The Extraprise - Using Collaborative Commerce to Extend the Value of Your ERP and Maxmimize Supply Chain Performance

B The Extraprise:
Using Collaborative
Commerce to Extend
the Value of Your ERP
and Maximize Supply
Chain Performance
Cox Enterprises
Aberdeen

© 2012 Ariba, Inc. All rights reserved.

Session Abstract
Companies with strong collaboration networks are significantly more
profitable, have lower risk, and more likely to be market leaders than
their peers. ERPs, while effective for driving productivity within the
enterprise, are limited in their ability to help you connect and
collaborate with customers, suppliers, and other partners outside. In
this session, leading SAP and Oracle shops examine how they've
used commerce networks to extend the value of their ERP and reap
more return from their supply chain.

2 © 2012 Ariba, Inc. All rights reserved.

Speaker - Cox Enterprises
• Brooke Krenn – Senior Manager, Procurement Systems
Procurement Systems Team - three full-time employees
Support all divisions of Cox
Responsible for administering:
– JP Morgan Chase Procurement Card Program ($100M+ yearly spend)
– Ariba P2P ($50M+ yearly with 15k+ POs)
– Comdata Fuel Card Program
– Corporate Headquarters’ Oracle Purchasing


Speaker - Aberdeen
• Constantine G. Limberakis
A senior analyst in the Global Supply Management practice at Aberdeen, Constantine
Limberakis examines how procurement organizations are utilizing technology and
streamlining “source to pay” processes in the areas of strategic sourcing, purchasing, contract
management, invoicing, and supplier management. Through his benchmarking and analysis of
fact-based research, Limberakis examines how organizations look to improve their usage of
spend management processes and technology in order to achieve Best-in-Class status. His
most recent published research focused on the evolution of supplier networks, entitled Supplier
Networks v2.0 – A Look at Commerce in the Cloud.


The Extraprise:
Using Collaborative
Commerce to Extend
the Value of Your ERP
and Maximize Supply
Chain Performance
Brooke Krenn
Cox Enterprises


Company Info
• Cox Enterprises, Inc. (CEI) is a leading communications, media
and automotive services company. With revenues of nearly
$15 billion and more than 50,000 employees, major operating
subsidiaries include:
Cox Communications, Inc. (cable television distribution, telephone,
high-speed Internet access, commercial telecommunications and
advertising solutions)
Manheim, Inc. (vehicle auctions, repair and certification services and
web-based technology products)
Cox Media Group, Inc. (television and radio stations, digital media,
newspapers, advertising sales rep firms, Valpak)
AutoTrader.com (online automotive advertising and Kelley Blue Book,
vAuto, HomeNet Automotive and VinSolutions subsidiaries)
Kudzu.com


Business Background
• Cox embodies a decentralized environment with multiple ERPs:
PeopleSoft
Great Plains
SAP
Two instances of Oracle
• Mid-2011, our main goal was to replace existing eProcurement
platform with a more user-friendly interface that could easily interact
with all divisions’ ERP systems
• Initiative led by CEI Supply Chain Services department
Very small team
“Grass Roots” approach – no formal executive sponsorship
Required to partner with six divisions to obtain unique business needs


The Story
• How to incorporate one eProcurement platform with multiple ERPs?
Needed a solution that could work with multiple ERPs, with proven track record
Speed to market – how quickly and easily could we implement?

• How to capitalize on indirect spend with suppliers spanning
all divisions?
Ariba was perfect answer – majority of our existing eProcurement suppliers
already transacting via Ariba Network
Ariba Network offered opportunity to grow eProcurement supplier list


Results
• Single source for indirect spend
Consistent experience for end users
User-friendly and easy-to-navigate interface
Streamlined payment and reconciliation process through use of Supplier Card
Continually increasing supplier base via the Ariba Network

• Increased compliance
Better visibility to spend – much improved reporting
More positive user experience resulting in better user adoption


Results
• Implemented with:
100+ suppliers
15 catalogs
1,282 users, across six divisions

• Increased awareness:
300+ additional new users in five months post go live
50+ suppliers added
Averaging 1,200 requisitions/month


Conclusions
• Using the Supplier Card model within Ariba P2P allowed us to
support multiple ERPs:
“Back end” process is seamless to the end user
Easily accommodate multiple Charts of Accounts
Automated payment process


B A Review of
eProcurement:
Tying the Knot on
Suppliers, POs
and Contracts

Constantine G. Limberakis
Snr. Research Analyst, Aberdeen Group


What are the core challenges we
still see today for eProcurement?

