networking events - sigsig.org/docs2/sig ariba 1062015 webinar.pdf · • data entry –fixing...
TRANSCRIPT
The SIG Webinar will begin shortly.
Once the webinar begins, the sound will come from your computer
speakers.
In the meantime, please take a look at the upcoming SIG networking events listed on the right side of your screen
and plan to join us if you are in one of these cities this fall.
NETWORKING EVENTS
GLOBAL SUMMITSOct 27-29 – Huntington Beach
SYMPOSIUMS
Oct 15 – New York, NY
Nov 10 – San Francisco Bay Area
REGIONAL ROUNDTABLES
Nov 5 – Raleigh, NC
For more information and to register for all SIG events:
www.sig.org
RECENT POSTINGS
The SIG Career Network is
bursting with opportunities.
New jobs are posted daily by some
of the best known global companies in the world for those
seeking careers in sourcing, outsourcing, procurement and
related functions.
For more information go to: www.sig.org/career-center.php
NEW to the Career Network!
• Best Buy Co., Inc. - posted September 29:
• Sr. Manager – IT Sourcing, Software
• UnitedHealth Group – posted September 24
• Sr. Sourcing & Procurement Consultant
• Otsuka – posted September 23:
• Associate, Finance Rotation Program
• US Cellular – posted September 15:
• Category Manager II
• Best Buy Co., Inc. - posted September 10:
• IT Sourcing Category Manager, SAAS
• Staples, Inc. – posted September 8:
• Project Manager, BPO
• Senior Sourcing Manager
• American Family Insurance – posted Sep 3
• Sourcing Manager
• NB Ventures, Inc. – posted September 3:
• Sr. Solutions Consultant, Technology
• Associate Director, Technology
• Director, Consulting
bit.ly/SIGLinkedIn @SIGinsights bit.ly/SIGfacebookbit.ly/SIGYouTube
Join the discussion in SIG’s Peer2Peer Resource program too!
Stay connected with other SIG members through various social media channels
SOCIAL MEDIA
bit.ly/SIGBlog
New Topic Each Week2:00 pm Eastern
(11:00 am Pacific)
Upcoming Free SIG Webinars:
October 8, 2015Supply Chain Risk Management: How to Turn Current Practices into Best PracticesPresented by riskmethods
October 13, 20156 Benefits Driving Procurement Away From Contingent Labor Towards Managed ServicePresented by Canon Business Process Services
October 15, 2015All About Staffing Suppliers: Driving Toward Optimization StrategiesPresented by Fieldglass
Register at www.sig.org
For more information and to register for all SIG events:
www.sig.org
Upcoming Town Hall Teleconference:
October 14th
50 Shades of Stakeholder Management:
Turning Reluctant Acquaintances into Long-Term
Partners
Presented by: Kristin Gallagher
Director, Global Sourcing & ProcurementRussell Investments
SIG Town Hall Teleconferences
bring a small group of buy-side ONLY attendees together for a facilitated
discussion on top-of-mind issues in an open-mic, private conversation. Town Hall Teleconferences are NOT recorded.
Calendar of Town Hall Teleconferences
Taking place at 1:00 pm Eastern on the following dates:
February 11 August 12 April 8 September 9May 13 October 14
June 10 November 11July 8 December 9
For more information and to register for all SIG events:
www.sig.org
SIG Symposiums and Regional Roundtables provide education and local networking for members and invited non-member corporate users
Symposiums 2015:
Minneapolis, MN – Mar 25
Toronto, Canada – June 1
Columbus, OH – Sep 17
New York, NY – Oct 15San Francisco Bay Area – Nov 10
Regional Roundtables 2015:
Chicago, IL – April 29
Atlanta, GA – May 6
Houston, TX – May 13
London – Sept 16Raleigh, NC – Nov 5
For more information and to register for all SIG events:
www.sig.org
SIG Global Summits are semi-
annual events with 350-450
decision-makers in attendance
• Non-commercialized
• Hundreds of industry thought
leaders
• 70% buy-side
• 4-5 keynote sessions
• Global brands
• 3 days of networking
• CPO Roundtables
• Nearly 50 breakout sessions
69% of delegates are director level or above, of which 43% are VP/C-level
www.sig.org/fall15
Recent speakers include:
For more information go to: www.sig.org/siguniversity
Online learning environment
Sourcing and Governance certifications with Professional and Executive level courses
Modules with lessons, formative assessments, summative testing and final proctored exam
Certification good for 5 years
Interested in providing input?
