Unleashing the Power of Analytics for Finance & Procurement

#AribaLIVE
Unleashing the Power of Analytics for
Finance and Procurement
Genaro Pena
Vice President SAP GRC Analytics EMEA
@genaropena
© 2014 Ariba – an SAP company. All rights reserved.
@ariba

Objectives of the Session Today
•
– Understand meaning: Improve visibility and
control over spend
– Automate & align procure to pay, optimize
cash management
– Identify ways to reduce risk, fraud and meet
compliance more efficiently
Help you understand how to use analytic tools, not only to analyze massive amounts of data
but also:…
Increase value
to your
organization
© 2014 Ariba – an SAP company. All rights reserved.2

High-Performing Companies
50% More Likely to Use Analytic Information Strategically
Have significant decision-support/
analytical capabilities
Value analytical insights to a
very large extent
Have above average analytical
capability within industry
Use analytics across their
entire organization
Low PerformersHigh Performers
Source: High Performing companies out-perform their industry in terms of profit, shareholder return and revenue growth. Competing on Analytics, Thomas Davenport

Analytics
Analytics Analytics
Business
Applications
Business
Applications
Business
Applications
Business
Applications
Analytic
Capabilities

Analytics Solutions from SAP
One Platform: Integrated, Standardized and Simplified

Evolution of Analytics: Help to Analyze, Predict
and Act

The Proof Is in the Numbers
Data Driven companies that couple
advanced analytics IT solutions with
consistent organizational practices
enjoyed 4% higher productivity and
6% higher profitability.
Andrew McAfee, Principal Research
Scientist at the MIT Center for Digital
Business
“
”

Graphics: grasundsterne GmbH
Cloud
Mobile
Technology Trends Evolving to Make Consumption of
Analytics Easier

Enabling the Enterprise-class Agile
Visualization
Customers want:
AGILITY for business users
+
The ability to SCALE and GOVERN BI strategically
across the organization.
AgilityforBusinessUsers
Enterprise scale and governance

How Analytics Have Evolved to Deliver
Collective Insight
End-to-end
Easy adoption
Fast
Implementation
Business
focused

SAP Lumira
all Data at Your Fingertips

SAP Lumira: Mobile BI Tailored Experience
Swipe, Tap, Zoom to Answers on the Devices
of Your Choice

Unleashing the Power of Collective
Insight in Procurement
ENGAGE PREDICTVISUALIZE
Instantly predict market trends and innovate
new product and services quicker
Predict demand or supply across your entire
network immediately
Provide exactly the right offers and service levels
to every supplier/vendor
Understand what the market is saying about
your suppliers & vendors, right now
Imagine the potential…

Emergence of a New Class of
Enterprise Applications
• Through 2015, analytics applications will
remain one of the fastest-growing
categories of BI and business
applications.
• Traditional approaches to BI struggle to
meet the increased demand for the
analytics insights…forcing the adoption
of packaged analytic applications…
…embedded with “best practices and
deployment expertise.”
“The Top Five Concerns in the Analytic Applications Space for the Coming Year,” Gartner, December 2009”
“
”

SAP Spend Performance Management
Gain full spend visibility
– Automated data capture from SAP and
non-SAP software
– Data accuracy for faster insights
Increase spend under management
– Set up performance targets
– Collaborate effectively to act on insights
Rapidly identify savings opportunities
– Find and act on savings potential
– Proactively monitor contract compliance
Reduce supplier risk
– Pinpoint supplier risks and supply concentration
– Find and act on qualified alternate suppliers
SAP
Global
Ledger Purchasing
cards
Travel and
expense
SAP NetWeaver
Business
Warehouse
SAP
ERP
SAP BusinessObjects
Data Enrichment and Classification OnDemand
* Note: SAP BusinessObjects Data Enrichment and Classification OnDemand solution
separately priced.
Maximize savings – minimize supplier risk
16

SAP BusinessObjects Spend Performance
Management for iPad

Analytic Solutions from SAP: Integrated,
Standardized and Simplified

Driving Business Results through Financial Excellence
From the CFO to a Broad Set of Finance Teams
VP of
Finance
Head of
Finance
Operations
Chief
Compliance
Officer
Corporate
Treasurer
Head of
Corporate
Reporting
FINANCIAL
PLANNING AND
ANALYSIS
• Develop and
Translate
Strategy
• Planning,
Budgeting and
Forecasting
• Profitability and
Cost
Management
• Monitoring and
Reporting
ACCOUNTING AND
FINANCIAL CLOSE
• Accounting
• Entity Close
• Corporate Close
• Reporting and
Disclosure
• Financial Close
Governance
TREASURY AND
FINANCIAL RISK
MANAGEMENT
• Payments and
Bank
Communications
• Cash and
Liquidity
Management
• Debt and
Investment
Management
• Financial Risk
Management
• Commodity Risk
Management
COLLABORATIVE
FINANCE
OPERATIONS
• Receivables
Management
• Collaborative
Invoice to Pay
• Travel
Management
• Financial Shared
Services
ENTERPRISE RISK
AND COMPLIANCE
MANAGEMENT
• Enterprise Risk
Management
• Controls and
Compliance
Management
• Access
Governance
• International
Trade
Management
• Fraud
Management
• Audit
Management

