Getting the business case right for any technology implementation is crucial to its future success. In this session, Todd Holcomb shares how Alliance Data prepared their business case, what difference this careful planning had on their initial e-invoicing campaign and key lessons learnt in their journey so far, including how to: - Understand your current P2P process, identify opportunities for automation and target your future P2P process - Elegantly gain the executive level buy-in and support to make your automation project a success - Seamlessly handle non-PO invoices elegantly with your electronic invoicing solution

1. Business Cases Are Not a Dark Art
The Science Behind the Numbers
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

2. 2
Agenda
 About Alliance Data
 Share Services Make UP
 Why A Business Case Driven Improvement Strategy
 How We Closed The Gap
• Baseline Performance
• Improvement Strategy and Objectives
• Results Realized Consequences of Inaction
 Business Case: Results Driven
 Results and Business Value Obtained
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

3. 3
Alliance Data: Three Businesses. One Focus.
The largest and most comprehensive provider of
transaction-based marketing and loyalty solutions
Total Enterprise Value: ~$8.0 Billion | Revenue: $3 Billion | Associates: ~9,000
Retail Services
Design, deliver and Multi-channel marketing Integrated credit and
manage both coalition services including database, marketing solutions
and stand-alone data, digital marketing
loyalty programs and agency services
Each business on its own is a Fortune 1000 company.
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

4. 4
Shared Services Organization
Technology
• PeopleSoft ERP
• Concur Non-PO Invoice
• OB10 – eInvoice and IDC
• OBIEE – Spend Analytics
Shared Services:
• Based in Plano, Texas
• Small Global Presence
• 24 FTE
Key Office Locations:
• Procurement Governance
• Dallas, TX
and Framework
• Boston, MA
• Invoice processing and
• Columbus, OH
Exception Handling –
• Toronto, CA
140,000 invoices
• EMEA
• Transitioning Invoice Data
• APAC
Capture (IDC) to third party
• Management of P-Card
KPI
program and equipment
leases
• Invoice per FTE: 4.5K
• Invoices on PO: 30%
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

5. 5
WHY A BUSINESS CASE
DRIVEN APPROACH
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

6. 6
Our Strategy
Required a fact based business case driven approach to
gain stakeholder buy in
Needed a solution to support a variety of needs
Lines of Business Corporate
 Invoice visibility to manage  Better visibility into invoice
the business & spend information
 Autonomy to make  Enhance ability to influence
purchase decisions LOB purchasing behavior
 Assurance of proper  Leverage scale
expense coding  Timely payment of
 Timely visibility into suppliers
expenditures and liabilities  Enhance overall supplier
 Maintain relationships governance
Customer Influencer
& Decision Maker & Enabler
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

7. 7
Where We Were
Establish a common baseline from which to measure
performance
 Unfavorable perception of AP
performance
Satisfactory
 100% paper based invoices
 Invoice receipt and processing varied by
Business Unit Metric ADS
 Inconsistent utilization of systems across Cost per Invoice $ 20
business units Invoices/ FTE 4.5K
 Elongated invoice processing cycle % manual invoices 86%
% paid in terms 48%
 Invoices “Past Due” when received for
processing Invoice cycle time 53 days
% Purchases on PO 32%
 Low productivity levels
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

8. 8
Our Future State Vision
Establish a performance goal to measure success
 Leverage technology to
reduce cost per transaction
 Improve efficiency in the Metric Goal
accounts payable operation Cost per Invoice $4
 Reduce duplication of effort Invoices/ FTE 20K
% manual invoices 35%
 Enhance data accuracy
% paid in terms 99%
 Secure invoice delivery Invoice cycle time 6 days
 Expand electronic invoice % Purchases on PO 70%
presentment for payment Benefits To be Realized
 Expand electronic payment $2-$3 million annual cost reduction
4-7% annual spend value savings
methods (ACH)
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

9. 9
HOW WE CLOSED THE GAP
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

10. 10
Plan on an Uphill Battle for Change
Construct a comprehensive business case with sound
assumptions and realistic fact driven estimates
 Business Leader buy in
 “Fact based” approach
 Overcome resistance to change
 Dispel fear of business disruption
 Quantify the “value” of change
 Demonstrate how value would be
received
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

11. 11
How We Used A Fact Based Approach
To Build A Business Case For Change
 Benchmarked our performance
$25.55
$19.57 $19.43
$14.10
$9.27
$7.72
$3.03
 Analyzed our transactions and Financial Services/Banking Industry
Alliance Data Systems
All Industries $1-$5 Billion Revenue
Top Performers Median Bottom Quartile
supplier base
 Developed a case for change
and gained executive support
 Economically viable
$2.3 million savings
 Communicated how change 169% ROI
would occur and gained  Better position for growth
Business buy in  Low execution risk
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

