Automate All Spend and Collaborate with All Suppliers
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Presentation taken from the San Francisco Ariba Commerce Summit 2011 on Automation and Collaboration with suppliers.
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Automate All Spend and Collaborate with All Suppliers
- 1. Automate All Spend and Collaborate with All Suppliers October 2011 Ā© 2010 Ariba, Inc. All rights reserved.
- 2. Agenda ā¢ A sense of urgency ā¢ Predicting success ā¢ The 4 āCāsā ā¢ Collaboration spotlight ā¢ Gauging your chance of success ā¢ Q & A, Interactive discussion 2 ** Ariba ConfidentialĀ© 2011 Ariba, Inc. All rights reserved.
- 3. A Sense of Urgency Connectivity and collaborative with trading partners PROCESS CHALLENGES ā¢ Risk Management (e.g. compliance and tax) ā¢ Order-to-Cash ā¢ Procure-to-Pay BARRIERS TO SUCCESS ā¢ Systems out-of-date, inflexible ā¢ Limited time and resources ā¢ Unclear business benefits āWe see companies shifting a whole range of business functions to the cloud.ā Edge Zarrella Performance & Technology Partner, KPMG Ā© 2011 Ariba, Inc. All rights reserved.
- 4. What is common among those who succeed? $5B in spend, 600K transactions annually Schering Plough, Ariba Live 2011 200% increase in AP efficiency in 2 years $3M Saved from 20 suppliers Schering Plough, Ariba Live 2011 Albemarle, Ariba Live 2011 Over a Million SKUās, Ease of Use, $240M in delivered savings & Innovative Functions Schering Plough, Ariba Live 2011 Disney, Ariba Live 2011 500 Suppliers, 300 catalogs in under 8 weeks Global Health Care Company, 2011 P2P deployed in 13 weeks Major Communications Co, 2011 100% spend under process compliance Lexmark, Ariba Live 2011 Ā£300M spend reduction British Airways, Ariba Live 2011 85% process cost reduction British Airways, Ariba Live 2011 4 Ariba, Inc. 2011 All rights reserved.
- 5. Vision You will go where you lookā¦ 5 Ariba, Inc. 2011 All rights reserved.
- 6. Strong Vision is: ā¢ Clarity ā¢ Coverage ā¢ Commitment (Compliance) ā¢ Collaboration 6 Ariba, Inc. 2011 All rights reserved.
- 7. Clarity: āA clear vision to reduce external spend Ā£300Mā British Airways 7 Ariba, Inc. 2011 All rights reserved.
- 8. Coverage ā100% spend under processā Lexmark 8 Ariba, Inc. 2011 All rights reserved.
- 9. Commitment (Compliance) CIO āEvery non-compliant order must be approved by the CFOā ā3 non-compliant orders are grounds for dismissalā British Airways 9 Ariba, Inc. 2011 All rights reserved.
- 10. Collaboration is thinking broader ā¢ Connecting Buyer and Seller ERPās ā¢ All Spend Types Direct Simple Indirect Complex ā¢ Global Networking 10 Ariba, Inc. 2011 All rights reserved.
- 11. The NEXT WAVE of productivity will happen beyond the four walls of a single enterpriseā¦ ļ¼ Technology ļ¼ Community ļ¼ Capabilities Productivity 2010s ā āInter-Enterprise productivityā with Collaboration between Enterprises 2000s ā āEnterprise productivityā with corporate ERP 1980s ā āEmployee productivityā with the Desktop Time 11 Ā© 2011 Ariba, Inc. All rights reserved.
- 12. The opportunity lies in better collaborationā¦ Over the past two decades, large global businesses successfully streamlined and optimized their business processes within the four walls of the business with ERP systemsā¦ -- Key ERP Efficiency Gains -- ļ¼ Master Chart of Accounts ļ¼ Unified item master ļ¼ Centralized/Standardized HR & Payroll ļ¼ ā¦enabling faster closing of books Your Companyās ERP ļ¼ ā¦enabling internal process streamlining ļ¼ ā¦enabling lower inventory requirements ā¦but no company is an island on to itselfā¦you are part of an extended supply chain. With your house in order, you must now look to your supply chain and your relationships with your trading partners for the next wave of savings. 12 Ā© 2011 Ariba, Inc. All rights reserved.
