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Enterprise Process Innovation

Continuum (EPIC)

Applying integrated analytics to

process execution

© 2011 IBM Corporation 2

Agenda

EPIC overview

– Optimization

– Certainty of outcomes

– Accelerated benefits

EPIC

I. Assess process maturity

II. Enable real time measurement

III. Implement innovative technologies

IV. Build quality into process

V. Institutionalize continuous improvement

VI. Innovate best practice designs


What is EPIC?

EPIC methodology is a philosophy of leadership, teamwork and problem solving

resulting in continuous process innovation and improvement throughout the

organization by:

– Flexible, iterative approach focused on the needs of the client

– Empowering employees

– Optimizing existing activities in the process to differentiate the business and achieve top

quartile performance

EPIC means:

– “Doing things right the first time”

– “Providing optimum quality at the right time and the right price”

– “Using the right tools for problem solving”

– “Innovating to the next level of performance”

EPIC delivers:

– Committed outcomes and cost optimization

– Reduced process complexity through simplification and standardization

– Increased visibility and stronger controls for sustained performance

– Proven method for driving the effectiveness of the end-to-end Finance organization

– Business agility to optimize competitive advantage


Our end-to-end, analytics-driven methodology provides continuous

innovation for our clients’ business processes.

EPIC Enterprise Process Innovation Continuum

Assess process maturity

and analyze performance

in real time.

Implement innovative

technologies and build

quality into processes.

Evolve best practice

designs against IBM

benchmarks,

extending innovation.


An optimization strategy captures the benefits of consolidation and delivers

immediate ROI while preparing your enterprise for IT integration.

-35% Globalization

scale & expertise

-25% Standardization

& automation

+7% Indirect procurement sourcing against spend

+25% Working capital against receivables & payables balances

Improved risk, controls, compliance & business agility

Consolidation Optimization IT Integration

Functional

Costs

Enterprise

Benefits

Annualized run rate savings range 30-60% from baseline.

Total Service Value


We work with you to create a transformation roadmap that meets your

unique needs.

► Global footprint

► Centers of expertise

► Economies of scale

► Standards-driven granular

measurement

► Process simplification & standardization

► Automation with innovative technologies

► Integrated analytics

► End-to-end process harmonization

► Extension to clients’ retained

activities

► ERP implementation/

rationalization

► Data warehouse/

Business intelligence

Consolidation Optimization IT Integration

Lowest

cost, risk

and value

Highest

cost, risk

and value


Integrated, iterative activities and an end-to-end approach consistently

deliver optimization with committed outcomes.


Identify gaps to IBM proven best practice

process models to

quickly strengthen controls &

design tactical roadmaps

Manage and analyze

performance at granular

level against standards and

benchmark targets

Deploy required tools to automate

manual tasks and drive

productivity, quality and outcomes

Eliminate errors,

exceptions and non-value added work to improve client

satisfaction and their

employees’ experience

Systematically manage end-

to-end process execution

against IBM best practice

process models, controls

framework and benchmarks

Create and extend

innovation & risk

management across

processes, technologies and people

Enable real-time

measurement


technologies

Build quality into process

Institutionalize continuous

improvement

Innovate best practice designs

Improved efficiency

Improved agility

Best practice outcomes

Improved compliance & controls

Enterprise Process Innovation Continuum (EPIC) Powered by Integrated Analytics


Each step is supported by assets, tools, process frameworks that

demonstrates the depth and maturity of E2E methodology.


Process

maturity

models,

process blue

books,

WebSphere

Business

Modeler,

process

reengineering

(BPR)

Standard

process/

activity

taxonomy,

patent-pending

Time-Volume-

Capture (TVC)

standard/

benchmark

targets,

Cognos

database

Rapid

workflow,

eInvoicing/

Portal, GERS,

ARCollect,

Payment

Systems,

account recon,

JIRA close

monitoring,

Service Flow

SLA mgmt

Auto e-mailer, auto-resizing,

QC tool, screen scraper, automation of

trackers, macros, hot

keys Six Sigma /

Lean initiatives, cross-client

comparisons, WebSphere

Business Modeler

Internal

benchmark

database –

subprocess

level, with key

work drivers,

external

benchmarks,

WebSphere

Business

Modeler, BPR

Advanced /

predictive

capabilities –

Insight,

collections

optimization

analytics, audit

recovery

analytics, B2B

Collaborative

Commerce

Enable real-time

measurement


technologies



improvement


F&A EPIC Intellectual Property


Our unique methodology applies six key enablers consistently across clients to

institutionalize continuous improvement and achieve operational excellence.

Service level

agreement Financial

Business

controls Productivity Quality People

EPIC leaders:

Six Sigma Black Belts

Industrial engineers

Automation leads

Center productivity leads

QA leads

Tower best practices leads

EPIC

Business Objectives


Analytics are integrated across our methodology, enabling actionable

business insight.

Business operations

How the business

applies information to

achieve its goals:

Policies

Activities

Procedures

Standards

Controls

Organization

Information and analytics How the business manages information and learns from it

IBM’s mature

process analytics

and optimization

capability provides

our clients with

differentiation and a

competitive edge.

