In today’s business environment with pressures to cut costs and improve outcomes, doing the same thing is not enough. A key element identified by procurement experts is to utilise best in class technology and make it really work for you. Lorraine will explain what this means, and how you can start to benefit from your procurement transformation by benchmarking your current procurement processes.

1. Value Realisation, Raise your game by raising your line of sight
Lorraine Longato – Director Value Engineering, SAP Ariba Procurement LoB
20 October, 2015
APJ Customer Commerce Summit

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The Challenges Today
An Overview
Levers of Value
What is ‘Best In Class’ - why so important?
An Industry / Global View
What's Next…
Agenda

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We know this is an organisational problem

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1850
Industrial
economy
2020
Digital
economy
1990
Internet
economy
IT
economy
1970
$0.36T
$12.10T
All figures are in Trillions; 1990 international dollars; Source: Department of Economics, UC Berkeley, BAIN 8 MacroTrends Brief.
$27.50T
$90.0T
Gross
world
product
The Digital economy: is already the next economic revolution

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Source & Contract Request & Buy Invoice & Pay
A Network Overview
SuppliersBuyers
Enterprise spend visibility
Network collaboration
Cost reduction
End-to-end process management

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How do we go from this…To This – Fully Enabled Collaboration

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Analyse
Spend
Source
Contracts
Procure
Invoice
& Pay
Manage
Cash
Price Reduction
Cash Management
Process Improvement
Overview – Ariba Levers of Value
Value
Levers
THE WALL
Spend Compliance

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Levers of Value
Savings tied directly to better sourcing practices
and competitive bid process. Translates directly into
per-unit cost savings.
Savings associated with the elimination of “maverick”
spend and directly tied to % spend under management
(incentives, preferred pricing, etc.). Savings from error
reduction, and error identification-to-resolution cycle
time
Savings attributable to removing costs from the
process, including: people, paper, time, 3rd party
fees, legacy technology or rebates, Pcard
optimisation, redundant work, etc.
Capture funds through optimisation of early payment
discounts and DPO extension.
Price
Reduction
Spend
Compliance
Cash
Management
Process
Improvement
Cash

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The areas Ariba can help your CFO, CPO, CIO & Supply Chain
Stakeholders in your Organisation
Source & Contract Request & Buy Invoice & Pay
Price reduction
Spend Compliance
Process Compliance & Auditability
Cash Management
Supplier Collaboration

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Source: Best-in-class (BIC) and Average (AVG) sources: Hackett Group, Aberdeen, PayStream Advisors
80%
67%
25%
Ariba Best-in-class Average
Electronic Invoices
50 K
33 K
11 K
Ariba Best-in-class Average
Invoices per Full Time Staff
98%
85%
70%
Ariba Best-in-class Average
Touchless Processing
2%
12%
17%
Ariba Best-in-class Average
% Invoice Exceptions
Discount Capture
0.20%
0.48%
0.94%
Ariba Best-in-class Average
Contract Leakage
98%
70%
50%
Ariba Best-in-class Average
Best-in-Class Metrics

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Best-in-Class Business Outcomes:
Typical Results in Source-to-Pay
Cost Reduction
 Negotiate better pricing based on advanced negotiation tools
and insights into consumption history
 Savings on ad hoc purchases through demand management
and spot quoting
 Market competition to drive price reduction in unit costs
4-15% in average unit price reduction
Process Efficiency
 Drive sourcing productivity through deep spend analytics
and immediate supplier discovery
 Reduce supply chain operation costs (e.g. content
management, supply chain planning/execution and order
processing)
 Reduce cycle times and increase AP productivity through
invoice process automation
40-60% in operating cost reduction
Spend Compliance
 Control maverick spending, risk and fraud through use of
contracted suppliers and preferred specs with standard,
repeatable buying processes
 Ensure supplier compliance to preferred terms with
reconciliation of invoice, PO, receipt & contract
$20M in contract leakage per $1 billion of spend
Cash Management
 Avoid unintended cash flow drainage with a formalised
payment terms strategy
 Realise early payment discounts and/or margin sharing
via shorter invoice processing cycle times and greater %
of spend on discount or financing
 Capture rebates on high volume, low value spend through
card programs
$1-2M in savings per $1 billion of spend

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Best-in-Class Characteristics
© Ardent Partners - 2015

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Ariba business benefits for your organsaition
An invitation to identify your opportunity (Business Case Samples)
Industrial Manufacturing Bubble Chart
Consumer Goods Bubble Chart

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Procurement and Finance! Its Time to
shift gears from the old
manual transmission

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Gear changes in milliseconds, with no interruption in the flow of
power, to provide faster acceleration and low fuel consumption.

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Contact:
Lorraine Longato – Director Value Engineering ANZ
lorraine.longato@sap.com
An Invitation to you all:
Introducing Business Network Benchmarking Program 2.0
Thank You