Web Inv. Web Invoicing & Electronic Payments. What s Inside. Strategic Impact of AP Automation. Inefficiencies in Current State

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1 Pay tream A D V I S O R S WHITE PAPER Web Inv Web Invoicing Strategic Imact of AP Automation What s Inside Inefficiencies in Current State Key Drivers for Automation Web Invoicing Comonents New Automation Paradigm Selecting a Solution Hot Trends You Can t Miss Ariba Comany Profile Q1 2008

2 Executive Summary Executive Summary Emerging financial solutions that enable trading artners buyers, suliers and banks to seamlessly exchange transaction-related information and funds are about to indelibly change the invoicing and ayables landscae. Enabled by new Internet tools and best-of-breed systems, a new cro of invoice networks are beginning to make significant inroads into reducing inefficiencies and driving costs out of comanies financial oerations through the elimination of aer. A new term called Financial Suly Chain management is being used to describe these systems, which offer real-time collaboration between buyers, suliers and banks. Demand for these new systems is being driven by organizations aetite for hard dollar oerational savings and the oortunity for enhanced working caital management caabilities. Research by PayStream analysts suggests that these forces have done wonders to raise the rofile of accounts ayable, which is now viewed as not only an avenue to lower costs but also contribute toward imroving discounts from suliers. Electronic invoices eliminate aer rocessing times including mail latency and desk float. With faster aroval times, finance managers have a greater ability not only to take existing discounts and but to create new ones. These working caital factors have sharly increased organizations interest in accounts ayable automation solutions that streamline and otimize some or all of the rocure-to-ay functions, including those that deliver Web invoicing, electronic ayment and discount management caabilities. Given this interest in AP automation solutions, PayStream has develoed the Technology Insight Series reort titled Web Invoicing and Electronic : Strategic Imact of AP Automation, designed for those organizations that have an active interest in Web invoicing solutions but need hel identifying aroriate strategies, vendors and solutions. This summary reort rovides a quick overview of Web invoicing solutions and their benefits, while the more detailed Technology Insight Series reort describes the different flavors of Web invoicing and their benefits, rofiles the leading vendors, and offers suggestions for technology selection. Web Invoicing and Electronic : Strategic Imact of AP Automation is one of many reorts in our cororate research library, including these other titles in our Technology Insight Series: AP Euroe: Accounts Payable Automation for the Euroean Market, Purchasing Card Management: The Lure of Plastic, Imaging and Workflow Automation: Migrating toward a Paerless Organization and Suly Chain Finance & Dynamic Discount Management i

3 Table of Contents Table of Contents Building a Case for Automation... 1 Inefficiencies in the Current State of Accounts Payable... 1 Key Drivers of AP Automation... 2 The Web Invoicing Universe... 3 The New AP Automation Paradigm... 5 Selecting a Web Invoicing Solution... 6 Hot Trends You Can t Afford to Miss... 8 Ariba EIPP... 9 About PayStream Advisors, Inc

4 Why Automate? Building a Case for Automation Inefficiencies in the Current State of Accounts Payable Even though automation has already delivered many tangible results in the hysical suly chain, these effects have barely trickled into organizations financial oerations. This is esecially true as it ertains to invoice receit, settlement of ayables and send management visibility. Given the historical lack of innovation in this arena, today s buyers and suliers are exeriencing a number of roblems that revent true otimization of accounts ayable invoicing and ayment rocesses. Manual & Inefficient Processes: The urchase-to-ay rocess has long suffered from the inefficiencies inherent to manual, aer-based rocesses including the lack of visibility and control over financial transactions, unavailability of timely information and high rocessing costs. Organizations are feeling the ain of deending on traditionally, aer and eole-intensive rocesses with almost two-thirds (63 ercent) of the resondents to PayStream Advisors annual Financial Automation Survey stating that an over-reliance on eole and aer-based rocesses is the biggest ain oint they face in their financial oerations. Lengthy Processing Cycles: Given that most organizations deal with aer invoices and other transaction-related documents as well as decentralized rocesses, it is not surrising that the average invoice receit-to-ay cycle is long for many comanies well over 20 days. Further, missing or erroneous information on the documents and other excetions and discreancies can make the invoice aroval and ayment rocess even longer. These factors result in a high cost of rocessing each invoice, on the one hand while they translate to inability to cature early ayment discounts offered by suliers on the other hand. High Cost of Financing: In the current environment, there still exists a great deal of uncertainty around the timing and amount of aroved ayments. As a result, suliers are comelled to maintain excess cash as a hedge against such Figure 1 Pain Points in Accounts Payable We asked resondents to our survey to rate the ain caused by each of these AP activities on a scale of 1 to 5, where 1 is low ain and 5 is significant ain. Results shown are a weighted average of survey resonses. Missing Promt Payment Discounts Over or Dulicate Tracking and Managing Sulier Send/Usage Sulier Contract Comliance Resolving Discreancies/ Excetions Processing Invoices for Aroval

