Building a Business Case for Procure to Pay Automa6on. June 19, Daniel Perry

Transcription

1 Building a Business Case for Procure to Pay Automa6on June 19, 2014 Daniel Perry Daniel.Perry@Unimarket.com

2 Building a Business Case for P2P Automa6on Ø What is Procure to Pay Ø What are your challenges? Ø What is eprocurement? Ø Why eprocurement? Ø Building a Business Case

3 Procure- to- Pay Life- cycle Invoicing & Payment Spend analysis Strategic Skill- based Order fulfillment & Receiving Supplier performance management Procurement & Workflow Sourcing & iden6fica6on of pre- sourced contracts Tac6cal Task- based Contract management

4 What are your challenges?

5 What are your challenges? Ø Lack of Visibility Ø Lack of Control Ø Cumbersome Processes Ø Lack of Resource

6 What is eprocurement? Invoicing & Payment Spend analysis Marketplace Dashboard KPIs Purchase Requests Requisi6ons Approvals Order fulfillment & Receiving eprocurement Supplier performance management Repor6ng Vendor Directory Vendor Registra6on Sourcing Orders RFQ Receiving Invoices Expenses Procurement & Workflow Sourcing & iden6fica6on of pre- sourced contracts Contract Management Blanket Orders Contract management

7 Ø Increased produc-vity Ø Ø Why eprocurement? 45mins per freed- up for higher value ac6vi6es (Summit Strategies) Reduced invoice processing costs from $38 to $3.10 (Aberdeen) Ø Increased adherence to policy Ø Reduce non- contract spend by 33% (Forrester) Ø Increased accuracy and category spend visibility Ø Ø Ø Ø Order accuracy up to 80% reduc6on in PO errors (Ariba) Up to 30% reduc6on in invoicing errors (Steering Commerce) Save error- related 6me 10mins per order freed up for higher value ac6vi6es (Summit Strategies) 1% cost saving by elimina6ng inaccurate pricing from manual PO s and invoicing (Ariba) Ø Reduced cycle -me Ø Ø Ø Requisi6on to PO crea6on reduced from 9.8 days to 21.4 hours (Aberdeen/Unimarket) PO crea6on to order confirma6on reduced from 7 days to 2 days (Forrester) Receive products faster and increase invoice- to- pay efficiency/discounts

8 Building a Business Case on Savings Small/Medium Community College Opera6ng Budget: $50,000,000 Addressable Spend: $10,000, Purchase Orders per month 400 Invoices per month 300 Expense Claims (Reimbursements) p/m

9 Process Savings Process Quan-ty Manual Cost Electronic Cost Savings Purchase Orders 4,500 $ $33 $396,000 Invoices 4,800 $38.77 $3.09 $171,264 Expense Claims 3,600 $28.21 $6.19 $79,272 Collabora6on and Visibility = addi6onal 12% savings on transac6ons $77,584 Total So? Dollar Savings $724,120 Other process improvements: W9 Tax profile informa6on data entry / supplier registra6on Electronic Contract Management efficiencies Reduc6on in errors and double- handling

10 Purchasing Savings (based on $10mil addressable spend) Process Descrip-on Savings Sourcing Savings Increase sourcing by 20% saves 14% $420,000 Contract Compliance Best prac6ce eprocurement saves 5% $500,000 Early Payment Discounts Average 2% discount on 50% of add. spend $90,000 Total Hard Dollar Savings $1,010,000 Other hard dollar savings: Reduc6on in late payment penal6es Reduc6on in double payment errors

11 Business Case ROI Combined Hard & Soo Dollar Savings: $1,734,120 Percent of Addressable Spend Saved Annually 15%- 20% Simple, right?

12 Building a Business Case on Savings Savings are ooen perceived as being difficult to define: Savings vs. Previous Year? Savings vs. Budget? Savings vs. Manual Process? A business case that relies totally on "savings" may get a lot of push-back because people argue about the definition rather than the business case itself. Your accomplishments are suspiciously hard to verify

13 What s missing? Ø Visibility Ø Control Ø Processes Improvements Ø Best use of Resource Savings are the result of achieving your goals not the goal itself.

14 Align to Business Goals Goals other than savings: Unify decentralized spend through standardized processes Strengthen governance and compliance culture Improve auditability and visibility Best use of available resource Alignment with business goals is key to securing execu6ve support for the program.

15 Building a Business Case on Goals Environment: $10k requires jus6fica6on form Paper/manual process 1-3 weeks for approval No visibility of requisi6on during process Documents ooen lost while being passed around for signatures Goals: Paperless Purchase Order Process Increase Control Reduce Cycle- 6me Reduce Errors & Double- Handling Increase Visibility Save Money

16 Building a Business Case on Goals Result: Electronic jus6fica6on form Electronic approval process Approvals within 48hrs Documents atached requisi6on/po Full visibility throughout approval process [eprocurement] gave us the opportunity to become more efficient. It definitely gives us the opportunity to leverage our resources. Andrew Litle - Execu6ve Director of Finance, Anne Arundel Community College

17 What s Next? þ ROI Calcula6on þ Align with College Goals Inter- departmental buy- in Ensure user adop6on

18 Cost of Change is Ooen a Barrier Is the cost perceived or defined? And what is the cost NOT to change?

19 Integrate Procurement with AP Get Accounts Payable, IT and Key Stake- holders involved early. Review current process objec-vely and in its en-rety. Agree on more efficient alterna6ves. Concentrate on improving the process. Ensure chosen solu6on will improve control AND streamline processes

20 Streamline problema6c categories Target problema6c categories early, but ensure everyone understands the end goal What would have to be in place to support a more streamlined process? Don't accept excuses no business unit is en6rely unique Think outside the box category- specific solu6ons may be available Think Yes, if not No, because Think Process Transforma6on not SoKware Implementa6on

21 Yes, if not No, because Your proposal is innova6ve. Unfortunately, we won t be able to use it because we ve never tried something like that before.

22 Ensure user adop6on

23 Make the right way easier than the wrong way Rogue Process Ensure it is an arduous process to approve invoices without a PO Include adherence to policy in employees performance goals Delay payment to suppliers if not submixng invoices electronically Finance fines offender s budget if invoice processed without PO Correct Process Easy to use requisi6on crea6on Fast/Mobile approval Faster payment to the supplier Electronic receiving/3- way match Don t let bad- habits derail your roll- out

24 Market your program to your suppliers Empower your suppliers to help your program Explain benefits of eprocurement Manage enrollment like a marke6ng program Nego6ate win- win: PCard + Rebate or einvoice + Early Payment Discount? Reward suppliers for accurate e- invoicing, with faster payment Invite small/local suppliers to par6cipate

25 Recommenda6ons Summary Business case based on business goals AND cost reduc6on. Focus on campus- wide adop6on. Integrate Procurement and Finance processes. Address problema6c categories. Make the right way easier than the wrong way. Market your program to your suppliers. Your contracted suppliers in eprocurement Fast and easy to use Solu6on Approved PO, on contract. 3- way match

26 Summary/Ques6ons Daniel Perry (888) ext 103 (443) (443)