How to Provide a Quick Return on Investment in Automation

Technology

John Dickens European SSC Manager

NEC Europe

May 21, 2012

Agenda

• NEC – Quick overview for context • NEC Europe Challenge • Commissioned Projects

– Pan European T&E Automation – Pan European Invoice Scanning Automation

• Brainware invoice scanning – Original Process Landscape – New Process Landscape – Re-engineering of Processes through Automation – Programme & Deployment schedule – Numbers

• Concluding thoughts / Lessons learned

NEC – Quick Overview for Context

• Oldest company in Japan, originally formed as the Nippon

Electric Company. • Probably one of the biggest companies you have never heard

of: – Ranked 241st in the Global 500 list of companies for 2011 – Revenues of USD 36,374 million – Employing 116,000

• Disparate global presence: – NEC Corporation of America: 2,000 employees – NEC Europe: 2,000 employees – Japan/ASPAC The rest!

NEC Europe Challenge

• In 2008 NEC Europe Region comprised 3 areas – – NEC Europe trading affiliates = Telephony – NEC Display Solutions = Flatscreens/Projectors – NEC Unified Solution = Enterprise Solutions

• In late 2008, NEC Europe made the strategic decision to create a Shared Service Centre whose design was structured around supporting many small, independent, trading affiliate businesses.

• Total staff across NEC Europe in initial scope only 900. • Initial process mapping exercise of all the Back Office

processes, across Europe, only identified 2 high volume, repetitive, non value add activities, that offered enough critical mass to allow a pan-European solution to be investigated – T&E, and AP Invoice processing.

NEC Europe Challenge

• In both scenarios the initial challenge was to look to standardise, simplify and automate a whole array of local practices / policies / processes, without Centralising the existing activities.

• Overlay on to all of this a highly cultural obsession with touching and signing paper, that increased the Cost of Ownership to make both processes “Worst in Class” as far as most benchmarks would have us.

• Opportunities for efficiencies in Finance were limited. • Little prior experience of any Pan European projects driven

by the RHQ. • Financial Pressures from Japan • Role Change for NEC Europe

Commissioned Project – T&E Automation

• Viewed as a beacon project • Objective was to provide a user friendly self service tool

that covered: – Pre-trip Authorisation – Travel Booking – Cash Advance Requests – Expense reclaim

• Aim was to replace existing processes rather than centralising.

• Customised to local HR Travel policies & available in local languages for all NEC Europe affiliates

• Has removed ALL manual inputting of expense reclaim into SAP.

Commissioned Project – T&E Automation

• Soft returns: – Vastly improved life cycles – Minimal Managerial touch – 24/7 availability – Ability to approve anywhere in the world – Greater Governance – 3rd party Audit backs up Corporate policies embedded in the tool. – Enjoyable experience – Reduced number of payment runs

• Hard returns: – Phase 1 (UK Trading & RHQ) saw 43% reduction in average ticket

costs for flights – Improved data has allowed greater VAT reclaim

Commissioned Project – T&E Automation

• Deployment: – Phase 1 UK & UK based RHQ (35% of activity) – Phase 2 Germany (30% of activity) – Phase 3 Scandinavia & Spain – Phase 4 France, Italy, Portugal & Poland

• Return: – Project deployment 18 months – ROI achieved within 9 months just from Phases 1 & 2.

• Phase 4 countries in 1st quarter of live.

Commissioned Project – Invoice Scanning Automation

• We couldn’t have achieved buy-in without the T&E project

• Again aim was to replace existing processes with an automated tool that was enjoyed locally but controlled / maintained / administered from the Centre.

• Like the T&E solution, we (unashamedly) used the Invoice Scanning solution to drive change rather than create discussion on change.

• Required “playing in other peoples fields” • We were heavy in low hanging fruit –

– Pan Europe: 40,000 invoices p.a./40 different people posting into SAP. – Opportunities to get more out of SAP. – Re-engineer the whole P2P piece.

Commissioned Project – Invoice Scanning Automation

• Viewed as THE Cost reduction project • Objective was to provide a tool that covered –

– Automatic posting of invoices to our SAP systems – Automatic authorisation of invoices – STP of 3 way matched invoices

• Aim was to: – Remove ALL Manual authorisation of invoices. – Remove ALL Manual posting of invoices. – Make greater use of the functionality of SAP – Drive efficiencies in the upstream P2P activities.

