Boost the performance of your Accounts Payable and Treasury departments thanks to the Ariba Network

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1 Boost the performance of your Accounts Payable and Treasury departments thanks to the Ariba Network Franck Dupas, Business Networks Executive / SAP France September 9th, 2015

2 Optimizing Payables Via Invoice Automation, Enabling Working Capital Strategies, Concluding with Electronic Payment 0 days Invoice date 5 days Invoice capture 25 days Invoice approval 41 days Net terms payment delivered Typical A B C D Best-in-class B C D 0 days Invoice and capture date 5 days Invoice approval Options: discount, SCF, or card payment delivered 55 days Net terms payment delivered Best-in-class capabilities Electronic invoice submission Intelligent error recognition PO and invoice with predefined line items Preapproval on PO and contract to reduce invoice workflow Creation of a payment window as high as 50 days for working capital optimization leveraging prorated discounts and SCF Electronic payment to maximize payment window Rich payment remittance details KPIs 90% electronic invoices 50K+ invoices per FTE 75% of PO and invoice lines against item master/catalog/ contract 90% touchless invoice processing Discounts: 10% of spend SCF: 10% of spend Card: 5% of spend Net terms: 75% of spend DPO = 55 days 60% to 80% reduction in supplier inquires More than 90% ACH payment method Value 40% to 60% operating cost reduction $1 million to $2 million savings per $1 billion spend 1 to 4 days DPO extension 40% to 60% operating cost reduction 2015 SAP SE or an SAP affiliate company. All rights reserved. 2

3 Invoice automation is critical for internal processing efficiencies, reducing costs and enabling working capital strategies # annual invoices per FTE Keys to success: Multiple methods for suppliers to submit electronic invoices Intelligent error recognition/front-end validation Preapproval on PO to reduce invoice workflow Payment Invoice Working capital High-touch invoice processing Low -touch invoice processing Manual Paper Fax Data entry Electronically manual PDF Scanning/OCR Electronic invoice Integrated invoice: EDI, B2B, XML Web invoice: PO flip, e-invoice Evaluated receipt settlement (ERS) 2015 SAP SE or an SAP affiliate company. All rights reserved. 3

4 Ariba Smart Invoicing 3 Levels of Defense The Best Invoice solution is the one that is TOUCHLESS! Ariba SMART e-invoicing drives auto post rates of 98% compared to less than 60% with other solutions Lower AP Cost Faster Cycles Lower Risk Level 1 basic field-level existence and PO and non-po verification Invoice Number Ariba rejects exceptions back to suppliers Customer Customer Account Coding Sub Total & Total Amount GST/VAT Compliance PO & PO-Line Match Bill To / Ship To Level 1 Level 2 Oracle JDE Other r SAP + Invoice Management by OpenText 98% Touchless Level 3 advanced account coding, matching and compliance Level 2 intermediate field-level, PO and non-po line level, change and tax verification Contract & Receipt Match Price & Tax Compliance PO-Line Change Line & Total Consumption Thresholds Shipping & Tax Thresholds Buyer Match (non PO) UOM & SKU Change Currency Match PO Number Requestor (Non PO) Invoice Date VAT / GST IDs Invoices Level 3 Faster cycle benefits buyers & suppliers 2015 SAP SE or an SAP affiliate company. All rights reserved. 4

5 Ariba Network Integration for SAP Business Suite Standard integration alternatives Ariba Network Integration for SAP Business Suite RDS ON-PREMISE Integration Options 1 2 SAP Add-On HCI SUPPLIER SAP ERP & SAP Invoice Management by OpenText 3 4 IDOC SAP PI Documents: PO ASN GR Service Entry Sheet Invoice Remittance Advice The scope covers integration between SAP Business Suite and the Ariba Network for: Purchase Order and Invoice Automation Discount Management Ariba Procurement Content (Catalogue Integration) 2015 SAP SE or an SAP affiliate company. All rights reserved. 5

6 Ariba invoice management Customer proof points KPI % Savings Ariba Customer Examples Invoicing Cycle Time Invoicing Error Rates 75-90% 75-90% cycle time reduction from automated streamlined invoice reconciliation and exception handling process (large CPG retail) 95% cycle time reduction, 30 days to 2 days (Financial Services) 50% Improvement of invoice accuracy by 50% or more from enforcing basic supplier invoice submission requirements. Approximately 2% to less than 1% error rate. (Utility) Per Invoice Cost 85% Average cost was $75~$100 per invoice (mostly non-po invoices.) New costs $12~15/invoice (Financial Services) Inquiries 50% Decrease of supplier calls by 50% because suppliers are able to have visibility to real-time invoice status (Pharmaceuticals) Discounts 1-2% 1-2% additional supplier payment discount from on-time/early payment. (oil and gas) FTE Reduction 83% we experienced a dramatic increase in process efficiencies which enabled a reduction of accounts payable headcount from 12 to two, freeing up those resources for more strategic projects within the department. (government sector) ROI < 1 year Based on 50% spend capture, expected to have savings on elimination (reduction) of overpayment (duplicate payments). Process efficiency of staff and even reduction of staff from reduced supplier inquiries. Will achieve ROI in one year. (Retail) reduction of # of checks to suppliers. At $20 cost per check.roi will definitely be recuperated within one year. (bank) 2015 SAP SE or an SAP affiliate company. All rights reserved. 6

