Spend Analysis: What Your Data Is Telling You and Why It’s Worth Listening

Spend Analysis: What Your Data Is Telling You and
Why It’s Worth Listening
Arnold Bynum - AbbVie
Rachel McGuire - AbbVie
Prashant Agrawal - Southern California Edison
Renee Ung - Southern California Edison
Ben Landis - Oldcastle Materials, Inc
Moderator: Annie Vaseekaran - SAP Ariba / March 15, 2016
Public

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Public
Agenda
Overview and introductions
Panel Presentations
 Arnold Bynum, Senior Manager - Business Process Systems, AbbVie
 Rachel McGuire - Senior Purchasing Assistant, Abbvie
 Prashant Agrawal, Senior Manager Master Data Governance - Southern California Edison
 Renee Ung – Senior Manager, Southern California Edison
 Ben Landis - Strategic Sourcing Manager, Oldcastle Materials, Inc
Q&A

Spend analysis: what your data is telling you and why it’s
worth listening
70% higher rate of spend under management
40% higher rate of spend strategically sourced
37% higher percentage of on-contract spend
*Ardent Partners : Spend Analysis – How the Best-In Class “Strike it Rich” with Spend Analysis

Panelists
Arnold Bynum
Senior Manager -
Business Process
Systems, AbbVie
Rachel McGuire
Senior Purchasing
Assistant, Abbvie
Prashant Agrawal
Senior Manager Master
Data Governance -
Southern California
Edison
Ben Landis
Strategic Sourcing
Manager, Oldcastle
Materials, Inc
Renne Ung
Senior Manager,
Southern California
Edison

Agenda
Panel Presentations
• Arnold Bynum, Senior Manager - Business Process Systems, AbbVie
• Rachel McGuire - Senior Purchasing Assistant, Abbvie
• Prashant Agrawal, Senior Manager Master Data Governance - Southern California Edison
• Renee Ung - Manager, Southern California Edison
• Ben Landis - Strategic Sourcing Manager, Oldcastle Materials, Inc
Q&A

What and why SAP Ariba
The implementation of SAP Ariba marked an important step toward accomplishing our strategic
objectives of better visibility to global spend, establishing regional teams and simplifying systems.
SAP Ariba provides a single location to maintain documentation and uses consistent global processes, the
system drives compliance and improves reporting.
Meet the business needs.
Ariba Sourcing, Ariba Spend Visibility and Ariba Contract Management allowed us to:
Standardize processes to enable agility.
Improve customer service levels by automating communication.
Improve data integrity and reporting, including spend visibility by category.
Improve searching capabilities, including status.
Improve compliance around policies, procedures and processes.
Establish a standardized platform for contract administration and spend analysis.

What and why SAP Ariba continued
SAP Ariba has a positive impact on sourcing in the following ways:
Increases collaboration by enabling users to include stakeholders and team members within an event.
Allows PSM to include the client approval steps on sourcing events.
Utilizes best-in-class sourcing methodology.
SAP Ariba provides a global view of AbbVie spend profiles, allowing us to view or export spend information by:
Category, as defined by AbbVie.
Supplier.
Country/region.
Diversity classifications.
Invoice/PO line item detail Level
Contract Management within SAP Ariba will feature:
Greatly improved search capabilities and reporting features, as well as standardized workflows.
Email notifications for contract expirations.
Improvements to link sourcing projects and contract workspaces.
Contract document versions compared and managed within the system.

AbbVie SAP Ariba program objective
The SAP Ariba program is aligned with AbbVie, IT and PSM strategies
Transition off of Abbott TSAs
 e-Sourcing (AbbottSource)
 Spend Analytics (PIN2)
 Contract Lifecycle Management (CLM)
Agility through standardization
 Common tools and processes across the organization
 Simplifying systems on a global basis
 Eliminate obsolete purchasing systems
Fiscal responsibility
 Spend visibility
Deliver a best-in-class, unified global platform for sourcing, contract
management, and spend visibility.