Business analytics and optimization

Command

and control

Common

Progressive

Real-time, pattern

based strategies

with situational

context

Task integration

(e.g. ERP)

Process

automation &

workflow

Business process

integration (e.g. F&A)

and collaboration

Spreadsheets and extracts

Data warehouses, governance and production reporting

Master data mgmt and dashboards/ scorecards

Contextual business rules and patterns

Pioneering Advanced analytics (e.g.,

predictive & behavioral

analysis)


Our EPIC methodology, introduced early in the process, is delivering

accelerated benefits.

Phase

Contract signing Go live

First 3 to 6 months:

Up to 25% savings YoY continuous

improvement: 3 to 5+%

Ramp up

Transition Consolidation Integration

Year 1 6 Months

Optimization


Enable real time measurement

Implement innovative technologies


Institutionalize continuous improvement


Next 12 months:

10% to 15% savings

Year 2 Year 3


EPIC powered by integrated analytics offers clients game changing

capabilities.

Achieving process optimization is never easy and the ability to achieve it varies by client

IBM offers a unique, standard methodology that can accelerate the path to process optimization based

on client’s strategy and desired pace of change

EPIC in Motion

Our EPIC methodology consistently

Enables significant process visibility through

standards-driven granular measurement and

monitoring of activities

Embeds analytics at each step in the process to

accelerate optimization

Leverages innovative technology and benchmarks

to drive to top quartile performance

Delivers 20-50% FTE productivity, when combined

with labor arbitrage translates to 30-60%

annualized run rate savings

Extends E2E across IBM/client organizations

driving EPIC across the entire enterprise

Ultimately accelerates companies’ readiness for

integration


Agenda

EPIC overview

– Optimization



EPIC








IBM assesses a client’s process maturity to identify gaps and

roadmaps to best practices.

Assess process

maturity

Activities:

Understand key metrics, work drivers and

process characteristics to determine

current process maturity

Compare to standard and best practices

process models and identify gaps

Stabilize and standardize operations

based on process blue books

Design “art of the possible” roadmaps to

achieve client objectives

Assess process

maturity


Comprehensive process blue books set the best practice standards

for people, process and technology to ensure consistency.

Standard best

practice process

models

Standard

process metrics

Standard location,

span of control and

staffing mix

Standard

business control

guidelines

Standard

SLA/ KPI/

CPI

Standard

process

taxonomy

Standard

regulations

Example:

Record to report

Outcome Metrics Driver

General Accounting (process)

Cost per Account Reconciled Activity analysis for General Accounting FTEs

Accounts Reconciled per Hour

Average cost of General Accounting FTE

Account Reconciliations (sub-process)

# of GL Accounts Reconciled per FTE hour # of accounts in COA

Cost per GL Account Reconciled % of time spent on preparing reconciliations

% of time spent performing reconciliations

% of time spent on resolving reconciling items

% of items auto-matched

Time to resolve reconciling items

Aging of reconciling items

Journal Entries (sub-process)

# of JE lines processed per FTE hour % manual vs. automated

Cost per JE line processed % of journal entry lines that are first time error free

Cycle time to perform monthly close Materiality thresholds for correcting journal entries

Reporting (sub-process)

# of financial/management reports generated per FTE hour # of Legal Entities

Cost per financial/management report generated # of Business Units

Cycle time to provide monthly flash reports

Tax Reporting (sub-process)

# of tax reports per FTE (not high priority at this point)

Cost per tax report

Intercompany Accounting (sub-process)

# of Inter/Intra company trading partner pairs administered per FTE hour # of Inter/Intra company trading partner pairs

Cost per Inter/Intra company transaction Materiality thresholds for correcting inter/intra company journal entries

Cost per Inter/Intra company trading partner pair % manual vs. automated

Fixed Assets (process)

Cost per Asset Record Activity analysis for Fixed Assets FTEs

Asset Records per Hour

Average cost of Fixed Assets FTE

Fixed Assets (sub-process)

# of Asset Tranactions processed per FTE Hour # of Fixed assets records

# of Fixed Assets Reports prepared per FTE Hour Capitalization thresholds

Cost per fixed asset transaction % manual vs. automated

Cost per fixed asset report prepared

Project Accounting (sub-process)

# of projects aministered per FTE Hour # of project settlements

Cost per project adminstered

Key Measures

Standard

enabling

technology

Assess process

maturity


We leverage process standards, simulation and maturity models

to design “art of the possible” roadmaps leading to best practices.

Define “to-be” improvements Model “as-is” process

Metrics

budgets

– $’000

– FTE

TVC data Technology

capabilities

Client “as is” data

Client “as is” models

Using WebSphere

Business Modeler

Benchmarking

and

best practices (internal and external )

Client “to be”

models

IBM best practice

simulation models

Implemented

in transition

Assess process

maturity


Agenda

EPIC overview

– Optimization



EPIC








We measure activities, people and processes at a granular level,

enabling Lean / Six Sigma analysis and process improvement.

Measure and monitor

to standards

Activities:

Implement tools to track availability and

productivity

Measure performance at granular level

against targets

Manage performance deviations through

real-time feedback

Identify best practices and codify techniques

Reset targets to drive continuous

improvement

Level load work to manage peak processing

periods

Enable real time

measurement


We have deployed industrial engineering methods to optimize both individual

and process performance.

