Smarter Data Discovery for Procurement Utilizing Cognos and Watson Analytics

Smarter Data Discovery for Procurement Utilizing Cognos and Watson Analytics

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Agenda THE NEED POSSIBILITIES EXAMPLES 3

Lydia Tilsley Business Analytics Manager, Corporate Operations Supply Chain Management, United Technologies Corporation

Moving the World Forward A global leader in building systems and aerospace industries We invent new and better ways to keep people safe, comfortable, productive and on the move 2

Our Brands Iconic brands delivering the smart, sustainable solutions the world needs 6

Balanced Across Markets & Geographies 2015 net sales $56B Military Aerospace & Space End Markets 36% 12% 52% Aftermarket Sales By Type 44% 56% Asia Pacific Sales By Geography Other 15% 20% 38% United States Commercial Aerospace Commercial & Industrial Commercial & Industrial Original Original Equipment Manufacturing Europe 27% 7

UTC Supply Chain UTC Spend Supplier Portal Product ~5-6K Supply Chain Employees Globally Supply Chain Enterprise System Consolidated Supplier Data Tools & Technology Non-Product 100,000+ suppliers Supplier Insights 8

Spend Analysis at UTC User adoption go to tool for all spend requests Time savings from weeks to minutes Insights Where can we find savings Compliance to Payment Terms FALSE TRUE Target days to pay 1 to 30 31 to 60 61 to 90 > 90 IMMEDIATE

Insights on the horizon Spend (over various periods of time) by commodity, by region, by country, by division, by site etc. Payment terms by commodity Contract compliance and long-term agreement coverage by commodity Days Paid Outstanding by commodity Spend by supplier - with trends Diversity spend

IBM Procurement Piero Giangrasso, Project Team Lead, Web Applications & Collaboration, IBM Procurement

IBM Global Procurement S&GP Segmentation $Billion 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 S&GP 41% $50B IBM Procurement Managed Spend - 2015 IPS 48% Marketing and Communications Services-Technical Staff / Services Services-Corp. and Professional (CPS) Facilities / Maintenance and MRO IT Products/Services/Maintenance Software Networking / Connectivity Logistics Telecommunications Services-Complimentary Workforce Travel Other Capital / Mfg Equipment $4.4B of production spend Production 9% Logistics 2% Active suppliers: 14k Spend - Top 50 suppliers 47% 12

The Digitization of Procurement Procurement functions are a rich source of data Accessing this data unlocks benefits $50B Spend Managed 148K Active Contracts 740K Purchase Orders 14K Suppliers Managed 22K Sourcing Events IBM Procurement 2M Invoices Supplier Selection Cost Management Accuracy Innovation Material and Labor Sourcing Contract Management Speed Quality Supplier Relationship Management Supply Chain Risk & Social Responsibility Flexibility Efficiency 3

Leverage Emptoris data to solve existing business problems Information is Organized Into a Data Mart 1. Extract Emptoris data to our Procurement Data Warehouse Enables linkage to all other IBM Procurement data. Spend by Contract RFx spend vs PO data ERP Data Emptoris Data Req Data 2. Cross Suite reporting within Emptoris Solves tactical business problems Inactive users with activity across Emptoris modules Non-Master supplier report User Role across modules Central Data Mart 14

Watson Analytics in Procurement Key Values Predictive and Prescriptive Analytics Customized Reporting Real-Time Data Maintenance Common use cases Payment Term Analysis Compliance Analytics Master Data Management Analysis Transaction Automation Analysis Risk and Fraud Analytics 15

POSSIBILITIES Vijay Chougule Offering Manager, IBM Emptoris Spend & Procurement Analysis

Enabling Insights at various levels Summary level Insights to your business I need to holistically track and monitor my Spend against industry benchmarks Deeper Insights at individual spending dimensions I need to be able to slice-n-dice the spend data up-to the transaction level to mine opportunities Smarter Insights to KPIs I want to understand what best influences outcomes by performing smarter data discovery CPOs / Procurement Executives Spend Data Analysts Category Managers

18 Assembling a Dashboard: Cognos Analytics

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Procurement Insights Explore Watson Analytics TODAY! Engage with our services further to identify right content Cognos Analytics would be available with Emptoris by 4Q2016*

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EXAMPLES Vishnu Tadepalli Sourcing Consultant, IBM Procurement Services (IPS)

Watson Analytics in Procurement Key Values Predictive and Prescriptive Analytics Customized Reporting Real-Time Data Maintenance Common Use Cases Payment Term Analysis Compliance Analytics Master Data Management Analysis Transaction Automation Analysis Risk and Fraud Analytics

Watson Analytics in Procurement Spend Analytics Master Data Management Compliance Analytics S2P Help Desk Analytics Reduce 3 7% procurement cost Spend Analytics for consolidating company-wide data, establishing baselines and anchoring strategic sourcing decisions Historical data, Quarterly Updated Master data with cleansed, standardized, enriched data Analytics solution checks the health of the master data and facilitates normalizing, cleansing and enrichment of master data 12- weeks, Historical data, Yearly Increased Process Compliance & Effectiveness Analytics solution enables organizations in the process of monitoring and analyzing process compliance & plugging savings leakage 3-4 weeks, Historical data, Quarterly Increased Customer satisfaction Analytics solution measures the type of queries received, resolution provided, C-Sat Score to provide insights and recommendations to increase C-Sat Score 2 weeks, Historical data, Monthly S2C & P2P Process - KPI Analytics Occupational Fraud & Abuse Discovery Supplier Payment Terms Optimization (SPTO) Transaction Automation Opportunity Analysis 27 Increase process efficiency and effectiveness Analyze, measure and manage the essential KPI s proactively and spot the problems influencing the finance of the company 2 weeks, Historical data, Monthly Identification of potential Risk suppliers/ employees or transactions Occupational Fraud analytics to mine through transactional data to identify potential fraud in procurement to payment process & in T&E Claim Process 4-6 weeks, Historical /Current data, Half yearly Working capital savings up to 0.5% SPTO for increasing working capital, and reduction in cost of capital with optimal usage of standard & discounted payment terms 3-4 weeks, Historical data, Quarterly Increased Automation by 25% Provides deep Opportunity Analysis of current spend for identification of opportunities to enable one or more Advanced Transaction Automation Solutions to deliver faster transactions while drastically improving compliance and reducing unit prices. 4 weeks, Historical data, Half yearly

Savings Identified for IPS Clients using Advanced Analytics $13M Potential Benefits $4M Potential Benefits $8M Potential Benefits Global Telecom Service Provider Vendor consolidation opportunities across categories, potential savings of $13M identified $ 0.6B Non-PO spend can be potentially moved to contracted PO spend leading to - Better control and visibility - Increased contracted volumes with vendors and hence price reductions Global Semiconductor Manufacturing Compliance Issues identified in Supplier Payment Terms Impact on Discounts $0.2M additional discounts are available due the migration in Payment terms Impact of Non Compliance on Payments $295M (50%) Non compliant spend is assessed to have a Bad impact on the payments FMCG major in NA Supplies are non-compliant as against orders placed 82% of the total over-deliveries are made by four vendors 43% of the total under-deliveries are made by ten vendors 25% of all invoices accounts to 49% of the amount blocked A total of $27M on blocked cash for business is contributed by the top eleven vendors

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