How to Avoid the Single Point of Project Failure & Reach 80% Electronic Invoicing

John Whitlow – Head of Purchasing

Areas to be covered

AGENDA•Imperial College London – Background•Process Management – P2P•Challenges Faced when Improving the Pay Stage•Our IT Systems•What the Pay Stage looked like in 2006•Business Case & Review of the Pay Stage•How we changed the Pay Stage in 2006 and why we decided to partner with OB10•Benefits and Challenges of Electronic Invoicing•Close - Questions

Imperial at a glance

The University’s objectives:• world class scholarship, education

and research in science, technology and medicine

• interdisciplinary collaborations• communicate and share knowledge

Established in 1907Turnover of £600 million

Academic faculties:• Engineering• Natural Sciences• Medicine • plus Business School

Our Management Approach to Process Management – Electronic Invoicing

•Use technology to achieve process improvements and efficiencies.

•Exploit IT opportunities to deliver sustainable cost and performance benefits.

•Enable full automation of the pay process and eliminate unmatched invoices and improve immediate invoice registration.

•Improve risk management regarding supplier payments and VAT reclaim.

•Increase invoices paid on time and enable early-payment discounts.

•improve invoice exception management.

•Reduce supplier queries.

•Reduce the cost of archiving and use of space.

Challenges faced when exploring how we could deliver improvements when investigating how we pay our suppliers

•The College would have to invest money and time to improve the pay process and deliver the expected benefits.

•Full benefits were likely to be delivered over a 1-2 year timeframe, allowing time for changes to take place and solutions to be rolled out. Sustained commitment was therefore required.

•e-Enablement would need to play a much greater role in enforcing compliance across the organisation.

•Process efficiencies had to comprise of opportunities for budget savings where a role could be re-allocated or removed and opportunities to undertake different tasks from increased capacity.

•There was a choice of technology solutions. We needed to assess what was the right solution, or combination of solutions.

•Delivering the benefits was about changing current practice. Change management would therefore be critical to our success.

Our IT Systems – Oracle Financials

•We are a mature Oracle house using the Advanced Procurement Suite and the Oracle Accounts Payable Module

• We implemented Oracle in 1999 - All purchasing is undertaken using iProcurement – we have 2,000 on-line users.

• We “punch-out” to 20 MRO suppliers including HP, Sigma, VWR, RS Components, Office Depot and through this route send out our purchase orders using XML.

• Content management - Supplier catalogues are also maintained on system for other mainstream suppliers.

• Oracle iSourcing is in place principally to undertake electronic reverse auctions but eventually will look after the whole electronic tendering piece.

• Oracle Accounts Payable was in use but until 2006 we had not explored how we could improve the whole procure to pay process. Greater focus was therefore given to Pay and options for improvement explored.

The Pay Process in 2006

•We processed on average 170K paper based invoices each year.

•The majority of invoices were posted to us and were then keyed in by staff in our central Accounts Payable Team.

•Once keyed and checked invoices were photocopied and posted out via the internal mail to administrators in all our departments ready for authorisation. This equated to 140,000 items of mail being sent out each year to different parts of the College.

•The departmental administrators would then be expected to check and forward invoices on to staff in their own department for final authorisation.

•Unless departmental staff notified central Accounts Payable of any issues with an invoice it would be processed by the settlement date if below £10K in value.

•All invoices above £10K in value were automatically put on system hold and required active authorisation before approval.

•The cost of processing an invoice this way was approximately £2.50.

Review of the Pay Process

•Management recognition that the Pay process was inefficient and didn’t work that well in practice. There was scope for serious improvement and cost reduction.

•Our aim was to receive invoices electronically, have a high level of matching, and streamline the internal authorisation process.

1)Electronic invoicing – Looked at solutions from Oracle (iSupplier Portal) and OB10 focusing on how we could receive a large percentage of our invoice transactions from both large and small suppliers – Right first time.

•Matching of Invoices – we not only wanted to receive invoices electronically but also wanted high levels of matching – touch-less end-to-end processing . This suited our profile where a high percentage of our purchase orders were being transmitted electronically so perfect data was being sent to suppliers so this data could be flipped and sent back. We ruled out doing this directly.

•Authorisation process – once received invoices could be automatically matched on our system so the next initiative was to have electronic workflow whereby invoices could be sent to the user for checking and authorisation.

Model adopted and why we selected OB10 as our Provider

•Electronic Invoicing – We selected OB10 as they had an established network of suppliers, provided a single solution for transmission by both small and large suppliers, fully understood our business requirements and submitted a very competitive transaction fee for their service.

•Matching of Invoices – Although there are benefits in removing paper invoices from the process there are even greater benefits if you can automatically match invoice data with purchase order line detail. This truly enabled a “touch-less” process and was the single largest benefit for Imperial.

•Authorisation process – By receiving invoices electronically from OB10 the format would be standardised. This afforded us an opportunity to revisit how we archive and present the data to our users. The data from OB10 is now collected by Storetext, our invoice scanning provider, and available on-line to all our users.

•This removed 140K items of internal mail saving us at least £30K per annum. At the same time we introduced electronic email alerts notifying users that invoices are ready to be paid. Again this was a major service improvement for our users.

Benefits of Introducing OB10 & the Challenges

•Benefits• Reduced the cost of processing a transaction from £2.50 to less than £1.00. • Enabled head-count reductions in our central Account Payable function saving in excess

of £100,000 per annum.• We are now processing in excess of 100K invoices per annum.• Allowed a single approach to be adopted for the receipt of invoices.• Reduced the volume of paper and associated storage.• Reduced the level of telephone queries from suppliers.• Facilitated the implementation of an improved authorisation process and removal of

unnecessary administrative procedures.

•Challenges• Change management – structural and cultural.• Quality of data – integrity of data is key.• Supplier enrolment and building the network – joint responsibility.• To improve our transaction level and move towards 75-80% 2009.

Thank you – Any Questions