Communications strategy: KEEP ALL STAKEHOLDERS INFORMED
AbbVie
Community
Partners
AbbVie
Stakeholders
Core Team
& Steering
Committee
Project
TeamDirect and scheduled meetings
• Project execution & status
Scheduled monthly Steering
Committee meetings and
project meetings
• Project updates
• Decision input
Email updates and periodic
meetings with category, functional
directors, and other SMEs
• Program updates and Newsletter
• Delegated and other Business Area
Stakeholders (Legal, VMO, etc.)
Broader Communications and
support channels
• Foundation
• AbbVie IT

Communications process steps
MILESTONE DATES Communicate and ImplementEvaluate optionsIdentify business needs Determine requirements
NEXT STEPS
Need to Know Details Analyze Action Items Follow up
Monthly process including
enrichment.
GL Accounts/Cost Centers/Profit
Centers. How and what these are
used for (high level explanation)
Product Category Codes, how
they are being used, how they
should be used, impact this has
when selected incorrectly.
Identify business
needs
Make decisions on what
to communicate
ROAD MAP PROCESS
STEPS
COMMUNICATION
Who will receive the
communication, who will send
the communication.
What is Spend Vis, how much
detail will be sent out.
How often does the
communication go out.
Identify who needs to review
the content we are
communicating prior to
sending it out.
What type of reports will be
available when requested?
How to use GL
Accounts/Product Categories
for reporting, training and
communication.
Reporting Process
Point of contact.
Communicating additional
Training for each areas. i.e.
PSM, Finance, GL Accounts,
Stakeholders, unclassified,
expectations
Tips of the week
Communicating point of contact
and Milestones
Continuous Monthly
Communication
Follow-up with the key
stakeholders
Communicate status of
the request intake tool
will work.
Proposal submitted Send out
communication
Evaluate
Question Key Stakeholders
Relay decisions to the key
stakeholders
Create presentation with first
round of information
Analyze and set up meetings
to confirm any questions that
need to be relayed
Create explanation for results
of data found.
Stay consistent with output of
communication/process
Send out SAP Ariba
Communication with details
Explain at Town Halls
Terry to relay communication
Rules of Engagement
Gather Rebuttals to
communication/Roadblocks
Meet to discuss feedback from
communication
Send monthly communication
out
Meet with Key Stakeholders
to review their feedback.
Set levels of expectations
for the next communications
How do we define success?
Evaluate success
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
OUTCOMES

Training process steps
MILESTONE DATES Communicate and
implement
Evaluate optionsDetermine requirements
NEXT STEPS
Finance: How to use GL
Account/Cost Center/Profit
Center.
How important Product categories
are, how to select the right one.
Where data comes from.
-Spend Vis Report Interface
-Filter requirements
-Scope of Data
-Unclassified explanation
Identify business
needs
to communicate
ROAD MAP PROCESS
STEPS
COMMUNICATION
Who will receive training,
when, how often.
Business Management
Training, cater to the business
and stakeholders.
PSM training on the
importance of how to
analyze spend.
Road Shows
Intercompany, Tax, Freight
filtering
How to read the reports
How to use GL
Accounts/Product Categories
for reporting, training and
communication.
Ask for the business suggestions
Who will need additional training
Schedule Training session on:
Report analyzing
Importance of correct product
category selection
How PSM can assist with
analyzing data for end users
Explain unclassified and how to
drill down for data
Send Surveys out
Continue monthly
training session
communication
Evaluate
Create Schedule
Set up training sessions to
provide PSM and Business
users information on what to
expect and importance of
their knowledge.
Identify business needs
Product/Service Benefit
Statement
Create list of who should attend
training, how many training
sessions, how often
Product/Service
Evaluation Plan
Follow-Up with overview of
how training went
Invite attendees to training
Send out communication about
Road show information
Send out communication as to
where additional information
can be found
Send Survey out after
training to identify areas
needing additional training
Evaluate success
OUTCOMES

