Introduction to Purchase to Pay Software 11/29/2012

1. Introduction to Purchase to Pay Software11/29/2012

2. Experience

3. Why Purchase to Pay Automation? • Helps organizations gain control over their purchasing and accounts payable functions. The impact is:

4. Problem Paper-based Purchasing & Invoice processing rob CFO’s of the clear visibility and control needed to manage cash and reduce indirect spending. Source: Purchase Insight and Forrester

5. Sourcing and buying differences • Buying – administrating the purchase of needed goods & services • Identify need • Requisition • Route Approval • Create PO • Shipping • Receiving • Payment • Sourcing – Funneling demand to fewer suppliers at better price • Analyze spend • Manage demand • Sourcing strategy • Supplier Discovery • RFX process ( RFP, RFQ, RFI, Reverse Auction) • Contract • Manage Contract

6. Managed vs Unmanaged Spend • Unmanaged • Goods and services are purchased in an ad hoc fashion. Clear visibility into total spending by types of goods and services are lost due to inconsistent invoice coding practices across profit centers, detailed expenditure information is trapped on paper invoices, expense reports and credit card statements. • Managed • Goods and services have been through a sourcing process and preferred suppliers are contracted to deliver at advantageous prices and terms.

7. Definition of a P2P system • A single software platform capable of managing PO, Non PO, and T&E spending. • Broad and flexible – scaleable. • Modular in design - start small and grow • Single database of all spending details for easier analysis.

8. Requisitions • Punch out – High volume, low price items from technologically sophisticated supplier • Catalog – Higher volume categories; where supplier can provide you with spreadsheet • Free form – unusual purchases where the supplier may be unknown • Requisitioner should code requisition to profit center

9. Setting up Catalogs • Unique to each company • Want to start earmarking spending into sourceable categories • Look at 20 % of suppliers that represent 80% of spending • Use them to create 5-7 broad categories of spending • Break the larger spend categories into subcomponents overtime

10. Common Spend Categories • Administrative Expenses – 5-7% savings • Office supplies • Office Equipment • Furniture • Postage • Shipping / Small package delivery • Temporary Services • Facilities – 7-9% savings • HVAC Services • Elevator Services • Plumbing • Maintenance Supplies • Cleaning/ Janitorial Services • Security Services • Finance and HR – 6-8% savings • Payroll processing • Equipment leases • Merchant accounts • Benefits • Property Casualty Insurance • Outsourced Collections • Sales and Marketing – 18-20% savings • Promotional Items • Printing • Market Research • Creative Services • Information Technology & Telecommunications – 9-11% savings • Software • Hardware • Voice & data networks • Cell Phones • Local and Long Distance phone lines • Capital Expenditures & maintenance - 6-8% savings • New construction • Equipment • Architectural or Engineering Services • Up fits and improvements • MRO supplies • Direct materials – driven by industry - 5-7% savings • Chemicals • Electronic components • Metals • Plastics

11. Approval Routing • Financial & Hierarchical • Special commodities • Ad Hoc • Budget visibility • Smart phone – mobile approvals • Line item • Full audit trail

12. Buying • Support centralized or decentralized purchasing • Consolidate requisitions to single PO • Po with multiple ship to addresses • Easy 3 bids and a buy functionality for the “free form” buying

13. Receiving • One of the most difficult parts of the P2P process • Need to make it easy • Simple entry of the packing slip info into browser • Support 2 step receiving - quantity & quality

14. PO Payment • Automated 3 way match • Discrepancy identification • Financial • Quantity • Discrepancy management workflow depending on type of discrepancy

15. Non PO Payment • Input invoice info from outsourced service, KFI, EDI, portal or network • Accurate account coding • Should code invoice to commodity categories that are consistent with catalog – help identify number of suppliers per commodity category • Speedy approvals via mobile • Identify suppliers with contracts and sample non-po invoices to ensure pricing compliance

16. Travel & Expense • Goal is efficiency & demand management • Lessen the time it takes to complete an expense report • Speed the approval time • Use the system to educate users on company travel & entertainment policies • Capture savings opportunities on hotel, flights & car rentals • Big savings come from identifying unusual spending habits, educating & avoiding in the future

17. Visibility & Reports • Gain increased accuracy into accruals because system replaces paper shuffling • Analyze by user • By supplier • By commodity • By cost center

18. Verian Value Proposition See - Manage - Save Confidential

19. Our Solution Footprint Verian Suite Verian Platform Workflow, Business Rules and Policy Enforcement Help Organizations gain visibility & control over their entire spend including PO, Non PO, Employee Expense Reimbursement, Asset and Inventory Tracking & Maintenance in single database for consolidated analysis. Confidential

20. Step 1 - See Purchasing Strategy Invoice Processing Strategy

21. Step 2- Manage Confidential

22. Step 3 - Save Spend Under Management Spend Under Control Confidential

23. ROI Regional Financial Institution • 3 Years After Implementing Verian • 100 Buying Categories Managed - $110M in Spend in PM • Better visibility into what was purchased from whom • basic contracting process in place • Change in behavior to question process and look for product substitutions. • Result in Purchasing • Faster approvals and focus on using less expensive substitutions (i.e. switching from color forms to b/w) • Better transaction data allowed them to generate 10% savings/year on $110 million in PO based spend. Plan to address $220 million in non-PO spend next year • Accounts Payable • Because of PO process catching $1M in invoicing errors per year. Catching $120k/yr in late fees • Scrutinizing expense reports allowed them to reduce expenses by $1.8M/over 5 years

24. Calculating ROI

25. ROI Large Medical Practice • After Implementing Verian • Med Supplies + D/M/V + Office Supplies (Annualized) • Current Provider + Office Supply Vendor • Current Expense = $3,253,149 • Rebid Current = $3,028,833 • Savings = $224,316 (6.9%) • GPO + Office Supply Vendor • Current Expense = $3,253,149 • First Alternative = $2,672,626 • Savings = $580,523 (17.8%) • Competitive GPO + Office Supply Vendor • Current Expense = $3,253,149 • Second Alternative = $2,592,241 • Savings = $660,908 (20.3%)

26. Calculating ROI

27. Additional Resources • Verian blog (verian.com/blog) • Useful articles and commentary on ways to increase efficiency using automated purchasing and invoice processing systems • Institute for Supply Management – ISM (ism.ws) • An association that exists to educate, develop, and advance the purchasing and supply management profession • Buyers Meeting Point blog (buyersmeetingpoint.com/blogs) • A helpful online knowledge and professional development resource for supply management and procurement professionals • Institute of Finance Management – IOFM (iofm.com) • Valuable tools, best practices, benchmarks, research and resources that will improve your accounts payable process • The Accounts Payable Network – TAPN (theaccountspayablenetwork.com) • A comprehensive knowledge base for executives and managers who oversee accounts payable

28. Questions • mschaffner@verian.com