Review practitioner

performance against

standards

Review of weekly availability and efficiency of account by manager

Cross-account

comparisons

Identify opportunities

through reviews and

prepare execution plan

DMS Generic Front End

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in.)

0

50

100

150

200

250

300

350

Vo

lum

e

Time per transaction Volume

Set standard times Create and install

TVC instance


General Accounting

Our common taxonomy of activities and metrics enable consistent

data collection across clients and delivery centers.

Finance

and

Admin

Solution Process Subprocess Activity

Accounts Payable

T&E Processing

Fixed Assets

Order-to-Cash

(Accounts Receivables)

Gather information

Prepare Entry Only

Post Entry Only

Prepare JE-Template

Prepare JE-Manual

Prepare JE-Automated

Review and approve JEs

JE rework-Client

JE rework-Internal

GA JEs-Client Meeting

GA Account Reconciliations

GA Journal Entries

GA Reporting

GA Consolidations

GA Cash & Banking

GA Acctg System

Maintenance

GA Client Requests

GA Other - Projects

IC Account Reconciliations

IC Journal Entries

Tax Acct Reconciliations

Tax Journal Entries

Tax Reporting

GA Journal Entries

Enable real time

measurement


Functionality:

Measures time and volume at activity level by

individual, by account against standards

Standardizes processes and shares best

practices

Drives continuous improvement as standards are

achieved and reset

Provides insights for solutioning new deals

User-friendly design:

Unobtrusive, yet always visible

Easy to select activities (only shows activities

specific to agent)

Auto-break if system unused for more than 5

minutes

Triggers actions to drive up utilization

Our TVC tool enables consistent, granular performance

measurement to standards.

ACT Reporting 5Sub

ActGovernment reports Vol Break XPCV1.6d

Client closing calls – Rept: 15

Government reports – Rept: 20

Internal closing calls – Rept: 16

Maintain Database Tbls. & Syst. Interf. – Rept: 21

Prep/Maint/Close of ERP system – Rept: 17

Prepare report – Rept: 18

Tax report – Rept: 19

ZZ – Assistance: 10007

ZZ – Break: 10000

ZZ – Client-driven waiting time: 10005

ZZ – Computer system downtime: 10002

ZZ – General Meeting: 10001

ZZ - IBM Required Tasks: 10004

ZZ – Industrialization (DE): 10006

ZZ – Training: 10003

TVC utility installed on each individual’s

desktop to monitor sub-activity times

Time-Volume-Capture

(TVC) tool

Enable real time

measurement


By setting standards at the activity level, we quickly optimize

individuals’ performance and reduce variability across clients.

Analysis:

Analysis highlighted wide variability in individual performance

TVC data used to identify low-performing individuals Team leaders implemented actions to improve

performance, such as: – Training – Work allocation – System constraints

Results:

Real-time performance feedback Individual’s motivated to improve performance Individual performance closely clustered around

average points for availability and efficiency Overall productivity of up to 10-20% on some accounts

BEFORE TVC: Individual Efficiency/Availability

Availability %

Eff

icie

nc

y %

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

Below average efficiency

Belo

w a

vera

ge a

vailab

ilit

y

Top quartile

Availability %

Eff

icie

nc

y %

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

Top quartile

Below average efficiency

Belo

w a

vera

ge a

vailab

ilit

y

AFTER TVC: Individual Efficiency/Availability

Enable real time

measurement

Example: Individual

Efficiency/Availability


TVC data identifies opportunities to improve utilization by level

loading work and managing peak processing periods.

Analysis:

Used TVC data to pinpoint non-critical work performed

during peak, month-end GL period

Analyzed necessity of performing this work during peak

periods

Where possible, reconfigured work/timing to be

performed during non-peak periods to improve capacity

utilization

Results:

Work pushed to non-peak periods included:

– Systems maintenance

– Desktop documentation

– Non-essential reconciliations

Overall productivity of 5-10% on some accounts

BEFORE TVC: Non-critical work

performed during peak periods

Example:

Level loading work

AFTER TVC: Non-critical work performed

during non-peak periods

Date

Total hours per day

Current staffing levels

Future staffing levels

Total hours per day

Current staffing levels

Date

Enable real time

measurement


TVC data identifies opportunities to improve utilization by

“right skilling” work and cross-training resources.

Analysis:

Used TVC data to identify amount and frequency of

“client-driven waiting time” by process and individual

Identified opportunities to reallocate resources to

different activities during peak and lean periods

Results:

Increased efficiency in terms of overall FTEs needed

Elimination of “forced idleness” from low volumes and

cyclical processes

Transaction processing teams cross-trained for back-up

purposes

Overall productivity of 5-10% on some accounts

Example:

Pooling resources

FTEs required before and after cross-training:

400

350

300

250

200

150

100

50

0

Jan Feb Mar Apr

Client-driven waiting time trend

Ho

urs

344

215

115

58

Reporting & GA

Pre cross-training

Post cross-training

GA (JE) Reporting

Canada 9 FTEs

Canada 6 FTEs

14 FTEs

I / C & GA

Pre cross-training

Post cross-training

GA (JE) IC

US 9 FTEs

IC 3 FTEs

11 FTEs

Enable real time

measurement


Agenda

EPIC overview

– Optimization



EPIC








Through the smart use of technology, we drive productivity, improve

quality, fill functionality gaps and enable end-to-end processes.