Reporting process steps
implement
NEXT STEPS
Monthly process including
enrichment.
GL Accounts/Cost Centers/Profit
Centers. How and what these are
used for (high level explanation)
Staffing for report creation
Data Extracts to Finance team
Slide Deck/Excel
Identify business
needs
to communicate
ROAD MAP PROCESS
STEPS
COMMUNICATION
Point of Contact,. PSM, Finance,
IT, AT Kearney, Category
Manager
Tracking requests, how to
prioritize.
Data extracts to finance teams.
Who reviews, approves, sends.
Staffing for reporting
Survey stake holders’ needs.
Intake tool process.
Standard report building
What type of reports will
be requested
How to use GL
Accounts/Product Categories for
reporting, training and
communication.
Ask for the business suggestions
Coming up with tips of the week.
Who will need additional training
Communicating additional
Training for each area. i.e.
PSM, Finance, GL Accounts,
Stakeholders, unclassified,
expectations
Understand expectations
Demand intake
tool/Sharepoint/triage
Complete the work
(deliver the
product/service)
Follow-up with the
customer
communication
Evaluate
Create Consistent Monthly
Reports
Create document to identify
requests and prioritize
Relay information on who the
Point of contact for reporting
will be
Identify who will receive reports
When and who will assist
with reporting
What are the risks
Weekly review of requests
coming in and confirm how to
communicate the data
Value Analysis of reports
being sent out
Review feedback from reports
Communicate most common
request to PSM users
Report Tracker
Service Satisfaction
Tracker on reports
Send Follow-Up
Communication on
Reporting process
Evaluate success
OUTCOMES
Evaluate success

Data/enhancement process steps
implement
NEXT STEPS
Document the data process,
checks and balances
Governance
Enrichment best practices
Identify business
needs
to communicate
ROAD MAP PROCESS
STEPS
COMMUNICATION
GL Account Mapping
Payment Card / Bank data
Catalog mapping into Ariba
Bring in Sourcing/Contract
data.
Define / filter intercompany
Define large spend vendors (gvt
payments, royalties, tax, freight)
Strategic Hierarchy mapping
updates
Unclassified
Spend Vis Reporting interface
Scope of Data
Filter Requirements
Enhancements to initiate
IT Scope supporting
requests and roadmap.
IT resources when
launching
communication
Evaluate
Business Development
Suggestions Tracked
Customer Reference Survey
Time frame of suggested
enhancements
Communicate time frame of
enhancements / changes
Send out Enrichment
communication
Governance decisions
communicated
Set filters for intercompany to
public folders.
Set filters for Tax/ Freight
Confirm last updates to
Strategic Hierarchy
Set up Milestone timeframe
in any enhancement changes
Request each PSM Group to
analyze unclassified spend
Send out timelines
Review Milestones
Set up Follow-Up Meetings
to review status
Evaluate success
OUTCOMES

The (19th day) monthly enrichment cycle
AbbVie uploads
Spend Data
Verification Enrichment
Pushed to
Presentation
 AbbVie provides
prior month’s
spend data to
Ariba Spend
Visibility by the 3rd
business day of
each month
 SAP Ariba loads
prior month’s
spend data into
Ariba Spend
Visibility
 AbbVie reviews
data to ensure
accuracy
 AbbVie approves
data for enrichment
 SAP Ariba
enriches AbbVie
spend data with
Supplier,
Commodity &
Diversity
classifications
 Enrichment data is
made available to
AbbVie for
reporting
and analysis
Duration*:
1 day
Duration*:
2-3 days
Duration*:
10-12 days
Duration*:
< 1 day
* Duration is in business days

Report analyzing
Multiple Reports
Profile Category
Preferred Supplier
Global Spend
Diversity
Importance of using Spend Reports
Consistent Data being used
Compare to Spend Initiative Report to confirm accuracy
Add explanation of Categories – do not exclude Spend from your Category
Report Location
Public Folder
 2015 Strategic Hierarchy with CTE Fields
 Spend Initiative Folder
 Spend by Region

Ariba Spend Visibility data sources
Invoice Items (Paid),PO Items (Ordered)
Suppliers
(Z001, Z002 ,Z003)
Direct Materials
Product Categories
PSM Strategic Categories
Profit Centers
Cost Centers
GL Accounts
Currency Conversions
Diversity Classification
FOUNDATION
SAP
Campoverde
BPCS
Payment
PO
Supplier
VLOG
BPCS
Payment
Supplier
Ludwigshafen
SAP
Payment
PO
Supplier
Redwood City
SAP
Payment
PO
Supplier
ARIBA
SPEND
VISIBILITY
Till 09/2014
ARIBA
FORMATTER
From 01/2013
Till 12/2014From 01/2013
Till 03/2015From 01/2013
…From 01/2013
From 01/2013
DirectHistoryFeeds