Receivables Management - Process Overview
Evaluate
customer
credit and
book sales
Issue bills
and
invoices
Manage
disputes
Manage
collections
Service
customers
 Define corporate
customer credit
policy
 Create sales order
 Real-time automatic
credit worthiness
check of sales order
 Evaluate credit
blocked sales
orders (exception
handling)
 Evaluate customer
credit risk exposure
across all
geographies
1 2 3 4
 Produce aging
reports, identify
overdue accounts,
and calculate DSO
 Execute collection
activities
 Ensure timely
recording of
payments and
management of past-
due accounts
 Automatic
processing of
electronic bank
statements
 Automatic check
processing
 Automatic creation of
disputes for invoice
underpayments
 Automatic, strategy
based prioritization
of accounts for
collections
 Monitoring success,
of collection activities
 Timely processing
and resolution of
disputes: workflow
based, auditable,
automated
 Automatic allocation
of collection worklists
to processors /
teams
5
 Create bills and
invoices
 Present bills and
invoices
electronically
 Enable online
inquiry
 Receive electronic
payments
 Process customer
inquiries regarding
invoices and
payment status

Receivables Management
Example for a Business Case
We Can Prove:
SAP lowers DSO…
Why…
Collections Management Professional support for collections specialists – more calls means more collections
Dispute Management Automated workflow with escalation makes sure no dispute gets lost in the process – disputes closed faster
Structured analysis capabilities means dispute causes can be identified and eliminated – fewer disputes
Example: 500M € company 1 day DSO = 500M / 365 = 1.4M € per day
Savings (cost saved or financial earn) = 1.4M * 5% interest = 40K €
Revenue 1 DSO 5% Interest
Rate
5 DSO 5% Interest
Rate
10 DSO 5% Interest
Rate
€ 50,000,000 € 138,889 € 6,944 € 694,444 € 34,722 € 1,388,889 € 69,444
€100,000,000 € 277,778 € 13,889 € 1,388,889 € 69,444 € 2,777,778 € 138,889
€500,000,000 € 1,388,889 € 69,444 € 6,944,444 € 347,222 € 13,888,889 € 694,444
€1,000,000,000 € 2,777,778 € 138,889 € 13,888,889 € 694,444 € 27,777,778 € 1,388,889
€5,000,000,000 € 13,888,889 € 694,444 € 69,444,444 € 3,472,222 € 138,888,889 € 6,944,444

SMARTER, FASTER, SIMPLER
RECEIVABLES MANAGEMENT

Use Case: Receivables Management
Unlock Historical Data
Utilize years of historical financial
and customer data
Apply Predictive
Analyze customer traits and past
behavior to better determine payment
patterns
Prioritize Collections
Proactively manage customer
payments through prioritized
collection worklists
Other Data Sources
(Internal or External
CRM
A/R ARCHIVE
(Years 3-7)
SAP FI – A/R
(Years 2-Current)
SAP PREDICTIVE
ANALYSIS
SAP HANA
In-Memory
Transaction & Analysis directly
In-Memory
SAP
RECEIVABLES
MANAGEMENT
Billing and
E-Invoicing
Dispute Resolution
Collections
Management
Credit Evaluation and
Management
Improve Cash Flow , Decrease DSO and Reduce Collections

Get More Visibility
on Sources of Cash
Ensure liquidity and
reduce risks
Increase efficiency and
optimize Working Capital
Analyzing global bank
balances and cash positions
based on data from SAP and
non-SAP systems Create more
accurate mid-and long-term
cash forecasts via real time
analysis
Leveraging Smart Business to
gain real time information in
different places to get full
picture
Monitor KPIs and alerts to
mitigate risks and trigger
actions
Wisely use money, invest
surplus part to get return, and
reduce financial cost
Supporting group treasury
functions to ensure liquidity and
optimize financing activities.
Smart Cash Management, powered by
HANA

SAP Smart Cash Management on HANA
SAP Cash Management on HANA
 Supporting the trend of centralization of Treasury
functions
 Cash Positions - Group-wise 0-7 days Cash Positions
with integration to mid / long term Liquidity Forecasting
 Cash Flow Analysis, – collected from heterogeneous
systems using real-time multi-dimensional analytics
powered by HANA
 Central Bank Account Management including Overdraft
Limit Analysis, Bank Risk Analysis including Signatory
management and workflow capabilities
 Smart Business for Cash Managers - analyzing big data to
monitor most critical KPI’s using a mobile device