Let us know!
For more information go to: sig.org/student-outreach.php
Partnering with Universities
Introducing students to seasoned supply chain executives
Sharing thought leadership with students in class, SIG University courses and at SIG events
Giving access to internship and job postings on the SIG Career Network
Allowing students to get real world insight into supply chain careers
Finding tomorrow's supply chain professionals today
What Procurement Doesn’t Know About
Payables (And May Be Afraid to Ask)Chris Rauen and Robert Banther – Ariba, an SAP company
© 2015 Ariba – an SAP company. All rights reserved. 11Public
Agenda Today’s Presenters
Chris Rauen Robert Banther
© 2015 Ariba – an SAP company. All rights reserved. 12Public
The Problem: Major Pain Point(s) to Achieving P2P Process Benefits
Payables Best Practices and Leading Indicators
Stakeholder Value Proposition: Qualitative and Quantitative
Recap – Final Thoughts
Agenda Agenda
© 2015 Ariba – an SAP company. All rights reserved. 13Public
Mind The Gap!
© 2015 Ariba – an SAP company. All rights reserved. 14Public
Poll Question #1: How aligned is AP and procurement in
your organization?
1. Tightly aligned: reporting to same executive
2. Good alignment: but report to different executives
3. Not well aligned: interact only to resolve problems
4. No alignment: operate independently with no interaction
© 2015 Ariba – an SAP company. All rights reserved. 15Public
Invoice Cycle: Days… Weeks… Months?
© 2015 Ariba – an SAP company. All rights reserved. 16Public
Invoice Cycle: Days… Weeks… Months?
Code Invoice
Receive Invoice
Deliver to Approver
© 2015 Ariba – an SAP company. All rights reserved. 17Public
Invoice Cycle: Days… Weeks… Months?
Code Invoice
Receive Invoice
Deliver to Approver
Sort and Scan
Key
© 2015 Ariba – an SAP company. All rights reserved. 18Public
90:10
Invoice Processing Performance: Fair or Foul?
© 2015 Ariba – an SAP company. All rights reserved. 19Public
• Invoice sent to remote location – misplaced
• Invoices not matched to POs or contracts
• Who needs to approve?
• Account codes applied are often incorrect
• Data entry – fixing invoice errors/exceptions
• Procurement diverted from strategic buying to
resolve invoice errors
• Too many payment status calls
• Contract leakage can cost you tens to
hundreds of millions of dollars annually
• Invoice data can’t be delivered to the sourcing
group to better manage spend
• You can’t capture early payment discounts to
lower costs, increase cash returns.
Procure-to-Pay Process: What Can Go Wrong?
© 2015 Ariba – an SAP company. All rights reserved. 20Public
• Invoice sent to remote location – misplaced
• Invoices not matched to POs or contracts
• Who needs to approve?
• Account codes applied are often incorrect
• Data entry – fixing invoice errors/exceptions
• Procurement diverted from strategic buying to
resolve invoice errors
• Too many payment status calls
• Contract leakage can cost you tens to
hundreds of millions of dollars annually
• Invoice data can’t be delivered to the sourcing
group to better manage spend
• You can’t capture early payment discounts to
lower costs, increase cash returns.
Procure-to-Pay Process: What Can Go Wrong?