Activities:

Deploy productivity tools to automate

manual tasks and reduce errors, cycle

time and nonvalue-added activities

Implement tools that wrap around client

ERPs

Implement enabling

technologies

1

AP T&E Record-to-reportRevenue Cycle (O2C) Payment Systems

Workflow Tools: RAPID, DCIW, Issue Escalation Management (JIRA)

Operational Excellence Tool: Time / Volume Capture (TVC)

Document Management Tools: Document imaging (Xerox), Electronic forms (eForms)

Standardization Tools: Desktop Procedures & Policies Repository (Quickr) , Service level management (Service Flow)

Expense

reporting

(GERS) Suite:

Purchasing Card,

Travel Booking

Integration,

Standard Reporting

ARCollect Suite:

CDR,

Dashboard,

Smart Search,

Unified Dialer,

Knowledge Management

(Knowlagent)

Payment Systems

Suite

(Transaction Processing

Engine, Integration Tools,

Value Add Features)

General Accounting

Suite:

Account Reconciliation,

Close Monitoring,

Audit Tracking,

Quicker Repositories,

Journal Entry,

Reporting Process Tracking

Accounts Payable

Suite:

Invoicing/Portal

AP Recovery/ Duplicate

Payments

Invoice Translation

Transaction Processing

Operational Excellence Automation Enablers: Auto e-mailer, Auto-resizing, QC tool, Scrapper, Automation of trackers, Macros, Hot Keys


technologies


We bring enabling tools that wrap around our clients’ ERP, providing process

standardization and improving performance.

Transaction Processing

Record-to-report Payment Systems AP T&E Revenue Cycle (O2C)

Analytics Tools: Time-Volume-Capture (TVC), WebSphere Business Modeler, ACL, Insight, Cognos, SAS / SPSS

Workflow Tools: RAPID, DCIW, Issue Escalation Management (JIRA)

Document Management Tools: Document imaging (Xerox, Iron Mountain), Electronic forms (eForms)

Standardization Tools: Desktop Procedures & Policies Repository (Quickr), Service level management (Service Flow)

Expense

reporting

(GERS) Suite:

Purchasing

Card,

Travel Booking

Integration,

Standard

Reporting

ARCollect Suite:

CDR,

Dashboard,

Smart Search,

Unified Dialer,

Knowledge

Management

(Knowlagent)

Payment

Systems Suite

(Transaction

Processing

Engine,

Integration Tools,

Value Add

Features)

General Accounting Suite:

Account Reconciliation, Close Monitoring, Audit Tracking, Quicker Repositories, Journal Entry, Reporting Process Tr

Accounts

Payable Suite:

Invoicing/Portal

AP Recovery/

Duplicate

Payments

Invoice

Translation

EPIC Automation Enablers: Auto e-mailer, Auto-resizing, QC tool, Scrapper, Automation of trackers, Macros, Hot Keys


We deploy process-enabling tools that “wrap around” client ERPs to

drive productivity and enhance quality.

Benefits:

Days Sales Outstanding (DSO) reductions up to 90% on past due debt

Cost savings of up to 60% Dispute resolution time reductions up to 80% Cash application improvements up to 80% Significant reductions in profit leakage, bad debt reserves

and write-offs Removes subjective decisions by individual staff

Benefits:

Visibility into issues types and resolution cycle times enables transparency and accountability

High-quality information enables proactive measures vs. tactical reactions

Improved dispute detection times Improved compliance and control Improved customer experience

Functionality: Comprehensive customer segmentation and

prioritization capabilities

Automated customer behavior scoring based on past

performance

Flexible strategy setting at multiple levels and times

Advanced workflow for role segregation and work

allocation to the “right skilled” resources

Web portal with automatic correspondence and

escalations to drive disputes to quick resolution

Comprehensive task, staff and workflow analytics

Drill-down capability enables management by

exception

Example:

ARCollect tool suite


technologies


We also provide BPO platforms that offer cloud-enabled Software-as-a-

Service (SaaS) solutions.

Benefits:

Full end-to-end integration

Highly standardized business model in an open

architecture

Multi-tenant platform

Flexible client adoption points

Benefits:

Operational run rate savings of 60-75%

Compliance only spend savings of 2-4%

Compliance + sourcing spend savings of 6-8%

Low-cost automation and process standardization

Increased insight into travel spend

Increased visibility and management control

GERS

Policy Rules

Receipt Management

Table Maintenance

Interface File

Process Call Center Argentina

Corporate

Card

Agency

Booking

Data

Staging

expense travel / administration

support

Data

Repository Dashboard visibility

Insight

Business Analytics

Management Standard

Reporting

Back Office Policy Audit

Receipt Management

thru OCR

technology

Legend

Client

IBM Research

IBM BPD

IBM RMDS

IBM BusinessTone®

Travel Partner

Corporate Card

User Book travel

Travel spend

Travel and expense

management


We implement a variety of “small scale” tools to automate manual

tasks and reduce errors, cycle times and nonvalue-added activities.

