Bennett. "This agreement will bring further expertise and capability that will accelerate the execution of our procurement strategy and provide an operating model that fits well with our Comerica culture," he said in a release.
"The market for this service is hot because banks are looking to significantly cut costs in the current year," says Accenture's Moore. "BPO and procurement are things that have a quick impact on the bottom line."