SAP - Open Text

SAP Invoice Managementby Open TextInvoice reconciliation done efficiently

1. The Need to Optimize the Cycle2. Value Proposition of SAP Invoice Management by Open Text

2.1 Strategic Arguments2.2 Functions and Features

3. Achieving Results with SAP4. Summary

Agenda

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1. The Need to Optimize the Cycle2. Value Proposition of SAP Invoice Management by Open Text3. Achieving Results with SAP4. Summary

Agenda

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Does this scenario look familiar?

CEO“Our cost of capital andmaterial costs are too high.”

CFO“My cost of accounts payables isnot state-of-the-art and neither isour cost of goods purchased.”Financial Analyst

“Use of cash discounts islow, cost of capital is rising.”

Supplier“Doing business with thatcompany is difficult as theyare unable to tell when theypay their invoices.”

Accounting“We cannot say which invoices we have receivedacross different departments and we have nocontrol over the time-to-payment.”

Purchaser“We could lower the cost of goodsif we could make systematic useof cash discounts.”

Accounts Payables“We spend more than 50% of ourtime responding to calls andemails from suppliers requestingstate of invoice or complainingabout late payment.”

Is this organization prepared to:

Increase process efficiency

Reduce finance operating costs

Make use of cash discounts

Is this organization prepared to:

Increase process efficiency

Reduce finance operating costs

Make use of cash discounts

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Poor vendor relations

Excessive cost per invoice

Difficulty in preparingaccruals

Fragmented stand-alonesystemsNo workflow or datamanagementNo integration withGeneral Ledger (GL) orAccounts Receivable(AR) systems

Inadequate APprocess control(compliance risk)

Limited visibility of liabilities

No insight into processbottlenecks

Fragmented andinefficient

Paper-based and labor-intensive

Lack of standardization

Typical barriers to efficientAccounts Payable (AP) operations

Result:

High Cost ofFinance Operations

Bad Vendor Relations

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Result:

Efficient OperationsReduced Costs

Improved VendorRelations Integrated systems and

processes

Global visibility intoliabilities

Consistent payment behavioracross countries andorganizations

Systematic, collaborativeapproach to collections anddisputes

Standardization andgreater automation

Streamline manual, paper-based processes

Workflows that minimizereconciliation time

What it takes to optimizethe AP invoicing process

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SAP Invoice Management by Open Text value:Process optimization

Issue addressed SAP Invoice Management Value achieved

Compliance - InadequateAccounts Payable ProcessControl

Implement system-driven processbased on pre-configured business rules

Extensive reporting available on theprocess. Complete audit trail available

Excessive Cost-per-Invoice Optimized process solution ensuresleverage of cash discounts, eliminatesdata entry errors and duplicate invoices

Reduction in AP cost, structured usageof cash discounts, significant staffredeployment

Limited Visibility of Liabilities Status of all invoices received is visiblethrough one screen

Improved ability to plan cash demand.Invoices are processed accurately andpromptly, so that they are always paidper the cash management design

Difficulty in PreparingAccruals

Centralized, controlled invoiceprocessing assures that invoiceaccruals are determined effortlesslythrough liability reporting

Shorter closing cycles

Poor Vendor Relations Invoices are processed accurately andpromptly – vendor payments aretriggered on time

Vast amount of cost caused by statusrequests and complaints from vendors iseliminated. Procurement can negotiateimproved pricing and payment terms.Credit ratings improve through on-timepayment

Manual Invoice Processing is inefficient and posesserious risk to your business operations

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Time-consuming historical research

Belabored vendor communications

Documentation and other requests for additional information from multiple parties

Manual routing

Labor-intensive monitoring and updates on unpaid invoice status

Scalability through headcount

The result:

Inefficient, labor-intensive processes associated with the receipt-to-pay process

Inability to optimize cash-flow and vendor relationships

Inability to improve overall business transparency for more accurate financial reporting

Lack of overall process control introduces compliance risk

Manually managing invoices processes drains both internal andvendor resources:

Benefits of fully optimized andautomated AP process

Pay problem invoices on timeStreamline and automate communication within the organizationPush responsibility to appropriate individuals

