How can you transform your accounts payable function from a cost center to a profit center? A successful initiative involves a commitment to business process improvement, effective use of collaborative technology, and supplier engagement through an e-commerce channel. Hear best practice approaches from Ardent Partners Managing Partner Andrew Bartolini, and Ariba customers discuss strategies and results from automating their accounts payable operations, and opportunities for future expansion.

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@ariba
Proven Strategies for Automating Your
Accounts Payable Operations
Andrew Bartolini, Chief Research Officer, Ardent Partners, @AndrewBartolini
Alice Hillary, Procure to Pay Operations Lead, Wiley
Marie Limousin, Global Sourcing Indirect and Initiatives Leader,
GE Water & Process Technologies, @marie_limousin
April 8, 2015
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Agenda
• Introduction
• State of AP (and AP Automation) in 2015
• The Future of AP (2016-2018)
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@AndrewBartolini

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Ardent Partners is a research and advisory firm
focused on defining and advancing the accounts
payable and supply management strategies,
processes, and technologies that drive business
value and accelerate organizational
transformation within the enterprise.
Ardent Partners
© 2015 Ariba – an SAP company. All rights reserved.3
@AndrewBartolini

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Payables Place
Global Source for AP News, Research, & Best Practices
www.payablesplace.com
@AndrewBartolini
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THE STATE OF AP IN 2015
© 2015 Ariba – an SAP company. All rights reserved.5
@AndrewBartolini

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AP’S QUEST FOR EXCELLENCE
Visibility
Connectivity
Efficiency
Compliance
Cash
Mgmt

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AP’S TOP PRIORITIES IN 2015
23%
25%
27%
31%
37%
63%
Generate discounts on spend
Better link P2P processes and systems
Improve collaboration/communication with
procurement
Improve visibility into invoice and payment data
Improve reporting and analytics around AP
Reduce processing costs
© Ardent Partners - 2014
© 2015 Ariba – an SAP company. All rights reserved.7
@AndrewBartolini

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THAT PERSISTENT PAPER PROBLEM
70%
30%
© Ardent Partners - 2014
Invoice Formats Payment Formats
44%
56%
© Ardent Partners - 2014
@AndrewBartolini
© 2015 Ariba – an SAP company. All rights reserved.8

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AP CAPABILITIES – “GLASS HALF FULL”
50%
63%
71%
Automatically route invoices for approval
Standardized AP processes
Two or three-way matching capabilities
©Ardent Partners - 2014
© 2015 Ariba – an SAP company. All rights reserved.9
@AndrewBartolini

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AP Capabilities – “GLASS HALF EMPTY”
25%
29%
30%
30%
31%
39%
47%
Linkage throughout procure-to-pay process
Straight-through invoice processing
Efficiently capture early payment discounts
Tools/programs to optimize working capital
Match invoices to contracts or payment plans
Provide suppliers rich-remittance information
Measure key AP metrics
©Ardent Partners - 2014
© 2015 Ariba – an SAP company. All rights reserved.10
@AndrewBartolini

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Accounts Payable KPIs (Overall Averages)
2014 ACCOUNTS PAYABLE BENCHMARKS
© Ardent Partners - 2014
Key Performance Indicators Average
Cost per Invoice $14.21
Invoices Processed per FTE per month 2,308
Invoice Processing Cycle Time 12.4 Days
Invoice Exception Rate 13.1%
Straight-through Processing 27.0%
% of Suppliers Submitting eInvoices 14.8%
% of Supplier Participating in Discounting Program 9.9%
© 2015 Ariba – an SAP company. All rights reserved.11
@AndrewBartolini

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AP Metrics (Best-in-Class v. All Others)
Metrics Best-in-Class All Others
Cost per Invoice $2.42 $17.61
Invoices Processed per FTE per month 4,814 1,408
Invoice Processing Cycle Time 3.7 Days 17.1 Days
Invoice Exception Rate 8.0% 16.4%
Straight-through Processing 50.3% 12.3%
% of Suppliers Submitting eInvoices 40.3% 8.5%
% of Supplier Participating in Discounting Program 17.2% 2.4%
© Ardent Partners - 2014
© 2015 Ariba – an SAP company. All rights reserved.12
@AndrewBartolini

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5%
16%
8%
17%
35%
57%
22%
26%
33%
41%
61%
85%
Dynamic discounting solution
Complete Procure-to-Pay solution
Supplier Network (B2B network or payment network)
eInvoicing solution
Automated routing and approval workflow
Document imaging/scanning
Best-in-Class All Others
© Ardent Partners -
2014
Best-in-Class Technology Usage
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@AndrewBartolini

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THE FUTURE OF AP
© 2015 Ariba – an SAP company. All rights reserved.14
@AndrewBartolini

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Suppliers = PartnersPayment & Invoice StatusFast/Better DecisionsOptimize Payments
Key Business Trends in 2015
(Why the Market is Ready for AP Automation & Networks)
 Collaboration
 Visibility
 Agility
 Cash
 End-to-End Processes
@AndrewBartolini
© 2015 Ariba – an SAP company. All rights reserved.15

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16
AP & Treasury
linked via
working capital
optimization
AP skill sets will
change
True P2P
Linkage &
Partnership
AP process will
be mostly
automated
KEY AP TRENDS
(“LIKELY” IN NEXT 2-3 YEARS)
83% 69% 66% 57%
© Ardent Partners - 2014
© 2015 Ariba – an SAP company. All rights reserved.16
@AndrewBartolini

