May 7-9, 2017

Disney’s Yacht & Beach Club Resorts®, Florida

Pay it Forward: Linking AP & Procurement for Closed Loop P2P

Richard Waugh Vice President, Corporate Development, Zycus

Extensive background in B2B e-commerce

Helped Launch GE's TPN, first on-line Marketplace for Sourcing & Procurement

Industry Analyst in Supply Management market for the Aberdeen Group

Co-Founder of B2eMarkets First SaaS Sourcing Suite providers

Scott Fitzgerald Director, Procurement, The Mentor Network

Seasoned procurement professional and business leader with more than 20 years of experience

Transformed the Procurement function at The Mentor Network from a transaction based compliance partner to a strategic business partner

Certified Purchasing Manager (C.P.M.) for lifetime and holds a Six Sigma Green Belt with Lean certification

Held Procurement and Strategic Sourcing leadership positions at noted leading organizations like Bank of America, MetLife and many more

About Invocus

Invocus – A Division of Zycus Portal-based touchless eInvoicing suite

Supplier Information Management

Supplier Self-service E-Invoicing Touchless Invoice Processing Dynamic Discounting Solution

Invocus is a division of Zycus, the 2017 Gartner MQ Leader in

source-to-pay suite of software solutions

DON’T JUST OCR THE PROBLEM. SOLVE IT!

Invocus Portal-based Touchless Invoicing Suite

SUPPLIER SELF-SERVICE PORTAL

PAYMENT STATUS DISCOUNTS E-INVOICING

TOUCHLESS PROCESSING

MATCHING WORKFLOW REPORTING

INVOICE

EXPRESS

SUPPLIER INFORMATION MANAGEMENT - (SIM)

ONBOARDING SUPPLIER MDM RISK MGMNT. ZYCUS

SUPPLIER

NETWORK

DYNAMIC DISCOUNTING

OPTIMIZATION COLLABORATION TRACKING

The Invocus Advantage

DON’T JUST OCR THE

PROBLEM. SOLVE IT!

Seamless Processing. Efficient Payment. Easy Exception Handling.

IMPROVE SUPPLIER

RELATIONSHIPS

Self-Service Onboarding. Timely Payments. Improved Visibility.

ENABLE CROSS FUNCTIONAL

COLLABORATION Analytics Support. Financial Compliance. Savings Maximization.

Today’s Agenda

2 What’s at Stake with P2P – for Procurement & AP?

3 What is the Ecosystem and Adoption of P2P Solutions?

4 Linking P2P Buy-Pay Channels

5 Payables Automation Playbook

6 P2P Success Metrics

7 Case Study: Re-Imagining P2P at The Mentor Network

1 A P2P Process Primer

A P2P Process Primer

Source: The Hackett Group

What’s At Stake – For Procurement & AP

Guided buying from approved supplier catalogs at pre-negotiated prices creates higher levels of compliance and spend visibility

Delivers:

– 40% increased order productivity (ex. touchless, self-service)

– 20% increase in indirect spend compliance

– 9% annual savings attributed to increased indirect compliance

– 15% fewer master data records and maintenance costs (items, suppliers)

– 35% more spend with line time visibility due to accurate coding of category/GL

AP automation with electronic invoice receipt, processing, and matching, with supplier inquiries handled on self service basis creates higher levels of productivity, with reductions in invoice processing delays and errors.

Delivers:

- 2.4X processing productivity

- 20% improvement in invoice to PO

first pass match rates

- Improved control over payment

timing

PAYABLES TRANSFORMATION

PURCHASING TRANSFORMATION

Source: The Hackett Group

Ecosystem/Adoption of P2P Solutions

Q For each software category, please indicate how extensively your organisation is using it, the

estimated level of value that it has driven and the deployment model being used.

Source: 2016 P2P Key Issues, The Hackett Group

Linking P2P Buy/Pay Channels

49%

10%

18%

TRANSACTIONS BY

CHANNEL

Source: The Hackett Group

P-card and other

Non-PO

2-way 25%

3-way

Payables Automation Playbook

Supplier

inquiry &

response

Eliminate physical document costs with aggressive use of electronic

Electronic invoice methods by supplier tier ex. EDI, E-Inv, ERS, PO flip, etc

Optimised thresholds for no and negative verification, pre-coded shopping trolley’s and catalogues

Quality approach PO, invoice, receipting. Maser data cleansing and improved timeliness.

No Checks, EFT, alternative payment methods ex. PayPal …value add of financial supply chain

Automated workflow, optimised business rules for approvals and reminders time to respond, 2nd approvers

24/7 transaction status visibility, chat + messenger, escalation

Source: The Hackett Group

P2P Scorecard – Success Metrics

Source: The Hackett Group, *Ardent Partners

% on-time payments

% first-pass match for PO backed invoices

% Electronic payments

% defective deliveries

% of reqs. rejected

% of POs vs. non-POs

Req.

creation

Req.

approval

Create

order

Transmit

order

Goods/ service receipt

Process

invoice

Payment

approval

Process payment

BUY PAY

PROCURE-TO-PAY (P2P)