12. 12
What We Did to Execute Change
 Streamlined invoice
management processes
 Increased PO utilization
 Reduced invoice matched
Accounts Payable Invoice Processing – Best Practice Data and Workflow
exceptions 3rd Party Supplier Network
Manager
Electronic Purchase Order
Preferred Suppliers
Customer Invoice Validation Rules
Customer Invoice Validation Rules
(High Volumes of Electronic Purchase Order Acknowledgement
Recurring Activity)
Electronic Invoice
· Acknowledges Receipt of
Billing
Purchase Order Sysytem
· Delivers Goods/ Services Electronic Invoice
· Submits Electronic Invoice Server
Data From Billing System Supplier Network
Database
 Enrolled suppliers into
Paper Invoice
Web Invoice Invoice Imaging Valid
Other Suppliers Entry / OCR Invoices
(Low Volumes of Purchase
Infrequent Activity) Orders
· Delivers Goods/ Services
Paper
· Flips PO Into Invoice / or Paper Invoices Invoice Accounts Payable
Enters Invoice Via Web Exceptions PreMatched Web Invoice Invoice Processing
· Prints and Mails Invoice To PO Invoices Entry
Invoice · Manages and Resolves
electronic invoicing
Central Invoice Receiving Department Paper Invoice
Images
Codes Exceptions
Invoice Workflow Application · Enters and Processes
PeopleSoft Application Suite Check Requests
“Concur” · Codes /Approves
Specific Categories of
Electronic Invoice and Image Invoices for Payment
Release (Utilities, etc.
Invoices Procurement
Invoice Coding/ Release For Approval (In process)
Invoices Pay
to $
(Approved) Accounts Payable
Invoices ACH Payments
(Released for to Suppliers
General Ledger
Payment)
Employee
Web Invoice
Names
Access Accounting Code Approval Rules Human Resources
Employee Data
 Selectively outsourced paper
Data
Employees /
Requisitioners/ Buyers Account Code Validation Data
· Enters Receipt Info ( PO Employee & Organizational Data
Invpices) Receipt of Goods
· Reviews Invoice Image
/Services For POs
Authorizes Invoice Validity
Invoice
· Enters Accounting Coding
· Releases Invoice for Approval
Approval
invoice processing
Web Review &
· Reviews and Releases
Approval
· Reviews Invoice Approved Invoices for
· Approves or Denise Invoice Payment
· Notifies Requisitioner / Buyer of Accounts Payable · Selectively Audits Invoice
Web Review & Denial Reasoning Audit/ Control Processing Activity
Approval Manager / Authorized
Approver
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

13. 13
BUSINESS CASE:
ELECTRONIC INVOICING
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

14. 14
Supplier EIPP Enablement
Implementing change initiatives defined in the business
case to achieve our Vision
Incenting (EIPP), and providing disincentives for the continued
submission of paper invoices.
Incentives:
 Electronic invoices receive priority processing
 Electronic invoices are guaranteed to be paid within negotiated
payment terms
 Suppliers with ability to comply with EIPP requirements receive higher
component ratings in eRFX quote reviews and scoring
 Suppliers who participate EIPP program are listed as preferred
suppliers in internal publications/ tools
Disincentives:
 Paper invoices receive secondary processing priority
 Paper invoices are not be guaranteed to be paid within negotiated
payment terms
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

15. 15
EIPP: Multi-Wave Supplier Enrollment
Proactively managing initiatives to achieve sustainable
productivity improvements and change
Wave I Wave II Wave III Wave IV
Targeted Targeted Targeted Targeted Suppliers
Suppliers Suppliers Suppliers
Suppliers with 30 or Suppliers with 10 – Suppliers with 10 – New Acquisition: All
more invoices 29 invoices 29 invoices invoice Volume
Target Results Target Results Target Results Target Results
45% of invoices Additional 14% of Additional 8% of Additional 33% of
transitioned to invoices converted invoices invoices converted to
EIPP to EIPP converted to EIPP EIPP
Timetable Timetable Timetable Timetable
Jan – July 2012 Mar – Sept 2012 Apr – Oct 2012 May – Nov 2012
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

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EIPP Active Campaign: YTD April 30, 2012
120.00%
100.00%
80.00%
Status % Total
60.00%
40.00%
20.00%
0.00%
Non Campaign
Refer to
Sold * In Sales ** Potential Pending Total
Buyer ***
**** *****
Total Inv Vol % YTD Apr
31.24% 15.50% 7.06% 5.33% 40.87% 100%
30, 2012
Total Inv Vol % as of Jan
17.62% 12.88% 4.45% 4.65% 60.39% 100%
30, 2012
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

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RESULTS AND BUSINESS
VALUE OBTAINED
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

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What I Would have Done Differently
 Manage Expectations. High conversion rates take
time
 Cleansing of vendor master must be priority
 PO line validation helps reduce match exceptions but
does not eliminate match exceptions
 Do not underestimate the importance of matching
supplier PO invoice lines to PO’s.
 Strength of messaging is key
 Communicate, Communicate and Communicate
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

19. 19
Critical Factors That Made The Difference
There is no silver bullet …. Just make sure you have a well
thought out plan and execute on it.
Robust
Solution
Design
Communication Progress &
Well Defined
& Change Results
Execution
Management Monitoring
Plan
Baseline Detailed Well Presentation Plan Effective
(Multi Wave)
Performance Thought Out & Request for Execution and
& Benchmark Execution Sponsorship Implementation
Plan Business Effective of Plans Business Value
Leader and Program Generation
Unit Road Governance Communication
Business Show
Case for
Change
 Objective fact  Detail “Vision”  Active Executive  Developing  Relentless, well
based analysis of and “solution sponsorship the right managed change
performance designs” strategic execution
 Effective communication partnerships
 Benchmarking to  Robust action  Strong Program
of the issue, solution, to enable
quantify the plan and leadership and
and business value to execution
opportunity business case management
Business Leaders
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

20. 20
Business Results Achieved To-Date
 5% increase in spend under management / contract
 $5.39 reduction in cost per invoice
 27% improvement in annual accounts payable
operating cost
 10% reduction in invoice processing cycle times
 Eliminated lost discounts
 Improved service standards to business operators
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary

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Discussion / Questions
Contact Us:
Todd Holcomb
Director Supplier Services
Alliance Data
7500 North Dallas Parkway
Suite 700
Dallas TX, 75209
todd.holcomb@alliancedata.com
www.alliancedata.com
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary