How To Transform Finance Transformation

Transcription

1 Case Study: Leadership and Integration Redesigning the Procure to Pay Process to Link Finance and Procurement James Copeland VP FSSC BMC Software Inc.

2 Agenda BMC Timeline Transformation SSC at BMC P2P Working together Results to date Questions Copyright 6/15/2012 BMC Software, Inc 2

3 BMC by the numbers Founded in 1980, 8th largest independent software company with over $2.2 billion in total bookings and revenue (Fiscal Year March h2012) Corporate headquarters in Houston, with more than 6,000 employees around the world IT needs to be structured, managed, staffed and deployed as a service a service that business leaders can leverage to achieve their goals and objectives - That s exactly what we do. We serve - 15,000 customers in 132 countries - Fortune 100: 94% - Fortune 500: 81% - Forbes Global 100: 96% - Forbes Global 500: 86% Copyright 6/15/2012 BMC Software, Inc 3

4 Timeline BMC Finance Transformation May 08 Feb 09 LSS AP Holds Reduction Apr 09 Oct 09 FSSC Transitioned to Buss Ops Aug 09 LSS IT Procurement Issues Feb 10 Apr 10 LSS P2P Re Engineering g Jun10 Dec10 P2P Team Formed Feb11 P2P Status Update Jun 12 The seeds for the P2P Re Engineering were planted one year prior by moving FSSC to Business Ops Copyright 6/15/2012 BMC Software, Inc 4

5 Finance Transformation Project Objectives and Scope Project Objectives: Identify opportunities to increase efficiency within Controllers Group and FP&A while maintaining/improving customer service levels Develop recommendations to maximize productivity returns from BMC s investment in the ERP implementation Recommend a future state organizational model to align Controllers Group and FP&A with the needs of the business units CFO Project Scope as indicated in the diagram below: Treasury/ Operations FP&A Israel Finance Finance, Amsterdam Controller VP/ CAO IC and IA Investor Relations Corp Tax Legend In Scope Out of Scope Copyright 6/15/2012 BMC Software, Inc 5 5

6 The Realignment FSS CAO FP&A Created a global Financial Shared Services (FSS) organization and clarified roles between FP&A and CAO to eliminate redundancy CAO organization will own all actual results, including both statutory and management views of the business (e.g., producing fully allocated P&L s) FP&A will be tightly aligned with the business, more focused on business analysis/decision support, and will devote less attention to tactical activities (e.g., detailed variance analysis, budget creation) FSS will focus on performing transactional accounting activities in the most efficient, cost effective manner possible and be driven by Service Level Agreements (SLA) with their customer base Copyright 6/15/2012 BMC Software, Inc 6

7 Accounting centers prior to FSSC Amsterdam Mexico City Houston, TX, USA Pune, India Singapore Tel Aviv, Israel Brazil Argentina Copyright 6/15/2012 BMC Software, Inc 7

8 Accounting centers after FSSC Amsterdam Mexico City Houston, TX, USA Pune, India Singapore Tel Aviv, Israel Brazil Argentina Copyright 6/15/2012 BMC Software, Inc 8

9 Financial Shared Services profile FSSC Pune - Global accounts payable Invoices (TTM) 116k Manual inv (TTM) 58k (50%) iexpense (TTM) 72k 39 countries Staff 19 - Global fixed assets 32 countries Staff 3 - General ledger EMEA region 25 countries Staff 10 - Cash application EMEA & APAC Staff 2 - Indiastatutory accounting Staff 5 FSSC Houston Revenue accounting - Staff 4 Professional services accounting - Staff 4 (Houston) 1 (Amsterdam) 1 (Pune) Capitalized software accounting - Staff 7 Key financial applications - Oracle11i single WW instance Single chart of accounts - Hyperion HFM and planning - BlackLine account reconciliation - IT2 treasury system Copyright 6/15/2012 BMC Software, Inc 9