How we use Ariba Spend Visibility
Global visibility to our spend – who is spending what with whom
Category profile analysis – review the categories of spend to see where the opportunities are
Vendor rationalization – are we spending money with too many suppliers?
Analyzing spend under influence – what areas of spend do we have the most control over?
Preferred supplier networks – identify those key suppliers we have the most spend with
Reporting – prepackaged and adhoc

Agenda
Panel Presentations
• Arnold Bynum, Senior Manager - Business Process Systems, AbbVie
• Rachel McGuire - Senior Purchasing Assistant, Abbvie
• Prashant Agrawal, Senior Manager Master Data Governance - Southern California Edison
• Renee Ung - Manager, Southern California Edison
• Ben Landis - Strategic Sourcing Manager, Oldcastle Materials, Inc
Q&A

Based in Rosemead, California
Over $12B in revenues (2014)
Estimated 10,000 employees
Serves over 14 million people
50,000-square mile service area
Approximately $4B in external spend (non Energy)
Who we are

20
InternalExternal
20102008<2000
2014
SAP SAP
SRM
SNC
SAP
Ariba
Supplier
Portal
Legacy
System
EDI
Upstream
• Sourcing Pro
• Contract Pro
• Spend Vis
• SIM
• SPM
Downstream
• Discount Pro
• PO Inv Auto
• P2P
• Invoice Pro
SAP
HANA
2012
BI BoBJ
SCE’s ongoing journey towards integration and collaboration

Day-to-Day Reports
• Static
• Operational/Transactional
• Real Time
• Suitable for limited data
search/extraction
• Maintained by IT
Examples:
• Open POs
• Invoice/Payment Status
• Inventory Report
Monthly Reports
• Structured
• Summarized
• Well Defined
• Batch Refreshed
• Maintained by IT
or BI Teams
Examples:
• Monthly KPI Reports
• Cycle Time
• DBE Reports
Spend Visibility
• Business Oriented
• Enriched Data
• Strategic Reporting Tool
• Quarterly Refresh
• User-driven dashboards
• Multiple Pre-packaged
reports
Examples:
• Category Management
• Sourcing
• Process Improvement
SAP ECC BI BoBJ & SAS Ariba Spend Visibility
Ariba Spend Visibility comparison with other tools

SCE Ariba Spend Visibility snapshot
Business led with support from IT on need basis
Quarterly data enrichment with monthly data refresh
One ERP System (i.e. SAP) with three data sources (i.e. PO, Non PO and Credit Card spend)
18 months of spend data at the time of go-live (July 2014)
Implementation duration 14-16 weeks
Multiple dashboards grouped as:
Executive
Category
Organizational
Sourcing Event Analysis

Capability maturity model
Driver for building a roadmap
Align with Company Goals and Vision
Resource and funding prioritization
Business Case

Spend Visibility
- Capability Maturity Model
• Adhoc reports used
• Analysis performed occasionally
• Analysis performed manually
using tools such as Excel
• Data kept in silos or on
individual desktops
• Spend data used (infrequently)
• Spend analysis on ad hoc basis
• Backward looking analysis
• Minimal Spend Data available
from different sources
(inconsistent, redundant)
• Static, inflexible reports
developed and used
• Dependent on capabilities of
SAP & BEx reports
• SAP’s Hana (in-memory data
base) implemented
• Standardized reporting (Crystal
Reports) implemented
• Limited-use reports
• Partial picture of spend
• Consolidation of data started
• Basic Spend Analysis
conducted
• Vendor Hierarchy data
available (occasionally)
• Data enriched
• Enriched data refreshed
quarterly
• Ad hoc queries enabled &
developed
• SAP’s HANA Leveraged for
analysis
• Data analyzed in Near-Real
Time
• Predictive Analytics used
• Limited use of UNSPSC
• Common financials
language used across SCE
• Master Data enhanced
• Common definitions for data
objects used
• Initial Dashboard developed
and used
• PO & Non-PO data
combined
• Data analyzed in Real Time
• Commodity Index developed
• Category Management
aligned (optimized)
• UNSPSC used extensively
• Dashboards refined; widely
adopted
• KPIs Tracked
• Decisions made using
insights from analysis
• Targeted reductions in spend
• Spend optimization tools
implemented
• Spend optimized (using
sensitivity analysis for
constraints)
• Employees trained to use
analysis and optimization
tools
• Performance measures and
incentives aligned to incent
behaviors, practices, and use
of tools
Level 4
Leader
Level 1
Basic
Level 2
Competent
Level 3
Expert

