“The Value Proposition of an automated, centralized finance function” 3 rd October 2013

“The Value Proposition of an automated, centralized finance function”3rd October 2013

Agenda ReadSoft at a glance Finance automation and centralisation: 10 lessons learned The Sappi experience: Koosh Panday Q & A

ReadSoft at a glance SAP Customers: 1,500 + Shared Service Centres: 100 + Oracle Customers: 100 +

Which are best processes to automate? • In your experience, which FOUR of the following factors would you say are thebest indicators that a BPM project would be successful? 0 10 20 30 35 40 50 % Already has identified process owner Current process is heavily document driven Has potential for continuous optimization over time Process has many branches and routings Has serial steps that could be made parallel High penalty for errors or mistakes in processing Geographically dispersed participants Current subject to load variations and log jams Restricted to one department Not mission critical Has potential for outsourcing Business Process Management Report

Ten Lessons Experiences in automation and centralisation

1.Automation is part of a centralisation business case Centralisation alone could mean resource duplication Technology can facilitate substantial efficiencies and more effective processes to support a shared service business case Technology will support both back office and front office functions – whether centralised, decentralised or (usually) a combination of the two. Example 1: Large UK bus company, no access to ERP at depo’s so all functions performed by SSC. Technology supports real time data and data flow to support this. Example 2: SA Provincial Government finance department: distributed document receipt, centralised capture, distributed AP processing

2. Automation bridges back office and front office functions • BPO or SSC – back office functions often provide the best business benefit for centralisation • Both back office and front office benefit from automation • Often a decentralised front office/ centralised back office approach: example: • SA Leader in power and automation technologies: Scan documents centrally, process (capture) via an offshore BPO, finance processes managed internally: technology supports a seamless process • SA Leading petrochemical company: 18 affiliates, central shared service centre, local management of documents and finance processes – technology driven processes end to end.

3. Sole solutions are rare, blended models are a reality Electronic documents are a mix of formats and delivery methods Example: Global law firm: 28 countries, centralised processing and systems, large range of input methods and formats : country/ vendor specific

4. Financial Benefits may start nebulous but eclipse operational savings • R 9 Bnannual spend • Spend that may provide early payment discount : 20% = R 1.8 Bn • Average early payment discount : 2.5% = R 45.0 M • Discount alreay taken = R 28.8 M • Additional discount opportunity = R 16.2 M R1.350 M Duplicate payment reduction R324 K Lost discount, late payments R 4.374 M Additional early payment discount R 1.428 M Resource saving Business case is often built on operational benefits, but larger benefits are realised from increased efficiency and effectiveness. Example:

5. Start with the process Map current and future processes Identify bottlenecks or challenges in each Measure the cost of these challenges: What is it now, what would you like it to be, and what is the value of the difference over time?

6. Break the process into components… 20% 8% 5.2% 33% 1.9% 0.8% 75% 1.1% 32% 10% 51% 4% 25% 3% 75% 23% • Avg. AP Salary: R 238,000 / year • Objectives for AP automation • Number of AP FTE‘s: 32 1. • Increase discount opportunity • Increase visibility into AP process • Free-upresources to focus on value add activities • Current time % • % saving from automation • % time to be automated 2. x = • Invoice data entry 3. • Error correction x = x • Invoice handling = x • Answering queries = • Other AP activities x = • APactivity to be automated

7. Visibility, control and compliance: importance as outputs but can provide challenges in value measurement SARS and/or SOX compliance Visibility across all processes Control of all documentation Ability to measure and identify bottlenecks Continuous process improvement

8. Scale or expand process scope for continuous increasing returns Purchase to Pay Order to Cash Master Data Finance RequisitionOrder ConfirmationDelivery NoteAccounts PayablePayment Approval Customer OrderRemittance Advice Vendor MasterCost CenterProfit Center GL Account Asset Financial Posting CAPTURE EDI Interfaces Web browser user interface SAP user interface Archive Core services Workflow engine User management Process log (audit trail) Archive services Data versioning Database persistence

8. Scale or expand process scope for continuous increasing returns Oct 07 Original • Reduction of resource by over 50% • Volumes have doubled • STP 80% and have touched 95% on some days • Stock and non stock invoices and expenses all processed through scanning • Expenses and debit notes now scanned • Next: Automated approvals process • Next: On line storage of documents • Objective: Early payment discounts on twice the number of transactions through dynamic discounting Sep 10 Average monthly invoices 42,440 75,000 Average monthly debit notes 390 Average monthly expenses 400 Headcount AP Manager 1.00 1.00 Team Manager 2.00 1.00 Key Users 1.00 0.00 AP Clerk 16.80 7.00 Scan Operator 0.00 1.0 Total Headcount 20.80 10.00 Avg. Verify Non Touch Success Rate 0.00% 85.00% Avg. Cockpit Non Touch Success Rate (Stock) 0.00% 80.00%

9. The importance of people in cross functional projects

10. Start measuring : now, during and after Example: One of largest global infrastructure companies Initially, measurable costs and KPI’s were unknown, transaction cost estimated Continuous process improvement became strategic objective

10. Start measuring : now, during and after Benchmark against best practise ReadSoft 2010

Robin Beetgerobin.beetge@readsoft.com0825617342 ReadSoft 2013

Sappi Koosh Panday ReadSoft 2013

“The Value Proposition of an automated, centralized finance function” 3 rd October 2013