How to Provide a Quick Return on Automation Technology InvestmentPresentation Transcript
How to Provide a Quick Return on Investment in Automation Technology John Dickens European SSC Manager NEC EuropeMay 21, 2012
Agenda• NEC – Quick overview for context• NEC Europe Challenge• Commissioned Projects – Pan European T&E Automation – Pan European Invoice Scanning Automation• Brainware invoice scanning – Original Process Landscape – New Process Landscape – Re-engineering of Processes through Automation – Programme & Deployment schedule – Numbers• Concluding thoughts / Lessons learned
NEC – Quick Overview for Context• Oldest company in Japan, originally formed as the Nippon Electric Company.• Probably one of the biggest companies you have never heard of: – Ranked 241st in the Global 500 list of companies for 2011 – Revenues of USD 36,374 million – Employing 116,000• Disparate global presence: – NEC Corporation of America: 2,000 employees – NEC Europe: 2,000 employees – Japan/ASPAC The rest!
NEC Europe Challenge• In 2008 NEC Europe Region comprised 3 areas – – NEC Europe trading affiliates = Telephony – NEC Display Solutions = Flatscreens/Projectors – NEC Unified Solution = Enterprise Solutions• In late 2008, NEC Europe made the strategic decision to create a Shared Service Centre whose design was structured around supporting many small, independent, trading affiliate businesses.• Total staff across NEC Europe in initial scope only 900.• Initial process mapping exercise of all the Back Office processes, across Europe, only identified 2 high volume, repetitive, non value add activities, that offered enough critical mass to allow a pan-European solution to be investigated – T&E, and AP Invoice processing.
NEC Europe Challenge• In both scenarios the initial challenge was to look to standardise, simplify and automate a whole array of local practices / policies / processes, without Centralising the existing activities.• Overlay on to all of this a highly cultural obsession with touching and signing paper, that increased the Cost of Ownership to make both processes “Worst in Class” as far as most benchmarks would have us.• Opportunities for efficiencies in Finance were limited.• Little prior experience of any Pan European projects driven by the RHQ.• Financial Pressures from Japan• Role Change for NEC Europe
Commissioned Project – T&EAutomation• Viewed as a beacon project• Objective was to provide a user friendly self service tool that covered: – Pre-trip Authorisation – Travel Booking – Cash Advance Requests – Expense reclaim• Aim was to replace existing processes rather than centralising.• Customised to local HR Travel policies & available in local languages for all NEC Europe affiliates• Has removed ALL manual inputting of expense reclaim into SAP.
Commissioned Project – T&EAutomation• Soft returns: – Vastly improved life cycles – Minimal Managerial touch – 24/7 availability – Ability to approve anywhere in the world – Greater Governance – 3rd party Audit backs up Corporate policies embedded in the tool. – Enjoyable experience – Reduced number of payment runs• Hard returns: – Phase 1 (UK Trading & RHQ) saw 43% reduction in average ticket costs for flights – Improved data has allowed greater VAT reclaim
Commissioned Project – T&EAutomation• Deployment: – Phase 1 UK & UK based RHQ (35% of activity) – Phase 2 Germany (30% of activity) – Phase 3 Scandinavia & Spain – Phase 4 France, Italy, Portugal & Poland• Return: – Project deployment 18 months – ROI achieved within 9 months just from Phases 1 & 2.• Phase 4 countries in 1st quarter of live.
Commissioned Project – InvoiceScanning Automation• We couldn’t have achieved buy-in without the T&E project• Again aim was to replace existing processes with an automated tool that was enjoyed locally but controlled / maintained / administered from the Centre.• Like the T&E solution, we (unashamedly) used the Invoice Scanning solution to drive change rather than create discussion on change.• Required “playing in other peoples fields”• We were heavy in low hanging fruit – – Pan Europe: 40,000 invoices p.a./40 different people posting into SAP. – Opportunities to get more out of SAP. – Re-engineer the whole P2P piece.
Commissioned Project – InvoiceScanning Automation• Viewed as THE Cost reduction project• Objective was to provide a tool that covered – – Automatic posting of invoices to our SAP systems – Automatic authorisation of invoices – STP of 3 way matched invoices• Aim was to: – Remove ALL Manual authorisation of invoices. – Remove ALL Manual posting of invoices. – Make greater use of the functionality of SAP – Drive efficiencies in the upstream P2P activities.
