Ariba E-Invoicing - Strategies for Collaborative Commerce
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James Tucker, Director Product Marketing, presentation on Ariba E-Invoicing taken from the San Francisco Ariba Commerce Summit.
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Ariba E-Invoicing - Strategies for Collaborative Commerce
- 1. Ariba E-Invoicing Strategies for Collaborative Commerce October 2011 James Tucker Director Product Marketing Ariba Network & Finance Solutions (650) 390-1702 jtucker@ariba.com
- 2. The Collaboration Imperative The Rise of the Networked Enterprise The Networked Enterprise Suppliers One that uses collaborative technology to connect internal employee efforts to customers, suppliers, and partners. 50% more likely to: Customers • Be a Market Leader • Gain Market Share Partners • Achieve Higher Margins • Increase sales Source: “The Rise of the Networked Enterprise”, December 2010, McKinsey Jacques Bughin and Michael Chui © 2011 Ariba, Inc. All rights reserved.
- 3. The Cash Flow Imperative There is growing demand for alternative sources of lending as corporates hoard cash Buyers Tension Between Buyers and Sellers Suppliers Large buyers • Looking for better returns on growing pile of short term cash • Stretching supplier payment terms Suppliers • Looking for liquidity relief from tight credit markets “Corporations • Working hard to accelerate order- “The market is ripe for depositing 42% of to-cash cycle – lower DSO dynamic discounting and their short-term cash in trading partner bank accounts” Supply Chain Risk!! collaboration” Where's Corporate Cash? In the Bank, CFO Magazine August 3, 2010 http://www.cfo.com/article.cfm/14514893/c_2984367 © 2011 Ariba, Inc. All rights reserved.
- 4. Collaboration Challenges with Invoice Processing 800K invoices processed off shore per year – 85% paper / 15% EDI • <1% (2K) have a data entry errors • 15% (122K) have data or business rule exceptions • 8% (64K) have inbound supplier inquiries Offshore AP 64K Inquiries inquiries 2K Inquiries Buyer Mailroom data entry Accrue errors Supplier Forward Rubber Segregate & Paper Data Entry Sort & Open Invoices stamp ERP / Payables Matching Allocate VAN Billing & Receivables EDI Approval Routing & Back out, Void Schedule Payment Invoices Exception Handling Print & Mail Supplier Mailroom 122K business errors Paper BU / Buyers Invoice with Exception Letter Segregate & Send to AR Manual Process Supplier Resolve Exceptions LEGEND
- 5. Roadmap to Touchless Processing Zero - Touch Paper Free Imaging Enabled Paper Based Smart Manual Workflow E-Invoicing Invoicing 5 PAYSTREAM FINANCIAL FINANCIAL AUTOMATION SURVEY PAYSTREAM AUTOMATION SURVEY
- 6. The Ariba Network and Invoice Management Solutions The Largest Business Network of its kind with Smart Invoicing BUYERS SUPPLIERS Buyer Portal Supplier Portal Procurement Sales/Mktg Finance Billing Back Office Systems Direct EDI , cXML PO Automation HTML, PO-Flip® SRM Indirect Invoice Automation Network CSV Buyer/P2P Buyer Adapter NETWORK® Payment Automation Complex Paper / Fax Electronic feed of all invoices 700K+ enabled suppliers AP PO, contract and receipt Matching $193B+ annual Spend AR IT Scanning & Workflow 40M+ annual PO’s & Invoices IT Reporting and analytics Supplier self-administration Detailed remittance Real-time transaction status VAT Compliant Easier reconciliation Invoice archival © 2011 Ariba, Inc. All rights reserved. Improved cash forecasting
- 7. Process Efficiency is the Key to Success e-Invoicing -- the First Step to Maximizing Discount Capture Reduce invoice approval cycle time to: Avoid late payment fees 3% Drive out cost while improving efficiency Maximize early payment discount savings Mitigate supply chain liquidity risk Discount Rate 2% Approvals Example discount term: e-Invoice Paper Invoice Approvals 2%10 Net 30 Reduce 1% Cycle Time 10 30 60 20 Days of Invoice Approval and Payment
- 8. Ariba’s Journey to Being the Global e-Invoicing Standard … 2008 2009 2010 2011 Country Specific Rules Global Compliance Supplier Enablement Automation KPMG Country templates Advanced Non-PO Invoice Processing Supplier Invoice UI Withholding Tax (eg. Contract Redesign Compliance) Buyer Invoice UI Redesign Southern Hemisphere Ariba Open Adapter Compliance (Brazil, Chile) Workflow Queue Management Advanced Discount E-Archiving Nordic Languages + and Trade Finance e-Signing & Validation Usability Improvements Turkish for Financial Stake Holders Invoices eclipse KPMG Country Guides Business Rules PO’s in the Ariba Invoice Conversion Services Network Smart Invoicing - Configurable Discount Management Approval Rules Global Standard Procurement with Invoicing World Class Finance Management Solutions Increased Geographic Coverage Increased Spend Penetration and Global Supplier Coverage 8 © 2011 Ariba, Inc. All rights reserved.
