Image Copyright Terri Unger, 2014
Based in Boston, Iron Mountain is an enterprise information management services company founded in 1951. It provides records management, information destruction and data backup and recovery services to more than 150,000 customers in 36 countries.
The company is pursuing organic and acquisitive growth opportunities and is seeking to convert to a real estate investment trust (REIT). It has also worked to enhance its global procurement activities.
“The industry is more margin-pressured and we must be savvy,” says Linda Behan, senior vice president of global procurement. “Becoming a global procurement organization will make us more efficient and reduce costs. It will improve the quality of products and services, supporting us so we can make investments and grow.”
Period of Change
Iron Mountain’s procurement organization manages purchasing, sourcing and supplier contracts processes for Iron Mountain globally. It is responsible for developing category and supply strategies. It facilitates cross-organizational communications and opportunity optimization through formal category planning, manages requests for information and proposals from suppliers, and analyzes opportunities and supplier proposals. Procurement works with Iron Mountain’s legal services on supplier negotiation strategies and contract execution, monitors contracts and supplier performance, and oversees requisitioning and purchase-order processing activities.
It has created a global software asset management program to optimize third-party software spend and ensure license compliance. A new travel management program has also been established to manage travel management and policies while improving engagement and safety.
Iron Mountain’s procurement strategic direction has changed greatly. In the past, the team consisted of three operational and three sourcing team members. It was decentralized and had minimum cross-organizational impact. In 2012, the company began creating a larger, centralized procurement division that was more engaged.
“We built category-sourcing expertise in operational, IT, HR, finance and marketing areas, and we invested in ERP infrastructure, operational/transaction processing, information and reporting, and other technology,” Behan says.
In 2012, Iron Mountain’s focus turned to strategic procurement and globalization. It worked on everything from compliance, risk mitigation and the REIT conversion to expanding sourcing talent and capacity, and globalizing analytics, reporting and category planning.
In 2013, the team delivered 182 percent of savings targets. Improvements in information, market intelligence, enabling technology and reporting informed the category planning process and opportunity identification. Establishing formal governance as well as enhancing internal and external websites drove improved business engagement and communication.
Contract administration and management helps identify contractual gaps, and to manage contract renewals and terminations. In 2013, the team implemented a contract management solution for reporting and proactive management globally. The contract lifecycle management process was also defined; new contract approval protocols and a global delegation of authority framework were established to provide greater transparency to contracts and consistency in their future execution.
ERP and operational infrastructures (help desk and requisition to p.o. processing) were improved through automation by upgrading to Oracle iProcurement R12 as part of the company’s long-term operational strategy. All this was just the tip of the iceberg for Iron Mountain Global Procurement in 2013.
“We have to be a nimble,” Behan says. “We have a great team and a strong organization thanks to improvements in people, processes and technology, and we are considered a strong business partner.”
Iron Mountain now follows a five-phased sourcing plan. The analysis phase aims to build understanding and align stakeholders. The strategize phase focuses on strategies and techniques. The sourcing phase attempts to create competition and select the best option. Execution manages transactions, while management measures performance and looks for improvement.
Data drives the strategy. During spend analysis, Iron Mountain collects and normalizes raw data, analyzing for historical, current and future trends based on everything from supplier and business unit to geographic factors and pricing. Iron Mountain interviews stakeholders and finance to get a handle on service requirements and projected expense and volumes. It looks for gaps to find the best way to fill them and develop a total cost baseline.
“We look for business partners with a range of quality products and services at a fair, competitive cost structure,” Behan says. “We scrutinize vendors to be sure they maintain diligence and are appropriately protecting information securely.”
While defining its strategic sourcing strategy, Iron Mountain determines sourcing objectives, assesses the supplier perspective and analyzes its buying power. In addition, it identifies standardization opportunities and consolidation requirements, looks for insource/outsource opportunities and strives to gain stakeholder support for its sourcing strategy and tactics.
During sourcing, Iron Mountain documents business requirements, develops supplier lists, screens and qualifies sources of supply, and develops and issues RFPs. It determines the characteristics of buying decisions and evaluates responses from suppliers before looking for ways to improve the suppliers’ bid.
Execution includes contract management and implementation. Iron Mountain forms a negotiation team and develops a negotiating strategy. As for implementation, the company puts together a team to work with procurement operations, implement a communication plan and notify suppliers and internal customers.
The manage phase tracks savings, compliance and benefits. The company also sets performance management accountability, coordinates supplier and buying activity, tracks compliance and quality assurance, and supports supplier performance management and development activities.
Looking ahead, Iron Mountain’s procurement focus will be on shared ownership and accountability. It wants to more formally globalize, drive additional global and regional initiatives and integrate and enable M&A activity. Efforts will center on many initiatives, such as optimizing global procurement resources, creating formal procurement, further implementing the i-procurement strategy, narrowing contractual gaps, and enhancing enabling technology, reporting and operational capabilities.
“One mistake global organizations make in globalizing procurement is forcing a decision that made sense in one region on another. Rarely will one answer fit all businesses and all regions,” Behan says.
Iron Mountain’s success will be due to bringing global constituents together to identify and execute sourcing opportunities. It must provide transparency to the benefits and risks associated with the options and make an informed decision together to meet these needs.
“With new leadership and a new structure, a lot of change is happening,” Behan says. “We’ve executed on this transformation and affected change thanks to our culture, business partners and skilled team.”