How to avoid the single point of project failure and reach 80% electronic invoicing
How to Avoid the Single Point ofProject Failure & Reach 80%Electronic InvoicingJohn Whitlow – Head of Purchasing
Areas to be coveredAGENDA•Imperial College London – Background•Process Management – P2P•Challenges Faced when Improving the Pay Stage•Our IT Systems•What the Pay Stage looked like in 2006•Business Case & Review of the Pay Stage•How we changed the Pay Stage in 2006 and why we decided to partnerwith OB10•Benefits and Challenges of Electronic Invoicing•Close - Questions
Imperial at a glanceThe University’s objectives: • world class scholarship, education and research in science, technology and medicine • interdisciplinary collaborations • communicate and share knowledgeEstablished in 1907Turnover of £600 millionAcademic faculties: • Engineering • Natural Sciences • Medicine • plus Business School
Our Management Approach to Process Management – Electronic Invoicing•Use technology to achieve process improvements andefficiencies.•Exploit IT opportunities to deliver sustainable cost andperformance benefits.•Enable full automation of the pay process and eliminateunmatched invoices and improve immediate invoiceregistration.•Improve risk management regarding supplier paymentsand VAT reclaim.•Increase invoices paid on time and enable early-payment discounts.•improve invoice exception management.•Reduce supplier queries.•Reduce the cost of archiving and use of space.
Challenges faced when exploring how we could deliverimprovements when investigating how we pay our suppliers•The College would have to invest money and time to improve the pay process anddeliver the expected benefits.•Full benefits were likely to be delivered over a 1-2 year timeframe, allowing time forchanges to take place and solutions to be rolled out. Sustained commitment wastherefore required.•e-Enablement would need to play a much greater role in enforcing compliance acrossthe organisation.•Process efficiencies had to comprise of opportunities for budget savings where a rolecould be re-allocated or removed and opportunities to undertake different tasks fromincreased capacity.•There was a choice of technology solutions. We needed to assess what was the rightsolution, or combination of solutions.•Delivering the benefits was about changing current practice. Change managementwould therefore be critical to our success.
Our IT Systems – Oracle Financials•We are a mature Oracle house using the AdvancedProcurement Suite and the Oracle Accounts PayableModule • We implemented Oracle in 1999 - All purchasing is undertaken using iProcurement – we have 2,000 on-line users. • We “punch-out” to 20 MRO suppliers including HP, Sigma, VWR, RS Components, Office Depot and through this route send out our purchase orders using XML. • Content management - Supplier catalogues are also maintained on system for other mainstream suppliers. • Oracle iSourcing is in place principally to undertake electronic reverse auctions but eventually will look after the whole electronic tendering piece. • Oracle Accounts Payable was in use but until 2006 we had not explored how we could improve the whole procure to pay process. Greater focus was therefore given to Pay and options for improvement explored.
The Pay Process in 2006•We processed on average 170K paper based invoices each year.•The majority of invoices were posted to us and were then keyed in by staff in ourcentral Accounts Payable Team.•Once keyed and checked invoices were photocopied and posted out via theinternal mail to administrators in all our departments ready for authorisation. Thisequated to 140,000 items of mail being sent out each year to different parts of theCollege.•The departmental administrators would then be expected to check and forwardinvoices on to staff in their own department for final authorisation.•Unless departmental staff notified central Accounts Payable of any issues with aninvoice it would be processed by the settlement date if below £10K in value.•All invoices above £10K in value were automatically put on system hold andrequired active authorisation before approval.•The cost of processing an invoice this way was approximately £2.50.
Review of the Pay Process•Management recognition that the Pay process was inefficient and didn’t work that wellin practice. There was scope for serious improvement and cost reduction.•Our aim was to receive invoices electronically, have a high level of matching, andstreamline the internal authorisation process.1)Electronic invoicing – Looked at solutions from Oracle (iSupplier Portal) and OB10focusing on how we could receive a large percentage of our invoice transactions fromboth large and small suppliers – Right first time.•Matching of Invoices – we not only wanted to receive invoices electronically but alsowanted high levels of matching – touch-less end-to-end processing . This suited ourprofile where a high percentage of our purchase orders were being transmittedelectronically so perfect data was being sent to suppliers so this data could be flippedand sent back. We ruled out doing this directly.•Authorisation process – once received invoices could be automatically matched on oursystem so the next initiative was to have electronic workflow whereby invoices could besent to the user for checking and authorisation.
Model adopted and why we selected OB10 as our Provider•Electronic Invoicing – We selected OB10 as they had an established network ofsuppliers, provided a single solution for transmission by both small and largesuppliers, fully understood our business requirements and submitted a verycompetitive transaction fee for their service.•Matching of Invoices – Although there are benefits in removing paper invoices fromthe process there are even greater benefits if you can automatically match invoicedata with purchase order line detail. This truly enabled a “touch-less” process andwas the single largest benefit for Imperial.•Authorisation process – By receiving invoices electronically from OB10 the formatwould be standardised. This afforded us an opportunity to revisit how we archiveand present the data to our users. The data from OB10 is now collected byStoretext, our invoice scanning provider, and available on-line to all our users.•This removed 140K items of internal mail saving us at least £30K per annum. Atthe same time we introduced electronic email alerts notifying users that invoices areready to be paid. Again this was a major service improvement for our users.
Benefits of Introducing OB10 & the Challenges•Benefits • Reduced the cost of processing a transaction from £2.50 to less than £1.00. • Enabled head-count reductions in our central Account Payable function saving in excess of £100,000 per annum. • We are now processing in excess of 100K invoices per annum. • Allowed a single approach to be adopted for the receipt of invoices. • Reduced the volume of paper and associated storage. • Reduced the level of telephone queries from suppliers. • Facilitated the implementation of an improved authorisation process and removal of unnecessary administrative procedures.•Challenges • Change management – structural and cultural. • Quality of data – integrity of data is key. • Supplier enrolment and building the network – joint responsibility. • To improve our transaction level and move towards 75-80% 2009.