5 Why Automate? uncertainties, which leads to an unnecessary increase in working caital that is tied u in the order-to-cash cycle. Further, suliers, who have limited access to caital, often have to rely on high-cost financing methods like factoring or asset-based lending to fund their working caital and imrove their cash ositions. This high cost of financing is a burden to suliers, which in most cases is assed on to the buyers in the form of higher cost of goods and services. Lack of Send Management Visibility: Tracking and managing sulier send and usage becomes a gargantuan task when dealing with tons of aer. Almost a quarter of resondents to PayStream s Financial Automation Survey stated that the inability to track sulier send was the biggest headache that they faced in their financial oerations. The lack of visibility across the urchasing and ayment rocess limits organizations ability to leverage economies of scale by consolidating send and negotiating favorable ricing agreements and bulk discounts with high-volume suliers. Key Drivers of AP Automation A aradigm shift is clearly underfoot as organizations strive to address the shortcomings they identify in the financial suly chain. Increasingly, savvy organizations are exloring innovative means to leverage automation to not only contain costs but also comress working caital requirements and rocess cycle times. And not surrisingly, accounts ayable automation is emerging as one of the key comonents of the financial suly chain strategy. The emhasis on cost containment and roductivity enhancement during the ast few years has insired organizations to seek out new ways to automate traditionally aer-based and labor-intensive rocesses.. This nagging realization that current accounts ayable rocesses are inadequate and inefficient has been magnified by the call for greater system integrity and accurate reorting as a result of the Sarbanes-Oxley (SOX) legislation. Further, to many innovative financial managers, accounts ayable automation is now recognized as an area offering significant otential for not only generating bottom-line imrovements but also greater ability to monitor and manage send, strengthen ability to cature existing and new discounts and build stronger trading relationshis. Our research suggests that these forces have sharly increased organizations interest in automation solutions, which now deliver both oerational and strategic benefits. Although the adotion of automation remains skewed toward large cororations, many mid-sized and smaller comanies are also making great strides towards less aer, even aerless environments. These aggressive technology adoters have learned that in many cases automation diminishes the rocure-to-ay cycle time from weeks to just days and delivers a raid return on investment. They have discovered that by automating each stage of the rocure-to-ay cycle, from electronic rocurement, rogrammed excetion handling and matching, along with enhanced disute management and aroval workflow, they can not only achieve roductivity gains and cost reductions, but also obtain traceable Sarbanes-Oxley audit trail. 2

6 Web Invoicing Universe The Web Invoicing Universe Web invoicing solutions streamline the invoice receit-to-ay cycle by enabling buyer organizations to electronically submit urchase orders and receive invoices, use workflow tools for aroval rocessing and make electronic settlement against aroved invoices. The nine solutions featured in the Technology Insight Series reort offer electronic invoicing, ayments automation or both in order to create endto-end solutions that integrate with enterrise and other legacy business alications. We define and describe the secific comonents of the Web invoicing universe as follows: Sulier Recruitment & Enrollment: Sulier on-boarding activities tyically start with vendor segmentation analysis and identifying those vendors to target first for automation.. These solutions offer marketing elements to recruit suliers and functionality to allow suliers to enroll themselves by logging into the alication to rovide bank account and registration information. Alternatively, buyers can manually enter sulier information or imort the same from their ERP or AP systems. In some cases, vendors go a ste further to authenticate the bank account information rovided by suliers before ayments are initiated. Invoice Generation & Delivery: This stage includes all the stes a sulier must comlete in order to roduce and deliver an invoice to the buyer. Web invoicing solutions facilitate the exchange of invoices between buyers and suliers through a variety of methods including EDI, direct file transfer, PO fli, and Web based e-forms. Some solution roviders also offer otions to handle aer invoices by converting them to electronic formats. Each invoice, whether submitted electronically or as aer, is tyically converted into a common invoice format for ease of querying and filtering. Figure 2 Web Invoicing & E- Universe Web invoicing solutions streamline and otimize the invoice receit to ayment rocess by enabling electronic exchange of information, the use sohisticated workflow for aroval and by roviding the ability to make electronic settlement. 3

