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Smarter Data Discovery for ProcurementUtilizing Cognos and Watson Analytics

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Agenda

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EXAMPLES

THE NEED

POSSIBILITIES

Lydia Tilsley – Business Analytics Manager,

Corporate Operations Supply Chain Management, United

Technologies Corporation

2

A global leader in building systems and aerospace industries

We invent new and better ways to keep people safe, comfortable,

productive and on the move

Moving the World Forward

Iconic brands delivering the

smart, sustainable solutions

the world needs

6

Our BrandsOur Brands

52% 36%

12%

Commercial

& Industrial

End Markets

56% 44%

Original

Equipment

Manufacturing

Sales By Type Sales By Geography

38%

27%

20%

15%

Asia

Pacific

Europe

United

States

Other

7

Balanced Across Markets & GeographiesBalanced Across Markets & Geographies

Military Aerospace

& Space

Commercial

Aerospace

Commercial

& Industrial

Original

Equipment

Manufacturing

Aftermarket$56B 2015 net sales

UTC Supply ChainUTC Spend

8100,000+ suppliers

~5-6K Supply Chain Employees Globally

Supply Chain Enterprise System

Tools & Technology

Non-Product

Product

Consolidated

Supplier Data

Supplier Portal

Supplier Insights

Spend Analysis at UTC

User adoption – go to tool for all spend requests

Time savings – from weeks to minutes

Insights –

• Where can we find savings

• Target days to pay1 to 30

31 to 6061 to 90

> 90IMMEDIATE

Compliance to Payment Terms

FALSE

TRUE

Insights on the horizon

• Spend (over various periods of time) by commodity, by region, by country, by division, by site etc.

• Payment terms by commodity

• Contract compliance and long-term agreement coverage by commodity

• Days Paid Outstanding by commodity

• Spend by supplier - with trends

• Diversity spend

IBM Procurement

Piero Giangrasso, Project Team Lead, Web

Applications & Collaboration, IBM Procurement

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

Capital / Mfg Equipment

Other

Travel

Services-Complimentary Workforce2

Telecommunications

Logistics

Networking / Connectivity

Software

IT Products/Services/Maintenance

Facilities / Maintenance and MRO

Services-Corp. and Professional (CPS)

Services-Technical Staff / Services

Marketing and Communications

S&GP Segmentation$Billion

$4.4B of production spend

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IBM Global Procurement

S&GP41%

IPS48%

Logistics2%

Production 9%

$50B IBMProcurement Managed

Spend - 2015

Active suppliers: 14k

Spend - Top 50

suppliers47%

The Digitization of Procurement

3

Procurement functions are a rich source of data

740KPurchase Orders

2MInvoices

14KSuppliers Managed

148KActive Contracts

$50B Spend Managed

22K Sourcing

Events

IBM Procurement

Cost Management

Contract Management

Supply Chain Risk & Social

Responsibility

Supplier Selection

Material and Labor Sourcing

Supplier Relationship Management

Accessing this data unlocks benefits

Innovation

Quality

Efficiency

Accuracy

Speed

Flexibility

Leverage Emptoris data to solve existing business problems

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1. Extract Emptoris data to our Procurement Data Warehouse

• Enables linkage to all other IBM Procurement data.

• Spend by Contract

• RFx spend vs PO data

2. Cross Suite reporting within Emptoris

• Solves tactical business problems

• Inactive users with activity across Emptoris modules

• Non-Master supplier report

• User Role across modules

Req

Data

ERP Data

Emptoris Data

Central

Data Mart

Information is Organized

Into a Data Mart

Watson Analytics in Procurement

Key Values

Predictive and Prescriptive

Analytics

Customized Reporting

Real-Time Data

Maintenance

Common use cases

Payment Term

Analysis

Payment Term

Analysis

Compliance

Analytics

Compliance

Analytics

Master Data Management Analysis

Master Data Management Analysis

Transaction Automation Analysis

Transaction Automation Analysis

Risk and Fraud

Analytics

Risk and Fraud

Analytics

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POSSIBILITIES

Vijay Chougule – Offering Manager,

IBM Emptoris Spend & Procurement Analysis

Enabling Insights at various levels

Deeper Insights at individual spending dimensions

Summary level Insights to your business Smarter Insights to KPIs

I need to holistically track and monitor

my Spend against industry benchmarks

I need to be able to slice-n-dice the

spend data up-to the transaction level to

mine opportunities

I want to understand what best

influences outcomes by performing

smarter data discovery

CPOs / Procurement Executives Spend Data Analysts Category Managers

Assembling a Dashboard: Cognos Analytics

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19

20

21

Procurement Insights

Cognos Analytics would

be available with

Emptoris by 4Q2016*

Explore Watson Analytics TODAY!

