Building a Financial Shared Services Center Learning Academy

Part 2 of 4: The Value Proposition of Shared Services for Procurement

Housekeeping Details

►Listen-only mode teleconference ►Questions Question function in GoTo Meeting Email: [email protected]

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►Trouble joining? - Email: [email protected] - Call: 203-487-7902/7911

Agenda

►The Value Proposition of Shared Services for Procurement ►Dan Parnas, P2P Consultant, Epiphany Supply Chain Solutions ►Basware Overview ►Bob Cohen, Vice President

►Q&A

Shared Services 201: The value proposition for Procurement

Dan Parnas, P2P Consultant Epiphany Supply Chain Solutions 5

… is your business ready for an epiphany?

About The Presenter Dan Parnas 

P2P Consultant for Epiphany Supply Chain Solutions



13 years at Charles Schwab & Co., Inc., most recently as Director, Purchase to Pay  In 2003, created one of the first true Purchase to Pay Operations, merging

the existing AP & Procurement departments  During my time at Schwab, was responsible for automation initiatives

including: IVR, Workflow, Imaging, Concur T&E, Ariba eProcurement, Xign/JP Morgan Chase ACH and eInvoicing, Citibank P-Card & Excel voucher uploads to PeopleSoft 

6 years spent with Gap Inc., Lucas Digital – Industrial Light & Magic, and Nextel Communications with primary Accounts Payable focus



Graduate of UC Santa Barbara, 1989, Business Economics

5

… is your business ready for an epiphany?

… is your business ready for an epiphany? •Does your organization suffer from uncontrolled spending and inefficient Source-to-Pay processes? Let Epiphany show you how to start saving money today and improving your operational performance.

STRATEGIC SOURCING STRATEGIC SOURCING

•Do you lack sufficient resources in sourcing or procurement? Pull from Epiphany’s bench of ondemand professionals to deliver timely, practical and comprehensive solutions.

•Are you looking to analyze your total spending, prioritize savings opportunities, and create lasting financial benefit for your organization? If so, your business is ready for an Epiphany!

StrategicSourcing Sourcing Strategic Sourcing Strategic

Negotiatethe theright rightcontracts contracts Negotiate the right contracts Negotiate withthe theright rightsuppliers suppliers with the right suppliers with

Source-to-Pay Source-to-Pay Advisory Advisory

SpendAnalysis Analysis Spend Analysis Spend

Gainspend spendvisibility visibilityand andaaa Gain spend visibility and Gain strategic approach to savings strategic approach to savings strategic approach to savings

Expertadvice adviceon onsupply supplychain, chain, Expert advice on supply chain, Expert purchasing and AP challenges purchasing and AP challenges purchasing and AP challenges

5

6

RecoveryAudit Audit Recovery Services Services Recoveroverpayments overpaymentsand and Recover strengthen spending controls strengthen spending controls

… is your business ready for an epiphany?

What is Shared Services for Procurement? Can mean different things to different people Through a SSC initiative, centralization is an inherent component  Most often refers to where a company with multiple business entities:  

 Centralizes all procurement activity ▪ Purchasing/Procurement - Operations/Sourcing ▪ Often where the company already has an established presence ▪ Commonly located in low cost geographical areas with highly educated/large labor pool ▪ Midwest (Omaha, Denver), Southwest (Phoenix), North Dakota (Microsoft)

▪ For global companies like Apple, SSC regionally across the globe ▪ Ireland for Europe, Singapore for Asia, etc..

 Provides those services for all business entities

5

… is your business ready for an epiphany?



Financial services, where most spend is indirect, Procurement innovation lagged behind F&A  Procurement was in reactive mode, letting the business set the tone  Economic pressures led to a move to development of a strategic

model ▪ Step 1: Centralized operations with limited regional support ▪ Step 2: Deployed eProcurement catalog buying – eliminated receiving/3 way match ▪ Step 3: Merged AP & Procurement into P2P Shared Services ▪ Over time through attrition, regional support shifted to SSC

▪ Step 4: Leveraged P2P visibility to consolidate commodity spend with fewer suppliers (90/10) – approached supplier relationships for long term/win-win ▪ Step 5: Expanded Vendor Management role to add strategic sourcing

5

… is your business ready for an epiphany?



Savings/Reduce expenses – Particularly in the current economic environment, if your company hasn’t already considered a SSC, it is likely they will  Strategic Sourcing ▪ 6.4% savings average

 Visibility/Control/Leverage (examples) ▪ Telecom ▪ Ongoing review & cancellation of lines, both land and mobile that are inactive

▪ Demand management ▪ Desktop shipping

▪ Supplier rationalization ▪ Compliance ▪ Close the loop 5

… is your business ready for an epiphany?

