The role of supplier networks in financial transformation.
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Transcript of The role of supplier networks in financial transformation.
The role of supplier networks infinancial transformation
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Agenda
• The CFO perspective• The HP roadmap• Enabling technologies• Where the market is headed• Potential financial impact
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The CFO Perspective
Is A/P More Strategic
More Same
Less
Source: 2009 Aberdeen Survey
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The CFO Perspective
Treasury Purchasing
Finance
A/P
Source: 2009 Aberdeen Survey
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The CFO Perspective
Improve Purchasing Compliance
Lower A/P Department Costs
Improve Payment Performance
Optimize Working Capital
Improve / Standardize Process
0 10 20 30 40 50 60 70 80
Source: 2009 Aberdeen Survey
©2010 HP 6
HP GBS – our strategy journey
6
Decentralized
Regional SharedServices
Global Consolidation
andAdoption
Technology Enablement & Process Optimization
Business Value Add as End-to-endProcess Owner
COSTS VALUE
TIME
1990 2010
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Invoice Receipt
A/P Workflow ERP
Invoice To Pay Process
Settlement& Financing
The A/P Process
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Account Payable Workflow
A/P Workflow Implementation
On Premise71%
Hosted20%
Out-Sourced
9%
No Intention5%
Implemented45%
Currently Implementing
15%
Actively Planning
20%
Planning15%
Source: 2009 Paystream Advisors Survey
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Benefits of A/P Workflow
• Automates routing and approval of invoices• Standardizes the process• Ensures greater visibility / compliance• Enables off-shoring of non value added activities• Compresses invoice approval cycle time
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Invoice Receipt
A/P Workflow ERP
Invoice To Pay Process
Settlement& Financing
The A/P Process
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Why paper invoices persist
Customers:
− ERP Input formats are proprietary − Cost and complexity of working with hundreds of suppliers
Suppliers:
− Billing Systems output invoices proprietary formats − Cost and complexity of customizing for clients
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Invoice submission methods
• Imaging• Optical character recognition• Outsourcing• E-Invoicing supplier network
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CustomerSupplier Network Services
Service components
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The Supplier Network
Many of your suppliers will be on the network
We enroll those who are not
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The global supplier enrolment team
OB10 Office Locations
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Buyer SummaryBuyer Name: AAA148735442 - A large Company
Total Suppliers: 1,526Total Invoice Volume: 406,616Total Invoice Value: 1,750,605,024
Buyer Overview - Actual Breakdown
Sales Overview- Actual Breakdown
Implementation Overview - Actual Breakdown
Buyer SummaryBuyer Name: AAA148735442 - A large Company
Total Suppliers: 1,526Total Invoice Volume: 406,616Total Invoice Value: 1,750,605,024
Buyer Overview - Actual Breakdown
Sales Overview- Actual Breakdown
Implementation Overview - Actual Breakdown
Campaign ReportingCampaign Reporting
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17
Touchless, Straight Through Processing
Recycling is good at home… but not in AP operations
• No Touch• Automated Matching• Immediate Receipt• VAT Compliant• Full Line-Item Level Detail
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SAP Add-on
Connector
Supplier
Supplier
SupplierSupplier
Supplier
Supplier
Customer / Buyer Firewall
Supplier
Archive
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Self-Service – Collaborative Network
Procure to Pay Framework
Electronic Purchase Order Delivery
Electronic Invoice Management
Supplier Financing
Payment Management
Purchasing
Treasury
A/P
Sales Order
Billing
Treasury
A/R
Standard Supplier Information
Buyer Supplier
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Self-Service – Collaborative Network
Procure to Pay Framework
Electronic Purchase Order Delivery
Electronic Invoice Management
Supplier Financing
Payment Management
Purchasing
Treasury
A/P
Sales Order
Billing
Treasury
A/R
Standard Supplier Information
Buyer Supplier
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Discounting Is More Attractive Than Ever
Sources: REL/Hackett Group; own analysis; Cash: Goldman analysis of S&P 500; Interest on 4 week T-Bills by Federal Reserve;
Invoice date Approval Due date
53 days25 days
Cash as % of assets Interest rates
’02 ’10
6%
10%
’05 ’100%
5%
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Supplier views approved invoices…
Click to View Details for Accelerated Payment
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…Evaluates accelerated payment offer…
Invoice Details & CurrentTerms Displayed
Click Here to Select a Date for Accelerated Payment
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…Selects payment date…
Click on the DateDesired for AcceleratedPayment
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…Requests early payment
Proposed Terms forAccelerated Payment
Click “Submit” to AcceptTerms for AcceleratedPayment or “Cancel” toLeave Payment Date as is
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$5bnInvoiced spend
Non-discount spend: 80% $4bn
Accelerated spend: 20% $800M
Accelerated spend: $800M
Offer rate (APR) 12%
Average acceleration 30 days
Additional discount p.a.: $8M
Example of $5 billion spend company
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‣Spend: $5 billion
‣Invoices: 300,000
‣Cost per invoice: $10
Business case example
Business Case AP automation
‣Save $5 per invoice
‣Annual savings $1.5M
‣Payment terms: 45 days
Net
‣Approval cycle: 25 days
Example company
Business Case including Dynamic Discounting
‣Acceleration 30 days
‣Combined annual savings $1.5M + $8M = $9.5M
‣Reduce approval cycle to 10 days