Engage with our services further to

identify right content

23

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Vishnu Tadepalli– Sourcing Consultant, IBM

Procurement Services (IPS)

EXAMPLES

Key Values

Predictive and Prescriptive Analytics

Customized Reporting

Real-Time Data Maintenance

Common Use Cases

Payment Term Analysis

Compliance Analytics

Master Data Management Analysis

Transaction Automation Analysis

Risk and Fraud Analytics

Watson Analytics in Procurement

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Spend Analytics

Reduce3 – 7% procurement cost

Spend Analytics for consolidating company-wide data, establishing baselines and anchoring strategic

sourcing decisions

Historical data , Quarterly

Transaction Automation Opportunity Analysis

Increased Automation by 25%

Provides deep Opportunity Analysisof current spend for identification of opportunities to enable one or more

Advanced Transaction Automation Solutions to deliver faster transactions while drastically improving compliance

and reducing unit prices.

4 weeks, Historical data , Half yearly

Supplier Payment Terms

Optimization (SPTO)

Working capital savings up to 0.5%

SPTO for increasing working capital, and reduction in cost of capital with

optimal usage of standard & discounted payment terms

3 - 4 weeks, Historical data , Quarterly

Occupational Fraud &Abuse Discovery

Identification of potential Risk suppliers/ employees or

transactions

Occupational Fraud analytics to mine through transactional data to identify potential fraud in procurement to payment process & in T&E Claim

Process

4 - 6 weeks, Historical /Current data , Half yearly

Compliance Analytics

Increased Process Compliance & Effectiveness

Analytics solution enables organizations in the process of monitoring and analyzing process compliance &

plugging savings leakage

3 - 4 weeks, Historical data , Quarterly

Master Data Management

Updated Master data with cleansed, standardized,

enriched data

Analytics solution checks the health of the master data and facilitates

normalizing, cleansing and enrichment of master data

12- weeks, Historical data , Yearly

S2P Help Desk Analytics

Increased Customer satisfaction

Analytics solution measures the type of queries received, resolution

provided , C-Sat Score to provide insights and recommendations to

increase C-Sat Score

2 weeks, Historical data , Monthly

S2C & P2P Process - KPI

Analytics

Increase process efficiency

and effectiveness

Analyze , measure and manage the

essential KPI’s proactively and spot the

problems influencing the finance of the

company

2 weeks, Historical data , Monthly

Watson Analytics in Procurement

Savings Identified for IPS Clients using Advanced Analytics

Potential

Benefits

$4M$13MPotential

Benefits

Potential

Benefits

$8M

Global Telecom Service Provider

� Vendor consolidation opportunities

across categories, potential

savings of $13M identified

� $ 0.6B Non-PO spend can be

potentially moved to contracted PO

spend leading to

- Better control and visibility

- Increased contracted volumes with

vendors and hence price reductions

Global Semiconductor Manufacturing

Compliance Issues identified in Supplier

Payment Terms

Impact on Discounts

� $0.2M additional discounts are available

due the migration in Payment terms

Impact of Non Compliance on Payments

� $295M (50%) Non compliant spend is

assessed to have a Bad impact on the

payments

FMCG major in NA

�Supplies are non-compliant as against

orders placed

� 82% of the total over-deliveries are

made by four vendors

� 43% of the total under-deliveries are

made by ten vendors

� 25% of all invoices accounts to 49% of the amount blocked

�A total of $27M on blocked cash for

business is contributed by the top

eleven vendors

Supplier Payment Terms Optimization Dashboard

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IBM Global Process Services

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IBM Global Process Services

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IBM Global Process Services

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Try Cognos and Watson Analytics for FREE!

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Thank You!