Analysis:

Journal entries (JEs) received via email

Some required interpretation and caused errors

Caused delays at month-end for error correction

Deployed IBM JET Express

Results:

JEs submitted via standard templates with upfront

validation (at the source and at receipt in IBM

delivery center) and auto-upload and archival

Estimated 10-20% reduction of journal entry

processing time

A. Prepare JE

input outputtool

B. Verify JEin

pu

t

tool

output

C. Process JE (prepare file for upload)

input outputtool

D. Archive JE

(save JE as separate file, print hardcopy)

inp

ut

too

lin

pu

tin

pu

tto

ol

too

l

outputoutput

Example:

JET Express (journal entry tool)


technologies


We implement a variety of “small scale” tools to automate manual

tasks and reduce errors, cycle times and non value-added activities.

Analysis:

Follow-up emails generated manually

No mechanism to track responses and issue closure

Deployed Auto Mailer tool

Results:

Better accuracy by using standard templates

Improved controls using tracking and follow up

Improved productivity on query follow up and

tracking

Functionality:

Automatically sends emails and reminders

(on non-receipt of response)

Uses predefined templates to improve

data quality and enable quicker responses

Triggers actions to drive up utilization

Tracks status through closure

Example:

Auto Mailer tool


technologies


We have deep “small scale” automation skills to optimize ERP

functionality and implement “quick hits.”

Objectives:

Automate sub-ledger reconciliation process

Minimize repetitive labor-intensive tasks

Create error free reconciliation environment

SAP script setup:

Automate comparison between open items on bank

Results:

Up to 75% reduction in the amount of manual work

effort for a particular task or set of tasks

Error prevention as SAP script auto-populates

necessary data

Summary of reconciled company codes presented

to the user

Before: Run for each company code

one at a time

After: Run and reported for all

companies at once

Example:

SAP scripting: Subledger reconciliation


technologies


Agenda

EPIC overview

– Optimization



EPIC








Our standard approach “builds quality in” upfront to prevent defects

before they occur.

Activities:

Reduce opportunity for errors in process

design

“Build quality in” vs. “inspect it in” later

Implement tools to automate quality

assurance

Monitor error rates and diagnose root

causes

Build quality

into process

Build quality into

process


Simple process redesign and automation quickly “builds quality in.”

Analysis:

Labor-intensive intercompany process with many

steps and repetitive manual entries

Process deconstructed into individual steps, which

were timed and evaluated to assess “value add”

Experimented with several process designs to arrive

at optimal solution

Results:

Macros built to automate manual, repetitive tasks

Improved quality

Streamlined process from 18 to 6 steps

Reduced work effort by more than 50%

Simple, quick to implement

Redesigned Process: 6 steps*

Process After Before IC-Automation

Download Table Data from

SAP & E-HUB

Save All Files in excel

format

Save SAP and Hub Files in

data Folder

Select your Recs in Master

Sheet & run the Macro

Prepare Master Sheet

Download Data from SAP

Baseline Process: 18 steps

Process Flow Before IC-Automation

Go to SAP and check

type of reconciliation

In Hub reports in LC A1 GRA

File Find Entries for TP A1 &

A2 GRA’s & copy

Update data in summary

sheet

Download Data from

SAP

Insert a New Sheet as Hub in

the recon File

Update data in Recon

Template


format

Paste Copied Cell in Hub

Sheet Insert Heading delete

unwanted rows & columns

Update balances in

Recon template sheet

Repeat the Process for

All LC & TP Pains

Attach LC and TP Files

and Save the sheets into

one File

In SAP Look For LCA1

GRA and TPA1 and A2

GRA’s

Attach Recon Template &

Summary Sheet to the File

Now Based on Rec Type

Match LC, TP, Hub Sheets

Color the verified identified &

timing items w/ diff colors

Update reconciler details

in Recon template sheet


All reconciliations

For Currency Recs

prepare timing template

repeat all steps except

TP & HUB related steps

Baseline Process: 18 steps

Process Flow Before IC-Automation

Go to SAP and check

type of reconciliation

In Hub reports in LC A1 GRA

File Find Entries for TP A1 &

A2 GRA’s & copy

Update data in summary

sheet

Download Data from

SAP

Insert a New Sheet as Hub in

the recon File

Update data in Recon

Template


format

Paste Copied Cell in Hub

Sheet Insert Heading delete

unwanted rows & columns

Update balances in

Recon template sheet


All LC & TP Pains

Attach LC and TP Files

and Save the sheets into

one File

In SAP Look For LCA1

GRA and TPA1 and A2

GRA’s

Attach Recon Template &

Summary Sheet to the File

Now Based on Rec Type

Match LC, TP, Hub Sheets

Color the verified identified &

timing items w/ diff colors

Update reconciler details

in Recon template sheet


All reconciliations

For Currency Recs

prepare timing template

repeat all steps except

TP & HUB related steps

Build quality

into process

Example:

Macros to automate manual tasks


“Small scale” tools automate manual tasks, reduce posting errors and

increase productivity.