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 25Public25
`
Project
ManagersSCE
Business
Team
• Publish data on pres.
schema, QA
• Train customer on SV
Analysis
• Creates report
templates,
dashboards, mat
views
• Provide
Refinement and
Feedback Training
• Apply Offline
Feedback
Collect, Validate Data
(6 weeks)
Data Enrichment
(6 weeks)
Refinement
(2 weeks)
Deployment
(2 weeks)
Ariba/SAP
• Train on Data Schema model and
help define data mapping based on
SCE business goals and decisions
• Assist in data review and QA to
identify duplicates, and missing data
• Generate enrichment
files
• ADS conduct enrichment
setup
• Analyze and cleanse
data
• Conduct custom
mapping exercise
• Review enrichment
questions and provide
clarification feedback
• Review refinement
drop in AA and
provide feedback
rules
• Participate in Ariba
Analysis training
• Rolls Ariba
Analysis to
end users
• Assemble and manage appropriate
resources
• Define Project Scope and complete
business decisions leading to data
extractions
• Approves Spend Data for Enrichment
• Complete data mapping and writes
data extraction scripts
Project phases and roles/responsibilities

Supplier Enrichment
• Supplier normalization / rationalization
• Parentage
• Enrichment: SIC, credit, revenue,
bankruptcy, diversity, Green, and
risk ratings
Data Extraction
(Tools and Services)
• Extract data from multiple Sources
• BI/SAS scripts
• Data Load Schema
Source Data
ECC
BI
Data Validation and Publishing
(Output)
• Personalized role-based dashboards
• Drag-and-drop reporting
• Prepackaged and custom reports
• Compound reports
• Opportunity analysis ("what-if modeling)
• Scheduled reports emailed to team
Commodity Classification
• Classification to UNSPSC and SAP Ariba best practice taxonomy
• SCE Custom taxonomy
• Granular drill down from highest to lowest to part
• Flex fields to support SCE Category Management
Ariba Spend Visibility process flow

Executive Dashboard Category Analysis Organizational Analysis Sourcing Event Analysis
Includes commonly requested charts
with capability to drill down
• Spend by Organization
• POs by Organization
• Spend by Material Group
• PO by Material Group
• NET PO Value - Directed - Non
Competitive
• PO Count - Directed - Non Competitive
• Spend by Release PO - YTD
• Spend without OLA - YTD
• Invoice Spend by Supplier - YTD
• Invoice Spend by Payment Terms - YTD
• Spend by Management
• Total Count of Savings Forms Submitted
• Sourcing Est. Dollars by Organization
• Sourcing Projects By Organization
• Active Contract Workspaces by
Agreement Type
• Active Contract Workspaces
In support of Category Strategy,
provides common Material Group
Category Internal Analysis charts with
the ability to drill down and redefine
criteria for further analysis
• Category Spend
• Category Organization Spend
• Category PO Award Spend
• Category UNSPSC Spend
• Category Manager Spend
• Category Agent Spend
• Category Vendor Spend
In the spirit of collaboration provides an
Operating Unit view with common Profit
Center charts to support discussions
with client organizations
• Organization Spend
• Organization Category Spend
• Organization Spend Detail
• Organization Category Detail
• Organization UNSPSC Spend
• Organization PO Award Spend
Provides historic visibility into events,
supplier participation and dollars
awarded
• Event Spend Summary
• Event Overview
Event Participation Summary
• Lot Summary
• Supplier Participation
• Supplier DBE Awards
Spend intelligence / market intelligence reporting

