shell case study: enabling straight-through touchless processing of 500,000 invoices

Copyright of SBSC Glasgow 1Month 2010

How to Enable Straight Through Touchless Processing of 500,000 Invoices

Toning Up PtP to Attain

Touchless Procesing, 9th June

2010

Steven Breaden

Senior Manager, Expenditure – Technical Strategy

Copyright of INSERT COMPANY NAME HEREUp to two lines if required

2Month 2010INSERT or DELETE CONFIDENTIALITY

Go to View/Slide

Introduction.....



Go to View/Slide

About Shell

We are active in more than 90 countries

Worldwide, we have 101,000 full-time employees

We produce around 3.1 million barrels of oil equivalent per day

Our fuel retail network has around 44,000 service stations

We sell transport fuel to some 10 million customers a day

In 2009…

We generated an income of $12.7 billion;

Invested $31.7 billion in capital; and

Spent over $1.1 billion on R&D

We are listed on the stock exchanges of Amsterdam, London and New

YorkSource: 2009 Annual Report



Go to View/Slide

BUSINESS OVERVIEW



Go to View/Slide

SHELL STAFF BY SEGMENT

Upstream 23,000Downstream 62,000Corporate 16,000

Total 101,000

AVERAGE NUMBERS 2009Rounded to the nearest thousand



Go to View/Slide

The SBSC Finance Community

Glasgow (1998) Krakow (2006)

Cape Town (2007)

Chennai (2007)

Kuala Lumpur (2000)

Manila (2004)

Athens (2006)

40 FTE

750

FTE

1500

FTE

1500 FTE40 FTE

650

FTE750

FTE



Go to View/Slide

Introduction

In order to automate the AP process, there are four key areas we have

had to consider in our journey from <10% Straight Through Put (STP)

towards our aspirational target of 50% of documents going through

Brainware reaching a Post / Park State within the ERP automatically.

Our 4 Key enablers to automation are:

Strategy

People

Technology

Data

Automation is not solely an IT project!



Go to View/Slide

Introduction (continued)

Straight Through Processing (STP):

Processing a document to Park / Post state within ERP without manual

intervention

2009 - Prior to Brainware V4.1 implementation, STP <10%

20 Invoice per FTE per day processing efficiency target

2010 – 3 Months after Brainware V4.1 implementation, STP 20%

35 Invoice per FTE per day processing efficiency target

2010 – End of year STP target of 50%



Go to View/Slide

Strategy



Go to View/Slide

Strategy

Strategy touches on all elements of automation. It will almost certainly have an impact on people

in your organisation, and the types of automation technology you adopt. It provides a roadmap

from where your organisation is in it’s Automation Journey, to where you need to get to.

It’s important to have a clearly defined strategy at the outset of an automation project, and to

adapt your strategy through out your journey. Some key things to consider :

Business Rules – No one knows your business like you do

Defining Business Rules for automation need to be the first point on your project plan.

There is no “One Size Fits All” technology for AP. Many organisations have a combination of two or three solutions in place to achieve automation targets.

In shell we have implemented Brainware, SAP Workflow, E-Invoicing and ERS to drive up automation



Go to View/Slide

Strategy

It is important to clearly match technical solutions to vendors.

Legal Fiscal Requirements – They are either an enabler or blocker to automation,

and need to be identified up front.

Internal organisation – Role mapping / team structure are enablers in successful

automation

Benchmarking and Networking – It’s important to find out what everyone else is

doing.

Structure is required in delivering strategic projects. Within Shell we have adopted

the “Lean Sigma” methodology to support strategy

In today’s office, there needs to be a robust strategy for eliminating paper based

invoicing.

It’s a simple formula - Paper = People!



Go to View/Slide

People



Go to View/Slide

People

During any automation project there are a number of people and relationships

that need to be considered and developed to ensure success.

Key customers and stakeholders to consider include:

CP & Finance

Senior Management

Project and Technical Staff

Accounts Payable

External Customers / Vendors



Go to View/Slide

People

CP / Finance

It is almost impossible to drive implementation of automated solutions without

end to end buy in.

Within Shell CP, own the relationship with the Vendor, as such CP buy in is

essential to the success of any of our automation projects

Organisationally, it is important to ensure CP / Finance goals are aligned to those

of the AP organisation – automation projects need to be worked in partnership



Go to View/Slide

People

Senior Management

Key enabler in an automation project, buy in needs to be secured as early in the

project as possible

Visible support of initiatives is essential in ensuring organisational buy in, focus

and support of your project

Manage expectations – goals, objectives and deliverables of the project need to

be identified and agreed early in the project

AP Automation is a journey – Senior Managers need to be committed to all

aspects of the project – timelines, automation targets, resourcing requirements of

the project - in order to deliver long term success.



Go to View/Slide

People

Project and Technical Teams

An initial project team is required to deliver the project - it is essential that this

has end to end process representation

A Technical team will be required to support post roll out.

Members of this team need to have a knowledge of the deployed

technology, coupled with high level knowledge of the E2E process

Within Shell we have also established a Technical Strategic Team to focus on

driving up efficiency within our process and to bridge the gap between CP,

Finance and AP.



Go to View/Slide

People

Accounts Payable

In order to roll out any new project you will need the support of AP

This can be a difficult relationship to manage, the ultimate aim of automation is to

increase efficiency and typically reduce headcount / FTE within your process.