7 Web Invoicing Universe Excetion Handling: Validation of invoices is a critical ste in the Web invoicing rocess to ensure that only clean invoices are viewed by the accounts ayable deartment, thereby reducing the amount of time send on resolving excetions. Invoices submitted are routinely checked for dulicity and mathematical integrity and also against a set of buyer-defined criteria that can be established during the imlementation hase or any time thereafter. This rocess identifies errors and excetions in the invoices roactively at the time of invoice submission itself and notifies the infringing arty to correct those errors before the invoice can be acceted and routed. Workflow & Disute Management: The rocess that buyers follow to sort, route, review, disute, and arove invoices for ayment, including workflow. Web invoicing solutions suort multile levels of aroval and include the ability to configure reminders and escalation rocedures if no action is taken on ending tasks in a secified eriod of time. The systems also allow buyers and suliers to investigate and collaboratively resolve disutes and excetions. Payment Processing: The stes that buyers take to initiate, ost, and execute ayment, including ayment rearation, rocessing, and submission to their financial institutions. Most Web invoicing solutions offer multile ayment otions including aer and electronic and allow buyers to configure ayment tyes at the sulier level. Some solutions also offer dynamic ayables discounting functionality allowing buyers to configure multile discount schemes and enabling suliers to discount all or any of their receivables at any time, u to the ayment date. Reorting & Analytics: This includes the ability to generate standard and custom queries and reorts and rovide visibility across transactions to buyers and suliers. The solutions also rovide comrehensive audit trails of all actions taken within the system and vendor self-service otions. Recent advancements in analytical caabilities allow managers to examine send at various levels; including tye of exense, emloyee, deartment and region. This wealth of information gleaned form the rocure-to-ay rocess, can not only be used to comly with regulatory requirements but also to rovide valuable business intelligence for strategic send analysis. Table 1 Key Benefits of Web Invoicing Web Invoicing Removes aer from the equation and reduces manual data entry Increases visibility by allowing simultaneous access to information Simlifies discreancy resolution, transaction audits and sulier inquiries Accelerates aroval rocessing and reduces errors and excetions Provides comrehensive audit trails and tools for reorting and send analysis Electronic Enhances romt ayment discount cature and reduces the incidence of late fees Lowers rocessing costs by removing the need for rinting and mailing checks and reducing losses from fraud Dynamic discounting rovides a low-cost financing alternative to suliers and an additional income stream to buyers Aids in comliance with Sarbanes-Oxley and other regulatory requirements Vendor self-service otions roviding visibility to suliers around ayment status reduce sulier inquiries

8 Key Idea! The New AP Automation Paradigm Until recently, automation efforts in the AP area were focused on invoice and ayment management and the oerational benefits that technology delivers. However, all this is changing. Innovative financial managers are now recognizing AP automation as an area offering significant new otential to generate bottom-line imrovements with rocessing acceleration and discount management abilities, better monitor and manage send, strengthen working caital ositions, and build stronger trading relationshis. Figure 3 outlines the various stages of automation that an organization can exerience in its quest to transition from mere tactical benefits of automation to more strategic objectives. The first two stages of this aradigm revolve around oerational activities, with organizations focusing on centralizing invoice receit and leveraging document scanning to comress the time it takes for invoices to enter the aroval workflow. A significant number of comanies are currently in the third stage of automation where they are leveraging electronic means to receive invoices as well as emloying advanced OCR technologies to extract data from aer invoices and utilizing automated matching and aroval. Another trend in the accounts ayable automation sace is outsourcing certain AP tasks. Finally a few savvy organizations have moved to the fourth stage, where they have eliminated aer to a significant extent and are rimarily receiving invoices via electronic means. These organizations have also considerably reduced the number of invoices flowing through the aroval workflow rocess and are relying heavily on straight-through-rocessing (STP) to manage clean invoices invoices that do not have any errors or those that meet certain re-determined criteria. While there is no doubt that a significant benefit comanies derive while they move from the first stage to the fourth stage of automation is lower rocessing costs, the greatest value for organizations lies in the more strategic benefits automation delivers namely, increased suly chain visibility, imroved working caital requirements and better trading artner relationshis. Stages of AP Automation Figure 3 Different Stages of AP Automation Organizations are recognizing AP automation as an area offering tremendous otential for achieving tactical and strategic objectives. Level of Automation 1 - Centralized - Scan Invoices - Manual Indexing - Manual Aroval 2 - OCR & Key From Image - Online Matching - Aroval Workflow - Automated Reorts 3 - Outsourced Data Cature - PO Fli - Automated Matching - Online Disute Resolution 4-100% Electronic Invoices - Sulier Self Service - Sulier OnBoarding - Integrated Purchase-to-Pay Processing Cost Per Invoice 5

