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  • Across the public sector procurement globally we are up against the same challenges: Demand for increased efficiency obligation to comply with contract New legislative requirements e-commerce and e-procurement which has come and is here to stay Appropriate fit has experienced implementation of e-procurement in the devolved Scottish Government where it is seen as a pillar of central government (discuss how the localised nature of Scottish government makes it easy to mandate a programme). In the UK the Gershon review has identified £21bn of potential savings across the public sector – part of this figure to be made up by a move from manual to electronic invoicing Ask the floor for what they would like to see addressed the workshop.

    1. 1. Resolving the issue of theResolving the issue of the long tail of low valuelong tail of low value paper invoicespaper invoices Tom Wilson Monday 6 October 2008
    2. 2. 85% of Europe’s 27bn invoices printed and sent by post (Gartner) – Average cost of PO is £65 (BuyIT) – Public sector average is £42 (OGC) – €500bn of unnecessary working capital locked within the supply chain of Europe’s top 1000 corporates due to poor visibility of payables and receivables (Hackett REL) Most procurement processes are paper-based and inherently inefficient. This locks up a vast amount of money within the procurement cycle. Whilst other ‘frontline’ business processes have been re- engineered or outsourced, procurement has been largely untouched until now..
    3. 3. A paper-based process is costly and inefficient . A single transaction is replicated many times. Paper processing introduces errors into the process and encourages maverick spending.
    4. 4. eProcurement projects are almost exclusively buy-side Traditional eProcurement environments have some automated functionality, but still rely on manual processing at key points, leading to a disjointed procurement process.
    5. 5. Survey Findings: Spend Patterns
    6. 6. Survey Findings: Transaction key points •Long tail of suppliers with low transaction volume. •82% of Transactions below £1,000.* •88% of suppliers have 10 or fewer transactions.* •60% of suppliers are one time transaction suppliers.* •Average transaction value of £541** •Dundee College showed 842 suppliers being used in 04/05 compared to Proc SNI figure of 219 •Great opportunity for embedded Procurement Card and consolidated invoicing on high volume transaction suppliers.
    7. 7. P2P Analysis Spend management analysis tools : Etesius, SpikesCavell • 6% DUPLICATE PAYMENTS • 50% of suppliers account for 0.5% NON-PAY EXPENDITURE
    8. 8. eSourcing,eAuctions,eSourcing,eAuctions, SupplierDatabasesSupplierDatabases Zanzibar,GPCVisaZanzibar,GPCVisa Feedback / MI Best Practice Management Information /Aggregation Collaboration / Communicate Specification / Notice Expression of Interest Invitation to tender Evaluate Negotiate / Reverse Auction Award Contract Management Content Management Selection /Requisition Approval Order Receive Invoice / GPC Payment About eCommerce The eCommerce Lifecycle eProcurementeProcurement eSourcingeSourcing
    9. 9. Quick wins through Purchase to Pay solutions…
    10. 10. Transactional BenefitsTransactional Benefits Compliance BenefitsCompliance Benefits M.I. BenefitsM.I. Benefits Price BenefitsPrice Benefits Payment BenefitsPayment Benefits    Key Measurements:Key Measurements: • Elimination of low value ad hoc purchases throughElimination of low value ad hoc purchases through automated payment.automated payment. • Reduced P2P transactional costs.Reduced P2P transactional costs. • Need to accurately baseline the ‘as is’ position.Need to accurately baseline the ‘as is’ position. Key Outputs:Key Outputs: • Reduced paper invoicing, accelerated resource-Reduced paper invoicing, accelerated resource- light P2P process.light P2P process. • P2P transaction processing costs down to betweenP2P transaction processing costs down to between £2-£10 (‘traditional’ P2P process typically between£2-£10 (‘traditional’ P2P process typically between £28-42 per transaction).£28-42 per transaction). • SeeSee www.purchasingcard.info to benchmark yourto benchmark your existing process.existing process. Quick win no 1: Payment Cards  
    11. 11. Cash… LOW LOW HIGH HIGH Transaction Volume Transaction Value Integrated Controlled Card (high volume / low value recurring) Electronic Consolidated Invoicing Evaluated Receipt Settlement Physical Card (non-recurring requirements)
    12. 12. Transactions Pareto’s law of transactional analysis Suppliers 20% of Suppliers account for 80% of the transactions - Use eProcurement The 80% of OTOVs account for 20% of the total transactions but 80% of the admin cost PO Inv
    13. 13. Public Sector • Public sector organisations require to move to automated solutions rather than manual administrative effort – secure efficiencies. • Public sector organisations want to import procurement card statements into …… Oracle / SAP / Cedar …. To allow for automatic payment for transactions. • The objective is to streamline the process by minimising the manual intervention required to manually cross-charge to cost centres. • Basic business needs • The business needs behind the implementation of … Oracle / SAP / Cedar pcard reconciliation are : • To receive pcard statement details electronically ; • To allow the statement to be coded individually to one or more accounts ; • To pay the statement without manual entry of the statement details ; • To drill down for the Oracle / SAP / Cedar invoice details
    14. 14. From Diagnostic through to VAT Invoice MasterCard’s Procure-to-Pay Solution Cardholder Supplier Spikes Cavell MC Optimizer E-Invoicing VAT Invoice E-catalogue Expensys InControl POS Level III