Brainware Invoice Scanning – OriginalProcess Landscape 3 MONTHS ACTIVITY SAP EFFICIENCY 3 MONTHS ACTIVITY SAP EFFICIENCY Grand Annualised Grand USERS Affiliate Manual PO Total Totals Manual PO USERS Affiliate Manual PO Total Manual PO 1 NEDERLANDS 230 53 283 849 81% 19% 0 EDI 0 550 550 1650 0% 100% 2 SCANDINAVIA 602 255 857 2571 70% 30% 17 UK / RHQ 1943 3745 5688 17064 34% 66% 4 GERMANY 1384 387 1771 5313 78% 22% UK 1943 4295 6238 18714 31% 69% EASTERN 3 EUROPE 1026 0 1026 3078 100% 0 3 FRANCE 1307 925 2232 6696 58% 42% 4 SPAIN 353 151 504 1512 70% 30% 2 ITALY 0 690 690 2070 0% 100% 1 NT FRANCE 5 0 5 15 100% 0% 3 POLAND 410 0 410 1230 3 0Non UK 5317 2461 7778 23334 68% 32%
Brainware Invoice Scanning – NewProcess Landscape LOCAL SCANNING SAP NEC BRAINWARE DISTILLER AP VENDOR EMAILS
Architecture of Distiller for InvoicesSolution for NEC
Brainware Invoice Scanning: Re-engineeringof Processes Through Automation• Use of PO’s is inconsistent across Europe• Use of PO’s for Cost of Goods sold activity is however high.• 3 Way match using SAP was not used• Even with a PO raised, invoices were stamped, manually coded, and signed off.• Japanese management touched too often.• System works most efficiently when PO prevalent – line pairs to a 2 way & 3 way match• Major re-education as to what a PO was.• Re-engineering started before the purchasing decision• Only stuck when we went live!
Brainware Invoice Scanning: Re-engineeringof Processes Through Automation• Key Changes – Invoices subject to GRN Mandatory PO’s – posted to SAP upon entering Solution. • If goods receipted prior to entering solution = STP • If goods not receipted – Workflow to PO Creator to add GRN in SAP (BW has added a payment block) – then workflows to AP to release payment block. – Invoices subject to PO’s with no Mandatory GRN – does not post to SAP upon entering Solution. • Doesn’t need a receipt – wants a confirmation that ok to post • Workflows to PO creator or PO Requestor to confirm a posting to SAP. • Posts to SAP for payment.• Authorising Managers no longer involved once PRF signed off, and PO created.
Brainware Invoice Scanning: Re-engineeringof Processes Through Automation• Invoices subject to no PO: – Solution extracts data, and passes to AP – AP reach out to business to input coding into a BW business case – Once done, item makes Company code / Bus Area / Cost Centre / GL Code / Value combination reference to an embedded Pan European Approval Matrix and routes case to Approver. – Approver can review image and when hits approval button it posts to SAP for payment on next run after it falls due• Business waking up to effort involved – focus is to increase use of PO’s in SG&A space to drive further efficiency into process.• Will always be a tail – other solutions being evaluated for tail.
Brainware Invoice Scanning:Programme & Deployment Schedule• Contract signed 30/9/10• System Design and build and initial testing complete 31/12/10• Live testing with UK & RHQ – commenced Jan 11, finished 31/3/11• Redesign of Workflow and Authorisation flows as well as solution functionality ongoing in full live test environment – completed end July 11• Ongoing 1-1 Vendor adjustments to improve cycle times in UK & RHQ• Mid deployment re 2 further UK Divisions, France Spain & Germany. Expect full operation here by 30/06/12
Brainware Invoice Scanning:Programme & Deployment Schedule• Scandinavia / France / Poland / Eastern Europe to start in live test 1/7/12 – complete by end of quarter 30/9/12.• Italy – migrating newly merged business to SAP in May 2012 – will commence live test likely 1/7/12 – 3 month full deployment.• Unified Solution Division currently migrating affiliate by affiliate into our SAP and adding to scope of invoice scanning.• Out of scope currently: – Portugal – in different SAP system currently – Unified Solution businesses (all merging into NEC Europe businesses) – Display Solutions businesses – different SAP system currently but expected to take on.
Brainware Invoice Scanning: Numbers• 4 year commitment• Expectation is we release 3 heads in year 2, and 4 heads in year 3. Some of these are in upstream operations• Initial investment costs c 200k – Servers – Scanners – Software Licences ( Based around number of pages scanned)• Annual Maintenance (% of Licence fee) = c£39k pa• ROI Projected within 3rd year – over 4 years estimate £500k.• Central AP team role change but will cover all affiliates with no increase in headcount – remain at 3.
Brainware Invoice Scanning: Numbers• UK & RHQ – Pre project 17 entering invoices - 3 months of full live – System plus 3 AP Staff (csv uploads / bulk data loads)• Average turnaround times (receipt to payment) halved• 44% of invoices pass through to SAP within 4 hours of arrival• We now have more invoices loading into the solution arriving by email exchanger, than we do scanning hard copy documents.
Concluding Thoughts & LessonsLearned• It is possible for smaller operations to gain benefit from Automating certain processes.• Work with Solution provider to build an offering that optimises return. If that means re-engineering processes – blame the system!• Avoiding centralising the processes before automating saves months maybe years.• Automating is easier to sell than centralising• Invest in time to ensure the solution is fit for purpose – if need be redesign.• Deploy when ready• Focus on the end to end process, not just the data entry.