Brainware Invoice Scanning – Original Process Landscape

3 MONTHS ACTIVITY SAP EFFICIENCY 3 MONTHS ACTIVITY SAP EFFICIENCY

USERS Affiliate Manual PO Grand Total

Annualised Totals Manual PO USERS Affiliate Manual PO

Grand Total Manual PO

1 NEDERLANDS 230 53 283 849 81% 19% 0 EDI 0 550 550 1650 0% 100%

2 SCANDINAVIA 602 255 857 2571 70% 30% 17 UK / RHQ 1943 3745 5688 17064 34% 66%

4 GERMANY 1384 387 1771 5313 78% 22% UK 1943 4295 6238 18714 31% 69%

3 EASTERN EUROPE 1026 0 1026 3078 100% 0

3 FRANCE 1307 925 2232 6696 58% 42%

4 SPAIN 353 151 504 1512 70% 30%

2 ITALY 0 690 690 2070 0% 100%

1 NT FRANCE 5 0 5 15 100% 0%

3 POLAND 410 0 410 1230 3 0

Non UK 5317 2461 7778 23334 68% 32%

Brainware Invoice Scanning – New Process Landscape

SAP

AP

LOCAL SCANNING

VENDOR EMAILS

BRAINWARE DISTILLER

NE

C

Architecture of Distiller for Invoices Solution for NEC

Brainware Invoice Scanning: Re-engineering of Processes Through Automation

• Use of PO’s is inconsistent across Europe • Use of PO’s for Cost of Goods sold activity is however high. • 3 Way match using SAP was not used • Even with a PO raised, invoices were stamped, manually

coded, and signed off. • Japanese management touched too often. • System works most efficiently when PO prevalent – line

pairs to a 2 way & 3 way match • Major re-education as to what a PO was. • Re-engineering started before the purchasing decision • Only stuck when we went live!

Brainware Invoice Scanning: Re-engineering of Processes Through Automation

• Key Changes – Invoices subject to GRN Mandatory PO’s – posted to SAP upon

entering Solution. • If goods receipted prior to entering solution = STP • If goods not receipted – Workflow to PO Creator to add GRN in SAP (BW has added a

payment block) – then workflows to AP to release payment block.

– Invoices subject to PO’s with no Mandatory GRN – does not post to SAP upon entering Solution.

• Doesn’t need a receipt – wants a confirmation that ok to post • Workflows to PO creator or PO Requestor to confirm a posting to SAP. • Posts to SAP for payment.

• Authorising Managers no longer involved once PRF signed off, and PO created.

Brainware Invoice Scanning: Re-engineering of Processes Through Automation

• Invoices subject to no PO: – Solution extracts data, and passes to AP – AP reach out to business to input coding into a BW business case – Once done, item makes Company code / Bus Area / Cost Centre / GL

Code / Value combination reference to an embedded Pan European Approval Matrix and routes case to Approver.

– Approver can review image and when hits approval button it posts to SAP for payment on next run after it falls due

• Business waking up to effort involved – focus is to increase use of PO’s in SG&A space to drive further efficiency into process.

• Will always be a tail – other solutions being evaluated for tail.

Screenshots

Screenshots

Screenshots

Screenshots

Brainware Invoice Scanning: Programme & Deployment Schedule

• Contract signed 30/9/10 • System Design and build and initial testing complete

31/12/10 • Live testing with UK & RHQ – commenced Jan 11, finished

31/3/11 • Redesign of Workflow and Authorisation flows as well as

solution functionality ongoing in full live test environment – completed end July 11

• Ongoing 1-1 Vendor adjustments to improve cycle times in UK & RHQ

• Mid deployment re 2 further UK Divisions, France Spain & Germany. Expect full operation here by 30/06/12

Brainware Invoice Scanning: Programme & Deployment Schedule

• Scandinavia / France / Poland / Eastern Europe to start in live test 1/7/12 – complete by end of quarter 30/9/12.

• Italy – migrating newly merged business to SAP in May 2012 – will commence live test likely 1/7/12 – 3 month full deployment.

• Unified Solution Division currently migrating affiliate by affiliate into our SAP and adding to scope of invoice scanning.

• Out of scope currently: – Portugal – in different SAP system currently – Unified Solution businesses (all merging into NEC Europe businesses) – Display Solutions businesses – different SAP system currently but

expected to take on.

Brainware Invoice Scanning: Numbers

• 4 year commitment • Expectation is we release 3 heads in year 2, and 4 heads in

year 3. Some of these are in upstream operations • Initial investment costs c 200k

– Servers – Scanners – Software Licences ( Based around number of pages scanned)

• Annual Maintenance (% of Licence fee) = c£39k pa • ROI Projected within 3rd year – over 4 years estimate

£500k. • Central AP team role change but will cover all affiliates with

no increase in headcount – remain at 3.

Brainware Invoice Scanning: Numbers

• UK & RHQ – Pre project 17 entering invoices - 3 months of full live – System plus 3 AP Staff (csv

uploads / bulk data loads) • Average turnaround times (receipt to payment) halved • 44% of invoices pass through to SAP within 4 hours of

arrival • We now have more invoices loading into the solution

arriving by email exchanger, than we do scanning hard copy documents.

Concluding Thoughts & Lessons Learned

• It is possible for smaller operations to gain benefit from Automating certain processes.

• Work with Solution provider to build an offering that optimises return. If that means re-engineering processes – blame the system!

• Avoiding centralising the processes before automating saves months maybe years.

• Automating is easier to sell than centralising • Invest in time to ensure the solution is fit for purpose – if

need be redesign. • Deploy when ready • Focus on the end to end process, not just the data entry.