© 2015 Ariba – an SAP company. All rights reserved. 21Public
• Invoice sent to remote location – misplaced
• Invoices not matched to POs or contracts
• Who needs to approve?
• Account codes applied are often incorrect
• Data entry – fixing invoice errors/exceptions
• Procurement diverted from strategic buying to
resolve invoice errors
• Too many payment status calls
• Contract leakage can cost you tens to
hundreds of millions of dollars annually
• Invoice data can’t be delivered to the sourcing
group to better manage spend
• You can’t capture early payment discounts to
lower costs, increase cash returns.
Procure-to-Pay Process: What Can Go Wrong?
© 2015 SAP AG. All rights reserved. 22
Invoice Exceptions: Where Do You Stand?
162,000 @ $3.24M
162,000 @ $32.4M
© 2015 SAP AG. All rights reserved. 23
Problem Invoices, Fortune 500 Company,
45,000 invoice per month… and costs to resolve them
Invoice Exceptions: Where Do You Stand?
162,000 @ $3.24M
162,000 @ $32.4M
© 2015 Ariba – an SAP company. All rights reserved. 24Public
Poll Question #2: How effective are you in capturing the
savings you’ve negotiated in contracts?
1. Very Effective. We capture most savings from the contracts we’ve
negotiated.
2. Average. We capture some savings from our contracts.
3. Poor. We have no way of tracking contract savings.
© 2015 Ariba – an SAP company. All rights reserved. 25Public
Deposit “Slip”
© 2015 SAP AG. All rights reserved. 26
Hidden Costs of Contract Leakage
$159,800,000
© 2015 SAP AG. All rights reserved. 27
Contract leakage, Fortune 500 Company, $8.5b in spend
Hidden Costs of Contract Leakage
$159,800,000
© 2015 SAP AG. All rights reserved. 28
Business Networks – Onramp to the Digital EconomyConnecting people, systems and processes to simplify business commerce
© 2015 Ariba – an SAP company. All rights reserved. 29Public
“Other”
GST/VAT Compliance
PO & PO-Line Match
Buyer Match (non-PO)
UOM & SKU Change
Currency Match
Sub Total& Total Amount
PO-Line Change
Line & Total ConsumptionThresholds
Shipping & Tax Thresholds
Invoice
Number
Bill To /
Ship To
PO
Number
Requestor
(Non PO)
Invoice
Date
VAT / GST
IDs
Account
Coding
Contract &
Receipt
Match
Price & Tax
Compliance
Network-Centric Payables in Action
© 2015 Ariba – an SAP company. All rights reserved. 30Public
“Other”
GST/VAT Compliance
PO & PO-Line Match
Buyer Match (non-PO)
UOM & SKU Change
Currency Match
Sub Total& Total Amount
PO-Line Change
Line & Total ConsumptionThresholds
Shipping & Tax Thresholds
Invoice
Number
Bill To /
Ship To
PO
Number
Requestor
(Non PO)
Invoice
Date
VAT / GST
IDs
Account
Coding
Contract &
Receipt
Match
Price & Tax
Compliance
98%+ Auto Post
Network-Centric Payables in Action
© 2015 Ariba – an SAP company. All rights reserved. 31Public
“Nearly 56% of all
incoming invoices are
still paper based.”
- TAPN 2014
“30% of invoices have
exceptions”
- AberdeenGroup
“$9 million in contract
leakage per billion in
spend on average.”
- The Hackett Group
“80% of early payment
discount opportunities
missed.”
- Ariba
High Cost of
Paper InvoicesToo Many Exceptions Lack of Compliance Lack of Control
Receipt &
Capture
Matching &
Approvals
Inquiries
& Exceptions
Discounts &
Payments
Systemic Compliance Control Payment Timing
Fixing a Broken Process
© 2015 Ariba – an SAP company. All rights reserved. 32Public
Buyer & Seller Benefits
$2 million discount savings
per $1B spend
DSO Reductio of over
6 Days
Spend Savings
$400K+ in AP Error &
Fraud Elimination per $1B
in spend
$4M per $1B of contract
leakage avoidance
Effectiveness Gains
98%+ touchless
processing
70% decrease in approval
times
Efficiency Gains
60 – 80% operational cost
takeout in AP
“Nearly 56% of all
incoming invoices are
still paper based.”