Savings % by Category

6-22

21-30

8-23

21-30

Travel related

Pro fessional services

7-20

11-20

Office sup plies

21-30

7-20

MRO sup p lies

21-30

8-20

Marketin g/Sales services

21-30

6-20

Marketin g/Sales p ro ducts

3-23

11-20

HR Related

6-20

11-20

4-8

21-30

Facilities 0

10

20

30

Strategic Sourcing

External Compliance

Internal Compliance

40-60%

15-25%

15-25%

Operating Efficiency

10-15%

6-25

>30

IT/Telecom

Source to Pay

Th ird p arty lo g istics

Sourcing

5-15

30+

Procure-to-Pay (P2P)

Utilities

Total Potential Savings

100

40

Unrealized P2P savings in a P2P focused Contract

Number of Sourcing Events Sources: Ariba, Accenture, IBM

Source: Everest 2008

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10

… is your business ready for an epiphany?



Opportunity to ensure end to end capture of negotiated rates/savings ▪ Root out maverick/off-contract spend ▪ 2.7% of a company’s identified cost savings is lost due to savings leakage (Source: The State of Strategic Sourcing, Aberdeen Group)

▪ Take advantage of this opportunity with Procurement in a Shared Services Center to build a process that closes the procurement loopholes ▪ Standard Ts & Cs  Payment terms – stretch them out and/or focus on early pay discounts ▪ Leverage technology to enforce policies and channel spend through eInvoicing/eProcurement  No PO – No pay ▪ Optimize P-Card programs to take advantage of rebates and eliminate time spent processing high volume/low dollar invoices

5

… is your business ready for an epiphany?

Steps to take to ensure a successful transition – Lessons learned 

Understand the business drivers – reduce cost, improve cycle time, etc..  Put a metrics program in place to ensure you are able to track those

business drivers 

Process mapping  Keep it simple ▪ Eliminate steps in the process that don’t add value  Close the loop!!! ▪ Use this opportunity to eliminate maverick spend



Strong executive leadership/sponsorship  Must have a mandate from Sr. Leadership that supports buying

through Procurement channels/processes  

Clear/concise/open/honest communication Flexibility 5

… is your business ready for an epiphany?



Never stop finding improvement opportunities  Create an environment where challenging the

status quo is rewarded and constant improvement is a given 

Process automation/Technology  Contract  Payment



Continue the shift from reactive to strategic

5

… is your business ready for an epiphany?

Contact Information

[email protected]

phone # 925-216-7018

Strategic Sourcing Negotiate the right contracts with the right suppliers

Spend Analysis Gain spend visibility and a strategic approach to savings

5

Source-to-Pay Advisory

Recovery Audit Services

Expert advice on supply chain, purchasing and AP challenges

Recover overpayments and strengthen spending controls

… is your business ready for an epiphany?

A Basware Presentation

Basware Overview Purchase to Pay Solutions

Delivering the financial agility you need to run your business more effectively.

Bob Cohen Vice President

Basware, Inc.

The Challenges

Procurement Pressures Driving Improvement and Modernization

69% 27% 21% 20%

Increasing supply risk

Lack of visibility into enterprise spend Insufficient number of staff

18%

Insufficient skill to capitalize on savings opportunities

18%

Increasing globalization/supply chain complexity

Source: Aberdeen Group, September 2010

Top down directive to cut costs

Fractured Purchase-to-Pay Makes Everybody’s Job Harder Procurement Non-compliant spend Too many suppliers

Supplier

Long sourcing cycles Poor visibility to demand planning

Large inventory Poor payment visibility High working capital costs Increased risk

Long DSO cycles

Procurement

Uncontrolled contracting

• • • • • • • • • • • • •

High costs of invoice handling Perceived trading risk? Costly audits Manual payment processes Complex sourcing processes Poor DPO/DSO performance No Supply chain finance strategies Internal printing and scanning costs Currency volatility exposure Regulatory compliance risks Corporate policy non-compliance Poor cash flow forecasting Over provisioning of cash

No granularity of spend No purchasing leverage Inefficient paper based process

Finance / AP High invoice processing cost Manual processing of recurring Invoices Data errors, double payments etc.

