Source-To-Settle: Why It's Time to Connect the Last Mile

Find out why it's time to connect the last mile, when it comes to Source-to-Settle.

1. Source-to-Settle Why It’s Time to Connect the Last Mile October 23 rd , 2014

2. Today’s Speakers Global Vice President, Audience Marketing for Line of Business Procurement     Emily drives the direction and market awareness for the portfolio of procurement solutions at SAP to ensure customer value and business growth.  She brings 20 years of experience in high tech marketing and management consulting to SAP, with prior procurement and sourcing-focused experience at several technology providers such as Ariba and eBreviate as well as A.T. Kearney.  Emily has a degree in International Relations as well as an MBA. Emily Rakowski [email protected] Chief Research Officer & Founder Andrew is a recognized expert in sourcing, AP and supply management, having benchmarked thousands of procurement and finance departments. He has held leadership roles in sales, marketing and services at Ariba and Commerce One in addition to a consulting and banking background. Andrew has been named a SDCE “Pro to Know” three times, and holds both a BA and MBA. Visit his blog at www.cporising.com Andrew Bartolini [email protected]

3. World Class Procurement Excellence …is essential to be competitive >85% Spend Under Management 8% Annual Recurring Savings 74% Compliant Spend Source: Ardent Partners CPO Rising 2014 Are you World Class?

4. The Business Case for Procurement Excellence Spend Optimization Reliability Productivity Innovation Improve spend visibility Increase internal collaboration Source more and better Identify and mitigate supply risk Drive supplier responsiveness Improve quality and consistency Increase operational effectiveness Integrate the procurement process Leverage team knowledge Focus on revenue generation Use supplier know-how and reward innovation Promote sustainability

5. Inefficient source-to-pay processes result in high costs Inconsistent, Incomplete, and Unclassified Data Limited Cost Savings Poor Contract Management High Procure-to-Pay Process Costs and Adoption Challenges Lack of Supplier Management and Collaboration Corporate buyers Suppliers Category managers Production Chief procurement officer Contract managers Contract Mgmt Supply Chain Product Development Finance Cost Accounting Strategic Sourcing Supplier Management Spend Analysis Procure-to-Pay

6. Efficient source-to-pay processes ensure cost savings Achieve Consistent, Complete, and Classified Data Ensure Sustainable Cost Savings Achieve Comprehensive Contract Management Reduce Procure-to-Pay Processing Costs and Gain High Adoption Manage Suppliers and Collaborate Effectively Corporate buyers Suppliers Category managers Production Chief procurement officer Contract managers Supply Chain Product Development Finance Cost Accounting Contract Mgmt Strategic Sourcing Supplier Management Spend Analysis Procure-to-Pay

7. Let’s get tactical – what does real process integration mean? Contract Mgmt Spend Analytics Sourcing Operational Procurement Invoice Mgmt & Payments Supplier Management Create a sourcing project from a report (bringing over items, current prices, total spend, supplier lists) Bring spend analysis reports into project workspace as reference If needed, bring direct material information from MM type module into sourcing event Place standard contract clauses into RFP for pre-agreement Bring items, prices, awarded suppliers directly onto draft contracts Bring RFP responses into contract as clauses / SLAs Establish vendor for procurement use Bring approved contract items, prices and payment terms into global ‘operational agreements’ / material info records Publish items / pricing into catalogs for use by employees Automated PO collaboration A utomated PO or contract flip available to ensure accuracy Disputes resolved collaboratively / visibly Evaluated receipt settlement when possible Supplier performance reported against spend amounts, used in sourcing events, included as contract SLAs Supplier master data maintained throughout all records One place to see all supplier interactions

8. Integration Status Poll This isn’t even a major consideration yet Manual handoffs or very separate applications Automated integration in a few places, but not the whole process Fairly clean end-to-end automated integration How closely integrated are your source to pay processes?