Reduce cost per invoice and grow volumes without adding peopleSupport consolidated shared service AP processing centerCapture early-pay discounts and eliminate duplicate invoicepayments

Implement paperless processingEliminate data entry and rework due to keying errorsInstill consistent worldwide standardized processes and trainingMove from doing busy work to analytical work – reduce errorsAutomate follow-up and escalation

View total liabilities accuratelyAccess process status immediatelyImprove accrual and cash flow decisionsUtilize metrics for root-cause analysisAssist with Sarbanes-Oxley / internal controls compliance

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Improve AP process

Reduce cost

Become more efficient

Increase decisionmaking ability

Overcoming barriers in the financial supplychain becomes a competitive differentiator

Financial Institutions

Customers Suppliers

Treasury

Physical Supply Chain

Credit2Cash

Financial Supply Chain

Invoice2PayManaging Cash

Leading organizations will use the Financial Value Chain to improve theefficiency of the Finance function and to optimize working capital.”

John E. Van DeckerGartner, 2006

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Sources of Cash Uses of Cash

Transparent invoice reconciliationbecomes a competitive differentiator

SAP Invoice Management by Open Text allows customers to:Improve on measurable KPIs like discount leverage, cost of capital, cost per invoiceand bank transaction feesStreamline internal and external communication regarding invoicesEstablish closer cooperation with suppliers

…IT Barriers

…Process Barriers

…Organizational Barriers

…Insight & Control Barriers

Helps to overcome…

SAP Biller Direct

InvoiceReconciliation SAP Bank Communication

Management

ReceiveInvoices

ResolveExceptions

Settle &Pay ReconcileApprove

Invoices

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Invoice Management is the Most CommonlyShared Finance Process

AP / Invoice Management is the most commonlyshared or outsourced Finance process

38%

38%

18%

29%

33%

44%

29%

38%

50%

68%

64%

65%

44%

50%

50%

50%

50%

50%

58%

58%

58%

67%

67%

67%

75%

83%

Data analysis & reportingtools

Data warehouse

Internet

KPI Dashboard and ServiceLevel Management tool

OCR

e-Invoicing

Intercompany re-conciliationtools

Intranet

ERP

Imaging / Scanning

Workflow

Automatic matching &payment allocation tools

Continuous improvement /quality program

World-Class

Peer Group

Source: Hackett Finance SSC Study Source: Hackett Finance SSC report 2005

Projected finance processes covered byShared Service Operations within 2-3 years

27%

43%

48%

50%

52%

52%

64%

68%

73%

73%

73%

73%

80%

86%

Other entry

Customer billing

Tax filing and reporting

Credit management

Frieght payment

External reporting

Cash management

Collections

Cost accounting

General accounting

Travel & expense

Fixed assets

Accounts receivable

Accounts payable

Peer Group

+4

+5

+3

+5

+7

+7

+4

+5

+0

+4

+2

+3

+4

+0

(multiple answers possible)

Agenda

1. The Need to Optimize the Cycle2. Value Proposition of SAP Invoice Management by Open Text

2.1 Strategic Arguments2.2 Functions and Features

3. Achieving Results with SAP4. Summary

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Differentiators of SAP Invoice Management byOpen Text

The only one-stop-shop solution from your landscape vendor:

Harmonized look-and-feel – familiar to your SAP users, thereby reducing training efforts

Reduced cost of operation – proven SAP technology, instead of technology clutter

No integration risk – this not available from any other vendor

No maintenance risk – one source of customer support, service packs and upgrades

Reduced vendor obsolescence risk – SAP’s proven track record reduces risk ofvendor obsolescence

Grows along your business needs:

Supports multiple back ends (SAP, non-SAP) achieving invoice transparency across thecorporation

Supports multiple languages and in-country rules and regulations regarding invoice handling

Scalable to the highest invoice volumes

Future proof – will work with future SAP Enhancement Packs and ERP releases

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What your organization gains from SAP InvoiceManagement by Open Text

Simplify and optimize the entire invoice management process:

Create workforce efficiencies through an automated, streamlined process with or without theadded benefits of Shared Services