Late visibility into obligations Slow book closing processes AP discrepancies

Profit Potential of Purchasing Company A

Company B

Company C

Excellent

Mediocre

Poor

Sales

100

100

100

Purchasing Costs

57

60

63

Other Expenses

30

30

30

Total Costs

87

90

93

Gross Profit

13

10

7

Tax 30%

3.9

3

2.1

Net Profit

9.1

7

4.9

Incremental Sales Required for

-

30M

85.7M

Excellent Performance

-

30%

85.7%

Performance

All example amounts reflect in millions

Source: Helsinki School of Economics, 2005

The Basware DNA

Who We Are Corporate Performance • Net sales $150mm in 2011 • 1000+ employees

• Partners in 30+ countries • >1m users in 1,700 customers History • Founded 1985 • Consistently Ranked #1/ # 2 by analysts in P2P

• 11 offices around the world

Our Open Network • > 550,000 active buyers/ suppliers • >20+ e-Invoices/POs in 2011 • $175+Billion annual spend • 130+ partners • 50 invoice formats supported

Cross industry references – Global Leader

Banking / Finance

Retail

Manufacturing

Food / Beverage

Transportation / Logistics

Energy

Professional Services

Medical / Pharma / Biotech

Public Sector

Construction

Services

Chemicals

Select North American Customers

Consistently Rated As Leading P2P Provider Independent research confirms Basware as eProcurement leader

The Forrester Wave™: eProcurement Solutions, Q1 2011 A global survey off eProcurement vendors

The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings and comments. Forrester does not endorse any vendor, product or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.

Our Solution

Basware Purchase-to-Pay & Connectivity Services

Suppliers

Basware Connectivity

Catalogs

Purchase Message Exchange

Supplier Activation Services

Scan and Capture Service

E-invoice Exchange

Procurement

Sourcing Contract Management Requisition Creation

Invoice Automation

Requisition Approval Order Goods Receipt

Data Capture e-invoicing Rule Based Matching Invoice Processing

Travel Management Expense Management Archiving Mobility

Customer Legacy Systems e.g. Financial Systems, ERP

Basware Professional Services

Basware Connectivity Services - 100% e-Invoicing Licensed Model / SAAS / Service Cloud – some want to own, others outsource or simply obtain access to service

Suppliers

Buyers

Connectivity Services

Sending out 100% as einvoices from day one

ERP

Receiving 100% as e-invoices from day one Supplier Portal Email Virtual Printer Integration Scan & Capture Printing

Supplier Activation Content Validation Monitoring / Reporting Transaction Routing Format Conversations Digital Signatures

Open Network

ERP ERP Straight through processing >90% invoices totally automated... BW

One Purchase-to-Pay Process Spend Visibility

Payment

Matching

Sourcing

Basware Open Network

Invoice Processing

Contracting

Procurement

Receiving E-Invoicing

Why Companies Choose Basware Procurement

Operational Governance

Cost Control

100% visibility of spend

Spend coverage

Full category coverage

On-contract purchasing

Compliance

Process transparency Controlled approvals

Policy enforcement

Catalogs

Supplier performance tracking Strategic / transactional reports

Integrated RFx

Data driven improvement Improved supplier relationships

Reduced finance costs

Prevent unnecessary spend Operational efficiency

Full, transparent audit trail Adapt to changing regulation Fraud discovery Notifications, reminders, alerts

Basware - Designed for FSSC use •

Multi-company support – Business rules and processes defined per company – Accounting fields specified by companies. – Multiple currency support • accounting currencies for different companies in same database – User roles by companies.

•

Multi-language support – Available in 15 languages including: • Danish, Dutch, English, Finnish, French, German, Italian, Norwegian, Portuguese, Spanish, Swedish, Russian, plus Unicode support for additional languages including Asian languages – New languages can be delivered rapidly

•

Multi-ERP support – Basware supports use of multiple ERP platforms/environments for single Basware solution • Multi-ERPs or Multiple Instances of an ERP • Largest customer has over 20 different ERP systems

•

Facilitating & supporting FSSC roll out – Provides centralized control over Purchasing and A/P process – Creates buy-in at BU’s because of easy of use and providing more information to the end-users (personal invoice archive, viewing from within ERP, audit trail) – Can be configured tightly or more flexible access depending on BU’s organisational style or working methods

Upcoming Learning Academies and Webinars Register here: http://www.basware.com/news-and-events/events

June 13 th - Shared Services 301: Top Metrics for AP & Procurement in a SSC July 11th - Shared Services 401: Shared Services vs. Outsourcing - The Right Approach for your Company

Basware Live

May 23rd – Invoice Automation Solution Demonstration

Q&A

Thank You!

Bob Cohen Vice President Basware 203-487-7905 [email protected]

Dan Parnas P2P Consultant Epiphany Supply Chain Solutions 925-216-7018 [email protected]