% Electronic invoice

% Touchless POs

% free text reqs

% spend on catalog

% of spend under contract*

Contract enablement

After the fact POs

Avg. - 16 Days BIC - 3 Days

Avg. - 69% BIC - 80%

Avg. - 19% BIC - 70%

Avg. - 42% BIC - 68%

Avg. - 60% BIC - 72%

Avg. - 62% BIC - 46%

Avg. - 54% BIC - 69%

AP Key Performance Indicators

Peer Top Performer

73%

90%

0.02% 0.11%

Early Discounts Taken as a Percent of Spend

78%

85%

Peer Top Performer

Early Discounts Taken as a Percent of Available

Percent of AP inquires resolved through self-service

Source: 2015 Hackett P2P Performance Study

27%

56%

Days Payable Outstanding (DPO)

26

35 Bottom Quartile

Median

Top Quartile

49

7,126

17,357 Invoices per FTE

Peer Top Performer

Take-Away: Procurement + AP Alignment = P2P Success

73%

90%

Source: The Hackett Group

Case Study: Re-Imagining P2P

73%

90%

Founded in 1980, The MENTOR Network is a national network of local health and human services providers. We proudly serve people with intellectual and developmental disabilities, children with emotional and behavioral challenges, people with medically complex conditions, and individuals with brain and spinal cord injury. Our services are designed to help people facing a range of challenges lead full lives in the community.

Finance Organization Structure

Chief Financial Officer

Audit Committee

VP, Internal Audit

Executive Assistant VP, Financial Planning &

Analysis

Director, Financial Planning, & Analysis

VP, Corporate Controller

VP, Tax

VP, Finance Shared Services

(AP & AR)

Sr. Director, Revenue & Accounting

VP, Finance Revenue Services

Director, Accounting Director, Financial

Reporting

SOx Manager

VP, Treasurer

Director, Treasury

Director, Procurement

Director, Real Estate

P2P Challenges

Limited PO/High P-Card Use

Limited Control/High

Non-PO Invoices

Low User Adoption of ERP P2P

Limited Network Access

Limited User Access

Lack of Scalability for Vendor Catalogs

Long Lead Time/IT Support Required for

Workflow Changes/Supplier on-

boarding

High License/Support Cost

Business Challenges System Challenges

Procurement and AP Partnership

AP Engaged Up-front as Equal Partners in P2P Transformation

AP SMEs Drive Payables Requirements Definition, Process Design and Testing

Aligned Buy-Pay Channel Strategy to Simplify Process

Ongoing Project Team Collaboration on Weekly Status Meetings, UAT, Training and Roll-out

Fully Vested Partners with Shared Goals and Objectives

#1

P2P Transformation

Drive Adoption with More User Friendly, Scalable P2P

Increase Spend Control

+ More PO Spend (Including P-Card) +

More Spend Under Management

Streamline Transactional Process for Greater Efficiencies

1,100 Users 7,500 Users

Goals for P2P Transformation: Before: After: Before:

P-Card Not Pre-Approved

G-Card on PO

Billing Auto-Reconciled

4 FTEs

PO Invoices 1.5 FTEs

PO Invoices

AP/PO Process Map

Process Simplification Example

Before: Orders for Multiple Items for Different Departments Required Separate POs for Each Item to Same Supplier

After: Consolidated PO for All Items Reduces Invoice Volume

AP Transaction Profile

Accounts Payable Transactions :

- Vendor Invoice – Expense and Capital

- Capital Expenditure Request Form

- Employee Expenses including Mileage Reimbursement

- Request for Payment - EFT Forms and Voids - Supplier Maintenance Forms - W-9 - 1099

Non-PO Invoices

420K

PO-Backed Invoices

142K

17 Total FTEs

FTEs Allocated to PO Invoices Reduced 63%

FTEs Re-allocated to More Strategic Tasks

Payees

7,700

PO Suppliers

700

Supplier Value Proposition for e-Invoicing

Carrots

Supplier participation mandatory by fixed date

Supplier participation part of RFP/Contract T&Cs; included as Scorecard KPI

Extended Payment terms

for non-electronic suppliers

Non-electronic invoices not eligible for flexible financing options

No payment status reporting available for non-electronic suppliers

Sticks

E-Invoicing Supplier Segmentation and Enablement Strategy

1. Prioritize e-Commerce Enabled (Tier I)

Machine Based eInvoicing

● EDI/XML Invoices Generated by

Supplier’s E-Commerce Systems

● Lowest Cost – No Manual Data Entry

2. Migrate Critical (Tier II) to Portal

Supplier Portal Based eInvoicing

● Supplier Portal Self-Service PO Flip Invoice

Creation

● No Cost to Buyer - Some Manual Data

Entry Required for Suppliers

3. Manage Tail Spend (Tier III) Through OCR

Digitize “Paper” Invoices

● OCR (Optical Character Recognition)

Scan and Capture of Mailed, Faxed or

Attached Invoices

● Highest Cost to Buyers

Tier

I I

Tier

I I I

Tier I

Engage Suppliers at Highest Level of Technical Capability

Non-PO Invoices

420K

PO-Backed Invoices

142K

Measuring Success – KPI Tracking

Key Performance Indicators Actual FY 16 Goal FY17

Procurement Managed Spend 40% - 38% -

No. of Active Users 33% - 60% -

Cost Savings as % of Sourceable Spend 5% - 5% -

Supplier Invoices - Manual 100% - 80% -

Supplier Invoices - Electronic 0% - 20% -

P-card Spend $51M 50% $45M 44%

G-card Spend $10M 10% $15M 15%

PO Spend $40M 41% $42M 41%

Total Spend $103M 100% $102M 100%

Invoices on Hold 61 - 50 -

Active Contracts Under Management 94 - 100 -

Value Creation - Annual Goal $6M - $6M -

Value Creation - Actual $5.8M - $XM -