- 10. Ariba: The Global Standard for e-Invoicing Order confirmation, change order, Vertical: Metals & Mining Amplifies coverage and capabilities advanced ship notice, goods receipt, in France and across Europe SAP – Integration and SRM PO-Flip® Certified tax and invoicing regulatory Complex Services Procurement E-Invoice, invoice status, scanning requirements in 24 countries & workflow, archival, contract Regional: Tactical sourcing, Inbound and Outbound Invoices matching and compliance regional expertise, government Supply Chain Finance Payment remittance, dynamic discounting, ACH settlement 1300+ buyers 100% on-demand with >90,500 3,500+ customers sellers in 65 countries 700K+ suppliers 28+ thousand trading partners 4 million purchase orders annually 40 million PO’s and invoices 40+ million invoices annually 3.2 million invoices annually $193 billion in spend $80+ billion spend annually $39+ billion in spend 34 countries and 72 currencies 10 ** Ariba Confidential© 2011 Ariba, Inc. All rights reserved.
- 11. Success of Networked Enterprises EQUIPMENT MANUFACTURER GLOBAL INVESTMENT BANK Before After Before After • Huge A/P staff for manual • 75% reduction in A/P headcount • High cost of paper- • Enabled 4K suppliers onto Network P2P processing • 90% global spend Networked based, manual invoice • Reduced BPO costs by 35% • Large volume of non PO • Improved price, vendor, and VAT processing • Now processing ~ 500k invoices/year invoices compliance • Difficulty in managing orders electronically • Lack of global spend visibility generated by SAP • Risk over ability to conform to • Capturing prenegotiated • Interest in improving system • Went from 100% paper to nearly 60% VAT requirements discounts ease-of-use e-invoicing with goal of 80% electronic • Lost discounts • Reduced vendor management • Drive 70% of invoice transactions off costs POs WATER TREATMENT HOUSEHOLD PRODUCTS Before After Before After • Lack of visibility into orders and • Reduced Days Sales • Paper invoice costs too high • 970 supplier relationships established invoices Outstanding (DSO) by 5 days • Unable to deliver and monitor in < 1 year • Improved PO and contract • Handling 12K POs and 15K invoices • 5% lost POs PO’s through SAP per month matching to invoice • 7 FTEs just to track orders • Too many missed discounts • Self-service Supplier Portal reduces • Redeployed 6 employees costs • Order/Invoice process delays due to long invoice process revenue • Eliminated vendor credit holds times • PO-Flip® option virtually eliminating since all POs and invoices now invoice exceptions • Invoice exceptions cause raw visible and managed • Poor on-time payment • 99% straight-through processing materials or equipment delays • Expanding solution deployment statistics • “much better option than build solution to Europe • Need one global system ourselves in SAP” © 2011 Ariba, Inc. All rights reserved.
- 12. Ariba Invoice – Make your money work better $15 Million impact for every $1 Billion in Spend CHALLENGE OPPORTUNITY “ Process Efficiency “ 1-for-1 $1 million in process cost take out for “ Top Performers vs Non-Top Performers Discount Capture “ 2-for-1 $2 Million in discount savings for “ every $1 Billion in discountable spend Contract Compliance “ 9-for-1 $9 Million in contract leakage savings for “ every $1 Billion in spend under contract Working Capital “ 3-for-1 $2.74 Million in working capital impact for 1 days of payables extension (DPO) on every $1 Billion in spend Source: The Hackett Group 2011 P2P Benchmark Report and Ariba Results © 2011 Ariba, Inc. All rights reserved.
- 13. ARIBA 2011 Best-Practice Webinar Series Q&A Free Business Case Assessment Ariba Best-Practice Webinar Series • PO, Invoice and supplier ramp www.ariba.com/programs/invoicenow • Discount savings estimate Forces Affecting the Future of E-Invoicing • Business case and ROI Nov 15th NETWORK® PayStream Advisors E-invoicing Adoption Benchmarking White Paper http://www.ariba.com/resourcelibrary/view James Tucker s/resource_library_asset_brief.cfm?asset_i Director Product Marketing d=819 Ariba Network & Finance Solutions. (650) 390-1702 jtucker@ariba.com © 2011 Ariba, Inc. All rights reserved.
- 14. Ariba E-Invoicing Strategies for Collaborative Commerce October 2011 James Tucker Director Product Marketing Ariba Network & Finance Solutions (650) 390-1702 jtucker@ariba.com
- 15. Accelerating Sales Online: A Panel of Leading Sellers Dell and EBSCO © 2011 Ariba, Inc. All rights reserved.
- 16. Business Commerce Is an Evolutionary Process… Innovative Expand Collaborative Collaborative Commerce Proactive Channel and Business Value Poise for Create Growth Processes, Responsive Infrastructure and Address Resources Reactive Additional One-off Comply with Requests First Customer Request Enablement Transformation Phases of Seller Evolution 16 © 2011 Ariba, Inc. All rights reserved.
- 17. Introductions • EBSCO Randy Bloom Corporate Sales Manager • Dell Kevin Turner Director, Global B2B Integrations • Q&A 17 © 2011 Ariba, Inc. All rights reserved.