7 Working capital Net payment terms Keys to success: Payment terms standardization Align to goals of other programs, such as discounts, SCF, card Start on date of correctly received invoice 2.5% 3 Ad hoc captures as needed acceleration for net term suppliers 1 Automate to minimize missed discounts Current DPO Payment Invoice Working capital Early payment discounts Keys to success: Timely invoice approvals/goods receipts Net terms of 45 days or greater APR goals of 18% to 36% Programmed management of discounts 2.0% 1.5% 1.0% 0.5% 0% $$ Day 10 $$ Day 30 2 Prorate discount to cover remaining missed opportunities 2015 SAP SE or an SAP affiliate company. All rights reserved. 7

8 The future of payables working capital adoption Financing as a competitive advantage Buy right, pay right Holistic versus discrete view of P2P True cross-functional executive sponsorship Procurement and payables organizational alignment DPO management $ Greater focus on DPO management Terms rationalization, standardization, and extension Separation of buying decision from financing decision Scaling multistrategy approach for SCF, discounts, P-Card/card settlement, net terms Price elasticity of demand using Big Data analytics Easier for suppliers to participate Global/regional adoption of preferred strategies Banks have better information about transaction status and history to make credit and rate decisions. The balance sheet as a true competitive advantage: clients compete with banks to finance (invest) and/or increase control of their supply chain SAP SE or an SAP affiliate company. All rights reserved. 8

9 Ariba s capabilities to earn discounts and optimize DPO People and experience Technology Risk management Subject matter experts Payables strategy and value analysis messaging and recruitment Program management/ managed service Largest B2B network Dynamic discounting Cash optimizer Flexible ERP integration Supply Chain Financing Governance from client and Ariba, an SAP company Resource commitment Deployment methodology Network analytics 2015 SAP SE or an SAP affiliate company. All rights reserved. 9

10 DYNAMIC DISCOUNTING Buyers and suppliers can propose prorated early payment discounts. In this example the supplier is proposed early payments by the buyer 2014 SAP AG or an SAP affiliate company. All rights reserved. 10

14 enablement Sample Invoice Automation Wave Plan: 995 s Enabled Covering 237,643 Invoices Wave 1: 98 s 125,162 Invoices Wave 2: 143 s 40,283 Invoices Wave 3: 269 s 38,759 Invoices Wave 4: 485 s 33,439 Invoices Invoice Volume > 400 Invoices Annually 32 Matched s (33%) 72,002 Matched Invoices (57.5%) Invoice Volume between 200 and 400 Invoices Annually 39 Matched s (27%) 15,808 Matched Invoices (39.2%) Invoice Volume Between 100 and 200 Invoices Annually 54 Matched s (20%) 12,999 Matched Invoices (33.5%) Invoice Volume Between 50 and 100 Invoices Annually 119 Matched s (25%) 12,365 Matched Invoices (37%) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Wave 1 Enablement Wave 2 Enablement Wave 3 Enablement Wave 4 Enablement 2015 SAP SE or an SAP affiliate company. All rights reserved. 14

15 Ariba supplier enablement framework Expertise Methodology Technology Core Competency Central to all solutions Managed services Performance management Strategy Project Management ~ 6 Month Strategy Month 1-2 and Month Best 2-5 Practices Month 5-6 Strategy & Targeting Process best practices Program Management Category best practices Data Management data enrichment matching Value segmentation Program Managers Change management Implementation support enablement Requirements & Design Managed Service Build Wave 1 Engineered process Registration (cxml/edi + Catalogs) Leveraged network effect Low cost factory model Education Registration (QE) Enablement Tools Enablement monitoring Quick Enablement tm Network Insight Support Services Training on-demand 24x7 customer support Global supplier support build catalog Self Service Support Test Walk-up registration Full supplier support Bi-directional enablement Deploy / Go Live Tools Discovery Walk-up admin Integration tool set 2015 SAP SE or an SAP affiliate company. All rights reserved. 15

16 Ariba s methodology A continuous approach to program success 1. Core team kickoff 2. and spend analysis 3. Campaign approach 1. Migrate to production 2. Communicate go-live 3. Post go-live support Deployment Strategy Design & Build 1. Requirement workshops 2. Integration specifications 3. System configuration 1. Create test transactions 2. Test targeted suppliers 3. Track and report results Testing Education Registration 1. Matching to Ariba Network 2. Create relationships 3. communications Help Desk Integration 1. Usability material 2. How to Integrate 3. How to use Portal 2015 SAP SE or an SAP affiliate company. All rights reserved. 16

17 Invoice Thank you Payment Working capital Contact information: Franck Dupas Business Network Executive