Analysis:

Data manually entered from ERP to workflow application Time-consuming data entry prone to errors Deploy Screen Scraper tool

– Highlight page in ERP – Tool “cuts and pastes” data to a notebook for

reconfiguration – Reformatted data is pasted to workflow

Results:

Reduced processing time by 25 seconds per

invoice, or 15-20%, by eliminating need to re-

key data

Eliminated errors from manual keying

Before: Manual data entry to workflow After: Data auto-populated from ERP to workflow

Build quality

into process

Example:

Screen Scraper tool


Eliminating exceptions focuses on diagnosing and reducing the

client-driven root causes that prohibit straight-through processing.

Activities:

Analyze activities to identify and eliminate

exceptions and nonvalue-added work

Identify exceptions early in the process

Diagnose root causes of exceptions

Work with clients to reduce the incidence

of exceptions at the source

Escalate exceptions through agreed

management process

Build quality

into process

Eliminate exceptions

and nonvalue-added work


Cross-client metric comparisons enable us to highlight gaps in

performance, isolate root causes and drive improvement.

Analysis:

Cross-client analysis highlights accounts with highest defects/exception rates

Analytics by defect type identifies root causes attributable to client’s upstream procurement processes

Team with the client to: – Increase accuracy

– Reduce procurement-related exceptions

– Increase exception resolution rates

Root causes and remedies

No goods receipt: Identify repeat offenders of goods receipts not processed timely, monitor and manage defects out

Incorrect GL info: Implement validation edits in PO system against COA and vendor master file

Incorrect/missing PO info: Implement/automate pre-processing validation of PO invoices

Vendor setups: Automate/implement self-service for vendor setups tied to invoice submission

Example:

Accounts payable exceptions

Build quality

into process


We continuously analyze processes to identify and eliminate

unnecessary work.

Reporting Activity Analysis

20% 18% 17% 14% 13% 12% 9% 9% 8% 8% 8% 7% 6% 6% 6% 5% 5% 5% 5% 4% 4% 4% 4% 2% 2% 2% 1%

0%

10%

20%

30%

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

clie

nt

Account Name

% C

on

trib

uti

on

% Contribution

Client Report Segmentation

14%

29%

57%

% Client Reports % Mgmt Reports

% Internal Tracking Reports

Client Report Category

19%

14%

10%

57%

% of Process Related % of General Management

% of Control Report % of Information Report

Reporting % Reduction

4.5%

7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Before

% C

on

trib

uti

on

After

Analysis:

Analysis of TVC data shows time spent on AP reporting activities varied from 1-20% across clients

Analyzed outliers (>10%) by segmenting and categorizing reports

Optimized report population by: – Eliminating duplicate reports – Eliminating reports no longer required by the client – Merging similar reports – Automating manual efforts in various reports

Root causes and remedies

Rationalized and validated set of reports

Reduced the number of reports by 30%

Reduced work effort (time) by 36%

Example: Accounts payable reporting

activity analysis

Build quality

into process


Agenda

EPIC overview

– Optimization



EPIC








We leverage internal and external benchmarks to identify specific

actions to achieve top quartile performance.

*External benchmark sources include APQC and other leading benchmarking firms

Activities: Encourage culture that promotes

experimentation to pursue potential

improvements

Perform internal (cross-client) and external

comparisons at the individual, process and

account levels

Identify gaps to IBM standards and top

quartile best practice process designs

Design “art of the possible” roadmaps to top

quartile

Reengineer processes and deploy technology

to address gaps

Leverage predictive analytics to strengthen

compliance and reduce spend

Best-in-class companies realize better

business outcomes than average

performers

Cycle Time in Days to Resolve Adjustments

Figure 50

Top

Performers

All

Participants

Median

Bottom

Performers

45

21

5

Days Sales Outstanding

Figure 49

Top

Performers

All

Participants

Median

Bottom

Performers

50

26

50

58

Invoices Processes

Figure 42

Top

Performers

All

Participants

Median

Low

Performers

Top

Performers

All

Participants

Median

Low

Performers

$1.24

$1.41

$1.95

619,252

78,320

32,395

Cost* Productivity**

*Total cost per invoice processed

** Number of invoices processed per FTE

Total Cost of Processing Accounts

Receivable per $1,000 Revenue

Figure 43

Top

Performers

All

Participants

Median

Bottom

Performers

$0.99

$0.33

$0.07

Drive to best practice

outcomes


improvement


Our corporate culture promotes experimentation to pursue potential

improvements.

Principles

Council, comprised solely of “frontline” practitioners,

established following initial Delivery Excellence period

Ideas generated by practitioners

Prioritized ideas presented to management monthly

Team selects ideas to implement based on cost /

benefits

Benefits

Ingrains a sense of individual ownership and

accountability

Promotes creative thinking, idea generation and

team work

Improves employee job satisfaction

Innovative process improvement ideas are

generated from a variety of sources, including

– Global process leaders

– CI team

– Account teams

– Clients

– Operations staff

“Frontline” practitioners have unique perspective

Local CI councils established to formalize

collection and evaluation of these ideas


improvement

Example: Accounts payable

reporting activity analysis


We use WebSphere Business Modeler as our standard to perform

end-to-end process comparisons and simulations.

43

Client A: New client

Close

AccRec

process

Confirm

reconcili...