10 FY2012 P2P building blocks Manager P2P P2P Reporting/Analysis E-Commerce Administrator Manager P2P Operations Program Manager P2P Operations Project Manager P2P Operations >$50,000 Category Managers Vendor Maintenance IS&T AP Resolution & Customer Service (CW) Vendor Maintenance Marketing/Events Bhushan Chavan AP Resolution & Customer Service >$2,500 Regional Buyers Corporate Services AP Resolution & Customer Service <$2,500 P2P Operations CW/Consulting Dhargalkar (CW) AP Resolution & Customer Service P-Card Admin Develop Strategy Build Organization Prioritize Initiatives Align Categories Tiered Routing WW P Card Solution Supplier (XML) Portals Hardware/Software/ Telecom/AV/Printers/Copiers HR/Legal/Facilities/Charities Office Supplies/Insurance Marketing/Advertising/Travel/ Events/Promotional Products CW/SOW/PS/MDF/Teaming/ Royalties/Financial Services Sourcing Manager Category Buyer P2P Sourcing Manager Category Buyer P2P Sourcing Manager Category Buyer P2P Sourcing Manager Category Buyer P2P Copyright 6/15/2012 BMC Software, Inc 10

11 FY2012 Results Tiered routing introduced, which enabled Buyers and/or Sourcing Managers to focus on more material transactions with higher impact and savings. Team aligned by category ygiving gbuyers and/or Sourcing Managers higher level of support and providing P2P resources with cross training opportunities. Approximately 80% of all purchasing transactions are now being processed through supplier portals, on purchasing cards, or by our P2P team in India. P2P team is now responsible for 100% of Corporate and Purchasing Card administration globally. Centralized help desk implemented globally for P2P and P Card. The American Express Corporate Account Reconciliation (CAR) tool has been implemented on a single platform throughout North America, EMEA, India, and will be introduced in Latin America by end of quarter, providing a consistent global process. Based an innovative idea suggested by the P2P team BMC is the first company to implement this tool on a consistent platform globally. Purchasing card transactions have increased 37% year / year and spend rose 20%. Cardholder participation is now at 3.3%, which is more than double our enrollment last year. With international expansion and growth I feel we will continue to see an increase, but at a much slower pace. Copyright 6/15/2012 BMC Software, Inc 11

12 FY2012 Results SharePoint repository introduced for P Card reconciliation documentation globally simplifying the auditing process for AP, Tax, and IA. 36 online catalogs were implemented across 30 countries in FY12 (office supplies, promotional products, hardware, books & subscriptions, and software). XML (ecommerce) purchasing transactions grew at an average of 5% year / year and einvoicing 3%. P2P s focus in FY13 will be to expand online supplier catalogs and rollout an einvoicing solution that will complement our front end automation. Automated reminders developed to enable users to perform past due receipts via or blackberry significantly reducing # of invoices on hold for > 30 days. Program implemented to automatically close aged PO s >120 days. Aged PO s maintained by P2P at an average rate of 5400 / Qtr. PO s processed outside of policy (after the fact) have fallen 3% since Q1. We will continue to track and communication with those individuals not adhering to policy, and escalate when necessary. First Pass Yield is at it s highest in history, reaching 86% at the end of Q4FY12. This is in part due to both verbal and formal written communication to our suppliers, but also attributing to the improvement are multiple system enhancements such as receipts, improved notifications, and user training. i Though h this fluctuates t week / week I believe we will begin to see it stabilize throughout FY13. Copyright 6/15/2012 BMC Software, Inc 12

13 Purchasing Card Trends Spend through the purchasing card program rose $4.5M or 20% in FY2012. A 37% increase in transactions for the year. Cardholder population grew 2% over the course ofthe year. EMEA program fully launched LA pilot program underway India office supply XML linked to Purchasing Card Program Growth opportunities within GP Copyright 6/15/2012 BMC Software, Inc 13