    15. 15. inControl takes Control into a New Dimension Routing Controls Credit Debit InstallmentHome Equity Line-of-Credit Alert Controls SMS/Email On Event Forewarning Issuers Government Cardholders Authorization Controls Specific Merchants Transaction Limits Curfews Geography Information Integration Optimization Innovation Control & Compliance Transition Support
    16. 16. If the end to end P2P process is ‘broken’... ...you cannot automate / industrialise the process Change…
    17. 17. Purchase to Pay Product Content Management Hub Punch-In Aggresso Cedar Coda Oracle SAP Match Invoice to purchase order for reconciliation and settlement / payment Invoice Channels Card Payments EDI Bureau / Broker Scanning / OCR XML Portal Middleware •Invapay •Deecal •Pccl •Trittor •Bottom Line •Graphic Data •Version One •170 •Impaq •Tecsol •Accountis •Aries •Open Business Exchange (OB10) •Kewill Purchase Order Placement Upload to general ledger
    18. 18. Step 1 ~ eProcurement Front-End Purchase Order Placement... • Electronic catalogue reduces maverick spend (15 – 18% savings, Aberdeen group) • Easy to use web based solution • Reduction in time from requisition to acquisition • Improved Management Information Purchase Order placed by requisitioner through cXML connection e- Procurement Scotl@nd. Goes directly into supplier’s sales order system Goods despatched 1-2 days Elcom (Pecos software)
    19. 19. Step 2 ~ Payment Through Integrated VISA GPC... • The elimination of receipting low value goods is made possible by moving to exception based reporting £Payment made to supplier in 3-4 days through Integrated VISA GPC $ 100% on Time Payment
    20. 20. Step 3 ~ Settlement / Reconciliation... (Elcom) eProcurement Scotl@nd holds all purchase order data * * to be uploaded by electronic file into Oracle 11i * * FORMATTED Customers automatically charged from Oracle to their cost centres etc Transactional Data received monthly by encrypted e-mail from Company Barclaycard
    21. 21. Transactional P2P Benefits... • Manual cost of processing of a paper invoice £10 / $25 • Automated cost of processing an invoice through auto-matching (integrated VISA GPC) with eProcurement £0.10 / $0.25
    22. 22. About US Bank U.S. Bank Corporate U.S. Bank Corporate Payment Systems division is the largest issuer of VISA commercial cards in the world. It has nearly 2,900 Purchasing Card and Corporate Card program clients, including 169 of the Fortune 500 companies. Payment Systems division is the largest issuer of VISA commercial cards in the world. It has nearly 2,900 Purchasing Card and Corporate Card program clients, including 169 of the Fortune 500 companies.
    23. 23. U.S. Bank Access Purchase • Next Generation Commercial Payment Card • No additional cost to U.S. Bank Commercial Cardholders • Can work with all Cardholders suppliers • Single point of supplier access for buyers to order • Uniform reporting on all purchases • Another configuration of Elcom’s Commerce Process Management solutions Access Purchase enables U.S. Bank commercial cardholder clients to uniformly order and pay their suppliers electronically with U.S. Bank Commercial Payment card products.
    24. 24. Next Generation Commercial Card U.S. Bank Merchant Service U.S. Bank Commercial Card Buyer Vendor Access Purchase Order & Card Information Confirmation OrderProcess PaymentProcess Order & Card Information Payment Vendor Product & Price Info Approvals, etc. Product Data Confirmation Payment Product Data
    25. 25. Access Purchase Revenue Generation • Catalog hosting with images • Electronic purchase orders processing • Web based payment processing • Marketing & sales promotion to all USB CPS clients Revenue to Elcom is generated automatically from standard merchant service charges when suppliers transmit card transactions to U.S. Bank Merchant Payment Services. U.S. Bank pays Elcom monthly. Suppliers also receive:
    26. 26. Survey Findings: Spend Patterns
    27. 27. SME Inclusion • Payment the fuel of economic growth • Do we care about SMEs? • UK SME based economy • 3,500,000 SMEs • 2,200,000 sole traders • 900,000 UK suppliers accept pcards • What about the other 2.6 million • INVAPAY
    28. 28. – Pay Pal for the Corporate World – Offers VGIS/LID Pcard Acceptance to ad-hock vendors and enables L1 vendors to generate LID – Offers card acceptance to One Time Only Vendors – Wed based exchange, instant Introducing Invapay
    29. 29. Payment Processing Buyer selects supplier from Directory and send order Invapay pays supplier by BACS Supplier logs on and processes transaction Transaction is processed as a L3 VGIS transaction to Acquiring Bank Acquiring Bank pays Invapay Trust Account Transaction processed to Issuing Bank L3 transaction delivered to Corporate in Billing File Invapay Issuing Bank Acquiring Bank
    30. 30. Corporate, Buyer or Vendor Instigated Onboarding 6-8 Weeks5 Mins
    31. 31. “What would you say is the biggest pain point in your A/P process?” Issues of “processing speed” were identified most frequently as the biggest challenge in the AP process. PayStream Research 0% 10% 20% 30% 40% 50% Change mgmt Information transparency Workflow Process efficiency Processing speed
    32. 32. “Have you ever benchmarked/measured the following items?” Most organizations have not benchmarked/measured the vendor set-up process or the number or vendors per of spend. Alternatively, most organizations have measured/benchmarked the cost per transaction and the average transaction value (ATV). PayStream Research 0% 20% 40% 60% 80% 100% Vendor Set-up process Number of vendors per dollar of spend Cost per transaction Average transaction value (ATV) no yes
    33. 33. Contact us Tom Wilson Appropriate Fit Procurement Tel: 07737 844 637 eMail: info@appropriateprocurement.com Web: www.appropriateprocurement.com