9 Solution Selection Selecting a Web Invoicing Solution One of the first questions that accounts ayable rofessionals must answer when investigating automation otions is whether a tightly focused or a more comrehensive solution would better meet their needs. Our analysts believe that AP technology buyers should kee the following factors in mind when making this critical decision: Financial Automation Goals: There is a solution to meet every organization s need, but identifying the ideal solution requires an organization to clearly understand what it hoes to achieve from its adotion. Organizations that have been slow to adot other financial automation technologies but want to take an incremental ste forward should consider adoting just electronic invoicing or electronic ayments as a starting oint. On the other hand, organizations that are comfortable with technology and want to accelerate the ace of imrovement in their invoice receit-to-ay cycle should think about an alication that delivers full circle functionality. Adotion Readiness: Every organization does not stand an equal chance of succeeding with automation. Differences in culture, financial resources, and human caital mean that certain organizations are more likely to succeed. This is a major reason all the vendors have ut considerable effort into develoing installation routines that require minimal IT suort, but some in-house comuting environments will still be roblematic. Individuals investigating Web invoicing should determine how their organizations stack u in each of these areas. As a rule of thumb, an organization s overall use of financial automation technologies relative to its eers rovides a rough indicator of its readiness to adot such solutions, esecially in its more challenging end-to-end form. Figure 4 Questions to consider when evaluating solutions Solution Evaluation Checklist What is the breadth and seed of sulier on-boarding exerience and caabilities? How does the solution ensure a comrehensive invoice cature? How does the solution suort automated workflow aroval and invoice matching? Who has the ability to configure it? Does the solution erform error detection and revention across all PO and non- PO invoices? What is the rovider s aroach to & Working Caital Management? Which ERP systems does the solution interface with? Does it suort multiinstance environments? Which ERP systems does the solution interface with? Does it suort multiinstance environments? Is the solution webtrust certified? What is your tyical roject time-line? 6

10 Solution Selection Process Comlexity: The higher the comlexity of an accounts ayable oeration, the greater the ayoff from automating invoice receit and aroval rocessing. Accounts ayable rofessionals should consider the number of suliers and invoice formats they receive, as well as their overall invoice volume and the comlexity of their average invoice when evaluating Web invoicing solutions. The structure of their accounts ayable oeration (i.e. decentralized vs. centralized) and the stes required to rocess, arove, and ay invoices are also critical and will have a direct bearing on their choice of a solution. AP Deartment Size: While large organizations should focus on the rocess imrovements and resulting ROI an investment in electronic invoicing and ayments technologies will deliver, regardless of the number of staff that are erforming invoice and ayment rocessing activities, small and mid-sized organizations do not always have that luxury. Small AP deartments, articularly those with five or fewer emloyees, often face budgetary constraints that limit their solution choices. In these cases, firms looking to automate invoice and/or ayment rocesses should be looking for vendors that can deliver a foundational solution, or one targeted very secifically to their needs. Accounting Software Infrastructure: One of the key reasons a market has develoed for best-of-breed electronic invoicing solutions is the lack of sohisticated invoicing and discounting caabilities offered by ERP and accounting software. Different AP software modules can offer very different levels of functionality around invoice and ayment management. A major consideration for determining an organization s selection of a Web invoicing solution should be the rocess gas or system weaknesses that are inherent to the AP/ERP software currently in use. 7