• Multiple instances of ERP platforms
• Duplicated efforts on eProcurement systems
• Inability to connect with multiple suppliers
• Low levels of eProcurement adoption
• Low levels of Supplier Network adoption
• Need to harmonize approaches for onboarding Catalogs,
Purchase Orders and Invoicing
• Struggle between IT and Procurement needs (CIO v. CPO)


While Many Report up to Finance,
There Is No Single Organizational
Structure
Procurement reports up to the Finance organization / CFO
43%

Procurement reports up to the Supply Chain organization
22%

Procurement reports up to executive management / CEO
15%

Procurement reports up to management of individual business
units / locations 10%

Other
5%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Percentage of Respondents, n=156

Effective eProcurement: Assessing Options for the New Economic Normal (Nov 2010)
Source: AberdeenGroup


Respondents’ Response to + or -
Change in eProcurement Budget
Don't Know / Don't
Measure
15%

Expect Budgets to
Increase
38%

Expect Budgets to
Decrease or Stay
Same
47%

 On Avg. +4.0% Percentage of Respondents, n=156
increase


Maturity of eProcurement
Deployments
No plans to purchase or deploy 20%
Level of eProcurement Maturity

Plan to deploy beyond 12 months 3%

Plan to deploy within 12 months 10%

Purchased not using 6%

Less than one year 3%

1 to 2 years 10%

3 to 4 years 16%

5 to 8 years 18%

More than 8 years 14%

0% 5% 10% 15% 20% 25%




Final Decisions on eProcurement

Leaders from Procurement and IT and/or Finance meet as
44%
an executive board to finalize decisions

Decisions are made by Procurement and IT plays an
24%
advisory role only

Decisions are made by Finance, and Procurement and IT
21%
play advisory roles

Decisions are made by IT and Procurement plays an
6%
advisory role only

Other 4%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%




Top Pressures in Implementing
eProcurement
Incomplete coverage of spend types / catalog categories in
corporate eProcurement systems 35%

Confusion on policy and requirements for buying products or
services 27%

Employee reluctance to use the eProcurement system(s) currently in
place 27%

Difficulty in understanding and/or leveraging information generated
in the eProcurement system 21%

Increased operational cost of IT management for existing
procurement solutions 19%

0% 5% 10% 15% 20% 25% 30% 35% 40%




From how many suppliers does your
company purchase indirect
products and services?
30%

25%
25%

20% 19%
16%
15% 13%

10%
7% 7%

5%

0%
Up to 100 101 to 1000 1001 to 5000 5001 to 10000 10000 to 25000 25000+

Range of Suppliers



Supplier Catalogs Currently in
eProcurement

Number of Catalogs (CIF or Punchout) 100+ 14%

26 - 100 19%

1 to 25 44%

Zero 17%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%




Spend Categories Managed by One
or More eProcurement Solutions in
an Enterprise

Top 5 Managed Categories

• 62% - Office Equipment, Furniture & Supplies
• 56% - IT Equipment Software
• 52% - Maintenance, Repair & Operating (MRO)
• 47% - Maintenance Services
• 46% - Telecom Equipment & Services



Spend Categories Managed by One
or More eProcurement Solutions in
an Enterprise

Bottom 5 Managed Categories

• 20% - Strategic Meetings
• 23% - Legal Services
• 25% - Employee Benefits
• 26% - Real Estate & Facilities
• 30% - Fleet Management & Operations