Run

necessary

Resolve

recon

issues

Identify

Issues &

Reconcile

Generate

recon

Gather

recons data

2 2.1 6 107

Assemble

recons

inputs

Supervisory

review &…

0 seconds

IBM

2 minutes9 minutes

4 minutes 3 minutes5 mins

30 secs10 mins

40 secs

2 mins

20 secs

1 min

36 secs

IBM

1

+ +5 11 12

+ + + + + ++

Data Gathering:

2 min vs 40 seconds

ERP set up without

auto match: 9 min vs 5 min

Issue resolution associated

with Journal Entries: 3.67 min vs 0

Extra Review by

Supervisors: 2 min 20 secs vs 30 secs

Total process time: 38.1 minutes

Client B: Recognized best practice (internally and externally validated)

5 minutes6 minutes 0 seconds4 minutes 0 seconds 50 seconds

1 min

30 secs

Close

AccRec

process

Run

necessary

Resolve

recon

issues

Identify

Issues &

Reconcile

Generate

recon

Gather

recons data

2 2.1 6 107

Assemble

recons

inputs

Supervisory

review &…

IBM

+ +5 11 12

+ + + + + ++

40 seconds

Total process time: 18 minutes


improvement

Example: Account

Reconciliation


Cross-client metric comparisons enable us to highlight gaps in

performance, isolate root causes and drive improvement.

Analysis:

Cross-client analysis highlighted a gap

Analytics isolated the gap to non-PO transactions

Process simulation used to:

– Compare to best practice model

– Diagnose drivers of gap

– Size the impact

Analysis identified two extra steps and three

significantly more labor-intensive activities: – Completeness verification: 2.5x more effort

– Approver selection: 8x more work effort

– Exceptions: 20% more volume

Cost per invoice comparison Invoices per FTE comparison

Pro

du

ctivit

y

Accounts

160

140

120

100

80

60

40

20

0

Approval / Coding

Process Design

Process

Complexity Client Specifics

Top

Drivers

2009 2008

$ 10.00

$ 9.00

$ 8.00

$ 7.00

$ 6.00

$ 5.00

$ 4.00

$ 3.00

$ 2.00

$ 1.00

$-

Pro

ductivity

Accounts

Cost per Invoice

External benchmark

Results

Targeted improvement: 20%+ reduction in hours

Example:

Accounts payable


improvement


We utilize our granular cost driver analysis and external

benchmarks to create client roadmaps to optimized processes and

shift to transaction pricing.

Analysis

Analysis of top AP cost drivers identified significant gaps to

best practices

Most of the activities to close gaps require client action

(with IBM support): – Adopt OB10 with 70% e-invoicing

– Enable PO flip and validation

– Utilize vendor query portal and workflow for self-service

inquiry resolution

– Increase first pass yield rate, reduce exceptions and time to

resolve

Price decomposition required for apples-to-apples

comparison to benchmark

Results

Composite price per invoice aligned to best practice

and better than target set by client

Client / IBM alignment on key drivers of AP cost

Agreed transaction pricing model based on client’s

process characteristics

Client objectives: Achieve best practices benchmark price per

invoice through automation of paper invoices

Extend accounts payable (AP) automation

program and drive to “e-everything” within 2

years

Migrate to a transaction pricing model

Key Drivers Today Gap

% Electronic 23% 67%

Elec. Invoices / FTE 30,000 15,000

% PO 73% 17%

AP Spend ~$2.4 MM

Cost / Invoice $3.45

Example:

External benchmarking


improvement


We design client-specific “art of the possible” roadmaps to quantify

the actions required to achieve top quartile performance.

Change Benefit IBM actions Client actions

Contact

Center $88K

Limit calls to 2,000 per month

Extensive supplier usage of OB10 VQP

Extensive employee usage of workflow query

Scanning $52K

Eliminate need for Tulsa oversight of third-party provider scanning

Push third-party provider to be self-sufficient

Workflow

User

Maintenance

$12K Integrate this activity with SAP Admin team

Leverage EMEA process team Streamline “RequestEZ” process

Exception

Management $80K

Workflow automation of Accounts Payable

– Invoice Processor role

Increase quality of invoice to improve first pass

yield %

Invoice

Processing $206K

Workflow automation of Accounts Payable

– Invoice Processor role

70% e-invoice volume Enable PO flip/validation to improve inbound E-

invoice quality Timely resolution of exception queues

Indexing $106K 70% e-invoice volume

Upload Error Correction

$30K Stabilize Workflow/SAP interface Stabilize workflow/SAP interface

TOTAL $574K

Example:

External benchmarking


improvement


Agenda

EPIC overview

– Optimization



EPIC








Advanced analytics bring predictive capabilities that improve

compliance and enable outcome commitments.

Behavior Shift Models – Identify category-specific behavior patterns that are anomalous

Game Theoretic Models – Use game theoretical models to prioritize expenses for audit

Abnormal behavior patterns are identified at various levels of granularity for further investigation.

Policy exceptions are prioritized for audit and recommend policy updates to reduce potential fraud.

Example:

Predictive Analytics

Innovate best

practice designs


O2C analytics suite includes collection optimization analytics

that improve working capital and process efficiency.