- 13. The Collaboration Challenge The difficulty for your business is that all of your trading partnersā ERP systems are not connected to or compatible with your ERP ā leading to business process āchoke pointsā and friction ā which results in missed opportunities and higher transaction costsā¦ ļ¼ 80% of business-to- ! Supplier āAā business transactions are still completed manually1ā¦ ļ¼ ! 85% of invoices and Your Company payments are still paper-based2ā¦ ! Supplier āBā ļ¼ the estimated size of this lost economic opportunity is $650 Billion annually3 Supplier āNā 1 Celent Communications 2 Aite Group 3 Basex Research 13 Ā© 2011 Ariba, Inc. All rights reserved.
- 14. Value is in the āwhite spaceā that lies between two trading partnersā back-end systems āThe White Spaceā Buyersā Suppliersā Enterprise Apps Supplier Enterprise Apps Response to inquiry inquiry Request for clarification Sourcing Negotiations CRM Applications Supplier Applications Catalog network creation Catalog Buying support interface Order Procurement Order transmission Management Applications Applications Acknowledge Change order order Acknowledge change Cancel order Advanced ERP Ship Notice Accounting Exceptions Invoice status Apps/ ERP Managing errors Payment status Payment 14 Ā© 2011 Ariba, Inc. All rights reserved.
- 15. The complexity of the business problem quickly demonstrates itself when you visualize the flows (products, information, money) between a single business and upwards of 100,000+ suppliersā¦ Buyer 1 Supplier 1 Sourcing Sales Procurement Order Mgmt Finance Finance Sales Supplier 2 Order Mgmt Finance Supplier 3 Sales Order Mgmt Finance 15 Ā© 2011 Ariba, Inc. All rights reserved.
- 16. The problem becomes unworkable once the challenge is expanded to reflect the volume of transactions and interactions that occur across an industryās ecosystemā¦. Buyer 1 Supplier 1 Sourcing Sales Procurement Order Mgmt Finance Finance Buyer 2 Sourcing Sales Supplier 2 Procurement Order Mgmt Finance Finance Buyer 3 Supplier 3 Sourcing Sales Procurement Order Mgmt Finance Finance 16 Ā© 2011 Ariba, Inc. All rights reserved.
- 17. The rationale for pursuing Collaborative Commerceā¦ With your ERP in place and a Supplier Portal enabled, your company has successfully automated key internal processes and some supplier elements ā¦ Where youād like to be 100% -- Complex Collaboration Challenge -- ! % of Total Spend Where you probably are today with an ERP & Supplier Portal approach % of Total B2B Trading Partners 100% ā¦but if your business is anything like the situations Ariba witnessed with our other customers, you still have a significant opportunity to capture additional efficiencies and savings by automating all of your spend types and supplier relationships. 17 Ā© 2011 Ariba, Inc. All rights reserved.
- 18. The central issue has been that the economics of establishing 100% digital collaborative connections to all your trading partners has not scaledā¦ Level of Trading Categories of Corporate Spend Partner Connectivity1 Direct General Indirect Maintenance, Repair & Operations Strategic Goods & Services Simple Services Complex Services Infrequent Goods & Services Scale 1As a percentage of the total number of business-to- business relationships that your business has in place low high 18 Ā© 2011 Ariba, Inc. All rights reserved.
- 19. Benefits of 2-Sided Business Network Collaborative Business Commerce Added Value for Buyers and Sellers Buyer Benefits Supplier Benefits ā¢ 70% process cost savings ā¢ Improved visibility and control from self-service ā¢ $2M discount savings on every Billion in spend supplier portal ā¢ $9M in contract leakage savings per Billion in ā¢ Reduced order-to-cash cycle spend ā¢ Eliminate exception with smart invoicing ā¢ $3M in working capital impact per Billion in spend ā¢ Increased revenue from new customer discovery ā¢ Rapid success from buyer/supplier matching ā¢ Broad value proposition drives 90%+ renewal rate ā¢ Single connection to existing back office systems 19 Ā© 2011 Ariba, Inc. All rights reserved.
- 20. Ariba Collaborative Commerce for use with ERP addresses 100% of your corporate spend, and 100% of your supplier relationships No Supplier Left Behind: ā¢ Single point of collaboration for ALL your suppliers ā¢ Collaborative capabilities for ALL spend Collaborative Commerce for use with ERP types ā¢ Simplified Buying ā¢ Buying Collaboration ā¢ Catalog Management ā¢ Known cost up front ā¢ Deployment in as little as 14 weeks ā¢ Cash-positive impact in first 12 months ā¦with the Ariba Collaborative Commerceā¢ for use with ERP solution, you can deploy a collaboration solution that enables complete collaboration with 100% of your suppliers and partners, with a solution design that creates value for both you and your suppliers. 20 Ā© 2011 Ariba, Inc. All rights reserved.