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BUSINESS NETWORKS’ Impact on P2P
Transactions….. Extends to P2P Collaboration
© 2015 Ariba – an SAP company. All rights reserved.17
@AndrewBartolini
 Collaboration
 Visibility
 Agility
 Cash Management
 End-to-End Processes

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For more information please visit:
www.ardentpartners.com
Andrew Bartolini
Managing Partner &
Chief Research Officer
617.752.1620
abartolini@ardentpartners.com
@andrewbartolini
Contact Info: Ardent’s Media Sites:
Contact Info
@AndrewBartolini
© 2015 Ariba – an SAP company. All rights reserved.18

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About Wiley
• Established in New York, N.Y. in 1807
• Serves professionals, scientists, educators, students, lifelong learners, and
consumers worldwide
• Publisher/provider of books, journals and content-enabled services
• Unique collection of businesses/subject matters
 Global Research
 Professional Development
 Global Education
• 5,100 employees
• $1.8 billion revenue (FY2015), 50% generated outside U.S.
• Global headquarters: Hoboken, NJ
• Global operations: North America, Europe, Asia, South America, Middle East
© 2015 Ariba – an SAP company. All rights reserved.19

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Business Challenge
• Multiple processes and systems
 More than 10 invoice/payment processing methods
 Lack of consistency and controls
 High cost to maintain multiple systems
• Organization needs and structure
 Resources moving offshore for AP
 Consolidating functions
 Payments not being made on time
 Paper trail
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Goals
• Support Business Needs
 Automate data validation
 Streamline approvals
 Reduce payment cycle
• Single, Global Process
 One stop for all invoices and payment requests
 Sunset legacy systems
 Check to Paymode process
© 2015 Ariba – an SAP company. All rights reserved.21

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Solution
• Transition to e-procurement for invoicing and payments
 Flag suppliers for past 18 months for use
 Update payment terms
• Single, Global Process
 One stop for all invoices and payment requests
 Sunset legacy systems
 Provide business unit training and support
© 2015 Ariba – an SAP company. All rights reserved.22

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Ariba Solutions Deployed
• Procure to Pay
 Punch-Out & CIF Catalog and Non-Catalog purchases
 IT Hardware/Software and Office Supplies
 Consulting Services
• Non-PO Invoicing
 Invoice and payment requests
 New Vendor Request e-form
© 2015 Ariba – an SAP company. All rights reserved.23

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Wiley Architecture
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Results
• Reduction in pay cycle
 80% invoices were approved in the same day
 Improved cash flow
 Satisfied suppliers
• Easy to use
• Improved credibility for Accounts Payable
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Next Steps
• Global Implementation
 International compliance
 Existing OCR process rest of world
 Migrating resources
© 2015 Ariba – an SAP company. All rights reserved.26

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GE Water & Process Technologies
• Second Tier GE Business under
Power & Water
 Provider of water treatment services
and solutions
– Chemical treatment
– Filtration and large installations
 One main ERP for Direct Material
 Large global diverse supplier base
© 2015 Ariba – an SAP company. All rights reserved.27
50% outside NAM - across 87 countries
@marie_limousin

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Business Goals
• On-time delivery
 Customer on-time performance depends on supplier delivery
 Cost savings and deflation negotiations relies on price accuracy
• Cash
 Reap cash benefits of early payment discount program with
financing from GE Capital
 Strengthen operations via to AP digitization and centralization
© 2015 Ariba – an SAP company. All rights reserved.28
@marie_limousin

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All interaction by
email, fax or phone
No feedback loop
from internal
processes
Dependent and
trusting clean
upstream data
(PO/GR and invoice
format)
No proactive
shipment visibility
unless calling the
supplier
Back and forth off
line coordination to
make PO “perfect”
Buy-to-Pay Process – Challenges
PO
Processes
Invoices
Pays
Goods
Receipt
3WM
MRP
Confirms
OCR
Email
Paper
Ships
SuppliersSourcingPlantsAP
Confirmation
PaymentSubmits invoice
@marie_limousin

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Plant have visibility
on inbound delivery
Supplier “sees”
relevant data and
status throughout
the BTP process
Sourcing
collaborates with
supplier to achieve
mutually correct PO
upfront
Finance receives
clean pre-matched
invoices and can
provide early pay
discount
Buy-to-Pay Process – New & Improved
PO
Processes
pre-matched Invoices
Pays
3WM
MRP
Confirms Ships
ASN
Confirmation
PaymentConverts PO into Invoice
PO
Shipped
Goods
Receipt
SuppliersSourcingPlantsAP
@marie_limousin

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Results
• Realized results
 Stable ramp up
• Unexpected results
 Move from Checks to EFT (from 25% to 100%)
 Unearthed variations in internal BTP process
 Supplier billing and ordering separate – manage contacts
© 2015 Ariba – an SAP company. All rights reserved.31
Suppliers PO Lines
@marie_limousin

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Lessons Learned
• Implementation Lessons Learned
 Get buy-in and communicate
 Supplier master data is critical
 Watch for internal process variations (dates definitions,
PO content, etc…)
 Get system knowledgeable tax expert
• Supplier Enablement
 Watch for centralization model at supplier level
© 2015 Ariba – an SAP company. All rights reserved.32
@marie_limousin

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Next Steps
• Expansion
 Global expansion to Asia and LATAM (Brazil)
 Continue to reach out to NAM suppliers (85% volume by Q4 ‘15)
• Expand functionality
 Evaluating Catalogs => Price accuracy
 Evaluating AribaPay => Cash impact
© 2015 Ariba – an SAP company. All rights reserved.33
@marie_limousin