11 Hot Trends! Hot Trends You Can t Afford to Miss The accounts ayable automation landscae, articularly the Web invoicing market, is constantly evolving. PayStream analysts believe that the following factors will shae the evolution of this marketlace, and that organizations contemlating an accounts ayable or invoice automation solution will need to take them into account: Convergence of Web invoicing and front-end imaging. Web invoicing solutions are exlicitly designed to facilitate external buyer-sulier interactions, while imaging & workflow automation (IWA) solutions have evolved to meet organizations internal needs around invoice receit and management. However, as the Internet exands into all corners of business communication, the distinction between internal and external breaks down. We are already seeing a convergence in this market with both tyes of roviders artnering or develoing functionality to offer comrehensive solutions covering both aer and electronic invoices and incororating better otions for invoice receit, aroval rocessing, and discreancy resolution that rovide better control and collaboration. Organizations seek straight-through-rocessing. As automation moves to the front-end of the accounts ayable rocess, organizations will also seek to leverage straight-through rocessing to the extent ossible, so that AP staff and arovers can focus on more value-added tasks than reviewing invoices. Demand will increase for solutions that facilitate this by delivering strong functionality around automated invoice matching and automatic aroval of clean invoices as well as strong functionality around aroval workflow to manage excetions and the disute resolution rocess in a collaborative manner. Imact of AP Automation on discount management. Innovative financial managers are recognizing that AP automation technology does not only deliver oerational benefits like cost containment, but has the otential to hel comanies to imrove their ability to cature sulier discounts. Innovative solutions are emerging to meet organizations strategic objectives by offering solutions, which unlock significant value from the financial suly chain through advanced features like vendor self-service, sulier on-boarding and dynamic settlement. Multile solution models will co-exist. There is not a single model for an AP automation solution. Solutions are available in software form, as well as on an outsourced basis. Likewise, some vendors emhasize a modular mix and match aroach while others concentrate on roviding a set solution. There is also tremendous variability in terms of solution focus. Some vendors focus tightly on secific asects of the invoice receit to ay cycle, while others strive to rovide AP automation functionality as art of a larger rocure-to-ay offering. Industry consolidation notwithstanding, this diversity will continue. Imact of SOX comliance on interest in automation. As organizations are beginning to realize that Sarbanes-Oxley comliance is an ongoing rigid rocess and that everything they do going forward will be subject to close scrutiny, they are turning to technology and automation to alleviate some of the ain. We believe technology that can facilitate the comliance rocess and reduce its cost by roviding comrehensive audit trials and by simlifying the auditing of internal controls will gain oularity. 8

12 Ariba EIPP Ariba Ariba has been a leader in the electronic invoicing and ayment solutions landscae since the late 1990 s. Ariba serves as an invoice and ayment rocessing engine for buyers and a resentment and ayment ortal for suliers through its EIPP solution. Ariba offers flexible deloyment otions for its solutions, to organizations looking to start or exand their rocure-to-ay automation efforts. Ariba is also no stranger to the on-demand model. The comany has ackaged its alications and services into solution bundles designed to meet the requirements of all the stakeholders - AP, Finance, Procurement and IT. Ariba rovides full circle functionality from rocurement and sulier recruitment to electronic invoicing and ayments and remittance management. The comany also offers in-house invoice conversion services to clients to enable them to handle aer invoices ainlessly. Additionally, Ariba announced in May, 2007 that it has entered into a strategic artnershi with suly chain finance comany, Orbian, to rovide access to third-arty financing otions to members of the Ariba Sulier Network. Comany reresentatives stated that the bank-neutral financing solutions will hel buyers and suliers who use the network otimize their working caital and minimize risk. Ariba has been successfully serving customers in such diverse industries as consumer roducts, energy, financial services, manufacturing, ublic sector, higher education, telecommunications and transortation. The network rocesses one document (PO and invoices) every two seconds. Referenceable clients for Ariba include well-known comanies like Exxon, Dell, Bank of America and Caterillar. Buyers and suliers in 115 countries leverage the network to engage in 11 million transactions worth more than $120 billion every year. Ariba EIPP Ariba offers it end-to-end EIPP solution in both hosted and licensed models based on client s secific needs. The Ariba Sulier Network (ASN) is the latform that suorts both the versions to connect buyers to the suliers. The goal of Ariba EIPP is to deliver maximum value to customers from rocess efficiency savings, ro-active recovery and comliance, discount management and suly chain financing otions. In order to ensure that customers are getting full value out of EIPP, Ariba rovides full service, global sulier enablement suort to its customers. Based on the enablement flight lan, camaigns are designed for each grou of suliers. High touch suliers are contacted initially by /fax with follow-u suort by hone and Webinars to exedite their recruitment rocess, which includes enablement, testing and suort. Mid-tier suliers are contacted by /fax with follow-u by hone leading to self service education and training materials. Low-tier suliers are ut through the Self Hel, Quick Enablement feature and contacted directly from the sulier network resulting in self service registration, education and training. We were really imressed with the solution s Quick Enablement functionality, which allows buyers to reach a wide range of suliers with minimal effort. The Ariba Sulier Network is a true many-to-many network enabling its customers and their suliers to transact and collaborate in a variety of formats based on their