Home
Cash Manager
Bank Statement
Success Rate
Feb 1st 2014
95.0%
Cash Pool Amount By
Deficit - Feb 1st 2014
(M€)
-26.8
Bank Risk
Feb 1st 2014 (M€)
15.7
Cash Position
Today (M€)
26.0
Liquidity Structure
Feb 1st 2014 (M€)
Current Account 1.2
Investment 0.78
Debt 1.4
Cash Flow
Week-to-date (M€)
Inflow 200.2
Outflow 192.5
Liquidity Forecast
Whole Company, In 30 Days
1,98M
2,47M
Feb. 1st, 2014 24%
Payment Statistics
Today (M€)
Accepted By Bank 200.2
In Approval 42.5
Rejected by Bank 55.0
Overdraft Limit
Feb 1st 2014 (M€)
Available 200.2
Consumed 42.5
Exceeded 55.0

Cash Position 
Cash Position by Bank & Currency 
26,046,372.00EUR

 
Filtered by Region (Europe), by Country (France), by Currency (All), by Bank (All), by Company (0001) 
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 11,000,000
Cash Position
HSBC
France
RBS France
CITI Bank
France
Deutsche
Bank
France
BNP
Paribas
France
Bank of
France
Laikiash
EUR
USD
GBP
EUR
USD
EUR
USD
EUR
USD
EUR
USD
EUR
USD
EUR
 
Value
Drill Down by Currency
EUR 1,246,372.00
Drill Down by Region
Drill Down by Currency & Country
Drill Down by Bank
Drill Down by Bank & Currency
Navigate to Bank Account

Analytic Solutions from SAP: Integrated,
Standardized and Simplified

Customer Pain Points Addressed by GRC
in Procurement and Finance
SAP GRC
Errors
Cost of
-Risk Mgmt.
-Internal
Controls,Internal
Audit,…
Operating
Cost/
Performance
Improvements
FraudAbuse, Waste Compliance
Risk-Adjusted
Management
GRC Solutions SAP Risk Mgmt SAP Process
Control
SAP Access
Control
SAP Audit MgmtSAP Fraud Mgmt
Business
Process
Efficiency:
e.g. monitor
key data
for
-DSO,
-DPO,
-DII, …
Money,
Time and
Resources
for these
GRC
business
process
Unintentional
Activities
e.g.
-Sales:
Close Foreign
Currency Deal
-Treasury:
Forget Hedging
Transaction
Waste
e.g.
-Travel Policy
Fraud
e.g.
-Lack of Segregation of
Duties
-(One-Time) Vendor
Fraud
-Conflict of Interest
Anticipate and Influence
events before they happen
e.g. Don’t report a risk at the end of
FY when it is certain to happen, but
at the beginning with
mitigation action and cost
e.g. allocate resources, budget
and time to the highest risks
e.g. risk-based approach
to Internal Audit
End-to-End
Risk and Control
System
Continuous
Monitoring
Proactive

Support decisions and promote
accountability with insightful
analytics and sign-off
Perform automated,
exception-based
monitoring of ERP systems
Evaluate control design and
effectiveness; raise and
remediate issues
Perform periodic risk
assessments to determine
scope and test strategies
Document controls and policies
centrally; map to key regulations
and impacted organizations
SAP Process Control for Procurement and Finance
Ensure effective controls and on-going compliance

Controls Testing…
Evaluate
Manual Test and Assessments
Manual
Test &
Assessmt. Workflow
Send Test Plan
Do Manual Work
….
….

Example: Manual Test of Effectiveness
Offline Version (Via eMail/Adobe Interactive Forms)

… And Automated Controls Monitoring
Evaluate
Manual Test and Assessments
Manual
Test &
Assessmt. Workflow
Automated
Monitoring
Legacy Apps

Continuous Monitoring / Auditing
Examples: Procure-to-Pay Process
 Detect duplicate vendor invoices; detect payments made without reference documents
 Detect large vendor outgoing payments made in the last 60 days
 Detect outgoing payments where payment address or bank data is allowed to be changed while making payments
 Detect vendors and employees with the same bank account information
 Indentify vendors that are marked for deletion but yet not blocked
 Identify vendors to whom terms of payment are set as „payable immediately“
 Identify vendors where cash payment is the payment method assigned
 Monitor change to alternate payee and other sensitive vendor master fields
 Identify cases where the purchase order value is less than the goods receipt value
 Detect purchase orders that were created on the same day as the goods were received
 Identify purchase orders that were created on or after the day the invoice was received
 Identify split purchase orders
 Indentify cases where quantity orderded in the purchase order is greater than the quanity requested in th purchase
requisition
 ...