- 18. Thank You 18 ** Ariba Confidential© 2011 Ariba, Inc. All rights reserved.
Editor's Notes
- E-Invoicing Strategies for Spend Management Matching a purchase order to an invoice will improve compliance, but what do you do when a transaction has no PO? Learn how to reduce errors, exceptions, and processing costs in such cases.
- Quick point on need to look outside the four walls of your enterprise…Deloitte’s third quarter 2011 Signals survey of 91 CFOs in North America with >$3billion in annual revenuesAs CFOs’ focus on growth appeared to slow somewhat this quarter, their focus on existing operations appeared to rise. Overhead cost reduction is a top concern for 26% of CFOs (up from 20% last quarter) and direct cost reduction is a top concern for 11%. CFOs also appear more focused on core operations, with 28% of CFOs citing operations and supply chain risks as a top challenge—up from 13% last quarter. So we have a collaboration imperative that is key for both process cost containment, cash flow control, as well as growth. In fact, a recent McKinsey study revealed that organizations using collaborative technology to connect internal efforts to customers, suppliers, and trading partners are 50% more likely to lead their market segments and achieve higher margins. These networked enterprises are enjoying a competitive advantage through inter-enterprise collaboration while those organizations relying on internal process automation alone are falling behind. Let me share a few quick examples…
- Quick slide to point out that collaboration is key to mitigating supply chain risk. A recent WSJ article shows that large corporate treasurers are keeping cash in highly liquid, highly secure short term securities at unprecedented levels while controllers are stretching supplier payment terms. At the same time, availability of credit for smaller and mid-size suppliers is very tight. This creates a serious tension between buying organizations and suppliers. Buyers are looking for higher-yield lower-risk returns on their growing pile of short term cash, and sellers are looking for liquidity relief from tight credit markets and extended payment terms. So many suppliers are looking to their customers flush with cash for early payment discounts and other supply chain financing options to provide them the liquidity relief they need, which ultimately reduces the buyer’s supply chain risk. Here’s the article: http://online.wsj.com/article/SB10001424053111904007304576494633247890952.html?mod=WSJ_hp_LEFTTopStories A couple of key quotes: “Although the S&P downgrade threatens to dry up already thin trading in the investment-grade-bond market, rates remain relatively low on a historical basis for corporate borrowers, and their borrowing is likely to pick up, Mr. Bender said. Indeed, companies of all stripes moved to bolster their finances last week, prior to the downgrade. A raft of investment-grade companies including Coca-Cola Co., Hyatt Hotels Corp., J.P. Morgan Chase & Co. and Kinder Morgan Energy Partners LP sold about $5 billion of bonds.But rather than using these funds for hiring, capital expenditures, or even shareholder dividends, corporations are filling their coffers further, said Mr. Carfang of Treasury Strategies.” And this: Those hoping that executives are looking for an excuse to loosen the purse strings are headed for a disappointment, said Steven Lear, deputy chief investment officer at J.P. Morgan Asset Management."We see these large surpluses held by Asian countries and that's a natural response to the crisis they went through in 1997-1998, saying 'You know what, we're never going to be short cash again,' " Mr. Lear said."Corporate treasurers in the U.S. went through that in 2008, and their reaction is going to be the same."Companies are hoarding cash because interest is at historic lows. Coupled with the tight credit markets, this has created a liquidity problem and significant risk in the supply chain. How are corporations that have excess cash dealing with it in the current environment?To the extent we can, we are hoarding it a little, just like the banks are. People want to have a little something in their rainy-day fund because things are so volatile right now. Our investments are extremely conservative—bank deposits, treasuries—and we want to know more about what we are investing in. …
- Quick overview of Ariba’s organic growth coupled with its recent acquisitions of Quadrem (souther hemisphere) and b-process – France and Europe make Ariba the standard for global e-Invoicing The last Quadrem spend number we reported was $39 billion in spend (rather than 36 b). The approximate count is 4m POs and 3.2M invoices for Q. b-process have ~3,500 paying customers. I am not sure if the 80,000 is correct. They have ~28,000 trading partners on their Bill Manager electronic platform and many more that receive manual documents but not sure of total (you may want to just stick to electronic). They have >40,000 million invoices and >$80M spend so I would add > or +.Note: Invoice volume poised to eclipse PO volume in the Ariba Network in 2012 – stay tuned!!B-process’ e-invoicing solutions handle more than 40 million invoices a year with an estimated value of more than $80 billion, and its customers include such large corporates as Carrefour, EADS, Eurocopter and Saint-Gobain.B-process adds 23,000 buyers and 57K suppliers 80K trading partners
- [walk through samples quickly]So how does your organization measure up?To help answer this, our guest speaker, Kurt Albertson,a senior advisor in The Hackett Group’s Procurement practice where he advises executives on strategic business decisions and promotes thought leadership through research and speaking on topics in the Procure-to-Pay and broader Supply Chain space, will provide the latest benchmarks across the procure-to-pay function to help your organization establish a business case for procure-to-pay automation and working capital optimization.