- TAPN 2014
“30% of invoices have
exceptions”
- AberdeenGroup
“$9 million in contract
leakage per billion in
spend on average.”
- The Hackett Group
“80% of early payment
discount opportunities
missed.”
- Ariba
High Cost of
Paper InvoicesToo Many Exceptions Lack of Compliance Lack of Control
Receipt &
Capture
Matching &
Approvals
Inquiries
& Exceptions
Discounts &
Payments
Capture 100% of your
invoices in a digital
format from any
supplier regardless of
volume, location or
capabilities
Resolve invoice errors
at point of submission
with self-serve supplier
portal and over 80
Network business
rules
Match invoices against
POs, Contracts,
Service Sheets.
Workflow routing and
approval
Control payment
timing and maximize
early payment
discount capture
Eliminate & Digitize PaperCapture & Correct
ExceptionsSystemic Compliance Control Payment Timing
Fixing a Broken Process
© 2015 Ariba – an SAP company. All rights reserved. 33Public
“1-for-1”
Process Cost
Containment
$1M per $1B in
spend process
efficiency savings
Discount
Capture
“2-for-1”
$2M+ in discount
savings for
every $1B in
discountable
spend
Working
Capital
“3-for-1”
$2.7 million in
working capital
impact for every $1
billion per day of
improvement of
DPO, DSO, DIO
Contract
Compliance
“4-for-1”
$4M in savings
leakage for every
$1B in spend under
contract
Business Case: Network-Centric Payables
© 2015 Ariba – an SAP company. All rights reserved. 34Public
“1-for-1”
Process Cost
Containment
$1M per $1B in
spend process
efficiency savings
Discount
Capture
“2-for-1”
$2M+ in discount
savings for
every $1B in
discountable
spend
Working
Capital
“3-for-1”
$2.7 million in
working capital
impact for every $1
billion per day of
improvement of
DPO, DSO, DIO
Contract
Compliance
“4-for-1”
$4M in savings
leakage for every
$1B in spend under
contract
$10+ Million Savings per $1 Billion Targeted Spend
Business Case: Network-Centric Payables
© 2015 Ariba – an SAP company. All rights reserved. 35Public
The Problem: Major Pain Point(s) to Achieving P2P Process Benefits
Payables Best Practices and Leading Indicators
Stakeholder Value Proposition: Qualitative and Quantitative
Recap – Final Thoughts
Agenda
© 2015 Ariba – an SAP company. All rights reserved. 36Public
• An approved invoice is a strategic asset
for a company
• Unlock additional value by taking
a liability and turning it into a
value creator
• All suppliers want visibility into invoice /
payment status, financing and payment
Every Company Has Strategic Assets….
© 2015 Ariba – an SAP company. All rights reserved. 37Public
Poll Question #3: How many different payment terms are set
up in your payables or ERP system?