Fraud, Waste, and Abuse Hit All Industries
“Survey participants estimated
that the typical organization
loses 5% of its revenues to
fraud each year. Applied to the
2011 Gross World Product, this
figure translates to a potential
projected annual fraud loss of
more than $3.5 trillion”
REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE 2012,
ACFE

 Procurement
 Sales
 Finance
Fraud Is a Cross-industry Topic
• A significant portion of the corruption schemes
associated with conflict of interest cases occur in
Procurement departments.
• Due to the nature of the different schemes, other
areas usually involved are Sales and Finance.
• The industries most commonly victimized in our
current study were the banking and insurance,
government and public administration, and
manufacturing sectors.
SOURCE: REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE 2012, ACFE

What does it mean for an organization?
Your key qualifying questions
 How does your org identify fraud before damage occurs?
 How do you keep track with changing fraud behaviors?
 How do you cope with false positive signals?
 Are you able to check all transactions for fraud and ensure no
business impact?

SAP Fraud Management
High-level Overview
Prevent fraud by stopping fraudulent business
transactions and process optimization
Detect fraud in real time within business processes
and by mass detection by multi-rule strategies
Investigate fraudulent transactions efficiently with
alert management capabilities and network
analyzer tool, and case management
Improve performance by real-time calibration
and simulation on current and historical data
Powered by SAP HANA – high performing,
configurable and scalable standard solution

SAP Fraud Management Key
Differentiators
Data mining and
documentation
 Integrated case management
for investigation,
documentation and audit
compliance
 Native full text search
 Graphical search
modeling
Predictive Analytics
 Unleash the potential
of Big Data
 Intuitively design and
visualize complex predictive
models
 Bring predictive analytics to
everyone in the business
Big Data
 Analize huge data volumes in
miliseconds in real time
 Powerful simulation and
calibration tools
 SAP and non-SAP
systems
10101010101
01000101001
10010110110

Providing More than 15 Predefined Scenarios to Detect
and Prevent Fraud in the Procurement Processes
 Address search (PEP list search)
 High-value keyword search in invoices
 Vendors or partners located in high-risk countries
 Irregularities in purchase orders and invoices
 The invoice receipt quantity is greater than the goods received
quantity. In purchasing, it is possible to defraud by invoicing a higher
quantity than is actually received.
 The amount paid in an invoice is greater than the amount shown in
the relevant purchase order item.
 Partners appearing in purchase orders and residing in high-risk
countries can be flagged, where high-risk countries are those
identified in the lists published by Transparency International (for
example, http://transparency.org/cpi2012/results).
 Irregularities in payments to vendors
 Split payments’: Many small payments to a vendor, when the sum of the
payments would exceed a limit on such purchases.
 There are invoices without corresponding purchase orders.
 Payments were made to banks in a country other than that of the vendor in
the invoice.
 Employees have the same bank data as regular vendors.
• Frequent changes in the master data of a vendor (bogus
business, flip-flop payee)
 The bank data of the vendor has been changed and then reverted to
the original data (flip-flop bank data).
 The Alternative Payee field has been changed and then reverted to
the original state (flip-flop payee).
 Conflicts of interest in connection with new vendors
 Rapid growth in volume of business with your organization; and
 Purchasing approvals granted by a very limited number of
employees.
 Potentially suspicious activity with respect to one-time
vendors
 There are many invoices from the one-time vendor; or
 There are invoices of a one-time vendor that have been posted to the
account of a regular supplier, and these invoices exceed a threshold
in invoice value.

• Monitor key performance indicators
• Create management reports
• Manage alert workload
• Investigate & evaluate cases
• Document & decide remediation actions
• Release business transactions
• Execute mass and real-time detection
• Generate alerts
• Stop suspicious business transactions
• Activate detection strategies
• Simulate and calibrate
SAP Fraud Management. Key Features
Achieve effective and efficient fraud management
• Prepare data acquisition
• Define detection and investigation objects
• Define rules & predictive models
SAP HANA

Just get started!
Experience SAP Lumira & Fraud
Management
1
Try it with your own data!
Personal Edition sap.com/trylumira
+ free trial
– search “sap fraud management”
2
… in the cloud
https://cloud.saplumira.com
http://www.sap.com/pc/tech/in-memory-computing-
hana/software/fraud-management/index.html
3

Thank You!
Contact information:
Genaro Pena
Vice President EMEA, GRC Solutions
genaro.pena@sap.com

© 2013 SAP AG. All rights reserved. 59
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Unleashing the Power of Analytics for Finance & Procurement

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