14 FY2012 Late PO Analysis (excluding non procured services and Intercompany) 12% 9% 6% 3% 0% LATE PO % TTL FY12 TRANSACTIONS Q1FY2012 Q2FY2012 Q3FY2012 Q4FY2012 Q1FY2012 Q2FY2012 Q3FY2012 Q4FY2012 Late PO s hovered between 6 9% throughout FY12 and the top 10 categories seem to be consistent. However there does appear to be a downward trend as a % of total transactions. P2P will continue to communicate with offenders and escalate to Sr. Management when necessary. Copyright 6/15/2012 BMC Software, Inc 14

15 P2P Metrics / Benchmarks FY2011 P2P Metrics / Benchmarks Q1FY2011 Q2FY2011 Q3FY2011 Q4FY2011 Q1FY2012 Q2Y2012 Q3FY2012 Q4FY2012 BENCHMARK FY12 TTL PURCHASING TRANSACTIONS BMC AVG % MANUAL TRANSACTIONS 1% 2% 1% 2% 1% BMC AVG % NON CATALOG WEBREQ TRANSACTIONS 68% 63% 62% 65% 52% 53% 38% 35% 28% Accenture % AUTOMATED WEBREQ TRANSACTIONS 14% 17% 14% NEW ecommerce (XML) % TTL TRANSACTIONS 14% 15% 18% 18% 16% 24% 22% 23% 15% IBM #784 % P CARD TRANSACTIONS 26% 33% 36% 35% 47% 46% 47% 45% 57% Accenture P CARD SPEND $ 5.30 $ 3.85 $ 4.28 $ 4.45 $ 6.71 $ 5.98 $ 4.84 $ M BMC AVG P CARD % MANAGED SPEND 5% 4% 4% 4% 6% 5% 4% 4% 1.39% CAP #10 P CARDHOLDERS % TTL FTE 1.3% 1.3% 1.6% 1.3% 1.8% 2.5% 2.7% 3.3% 1.4% BMC AVG PO TRANSACTIONS <$2, % 59% 61% 59% 60% 63% 65% 63% 60% BMC AVG PO TRANSACTIONS >=$2, % 34% 34% 36% 33% 31% 30% 30% 34% BMC AVG PO TRANSACTIONS >=50K 7% 7% 5% 5% 7% 6% 5% 7% 6% BMC AVG TTL VOUCHERS BMC AVG % einvoicing/integrated VOUCHERS 14% 13% 17% 17% 18% 17% 19% 17% 15% BMC AVG % INVOICES ON HOLD 16% 18% 19% 18% 17% 18% 19% 14% 18% BMC AVG FIRST TIME PASS RATE 84% 82% 81% 82% 83% 82% 81% 86% 85%/95% HACKET Copyright 6/15/2012 BMC Software, Inc 15

16 How do we get there? Automation and / or elimination of purchasing transactions. Develop efficient process to route high volume transactions offshore. Centralize customer service and support Align resources. Reduction of supplier onboarding, maintenance and inquiries. Decrease manual invoices and improve FPY Improve DPO. Support with minimal resources. Copyright 6/15/2012 BMC Software, Inc 16

17 Accounts Payable and P2P working together Reduce Touch - Best case don t touch the invoice Current scenario 30,000 invoices per quarter» 15,000 are manual Increase P2P first pass invoice yield (target > 90%) - If we have to touch it we only want to do it once Copyright 6/15/2012 BMC Software, Inc 17

18 Symptoms of the problem Historical trend of invoices on hold Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Copyright 6/15/2012 BMC Software, Inc 18

19 Increase FPY 1 Train procurement, facilities and other key users 2 Restrict WebReq access to Superusers 3 Notify suppliers that No PO No Payment is our policy 4 Implement the Oracle isupplier Portal 5 Adopt/Require Tiered Routing globally for all categories 6 Auto close for aged PO s 7 Issue Weekly Report that shows violators of No/Late PO policy 8 Ensure procurement professionals are NOT entering their own name on ANY Oracle WebReqs that is, ALWAYS enter the name of the actual requisitioner 9 Revise process/procedure on 2 3 way match PO s and communicate/train users Copyright 6/15/2012 BMC Software, Inc 19

