Achieving Procurement Excellence in the Banking and Insurance Industries

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@ariba@ariba
Procurement Excellence in the
Banking and Financial Services Industry
Kelly Miller, Vice President, Financial Services, Ariba, an SAP Company
Dave Kosovec, Ariba, an SAP Company
Eric Phillips, Senior Supply Chain Process Analyst , First Niagara Bank, N.A.
Mike Cline, Director Enterprise Sourcing, First National Bank of Omaha
Marianne Clements, VP, Global Accounts Payable Strategy and Operations, AIG
© 2015 Ariba – an SAP company. All rights reserved.

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Financial Services Industry Trends
Reduce Costs and
Complexity
■ Defend against erosion of
margins
■ Reduce high levels of IT spend
driven by complex, siloed system
landscapes
■ Relieve pressure on internal
costs to serve and operate
■ Increase liquidity and satisfy
internal and shareholder cash
return requirements
Mitigate Risk and Ensure
Compliance
■ Maintain Capital holding
requirements
■ Follow all relevant Regulatory rules
and auditing requirements
■ Ensure Supplier certification and
maintain all auditing requirements
Speed and
Time to Market
■ Increase speed to market of
technology and product innovations
■ Increase the pace of onboarding
new customers
■ Improve visibility into the
customer base
■ Respond to new, non-traditional
competitors
Focus on Customer
Centricity
■ Achieve intelligent segmenting
and direct-to-customer marketing,
with profitable operations across
all segments
■ Effective Socializing - reward
influencers, monitor customer
sentiment, protect brand image
■ Strong Personalizing - programs
to deliver relevant content and
offers across channels
Market and industry trends are putting increased pressure on sourcing and buying functions.
The commerce implications of these trends require a new level of business collaboration...
© 2015 Ariba – an SAP company. All rights reserved.2

Source: SAP analysis of Fortune 500 rankings
Of the top global banks in
the Forbes Global 2000 are
SAP Customers
97%
€51 trillion in assets around the globe are
managed by SAP banking customers
Embedded, preconfigured
industry best practices
12,000 banks around the world are innovating with
SAP solutions on the SAP platform
5,600 insurance providers in 107 countries
are innovating with SAP
Of the insurance
providers in the
Forbes Global 2000
are SAP Customers
88%
25 of the top 25 global insurers in the
world run SAP
Our Place in the Financial Services
Industry

Financial Services Providers set a new standard of procurement and sourcing excellence
by transforming the way they do business with suppliers and executing with operational
excellence.The result of this transformation is reflected in the following areas:
High speed to value and business impact
• Craft a program and solution aligned with your business’s desired outcomes
• Connect with your trading partners in weeks
• Achieve tangible savings, with typical payback within
a year
Platform for growth, innovation, user adoption
• Deliver cloud software built for upgradability, with
innovation planned at every step
• Hybrid solutions available to best leverage existing investment in ERP or other
technology assets
• Our network is open, intelligent, and ubiquitous
Global scale
• SAP and Ariba combine the experience and scale of the
#1 enterprise application, business network, and spend management companies
• The combination of Ariba’s innovation in spend
management and cloud solutions with SAP’s global scale and reach delivers on
the full potential of business networks
Why Ariba and SAP?

Agenda – Financial Services Track
3:00 – 4:10 Moderated Customer Panel Discussion – Kelly Miller, VP Financial Services, Ariba, an SAP Company
Customer Panel – Achieving Procurement Excellence in the Banking and Insurance Industries
AIG – Marianne Clements, Vice President, Global Sourcing & Procurement Services
First National Bank of Omaha – Mike Cline, Director Enterprise Sourcing, Sourcing & Contract Services
First Niagara Financial Group – Eric Phillips, Senior Supply Chain Process Analyst
4:10 – 4:25 Networking Break
4:25 – 5:10 Industry Innovation Showcase – Dave Kosovec, Solution Consultant, Ariba, an SAP Company
5:10 – 6:00 Industry Thought Leadership Roundtable – Moderated by Kelly Miller

PANEL DISCUSSION

FIRST NIAGARA BANK,
N.A

Introduction
• First Niagara Bank, N.A.
 Headquarters: Buffalo, NY
 Footprint: New York, Pennsylvania, Connecticut, Massachusetts
 Top 25 US Bank: $38B Assets; 400 Branches, 6,000 Employees
• Eric Phillips, Senior Supply Chain Process Analyst
 10+ years of banking experience including in
branch customer service, back-office operations management,
and process improvement.