1. Less than 5
2. 5-10
3. 11-25
4. 26-49
5. >50
© 2015 Ariba – an SAP company. All rights reserved. 38Public
Payables Best Practices & KPIs
KPI’sBest-In-Class Capabilities
• 90% electronic invoices
• 50K+ invoices per FTE
• 75% of PO & Invoice lines
against item Master/
Catalog/ Contract
• Discounts: 10% of spend
• SCF: 10% of spend
• Card: 5% of spend
• Net Terms: 75% of spend
• DPO = 50 days
• 60-80% reduction in
supplier inquires
• +90% of payment are
automated
• Electronic Invoice
Submission
• Intelligent error recognition
• Predefined line items
• Pre-approval on PO &
contract
• Pay electronically to maximize
payment window
• Rich payment remittance
details
• Secure bank account storage
• Create a significant
payment window for
working capital optimization
B
C
D
0 Days
5 Days
50 Days
Invoice
Approval
Net Terms
Payment
Delivered
Invoice &
Capture Date
Options:
Discount, SCF,
or Card
Payment
Delivered
Best-In-Class
A
B
C
D
0 Days
5 Days
25 Days
35 Days
Invoice
Capture
Invoice
Approval
Net Terms
Payment
Delivered
Invoice Date
Typical
© 2015 Ariba – an SAP company. All rights reserved. 39Public
DPO & Discounts are 12 – 14x
more valuable than trx’l automation
(Source: Blue Hill Research) CEO
CFO
VP Shared
Services
Corporate
Controller
Director,
Accounts Payable
TreasurerCPO /
VP Supply ChainSuppliersCIO
Assistant
Treasurer
Assistant
ControllerDir, Sourcing /
eBusiness
Director,
Finance I/T
Accounts
Receivable
• Increase margins and earnings per share
• Extend DPO: Income Statement & Balance Sheet Benefit
• Transform A/P from a cost center to profit center
• Enhance controls / risk mitigation
Payables
Outcomes
> touchless invoices
> discounts earned
< A/P Inquiries
Optimize DPO
Investment return:
12% - 36%, risk free
Risk Mitigation:
Bank Account Mgmt
Provide suppliers
early pay alternative
Payment visibility
1 platform:
Buy Right, Pay
Right Lower TCO
Get paid faster
Easier reconciliation
Improve cash flow
forecasting
Payables Stakeholders & Outcomes
© 2015 Ariba – an SAP company. All rights reserved. 40Public
Payments:
200,000Risk Mitigation
Total: $4,345,890
eInvoices:
70% = 280,000
Invoice
Savings:
$1,400,000
Savings Per
Invoice:
$5.00
ePayments:
70% = 140,000
Payment
Savings:
$350,000
Savings Per
Payment:
$2.50
3rd Party Fees &
Lawsuits
Risk Premium
Brand equity /
Perception
Other Benefits
Free Up A/P Help
Desk Staff
Redeployment
of Scarce
Resources
Collection of Tax
Reporting Info
Invoices:
400,000
Income Statement Impact
Spend:
$1 Billion
10% Adoption =
$100,000,000
Average Discount =
1.50%
Gross Discount:
$1,500,000
Spend Extended:
$250 Million
20 Days Term
Extension
Weighted Average
Cost of Capital = 8%
Return Earned:
$1,095,890
1 Day DPO
DPO Extension
A/P Balance
Increase=
~$3,000,000
Balance
Sheet Impact Added Benefits
Business Case Example:
Invoices, Payments, & Payables Working Capital
© 2015 Ariba – an SAP company. All rights reserved. 41Public
>8 million users from
1.8M+ companies …
… use the
Ariba Network …
… for better business
commerce
In next 24 hours,
Ariba customers will:
• Manage >$2.3 Billion B2B transactions
• conduct >243,836 purchase, sales, and financial transactions
• manage >4 million contracts
• save their companies >$65 million
The World’s Business Commerce Network
68+ million
Annual Invoices
>1.8 million
Connected Companies
150
Countries
>75%
Global 2000
> $800 billion
In Annual Commerce
31+ million
Annual Purchase Orders
© 2015 SAP AG. All rights reserved. 42
Process Savings
ELECTRONIC INVOICING
Embrace the Power of Network-Centric Payables
© 2015 SAP AG. All rights reserved. 43
Discount
Management
Supplier
Management
Compliance
Working Capital
Process Savings
ELECTRONIC INVOICING
Spend Analysis
Embrace the Power of Network-Centric Payables
Q&A
Contact information:
Chris Rauen
650-390-1910
http://scn.sap.com/people/christopher.rauen/content
Robert Banther
678-232-5080