20 Decrease touch 10 Develop & implement a systemic solution to the Fieldglass Receipt issue 11 Evaluate alternative front end AP process 12 Implement Kofax scanning improvements 13 Formal plan/approach to accelerate the rate of catalogue integration outside of the USA 14 Need formal plan and execute a Supplemental P Card (MC or VISA) in large International ti lcountries Copyright 6/15/2012 BMC Software, Inc 20

21 Results to Date

22 Historical trend all regions and total Year over year decrease 76% From December High down 83% The holds problem was primarily Region Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 APAC India, EMEA and North America. ISREAL Significant improvement in North America. INDIA EMEA LAM NA Total Copyright 6/15/2012 BMC Software, Inc INTERNAL USE ONLY Copyright 6/15/2012 BMC Software, 22 Inc.

23 North America Region 81% drop in holds for the quarter. Noexpense reports onhold. This was during Q4, a high volume invoice and expense report period. For North America (US + Canada) total 11 invoices amounting to $65K are on Hold. No invoices for US/ CA are above 30 days hold. Specifics for North America (7 invoices) 2 No PO 4 Insufficient funds on PO 1 No receipt There are no expense claims on hold 23 Copyright 6/15/2012 BMC Software, Inc INTERNAL USE ONLY Copyright 6/15/2012 BMC Software, 23 Inc.

24 North America Process Control Chart Green Line is the average Red Lines are the UCL and LCL - Set 3 standard deviations from the mean Data points outside the red lines indicate something outside the norm has happened - Only 5% chance that this was a random event 1 st Time Pass Rate for this Week is %, Average for END of FY12Q %. 24 Copyright 6/15/2012 BMC Software, Inc INTERNAL USE ONLY Copyright 6/15/2012 BMC Software, 24 Inc.

25 North America Invoices on hold greater than 30 days What Changed? Objective was to eliminate any holds greater than 30 days No excuses weekly video conference with the P2P team Deep dive in all older invoices Pick up the phone 0 10/24/ /24/ /24/2011 1/24/2012 2/24/2012 3/24/ Copyright 6/15/2012 BMC Software, Inc INTERNAL USE ONLY Copyright 6/15/2012 BMC Software, 25 Inc.

26 Assess your metrics weekly Week Week Week Week Week Week Week Week Week Week Measurement details Jan Feb Feb Feb Feb Mar Mar Mar Mar Apr Invoice Volumes st Time Pass Rate % % % % % % % % % % Cycle Time (Avg./ St Dev) Days Invoice went on Hold to Hold resolved date 8 & & & & & 36 7 & & 16 9 & & & 21 Total Hold Invoices Received in Week Total Holds Resolved PO Vs Non PO (%) 58 & & & & & & & & & & Copyright 6/15/2012 BMC Software, Inc INTERNAL USE ONLY Copyright 6/15/2012 BMC Software, 26 Inc.

27 First Pass Yield 92% 90% 90% Objective is 90% FPY for FY13 88% 86% 86% 85% 86% 87% 84% 82% 83% 82% 81% 80% 78% 76% Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Actual Plan Assuming 5,000 manual invoices Per month, we will need to eliminate: From our low of 81% need to eliminate 450 exceptions per month From our year end metric ti of 86% we need to eliminate i 200 exceptions per month Copyright 6/15/2012 BMC Software, Inc 27

28 Closing thoughts Single largest contributing factor tosuccess No PO No Pay Employee contact t Copyright 6/15/2012 BMC Software, Inc 28

29 Questions?

30 Learn more at Copyright 6/15/2012 BMC Software, Inc 30