Average Time to “On-board"
a New Supplier into Your
Procurement System

More than a month 15%
12%
Time to Enable New Suppliers

Up to a month 18%
24%

Up to a week 12%
14% Goods
Services
1 to 3 days 23%
20%

Less than 1 day 14%
17%

0% 5% 10% 15% 20% 25% 30%




Top “Two” Stated Areas Preventing
Procurement From Using an
eProcurement System
35%

30% 29%
27%
25% 24%
21%
20%

15% 14%

10%

5%

0%
User knowledge of System and process Ease of using the system Perception of system’s Management support
system capabilities alignment / UI Navigation utility/purpose



Distinct Vendor Systems Used to
Manage “Source to Pay" Processes
in the Enterprise



% of Transactions that Begin in Your
eProcurement Ultimately Completed
Outside of the System  10% said they Don’t Know
 6% said they Don’t Measure
18%
17%
16%  Avg. 16% fall outside
14%
14%  11% Best-in-Class
13%
12%
10% 9% 10%
8%
7%
6% 7%
4%
3%
2% 3%
0%
0% 1% to 5% 5% to 10% 11% to 15% to 21% to 31% to 41% to 51% or
15% 20% 30% 40% 50% more

Percentage Range - Percent of transactions that begin in eProcurement system are ultimately completed
outside of the system (i.e. end-users opt to complete the transaction manually), Percentage of
respondents, n=129



% Suppliers Enabled Receive/Deliver
ePurchase Orders
30%  15% said they Don’t Know
 3% said they Don’t Measure
25%
24%
 Avg. 20% enabled
20%  27% Best-in-Class

15%

10%
9%
5% 5%
4% 4% 3%
5% 5%
3%
1%
0%
Less than 11% to 15% 16% to 20% 21% to 25% 26% to 30% 31% to 40% 41% to 50% 51% to 60% 61% to 75% More than
10% 75%

Percentage Range - Enabled to receive and deliver electronic transactions (including XML and EDI, but
excluding fax and email), Percentage of respondents, n=98



Defining the Best-in-Class Use
of eProcurement



Defining the Best-in-Class Metrics



Best-in-Class Metrics
Catalogs, Common Data and Contract
Management



Deployment Approach for eProcurement



Platform Approach for eProcurement



Goals for using a Supplier Network
today
Optimize supplier collaboration 41%

Transact with suppliers electronically 37%

Improve transparency throughout the source-to-pay cycle 31%

Improve the utilization of eProcurement system 30%

Instill a culture of supplier focused best value solutions 17%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%


Supplier Networks v2.0 – A Look At Commerce in the Cloud
(April 2012) Source: AberdeenGroup

Reasons for lack of supplier
network adoption for suppliers

35%
32%
30%
27% 27%
25% 25%
25%
20%
20%

15%

10%

5%

0%
Cost of There are too Proprietary There are too Lack of ability to Don’t know
subscription for few buyers and nature of the many networks support technical
suppliers is too suppliers using network to support specifications
high them


Primary Reasons Why Supplier
Network was chosen
60%
52%
50% Best-in-Class All Others

40% 38%
36%

30% 29%
24%
21%
20%

9%
10%
3%

0%
Chosen independently to Pre-connected as part of Recognized and used by Was the only platform
complement existing an eProcurement Platform most others in the industry available for its purpose
purchasing and AP
systems


Summary – Solutions around
eProcurement
• Need a platform to integrate multiple ERP
• Coordinate IT and Procurement strategy
• Strategize on category approach / technology
• Increase enablement of suppliers through programs
• Improve visibility / ease of use for buying
• Capture identified savings through catalog efforts
• Proactively apply contract pricing to purchases
• Leverage a supplier network and network capabilities


Contact Info

Constantine G. Limberakis, Senior Research Analyst
Global Supply Management, AberdeenGroup
constantine.limberakis@aberdeen.com
Twitter: @ABG_SpendMngmt
Office: +1.312.470.6071 | Mobile: +1.312.927.5769

For More Research Please Visit:
www.aberdeen.com

Q&A

Contact info:
Steve Carlson scarlson@ariba.com


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The Extraprise - Using Collaborative Commerce to Extend the Value of Your ERP and Maxmimize Supply Chain Performance

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