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AP as Chief Compliance Officer: How
E-Invoicing Can Improve Compliance and
Close the Loop on Procure-to-Pay Savings
Chris Rauen, Solutions Marketing Manager, Ariba
Eduardo Sanchez, Senior Director - Strategic Sourcing and
Indirect, ADT
March 18, 2014
© 2014 Ariba – an SAP company. All rights reserved.
@ariba
3. Compliance Benchmarks
3
Increasing compliance rates by 10% can drive
over $4 million in value per $1 billion in spend
Type Key Performance Indicator (KPI) Laggards Average Innovators
Compliance % Compliance to Contract Values (H) 60% 76% 86%
Compliance $ Savings leakage (per $1 Billion) (H) $18.8M $9.4M $4.8M
Lost Savings per $ Billion of Indirect
Spend due to Contract Non-Compliance
Compliance to Indirect Preferred Supplier
Contract
© 2014 Ariba – an SAP company. All rights reserved.
4. Ariba Compliance Drivers
• Purchase Order – Invoice Automation
PO as control document for network-based smart invoicing
Supplier collaboration – Extended status visibility
PO pricing and terms compliance
• Contract Invoicing
Services contract as control document
Supplier collaboration – Extended status visibility
Services contract pricing and terms compliance
© 2014 Ariba – an SAP company. All rights reserved.4
5. Ariba SMART Invoicing – 3 Levels of Defense
The Best Invoice solution is one that is TOUCHLESS!
Ariba SMART Invoicing drives auto post rates of 98% compared to less
than 60% with other solutions
Faster cycle benefits
buyers & suppliers
Ariba rejects exceptions
back to suppliers
Supplier
Supplier
Supplier
Supplier
Supplier
Level 2
Level 1
Level 3
Invoices
Confirmations
98%
Touchless
Lower AP Cost
Faster Cycles
Lower Risk
Account
Coding
Contract &
Receipt
Match
Price & Tax
Compliance
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
Consumption
Thresholds
Shipping &
Tax
Thresholds
Invoice
Number
Bill To /
Ship To
PO
Number
Requestor
(Non PO)
Invoice
Date
VAT / GST
IDs
Level 1 – Basic field-level existence - PO and non-PO verification
Level 2 – Intermediate field-level, PO and
non-PO line level, change and tax verification
Level 3 – Advanced account coding,
matching and compliance
Customer
5 © 2014 Ariba – an SAP company. All rights reserved.
6. About ADT
• 140-year-old company - Spun off from Tyco
First security company to offer mass-market, home
automation services
$3.2B in revenues, 6.4M customers
• Largest field network in the industry
400 exclusive, authorized dealers
200+ field locations (U.S./Canada)
Answers 19M alarm signals each year
© 2014 Ariba – an SAP company. All rights reserved.6
7. Business Process Transformation
• Six Sigma legacy
Assess subscriber acquisition, customer service costs
Target subcontractor invoice process for improvement
– Improve control over major source of spend
– Reduce subscriber acquisition costs (SAC)
• Extend existing infrastructure
Oracle for financials/supply chain management
Specialized, homegrown systems for job management,
dispatches services, other functions
© 2014 Ariba – an SAP company. All rights reserved.7
8. Business Challenge
• Sub-contractors managed by local branches
Complex, resource-intensive invoice management process
– Manual invoice review – approval process
– Large number of change orders
– Too many invoice-contract match errors
– No line item detail for improving control over spend
• Few IT resources for support
Focus on separating from parent company Tyco
© 2014 Ariba – an SAP company. All rights reserved.8
9. Business Goals
• Eliminate overpayments
Reduce spend on subcontractor labor, MRO small tools by 10%
• Drive compliance to approved vendors and products
Standardize contracts – implement catalogs (CIF and punch-out)
• Improve accuracy of cash flow and accruals forecasts
• Reduce time spent tracking invoices inquiries
• Deploy with minimal IT resources
© 2014 Ariba – an SAP company. All rights reserved.9
11. Results with Ariba
• Improved invoice-contract match rate
Centralize management of contracts
Validate invoices against contracted pricing
Validate miscellaneous charges
• Improved control over spend
Verify services billed agree to services performed
Standardize items to compare costs by vendor
© 2014 Ariba – an SAP company. All rights reserved.11
12. More Results from Ariba
• Prevention of contract leakage
Visibility into contracted rates
Capture line item detail
Leverage transaction data for future negotiations
• Speed invoice processing cycle – lower costs
Segment invoice approvals by Operations Support Center - AP
• Consolidation of vendors/spend
© 2014 Ariba – an SAP y. All rights reserved.12
13. Next Steps
• Expand supplier engagement
New supplier categories, contracts and catalogs
• Automate new spend categories
Professional services, IT, MRO purchases, facilities, temp labor
• Dynamic discounting
Lower costs of goods and services
Earn risk-free, double digit annual returns on cash
© 2014 Ariba – an SAP company. All rights reserved.13