Ariba Spend Visibility use cases
Category Profile to Support Category Management Process
Business-Driven Dashboards across all levels
Master Data Enrichment
UNSPSC
Supplier Parentage
SAP Vendor Master
Process Improvement Initiatives

Master data enrichment (UNSPSC)

30
Category profile

Future opportunities
Supplier 360 Integration
Market Intelligence
Continue to build roadmap based on Capability Maturity

Key takeaways
Business-driven tool
Simple Implementation/Enablement
Sequencing of SAP Ariba Modules
Multiple Use Cases
Capability Maturity Model

Agenda
Panel Presentations
 Arnold Bynum, Senior Manager - Business Process Systems, AbbVie
 Rachel McGuire - Senior Purchasing Assistant, Abbvie
 Prashant Agrawal, Senior Manager Master Data Governance - Southern California Edison
 Renee Ung - Manager, Southern California Edison
 Ben Landis - Strategic Sourcing Manager, Oldcastle Materials, Inc
Q&A

Agenda
Who is CRH, and who is Oldcastle?
Implementation and Lessons Learned
Procurement Landscape at CRH / Oldcastle
Business Case for Spend Visibility
Spend Visibility Utilization Example

CRH is a leading international building materials company
€24 billion Revenue
34 Countries
3,300 Locations
90,000 People
300mt of Product
No. 3* Global B. Mat Company
*Based on Market Cap

Cement & Aggregates
Asphalt & Paving
Readymixed Concrete
Products for
Construction Solutions
General Merchants
Specialised Distribution
Do-It-Yourself
CRH’s portfolio of businesses service the full breadth of
construction…

Procurement landscape and challenges
• Over $19B in annual spend globally, $9B in
North America
• 7.5MM invoices group wide
• Over 130K unique Supplier Global Parents
• 650 unique L3 categories
Landscape - Stats Challenges
• Various disparate ERP systems
across the globe
• Multiple currencies
• Internal resource allocation
• Increased coordination across groups,
difficulty gathering spend and
identifying opp.

Benefits: why is Ariba Important?
• Improved supplier
intelligence
• Rating of supplier
performance
(score cards)
• Simplification of
communication
• Information on
previous contracts
handy in one place
• Measurement of
contract compliance
• Common tenders
• Shortened sourcing
cycle
• Spend transparency
• Improved spend
analysis
• One-stop solution
for procurement
• Increased reporting
speed
• Pre-created
templates available
for future tenders
• One platform to manage all spend and to discover sourcing opportunities
• Facilitate cross-boarder/cross-region tenders
• Work as a central Contract Management Database
• One place for savings tracking and reporting
• Create a standard way of working in Procurement
Higher
Purpose
Spend
visibility
Sourcing Contract
management
Supplier management
Procurement
effectiveness
Technology is a cornerstone in moving towards One CRH

Ariba Spend Visibility general benefits
1st step in building a sourcing pipeline
Uncover savings opportunities
Single global taxonomy
Source of truth
Supplier Enrichment
Increase internal efficiencies
Utilizing D&B Data

Approach to implementation and lessons learned
| 40
Lessons Learned
• More frequent data refreshes
• Top-quality data for opportunity analysis
• Continuous Refinement & data
enhancement
• Consistent customized training
• Creating an understanding & demand
for the information
• Alignment with IT resources
• Using the tool must be easier than
working around it
• Dedicated procurement resource
per group
• Global core team coordinating
• Training early and often
• Extraction Methods across the group
• Single taxonomy
Implementation Approach

Ariba Spend Visibility - benefit case studies
Discover new opportunities
Supplier Parentage Hierarchy
Source of truth against supplier data
Price harmonization with unit pricing
Creating demand from other groups within org.

Thank you
Contact information:
Arnold Bynum
Arnold.Bynum@abbvie.com
Rachel McGuire
Prashant Agrawal
Prashant.Agrawal@sce.com
Renne Ung
renee.ung@sce.com
Ben Landis
Benjamin.Landis@oldcastlemat
erials.com
Moderator
Annie Vaseekaran
Solutions Marketing
annie.vaseekaran@sap.com

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