13 Ariba EIPP referred methods across the comlete order to ayment rocess. When it comes to electronic invoice generation and delivery, suliers have the following otions: they can (1) directly integrate their back end financial systems with the ASN via EDI or cxml; (2) uload CSV file-based invoices exorted from their systems; (3) fli a PO via the network ortal to create an invoice, which can then be edited and submitted directly; or (4) enter a PO or non-po based invoice via the Web ortal. Ariba also rovides suort for aer invoices by allowing suliers to submit invoices to Ariba s rocessing center where they will be converted to cxml format at the line-item level. This allows customers to receive electronic invoices from all suliers through a single channel (the sulier network), regardless of oint of entry. The solution rovides multile tiers of validation. First, the automatic reconciliation rocessor validates each invoice against a set of business rules, checking for dulicate invoices, mismatched amounts, and other inconsistencies. The results of the automatic reconciliation are sent to administrative users for review, aroval, and resolution of any discreancies. If the invoice does not ass these rules, it is immediately rejected, and the sulier is notified via . Secondly, data validation rules are configured and executed as art of the invoice reconciliation rocess. If an invoice is rejected, the vendor will receive an notification, and the invoice status is udated with rejection codes. Electronic invoices are automatically matched against PO s, receits and contract terms for 2-, 3- or 4-way matching based on re-defined business olicies. Ariba s real-time contract comliance caabilities rovide ro-active audit and recovery suort to AP deartments. Ariba rovides a library of validation rules that customers can use or they can define their own. Tolerances can be established to allow for accetable levels of discreancy for any matching criteria. The invoices are checked for additional tolerances, and excetions can automatically be routed for aroval and resolution by excetion tye to the aroriate stakeholder. The Ariba solution comes bundled with a library of best-ractice aroval workflows and rule sets for invoice receit, reconciliation and excetion management. Ariba rovides robust functionality to route the transaction documents to aroriate users or roles in the organization based on customer-configured business logic. Aroval flows unique to certain account codes such as GL, cost center, commodity, internal order number, service entry numbers etc. can also be generated. Users are assigned to grous, which in turn are assigned ermissions that govern the functions a user can erform. The workflow will automatically include the aroriate set of users u to the necessary aroval authority to reconcile the invoice. Additionally, access to edit the invoice reconciliation data is strictly controlled by assigning users to grous. Finally, escalations can be configured to notify or move arovals to aroriate users if a given time elases with no action taken on the invoice. Further, in cases where an emloyee is on vacation or absent, authority may be delegated to another user. Ariba s ayment strategy is to allow for an oen network of ayment and financing otions for its customers. To this effect, it is currently in discussion with suly chain financing comanies to rovide for this interface between the ASN and their ayment networks. Ariba currently suorts -card caability, including integrated offerings with Amex AP-Plus and GE v-payment, and level 3 data integration with MasterCard. Ariba also rovides full suort for ACH ayments, including full scheduling and tracking of all ayment activity, formatting and routing of ayment files to banking 10