High Days Sales Outstanding (DSO) due to delinquent Accounts Receivables Business Challenge

Reduced Days Sales Outstanding due to

reduced delinquent receivables

Enhanced customer satisfaction

Reduced cost of collections

Reduction in bad debt charges offs

Collect historical

payment data

Segment customers

based on historical

payment behavior

Assign risk based

collection score

Apply differential

treatment strategies

Commercial terms

Habitual late payers

AP Process limits

#1 Collections focus

Results swingers

Complex accounts

Pays on time and in

terms

Occasional disputes

Requires collections

discipline

Low Days to Pay - Variation

Days t

o P

ay

High

1

2

3

Close focus a/c

High

Our Approach

Benefits / Impact

Increased cash collections for a large US

based News and Business Information

company by 20%

Increased cash collection from high risk

accounts for a Global document

management company by 80%

Case Study

Example:

Predictive Analytics

Innovate best

practice designs


Our new B2B Collaborative Commerce solution for S2P offers significant

savings.

Collaborative Commerce is an

overall roadmap / architecture for

how a business should employ

best practices, standardized

processes and technology to

achieve high performance from

their supplier spend.

Up to 10X is the business

outcome and value proposition¹

that we can offer to clients when

they outsource their Source-to-

Pay processes to IBM since the

value they will receive is

significantly greater than what they

can achieve on their own.

Suppliers

Performance

Analytics

Integrated

Supplier

Relationships

Transaction

Automation

Bids

Contract

Orders

Invoices

Scorecards

Collaborative Commerce Workplace

Strategic Sourcing

Buying Operations

Payables

Performance Analytics

Portal Client

Requirements

Catalog Buys

Requisitions

Receipts

Queries

Reports

Suppliers

Performance

Analytics

Integrated

Supplier

Relationships

Transaction

Automation

Bids

Contract

Orders

Invoices

Scorecards



Strategic Sourcing

Buying Operations

Payables

Performance Analytics

Portal Client

Requirements

Catalog Buys

Requisitions

Receipts

Queries

Reports

Collaborative Commerce Roadmap

Savings

Price (Cost)

Up to 10X Value Proposition¹

¹ Dependent on scope and client maturity


Powered by integrated analytics, EPIC offers clients game changing

capabilities.

Achieving process optimization is never easy and the ability to achieve it varies by client

IBM offers a unique, standard methodology that can accelerate the path to process optimization based

on client’s strategy and desired pace of change

Our EPIC methodology consistently

Enables significant process visibility through

standards-driven granular measurement and

monitoring of activities

Embeds analytics at each step in the process to

accelerate optimization

Leverages innovative technology and benchmarks

to drive to top quartile performance

Delivers 20-50% FTE productivity, when

combined with labor arbitrage translates to 30-

60% annualized run rate savings

Extends E2E across IBM/client organizations

driving EPIC across the entire enterprise

Ultimately accelerates companies’ readiness for

integration

EPIC in Motion


Examples of our integrated analytics that enable actionable insight and

powers our commitment to outcomes.

Business operations

How the business

applies information to

achieve its goals:

Policies

Activities

Procedures

Standards

Controls

Organization

Information and analytics How the business manages information and learns from it

IBM’s mature

process analytics

and optimization

capability provides

our clients with

differentiation and a

competitive edge.

IBM integrated analytics

Common

Progressive

Process blue

books

Pioneering

TVC: “Right

skilling” of

work

Process

maturity

models

WBM: Process simulations

Cross-client comparisons

Lean: Ids outliers / eliminates NVA work

Six Sigma: Performance deviations

TVC: Granular performance measurement to standards and roadmaps to best practices

TVC: Real-time performance feedback

ARCollect: Customer segmentation / predictive paying patterns

GERS: Behavior shift models / statistical fraud analysis


Market maturity continues to increase the demand for more complex services

and increasing value … EPIC helps clients keep pace!

Market Maturity

To

tal

Serv

ice V

alu

e

Labor Arbitrage

Efficiency

E2E Process Harmonization

Integrated Analytics

Virtualization


Backup


Skill Number Major focus

Six Sigma

Black Belts 22

Drive process improvement through error/defect analysis Analyze improvement opportunities through detailed analysis and

process decomposition

Industrial

engineers 10

Identify improvements by deconstructing a process into component steps to identify optimum process

Analyzes activity/efficiency data to identify improvement opportunities

Automation

team 12

Develop “small IT” tools and applications Review processes for automation opportunities Deploy IBM’s standard toolkit

Operations

staff 6

Bring operations experience and best practice knowledge Work with operations teams to identify and implement process

improvement opportunities

ERP experts 3 SAP and Oracle experienced team to ensure ERP functionality is

maximized

Consultants 2 Run process improvement workshops

Project management

The IBM core process innovation team

IBM operates a 55 strong global process innovation team


Multiple, micro improvements achieved during initial phase collectively add

up to significant savings.

24% average FTE reduction from 3 to 6 month initial period, followed by

ongoing year-on-year continuous improvement

Delivered to 40+ F&A outsourced accounts

7 IBM Centers of Excellence

2008 savings of 490 FTEs

2009 savings of 510 FTEs

America APAC EMEA India Total

PTP 26% 21% 22% 32% 27%

RTR 20% 21% 22% 21% 21%

OTC 15% n/a 22% 18% 20%

Total 22% 21% 22% 25% 24%

Thank You

For more information, visit:

www.ibm.com/services/process

http://www.ibm.com/services/process

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