Improve working capital management through better visibility to cash requirements

Cut costs through process automation and control

Reduce costly manual errors

Optimize cash discount utilization

Improve business processes while reducing compliance risks:

Enable more accurate financial reporting through complete visibility

Segregate duties through workflow control – invoice processor and all process constituents

Monitor across all steps of the invoice process comprehensively

Provide complete audit trail – from receipt through settlement

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What your Finance Shared Services Organizationgains from SAP Invoice Management by Open Text

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CostCost of errors drastically reduced

Costly focus and follow-up on numerousstatus calls and complaints from suppliersavoided

Need to install more instances whenadding countries avoided through localization

RiskOne place to monitor all invoices

Platform for central service delivery, enabling selective process harmonization

Transparent routing of invoices to process constituents across the corporation

QualityProcessing capacity grows with volume, without need to grow headcount proportionally

Consistent service provision adhering to KPIs and SLAs

SAP Invoice Management by Open TextAutomated paper-to-post invoice management

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Einlesen CommentTrigger workflows Post invoices

InvoiceInterpretation

InvoiceMonitoring

InvoiceClosing

CollaborationInbox(incomingmail / fax)

Archivierung

OCR frontend (Dec 2008) ERP

Payment

Invoice Cockpit

Prüfung und

Vervollständigung

UMWANDLUNG

PREPARE Verify andcomplete

ExceptionHandling Approval

Automated reconciliation and posting

Auswertung

Umwandlung

TRANSFORM

Payment

AP/FI

Non-SAPBackend

Backend

Backend

SAP Invoice Management byOpen Text Architecture

Post

Post

Post

Archiving (HTTP Content Server)e.g. SAP Archiving by Open Text – Archive Server

Scanning Interpretation Process allincoming invoices

Automaticallypost invoices

Processexceptions

Clearingexceptions

Comments Automaticallypost invoices

Resolveexceptions

InvoiceInterpretation

InvoiceMonitoring

InvoiceClosing

CollaborationInbox(incomingmail / fax)

Archiving

OCR front-end (Dec 2008) ERP

Transform

Payment

Payment

Invoice Cockpit

MONITOR WORKFLOW MONITOR AP / FITRANSFORMPREPARE

EDI Crossgate

SAP PI (XI)

Scanninge.g.

SAP Archivingby Open Text– Enterprise

Scan

FAX

Paper

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Benefits you gain throughout the entireinvoice management process

Familiar SAP Look and Feel

Full Access to Familiar SAP Functionand graphics (somewhat related toabove) provide

One-Click Access To

User Friendly GUI/screens/dialogboxes make it easy to

Role-based routing

Automated routing

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Standard SAP tools are included for sort, filter, print, email, export

Complete history of all processed invoicesSummary overview of invoices, including the number of and value ofinvoicesAudit history with commentsAt-at-glance reportingApproval history at a glance

Approve or reject dataPrior approvalsLocate necessary supporting documentation, including invoice image,purchase order, goods receipt, SAP invoice, comments and completehistory

Process dataAnalyze dataComment on dataValidate data

Accurate team review, resolution and approval

Efficient processing

Document processing – duplicate check

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Familiar SAPLook & Feel

Early &AutomatedDuplicateDetection

Automated orManual Data

Entry

ImmediateData

Validation

Exception processing – price discrepancy

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One-clickAccess toSupportingInformation

CompleteProcessHistory

Role-BasedProcessOptions

BestPracticesExceptionHandling

TransparentRole-Based

Routing

Invoice approval with assignmentof accounting information

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Approve inPreferred UI -

Portal orSAPGUI

One-Click toApprove or

Reject

EasyDelegation to

EnterAccounting

ApprovalHistory at a

Glance

One-Click toAdditional

Information

ConciseInformation,

Easy to Grasp

ImmediateData

Validation

Analytics and monitoring

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Analyze KPIswith SAPGraphics