First Niagara’s Ariba Vision
• Goals
 Use Ariba as a one-stop shop for vendor management
 Improve spend analysis
 Expand our ability to report on contracts
 Utilize an e-sourcing tool
 Integrate Purchasing and Accounts Payable into one system

First Niagara’s Ariba Vision
• Goals cont.
 Provide our vendor managers an effective tool to
measure vendor performance
 Improve our ability to monitor vendors for issues that
could increase our risk

FIRST NATIONAL BANK OF
OMAHA

About First National Bank of Omaha
• Family owned for six generations and nearly 160 years
 Part of the largest privately owned banking company in the U.S.
– Holding company has $19 B in managed assets and 5,000 employees
– FNBO has more than 100 locations in a seven-state area
 Top 15 credit card issuer
 Top 5 agricultural lender
 One of only three banks to offer all four credit card networks
– Visa, MasterCard, Discover and American Express

FNBO Enterprise Sourcing (ES)
• ES Overview
 Led by CPO and three directors
 58,040,238 Sourceable Spend; 50,023,740 is “Managed”
 Approximately 18,000 POs annually
• Mike Cline
 Manage Sourcing, Contracts and Supplier Information
and Performance Management Modules

ES Best Practice
• Supplier Information & Performance Management
 Launched SIPM Q4 2013
 Implemented 35 SIPM Scorecards, Surveys and Business Reviews
to date
• Regulatory Oversight
 Monitor “Critical” vendors in accordance with regulatory guidance
(OCC, CFPB, OFAC, etc.)
 Implementing 20 Critical Vendor Semi-Annual Monitorings by Q2

AIG

99.8%Fortune 500 Companies AIG Serves
$64BAIG’s Revenues in 2014
$205BRepayment with Profit to
US Tax Payers
$100
Million +Claimspaideach
businessdayby
AIGPropertyCasualtyin2013
$7MDonationsmadebyAIG’s
matchingGrantsProgramtomatchemployeesgiftsto
Charitableorganizationsin2013
About AIG

1999
AIG Starts
SAP GL Rollout
2006
Concur
Rollout
2000
AIG Selects
Ariba Buyer &
eForms
2008
AIG Global
Reorganization
2012
Conversion to
On Demand
2014
$310M in
Savings
2001
Fieldglass
Rollout
2003
Ariba - Full
Suite Rollout::
Sourcing,
Contracts,
Analysis
2011
SAP Accounts
Payable Rollout
ONE
2013
Ariba Spend
Visibility /Data
Enrichment
AIG’s Evolution of Ariba Solutions

#AribaLIVE @ariba
Innovations for Financial Services
• OCC Compliance
• Ariba & Fieldglass Integration
• Spot Buy vs. Spot Quote
• Demand Aggregation

#AribaLIVE @ariba
OCC Compliance: Ariba Solution Map
Planning
Process management with configurable workflow
• Sourcing, Contract Management, SIPM
Due Diligence
Management of 3rd party information, onboarding, grading, etc.
• Spend Visibility, Sourcing, SIPM, Supplier Infonet
Contract Negotiations
Documented process, people, communication, clauses, etc.
• Sourcing, Contract Management
Ongoing Monitoring
Performance, compliance, events, etc.
• Spend Visibility, SIPM, Supplier Infonet
Termination
Track and monitor contracts and 3rd parties no longer engaged
• Contract Management
Expansion of 3rd Party Relationships
Configurable lifecycle vendor management
• SIPM
Sub-contractors
Management of parent-child relationships
• SIPM
Board Communication
360-degree reporting and roll-up of all supplier information
• Spend Visibility, Reporting

#AribaLIVE @ariba
• OCC Compliance

21
Materials Services
Spend Groups Corporate Items Travel & Expense Contingent Labor Professional SOW Services Recurring Services
Buying
Process
Catalog via Requisition Travel Authorization PO Against Contract PO Against Contract Price Term Source &
Setup
Invoice to Pay Process PO and/or GR Matching
to invoice
ER & Receipt matching &
approval
Match Invoices to
Timesheet approvals
Match Invoices to Milestone
approvals
Match Invoice to Contract
Seller Collaboration
Activities
• Publish Catalogs
• Spot Quote
• Invoice Submit & PO
Validate
• Check Availability & Pricing
• Reservation Confirmation
• Candidate Submission
• Timesheet Submission
• Supplier Bidding
• Time/ Milestone Submission
• Invoice Submissions
• Invoice Against Contract
% of Spend
(Financial Services)
12% 2% 6% 29% 42%
Category Examples • Office Supplies
• IT Hardware
• Software
• Airfare
• Hotels
• Car Rental
• Independent Contractors
• Temp Labor
• Marketing
• Consulting
• Print
• Legal
• Telecom & Hosting
• Facility Maintenance
• Logistics
• Outsourced IT
Key Value Drivers • User Compliance
• Unit Price Reduction
• User Compliance
• AP Automation
• User Compliance
• AP Automation
• User & Supplier Compliance • Supplier Compliance
• AP Automation
Simplicity / Need for Scale and EfficiencyStrategic Sourcing & Contract Management
Procure-to-Pay Process Groups for Financial Services
How to Get Maximum Adoption and Supplier Collaboration