AP are required to test and validate automated solutions, and also operate the

system post implementation

Automation projects can be an opportunity for AP staff to develop project experience

Experience gained through the process can lead to other opportunities within the

organisation



Go to View/Slide

People

External Customers / Vendors

Solutions need to be workable for your Vendors

Automation should simplify Vendor payment

It is essential to consider current ways of working with Vendors when rolling out

an automation project.

It is also critical to develop the relationship with 3rd party automated solution

providers. They need to understand your business and goals – you need to

understand what they can deliver.

Open and honest communication is a must!



Go to View/Slide

Technology



Go to View/Slide

Technology

Currently within Shell we utilise the following technologies :

ERS

Brainware (OCR) Technology

PDF Functionality

SAP Workflow

E-Invoicing



Go to View/Slide

Technology

ERS

Shell currently have vendors on boarded on ERS

Benchmarking statistics show that even with Top Quartile and World Class

Organisations, only around 27% of transactions are handled via ERS

Currently Shell transacts in the region of 500,000 transactions via ERS

ERS is a key part of Shell’s automation strategy, however it is clear that other

technologies in this space are required to drive us to top quartile AP

performance.



Go to View/Slide

Process Flow – Brainware

Receive Invoice(PDF)

“Scan” Invoice(Physically /

Electronically)

OCR / Verify Document

SAP Workflow / Exceptions

Pay Vendor

Automated Flow

PDF

“SCAN”

BRAINWARE

V4.1

SAP WF

Paper InvoiceMail sort / Scan

Upload Document to Image Repository

Process in Verifier & ERP Exceptions

Process ERP Exception Item

Semi Automated Flow

SAP WFVerifier Exception

s

Exception

s

Pay Vendor



Go to View/Slide

Technology

Brainware (OCR) TechnologyWe have recently upgraded to V4.1 of Brainware – Global Retrofit took place Feb 23rd 2010.

Aspirational targets for yr end 2010 of

90% Extraction

50% STP to Park / Post in ERP

Currently achieving

80 % Extraction

20 % STP to Park / Post in ERP

At present, approximately 1,000,000 invoices are routed though Brainware per year, as such Brainware plays a key part in our automation and efficiency targets

The technology allows us to simplify exception handling in the ERP

Reduced language requirements – key to Shell as given global nature of our business

Apart from FTE efficiency, we also use Brainware to drive compliance, and to add control within the AP process



Go to View/Slide

Technology

PDF Functionality

Almost 100% of invoices processed via Brainware at present are submitted as

paper documents to one of our scanning hubs

With Brainware V4.1 we have implemented the Exchange Connector Technology

to automate PDF upload to Brainware

We are currently rolling out PDF functionality to vendors

PDF invoicing is a key enabler in driving up efficiency in the organisation

In today’s economic climate, it is also an attractive option to suppliers, reducing

invoicing and administration cost and speeding up vendor payment.



Go to View/Slide

Technology

SAP Workflow

We use a SAP Workflow solution

This has been customised to maximise automation in the process

Our SAP WF Solution supports and is supported by our Brainware

implementation

As part of the V4.1 Brainware roll out, we have revised our ERP / WF business

rules and matching logic

This allows checks such as Vendor Derivation and PO Line Matching to

take place before a document is created within SAP

Automatic posting of invoices with 3 Way Match Logic implemented



Go to View/Slide

Technology

E-Invoicing

Shell is currently reviewing it’s e-invoicing strategy

The expectation is that a robust E-Invoicing Strategy could supplement current

solutions and drive efficiency to 80+ Invoices Per FTE per day

There are approximately 400 E-Invoicing providers in the market offering varying

degrees of automation from PDF invoicing through to fully integrated solutions



Go to View/Slide

Data



Go to View/Slide

Data

Data is another key component of any automation project.

Before any automation project, data is required to help formulate strategy – and

validate results. Some data to consider include:

High Volume Vendor reports

Spend analysis

PO vs Non Po transactions

FTE efficiency

Compliance within the business

Benchmarking Data



Go to View/Slide

Data

In order to gauge where you are on the automation journey and to identify

areas for improvement it is important to have data and a suite of reports

covering a number of metrics at the following levels:

• Operational

• Managerial

• Strategic

Within Shell, we have developed various reports to analyse and drive

Automation particularly around our recent Brainware implementation.



Go to View/Slide

Data

Operational Metrics:

Extraction Report

SAP Error Message Report

Processing Stats

Line Item Extraction



Go to View/Slide

Data

Extraction Reporting



Go to View/Slide

Data

Managerial Metrics:

Straight Through Put Report

FTE Processing Efficiency

Cycle Time Report

Universal Work List / Escalation Report



Go to View/Slide

Data

STP Report



Go to View/Slide

Data

Strategic Data:

PDF Volumes

Extraction Report

SAP Error Message Report

FTE Efficiency Metrics



Go to View/Slide

Summary

Currently achieving 20% STP to Park or Post via Brainware against a

50% target just 3 months after go live on V4.1

Brainware extraction is currently at 80% against a year end target of 90%

Lessons Learned:

Remove Paper!

Business Rules are key to success

Straight Through Put – One phrase, many definitions!



Go to View/Slide

After!

shell case study: enabling straight-through touchless processing of 500,000 invoices

Business

required confidentiality

insert company

insert

7 billion

lines