- 21. Gauging your Chance for Success VISION Leading Laggard Clarity Deliver $50M in Source to Make processes more efficient Settle savings within 52 weeks. Coverage 85% of all orders are Provide more catalogs electronic and 99% of these are accurate upon invoice receipt. Commitment The CFO will report monthly to The project is funded (Compliance) the CEO the progress against metrics. Penalties are identified for non-compliance. Collaboration 80% of trading partners are Procurement, IT and AP are enabled and 100% source-to- on the selection team settle eTransacting. 21 Ariba, Inc. 2011 All rights reserved.
- 22. Q&A 22 Ariba, Inc. 2011 All rights reserved.
- 23. Managing your Challenges in 2020 ā¢ āSuppliers in the coming decade will continue to take on bigger pieces of things they already do for customers.ā ā¢ āMarket pricing for goods and services will become so transparent ā¦ that negotiation will be a lost art.ā ā¢ āProcurement will become more strongly linked to financial supply chains, optimizing cash flow and working capital, implementing dynamic discounting, supply chain financing, and so forth.ā ā¢ āTiming of customer-supplier collaboration will shiftā earlier 23 Ariba, Inc. 2011 All rights reserved.
- 24. Next Steps CIO Magazine Webinar recording: How the Cloud can benefit ERP http://exchange.ariba.com/community/solutions/collabo ā¢ Free Business Case Assessment rative_commerce/blog/2011/08/29/cio-magazine- webinar-recording-how-the-cloud-can-benefit-erp ā¢ Transaction and ramp assessment ā¢ Savings estimate ā¢ Business case and ROI John Lark Director of Marketing (650) 390-1903 jlark@ariba.com Ariba Collaborative Commerce for Dummies Whitepaper http://www.ariba.com/resourcelibrary/views/re source_library_asset_brief.cfm?asset_id=772 Vision 2020 Welcome to the Future of Procurement Ariba Collaborative Commerce Research Whitepaper http://www.ariba.com/resourcelibrary/views/mi http://www.ariba.com/resourcelibrary/views/re crosites.cfm? source_library_asset_brief.cfm?asset_id=829 Ā© 2011 Ariba, Inc. All rights reserved.
Editor's Notes
- This sense of urgency was also shared by delegates at a recent KPMG event in Hong Kong, where KPMG shared results of recent research, most notably, the process challenges CFOās have regarding compliance and tax. Complying with global tax regulations like VAT tax in Europe, is very difficult and mistakes can be very costly. And the business process challenges highlighted point to an increasing need to connect their procure-to-pay functions with their suppliers order-to-cash functions. Both processes focus on cost take out and improved cash flow control.
- Faster quarterly closesā¦More with fewer peopleā¦.Standardization of processes across divisionsā¦
- You still have painā¦and that painās source lies beyond the four walls of your enterpriseā¦Poor Term Compliance (Rogue spend)Canāt adapt processes to different spend categoriesMinimal order status, invoice and payment status visibilityLost POāsLack of visibility to MRO spendMajority of staff time is reacting to emergencies
- The Ariba solution was architected to address the reality you and your industry peers faceā¦.one where up until now the economics of the available collaboration solutions was cost prohibitive to deploy across all of your trading relationshipsā¦
- OK. So we had three key take aways for todayās eLearning session:Remember that the CFO and finance organizations are inundated with proposals for improving their business. So itās essential to quickly establish a sense of urgency with your finance contacts.Weāll look at three collaboration imperatives for finance: cash flow, productivity, and supply chain risk mitigationWeāll learn how to map Ariba solutions to these imperatives for financeResearch tells us that Companies must become more closely linked in a volatile business environment because of supply chain disruptions (i.e. Japan) , financially weak trading partners and changing market demand all of which require immediate responses to questions like: Q: where are revenues coming from, and when can i expect them? Q: how can I spot problems that will affect my cash position? Q: How can I reduce the chance of cash flow problems occurring in the first place? Q: how long before cash goes out or comes in? Q: Am i paying too quickly? Am I paying too slowly? What can I do to optimize working capital? And of course as managing cash performance gains greater scrutiny, how is my performance perceived by investors and Wall Street?