Analyze UsingOver 50Criteria

Full Access toSAP Functions

CompleteOverview of All

ProcessedInvoices

Your Choiceof Reporting

Currency

Total ProcessSummary

One-ClickAccess to

Invoice Details

Liability report

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AnalyzeLiabilities for

AccurateAccruals

Full Access toSAP Functions

AssessLiability by

GeneralLedger andCost Object

SupportsAudit for

Accrual Entry

Support large and/or distributedorganizations with transparent routing

Shared Service CenterAP clerk in Russia

Routes to buyer in USRoutes to approver in Argentina

Approver inArgentina gives OK

Buyer in USsolves exception

Invoice received inLondon, UK

Is scannedWorkflow in SSC inRussia started

22

11

33

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1. The need to optimize the cycle2. Value proposition of SAP invoice management by open text

3. Achieving results with SAP4. Summary

Agenda

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Selected SAP Customers operatingSAP Invoice Management by Open Text

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Customer return on investment

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Typical customer realizes >50% cost-per invoice decrease and return-on-investmentin <12 months through:

25%-50% FTE Headcount redeployment

(20-50%) Lower cost per invoice reconciled

(<75%) Lower cost of errors

Reduce Duplicate invoice processing

Improved vendor relations50-75% less Vendor hotline traffic

Less follow-up effort On vendor status requests and complaints

Realize Increased cash discounts

Lowe cost Through better pricing and terms

Tighter controlsReduce Non-PO invoices

Reduce Maverick buying

Support SOX compliance

** Numbers based on aggregated market insight

Sample ROI

Invoice reconciliation cost structure$10,000,000,000 Annual sales (worldwide manufacturing company)

$3,000,000,000 Total invoice value

2,000,000 Invoices / year

12,000 Invoices / AP clerk / year

70% / 30% MM invoices / FI invoices

2% Invoices require vendor status calls, 10 minutes each, 3.2 FTE

3% Invoices have errors (double payments, wrong payment) 15 minutes each, 7.2 FTE

$5,000,000 Labor cost per year (fully loaded FTE = $30,000 / year)

10% Share of invoices for which an avg. of 3% cash discount applies

Savings$2,000,000 40% lower cost / reconciled labor

$108,000 50% error reduction

$4,500,000 Cash discount savings for additional 5% of invoices

$48,000 50% reduced vendor status calls

Investment$TBD Software licenses (add ongoing below)

$TBD Deployment

$TBD Administration and maintenance** Numbers based on aggregated market insight

Agenda

1. The need to optimize the cycle2. Value proposition of SAP invoice management by open text3. Achieving results with SAP4. Summary

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The bottom line

The ability to control and anticipate

Comprehensive overview of all invoices across the corporation

Increased control of time-to-payment

Allows for better cash usage based on comprehensive insight

State-of-the-art shared services delivery platform

SAP architecture enables leveraging economies-of-scale

SAP automation improves efficiency in administrative processes

Invoice automation powers financial transformation

Automates labor-intensive invoice reception and reconciliation

Frees line operations from finance administration work

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Thank you!

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Automated or manual datacapture of invoice metadata

Early and automated duplicatedetection

Configurable input for non-SAPinvoice data fields such aspriority setting

Enforcement of mandatorydata input

Application of 35 configurablebusiness rules

Configurable SAP workflowcollaboration to ensuredocumented input from allprocess participants

Document processing function

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Features

Alternative slides for 20-24

Exception processing function

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Immediate routing to 16configurable business roles forresolution

Dashboard with configurable bestpractice resolution exceptionhandling options

Documented collaborationutilizing SAP workflow to ensureinput for all process participants

Features

Alternative slides for 20-24

Invoice approval and accounting

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Easy delegation to enteraccounting

Immediate routing for coding andapproval

Immediate coding validation

Invoice approval driven byconfigurable delegation ofauthority matrix, regardless ofwhere this information is storedwithin the corporation

Documented collaborationutilizing SAP workflow to ensureinput of all process participants

Features

Alternative slides for 20-24

Analytics function

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Analyze using over 54 criteria

Your choice of currency reporting

Information can be limited toopen items, resolved items or allitems

Information can be reviewedbased on a workflow processview or from a document view

The individual items can bedisplayed in a document currencyand report currency

Cycle time and current processparticipant are available

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Features

Alternative slides for 20-24