9. think BIG Start Small & Considerations On Demand Solutions Modular Capabilities Integrated, End to End Suite Global Footprint / Compliance Shared Service / Multi-Backend

10. Agenda The Current State of “Source-to-Settle“ Why it’s Time to Connect the Last Mile Designing for “Source-to-Settle” Success Copyright © 2014 - Ardent Partners Ltd.

11. What Do We Mean by Source-to-Settle ? Spend Analysis Sourcing Contract Management Procurement Accounts Payables Copyright © 2014 - Ardent Partners Ltd. Source to Settle

12. Top CPO Priorities (Next Three Years) Copyright © 2014 - Ardent Partners Ltd. © Ardent Partners - 2014 Innovation

13. Top Strategies for CPOs in 2014 Copyright © 2014 - Ardent Partners Ltd. Collaboration

14. AP’s Top Priorities in 2014 Copyright © 2014 - Ardent Partners Ltd.

15. That Persistent Paper Problem Copyright © 2014- Ardent Partners Ltd. © Ardent Partners - 2014 Invoice Formats Payment Formats © Ardent Partners - 2014

16. The Benefits of Electronic Payments 24% of all AP groups report increased accuracy and control of payment delivery 24% 45% 51% 16 45 % of AP groups say that electronic payments enable more efficient and streamlined processing (e.g., review, approval, execution). 51% of enterprises rate cost savings as the top benefit seen from electronic payments

17. 17 Greater involvement in working capital optimization Skill set required within AP will change Stronger AP & Procurement partnership AP process will be largely automated AP Trends & Predictions (“Likely” in Next 2-3 years) 83% 69% 66% 57%

18. 1 in 5 CPOs Owns Accounts Payable Copyright © 2014 - Ardent Partners Ltd.

19. Suite Adoption Rates Copyright © 2014 - Ardent Partners Ltd.

20. S2S: Why It’s Time To Connect the Last Mile

21. Why Source-to-Settle Matters? Copyright © 2014 - Ardent Partners Ltd.

22. Why Source-to-Settle Matters? Copyright © 2014 - Ardent Partners Ltd.

23. Why Source-to-Settle Matters? Copyright © 2014 - Ardent Partners Ltd.

24. Why Source-to-Settle Matters? Copyright © 2014 - Ardent Partners Ltd.

25. Why Source-to-Settle Matters? Copyright © 2014 - Ardent Partners Ltd. Key Takeaways: Joy’s Law: “Innovation will happen, and it will happen elsewhere.” Innovation extends to all supply markets A ‘static “supply base is now a red flag No company can risk going it alone Increasing reliance on suppliers Suppliers are partners assets

26. Why It’s Time to Connect the Last Mile Spend Analysis Sourcing Contract Management Procurement Accounts Payables Copyright © 2014 - Ardent Partners Ltd. Seamless processes capture and retain value Efficiently Effectively Repeatable Scalable Automation amplifies and accelerates the benefits

27. Why It’s Time: 4 Proof Points Spend Analysis Sourcing Contract Mgmt. Procurement Accounts Payables Copyright © 2014 - Ardent Partners Ltd. Enterprises that leverage spend analysis into their sourcing projects save, on average, between 24% - 41% more per project Eliminating any sourcing/contract process gap can reduce savings leakage by up to 38% Best-in-Class enterprises report compliance rates that are 20%+ superior Linking and automating the P2P process can reduce invoice cost by 40% to 70% 1 2 3 4 1 2 3 4

28. Impact on Savings Poll We probably lose over 50% of negotiated savings We probably lose over 25% of negotiated savings We probably lose over 10% of negotiated savings No leakage – we’re rock stars How much of your negotiated savings do you believe is lost along the process (between sourcing/contracts, or contracts/procurement, or procurement/payment)?

29. Designing for S2S Success

30. Recommendations Begin building your S2S business case today Develop an S2S blueprint with the end-state in mind Place any current programs, systems and processes into a larger source-to-settle context Look beyond savings Improve communication and collaboration with internal AND external stakeholders Embed the procurement staff in the business Copyright © 2014- Ardent Partners Ltd.

31. Thank You . Questions ?