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Raise your game by raising your line of sight
How procurement IS raising the bar in the technology landscape
Lorraine Longato – Director Value Engineering, SAP Ariba Procurement LoB
2 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
The Challenges Today
An Overview
Levers of Value
What is ‘Best In Class’ - why so important?
An Industry / Global View
What's Next…
Agenda
3 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
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
4 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
$65 trillion
Global business trade by 2020
2.5 billion
Connected people on social
networks by 2020
75 billion
Connected devices by 2020
An era of unprecedented change fueled by this connectivity
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Connectivity is everywhere.
Innovators are connecting people, devices and business
Société de Transport de Montréal
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Our digital economy is…shared
Use only what we need; pay as we go
Our digital economy is…personalised
Better convenience, more choice & value
Our digital economy extends far beyond efficiency
benefits, it fuels and accelerates dramatic growth
7 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
Source & Contract
Request &
Buy Invoice &
Pay
Complete enterprise spend visibility and process
orchestration
Network enabled supplier collaboration and content
providing real-time insight
Reduce spend by increasing compliance through
automated processes
End-to-end process management for procurement
related activities
A Network Overview
Suppliers Buyers
Enterprise spend visibility
Network collaboration
Cost reduction
End-to-end process management
8 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
How do we go from this…
9 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
How do we go from this… To This – Fully Enabled Collaboration
10 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
Challenges Remain in Supplier Engagement
PAY PROCURE SOURCE
Higher costs
Poor compliance
Source & Contract
Missed sales opportunities
Limited visibility Wasted time and resources
No audit trail
Manual paper-based
collaboration
Outdated catalogs
Procure & Collaborate
Mail, phone, face-to-
face
Exceptions
Billing errors
Delayed and wrong payments
Invoice & Pay
INVOICE & COLLECT FULFILL SELL
BUYER PROCESSES
SELLER PROCESSES
Source & Contract Request & Buy Invoice & Pay
Source & Contract Request & Buy Invoice & Pay
11 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
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
12 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
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
13 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
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
14 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
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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Cost Savings
Only .2% contract
leakage
60 – 80% operational
cost takeout
$2M savings for every
$1B in spend from
discount execution
$3 – $20 savings per
document
Seller Benefits
Average DSO
reduction
of 5.6 days
Increase of annual
sales
by 15%
98% customer
retention rate
Business Results
+5 – 7
Net Income Impact %
Productivity
66% decrease in
approval times
98% touch-less
processing
8x more invoices
managed per FTE
Source: Billentis, The Hackett Group 2011 P2P Benchmark Report, Aberdeen, and Ariba Results
The Impact of Networked Business
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SAP Ariba understands spend in all industries
Industrial Manufacturing Bubble Chart Mining Bubble Chart Banking Bubble Chart Consumer Goods Bubble Chart
Higher Education Bubble Chart Technology Bubble Chart Utilities Bubble Chart Healthcare Bubble Chart
18 © 2015 SAP AG or an SAP affiliate company. All rights reserved.
Thank You
Contact:
Lorraine Longato – Director Value Engineering, SAP Ariba Procurement LoB
[email protected] Phone: +61 448 749996
Pending Participation Program
• The 2015 Global Procurement Benchmark Initiative – We invite you All…
www.sap.com , www.ariba.com Ariba is an SAP Company ®