14 Ariba EIPP artners and third arty roviders and delivery of electronic remittance advices and notifications. Additionally, the Ariba network rovides for ayment status visibility and reorting for both buyers and suliers. Ariba also offers dynamic discounting caabilities bundled with its solution. The Discount Management module rovides amle flexibility for buyers to choose a selffunded method (standing early ayment terms or dynamic early ayment discounts) or a third-arty funded suly chain financing method. Further, suliers also have the otion to initiate early ayment requests. Ariba s value lies in the fact that it offers a variety of value-added services around discount management in conjunction with the technology to enable discounting. Through a careful analysis of the buyer s sulier base and using a roven rorietary methodology, the Ariba Discount Management Program rovides a detailed bluerint showing the buyer how to achieve maximum ROI on its working caital through effective management of early ayment discounts. The Ariba Discount Management Program involves multile stages. Ariba works with the buyer to determine the comany s riorities and gathers relevant send data to gain a high-level understanding of the oortunity. Buyer s sulier data is then analyzed based on criteria including current ayment terms, send frequency and volume, industry heuristics and standards, benchmark discounting standards, and average Days Payables Outstanding (DPO). A rioritized sulier enablement flight lan is roduced and reviewed, and a rogram design is determined, including initial targeted suliers. Ariba rogram managers work with the buyer to define the imlementation of the roject lan and to chart milestones. Ariba offers a solid reorting ackage including oerational and analytical reorts and a strong search functionality. Because the data available can be maniulated by users through an intuitive ivot table drag-and-dro interface, the ossibilities for generating new reorts are almost unlimited. Each reort has multile otions for dislaying grahs as well. Different tyes of reorts that can be generated include (i) buyer settlement reorts, which allow auditing and analysis of all asects of invoices, including status, excetions, and accruals in summary or in detail; (ii) contract reorts, which cover asects of the contract that are not fully used, such as the number of days or dollar amount remaining on the contract; (iii) urchase order reorts, focusing on items being ordered, the dollars being committed, and the suliers being used; and (iv) dynamic discount reorts, which dislay details on discounts taken over a defined eriod of time, by sulier and SIC code. Believing that integration is a critical asect of any rocure-to-ay system, Ariba solutions were built to suort integration to external systems. Ariba rovides out-ofthe-box integration for SAP, Oracle, and Peolesoft but has the caability to integrate with virtually any AP or ERP system. Over 45 ercent of Ariba s customers integrate to at least one instance of SAP, including both R3 and SRM. Transactional data integration (POs, invoices etc. between an ERP and Ariba) occurs through the Ariba Sulier Connectivity adater and outbound files from the ERP system are translated into cxml file formats that are then transmitted to Ariba alications. A tyical imlementation for the Ariba EIPP solution takes between eight and twelve weeks. The main factors that determine the length of the imlementation include the client s change management lans, internal ERP rojects and relative rioritization of the EIPP initiative. Ariba s fee structure is also flexible and deends rimarily on the tye of solution licensed, hosted or Software-as-a-Service selected by the client. 11

15 Ariba EIPP Outlook Ariba has a solid resence in the Web invoicing sace and we were really imressed with the solution s electronic invoicing and its relatively new dynamic discounting caabilities. One of the features that really aealed to us is the vendor quick enrolment, which is esecially useful for one-time or really low volume vendors. Our exeriences with clients indicate that this is one area where buyers face the most challenges around sulier recruitment and we believe that Ariba has found the winning formula in this asect. Additionally, Ariba s unique contract comliance and PO accuracy caabilities serve as the keys to maximize savings from invoice rocessing efficiency. Ariba believes that the key to adding value for customers (both buyers and suliers) is by adding more dimensions to the Ariba Sulier Network in the form of continual additions and enhancements to caabilities for collaboration between trading artners. To this extent, we can exect to see a number of new features and caabilities included in forthcoming versions of the sulier network. Ariba s EIPP solution and sulier network combined with its already robust rocurement suite definitely offer a strong value roosition to organizations seeking to automate their rocure-to-ay rocesses. About PayStream Advisors, Inc. PayStream Advisors is a technology research and consulting firm that imroves the way comanies lan, evaluate, and select emerging technologies to achieve their business objectives. PayStream Advisors assists clients in sorting through the growing comlexities of IT alications related to business rocess automation with the goal of making objective, analytical, and actionable recommendations. Wherever business rocess automation technology is an issue, PayStream Advisors is there to hel. For more information, call (704) or visit us on the Web at About the Lead Analyst Sushmitha (Sush) Koka is the Research Director with PayStream Advisors, Inc. In addition to managing PayStream s overall technology research effort, Sush leads client engagements and articiates in technology strategy rojects. Sush s areas of focus include document and data management, electronic billing and ayment, accounts ayable, receivables and collections, and business rocess automation. She has extensively researched and written reorts in the above areas and her work has also been ublished in a number of trade magazines. 12