22
Materials Services
Spend Groups Corporate Items Travel & Expense Contingent Labor Professional SOW Services Recurring Services
Buying
Process
Cloud P2O Concur Fieldglass Fieldglass Contract Compliance
Invoice to Pay Process Cloud Invoice Pro
(or combined with P2P)
Concur
Fieldglass Fieldglass
Cloud Contract
Invoicing
Seller Collaboration
Ariba Network – Supplier Data Mgmt, RFx, Contracts, Catalogs,
PO Automation, Invoice Automation, Working Capital & Payments
% of Spend
(Financial Services)
12% 2% 6% 29% 42%
Category Examples • Office Supplies
• IT Hardware
• Software
• Airfare
• Hotels
• Car Rental
• Independent Contractors
• Temp Labor
• Marketing
• Consulting
• Print
• Legal
• Telecom & Hosting
• Facility Maintenance
• Logistics
• Outsourced IT
Key Value Drivers • User Compliance
• User Compliance
• AP Automation
• User Compliance
• AP Automation
• User & Supplier Compliance • Supplier Compliance
• AP Automation
Ariba Spend Visibility, Sourcing, SIPM & Contract Management
Procure-to-Pay Process Groups for Financial Services
How to Get Maximum Adoption and Supplier Collaboration

#AribaLIVE @ariba
Ariba/Fieldglass Integrated Workflow

#AribaLIVE @ariba
• OCC Compliance

Strategic Sourcing
RFx/Auctions
Goods & Services
Catalogs
Supplier Enablement
Tactical Sourcing
3 Bids and a Buy
Bulk & “eaches”
Indirect Goods
Services
Catalogs
Supplier Enablement
Categories of Purchasing
T I M E
SPEND
Spot Buy
Find & Buy
Not sourced
Services (future)
No Catalogs
No Supplier Enablement

32% of Indirect Spend Is Not Sourced and
Difficult to Manage
Suppliers
Spend
Spot Quote is when
companies require an RFQ
process to take place
Strategic spend
Tactical spend
*Source: The Hackett Group, Inc., ‘Using Technology to Streamline Tactical Sourcing’, April 29, 2013; Ariba Research, Customer Council 2014.
“Process optimization can lead to
purchasing cost reduction by 2-5%.”
Hackett – Using Technology to Streamline
Tactical Sourcing

32% of Indirect Spend Is Not Sourced and
Difficult to Manage
Suppliers
Spend
Spot Buy is when companies find
and buy non-sourced goods
Strategic spend
Tactical spend
*Source: The Hackett Group, Inc., ‘Using Technology to Streamline Tactical Sourcing’, April 29, 2013; Ariba Research, Customer Council 2014.
“The time it takes is not justified given
the low level of spend.”
Hackett – Using Technology to Streamline Tactical
Sourcing

#AribaLIVE @ariba
• OCC Compliance

Demand Aggregation & Sourcing Integration
 Professional buyer can
aggregate all approved
requisition lines that are
candidate for aggregation
 Professional buyer can
trigger a sourcing request
from the aggregated object
 Better discounts
 Reduced logistics and
admin costs
 Automatic aggregation of
imported requisitions
 Approved requisition before
starting a sourcing event
Description Value Proposition

PR-101 L1
PR-101 L2
PR-101 L3
PR-102 L1
PR-102 L2
PR-103 L1
PR-104 L1 PR-104 L1
PR-101 L3
PR-101 L2
PO-201 L1
PO-203 L1
PO-203 L2
PO-203 L3
Purchasing
Agent 1
PR-102 L2
Purchasing
Agent 2
Approved
Requisitions
Held Items
PO-101 L1
Requisitions may have items that are
directly converted into a PO
Purchase
Orders
Req may have items that are managed
by different professional buyers
PR-103 L1
PR-102 L1
Sourced – new
source of supply
and updated
price
PO-202 L1
PO-202 L2PR-202 L2
PR-202 L1
PR-201 L1
PR-203 L1
PR-203 L3
PR-203 L2
Edited &
Approved
Aggregations
Updated Price
Aggregated

Screenshots:
Demand Aggregation

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@ariba
Interactive Discussion

#AribaLIVE
@ariba
Thank you!

Achieving Procurement Excellence in the Banking and Insurance Industries

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