how to increase invoices per fte by 63% globally
DESCRIPTION
Hewlett Packard look at how they have achieved efficient invoice processing around the globe.TRANSCRIPT
©2009 HP Confidential1©2010 HP
Jeff Fiorini
July 2010
HEWLETT PACKARD HOW TO INCREASE INVOICES PER
FTE BY 63% GLOBALLY
©2010 HP2
AGENDA– About HP
– Shared Services and the HP environment for Accounts Payable
– Current State of Accounts Payable
– The Roadmap to Best in Class
– Summary
– Q&A
© Copyright 2010 Hewlett-Packard Development Company, L.P.3
Today HP is the largest technology company in the world— committed to using our products and services to unleash new possibilities and have a meaningful impact on business and life
– Fortune 10 – U.S.– Fortune 32 – Global– Doing business in
approximately170 countries– 304,000 employees– 145,000 sales partners – 210,000 service partners– 88,000 retail locations
©2010 HP4
INVOICE PROCESSING FOR THE WORLD’S LARGEST TECHNOLOGY COMPANY– Q2 net revenue of $30.8B, up 13% Y/Y– Non-GAAP diluted EPS of $1.09; up 27% Y/Y– GAAP diluted EPS of $0.91, up 28% Y/Y– Cash flow from operations of $3.1B
Imaging & Printing Group
21%
Personal Systems Group
32%
HP Services 28%
Enterprise Storage & Servers
15%HP Financial Services and other
1% Software 3%
EMEA38%,
Asia Pacific18%,
Americas 44%,
Q2 FY10 revenue: $30.8BREVENUE BY SEGMENT REVENUE BY REGION
Global company structure and multiple product lines drive Accounts Payable complexity:•Shared Services for processing of 6.6M* invoices for > 60 different countries
•Centralized invoice processing for 6 different company segments
•Large process differences between services and product business
•Different procurement systems for direct and for indirect procurement
•Invoice processing back-end on 19 SAP systems
* Does not include pre-merger EDS invoice volume.
©2010 HP 5
GBS PORTFOLIO
Marketing Support
Quote to Cash (Order
Mgmt)
Finance & Admin/
Corporate Functions
Supply Chain (Inbound & Outbound)
Service Admin (EDS)
Hire to Retire
Global operations (APJ – AMS – EMEA – INDIA)
Reporting and analytics services
Strategy & planning
Compliance & controls
Global shared services solutions
Shared Services at HP: Global Business Solutions
©2010 HP 6
Existing Center
New Center
HP GLOBAL BUSINESS SERVICE FOOTPRINT
San JoseAMS Bangalore
Barcelona
Singapore
DalianBucharestWroclaw
Chennai
EMEA
APJ
India
Cordoba
Manila
Wuhan
©2010 HP 7
HP GBS – OUR STRATEGY JOURNEY
7
Decentralized
Regional Shared Services Global
Consolidation and
Adoption
Technology Enablement & Process Optimization
Business Value Add as End-to- end Process Owner
COSTS VALUE
TIME1990 2010
©2010 HP8
8
©2010 HP9
THE NEED FOR A ROADMAP– HP has successfully focused on building Shared Service Centers
– For years we have reviewed trends in our A/P metrics from year to year
– Transaction volume has grown organically and through M&A activity
– We implemented significant projects for Accounts Payables independent from each other (silo approach with no overall vision)
– How do we make the next step to best in class productivity?• Global end-to-end process owners drive standardization and methodologies in partnership
with stakeholders including IT, procurement, and operations
©2010 HP 10
CURRENT STATE OF HP’S AP PROCESS
HP (Compass):
Automated OB10 to keep efficiency
Metric Name Category HP FY08 HPFY09
APQC Top Performer
Hackett World Class
Hackett Large
Diverse
Best in Class Status
Cost of AP per invoice processed
Cost Effectiveness < $2.56 < $2.56 $2.61 $2.56 $3.29
# of Invoices per AP FTE
Process Efficiency
9.6K 9.9K 18.9K 21.2K 16.1K
Invoice line items matched the first time 57% 57% 93% 91% 61%
% of invoice line items received electronically 70% 72% 80% 80% 48%
OpportunitiesLeverage best-in-class P2P capabilities:•Front-end validations•Self Service •E.invoicing•Workflow
ChallengesNot in a position to effectively address:•Scalability of operations to respond to volume changes•Acceleration of off-shore wage inflation•Expansion of AP real estate footprint resulting from organic growth and M&A activity
©2010 HP 11
HP’S PROCURE-TO-PAY VISION
End to End Process Management• Integrated design• Alignment with Procurement• E2E Business Performance Measurement and
Benchmarking
Supplier Portal - Expand Self-Service Coverage• Purchase Orders• Invoice Status• Dispute Resolution• Inquiry Status• Vendor Master Data
Process Automation• Drive suppliers to e.Invoicing• Front-end, real time, quality edits• Deploy OCR capabilities • Manage exceptions via workflow
Achieve Best in Class P2P process through Automation, Standardization & Optimization
Transform the Process utilizing Best in Class Process Framework focusing on 3 Core Strategies
©2010 HP 12
AP ROADMAPHP vs. Large Diverse Companies
Supplier Setup Invoice Processing
Discrepancy Resolution
Supplier Payment
Customer Inquiry & Response
File, Store & Retrieve
Reconciliation Accrual &
Compliance
% of Updates • Workflow related•Self -Service
FTE Levers% Invoices• Electronic• Auto-posted
% of Exceptions% Expectation Mgt via Work flow
# of payment runs# bank accounts# of manual payments
% Self -Service # of paper documentsLocal Country Req’s.
# of reconciliations# of accruals# of suspect duplicates
37Current HP 213 169 12 135 20 79
21Large Diverse 145 75 29 58 17 70
• Integrated Vendor Updates • Introduce Supplier Self Service
Process Automation Projects
• OB10 Supplier Enablement Campaigns• Introduction of next generation Workflow and OCR capabilities
• Enable OB10 Front End Quality Edits • Identify, Route, and resolve via workflow• Introduce PO Flip
Already at Best Practice
• Enable OB10 Front End Quality Edits•Expand capabilities of AP On-line tool
OB10 Supplier Enablement Campaign
• Tools to automate Reconciliation Process• “Fuzzy” logic to proactively ID duplicate payments
665
415
Traditional Process Taxonomy based on APQC and Hackett Benchmarking Methodologies
(16)Variance (68) (94) 17 (77) (3) (9)(250)
7217 120 81 12 83 20FY13 FTE 405
©2010 HP13
11 October 2010
BEST IN CLASS “PAPERLESS” PROCESS FRAMEWORK
Current 72% 57% 45%
Metric Percent Electronic Invoice Items Matched First Time Percent Self-Service
Future 83% 84% 72%
Current Productivity
9.9K
FutureProductivity
(Timeless Model)
16.3K
©2010 HP14
IMPROVEMENT STRATEGY Supplier Setup
Multiple request processes/tools
Workflow and manual
approvals
Supporting data sourced by purchasing
Manual checks validation and
updatesSingle Master
File
Single request process and tool Supplier Portal
Supporting data submitted with
requestSingle Master
File
• Best Practice Drivers• Single Master File• Supplier Self Service• Request submitted with supporting data• Workflowed approvals• Automated validations/checks
Current Process
Future Process
CurrentProcess
Best Practice
FutureProcess
Updates/FTE 3,341 3,493 > 5,000
Turnaround time; days
Best 4Avg. 13
1 to 2 2
Total FTEs 37 21 17
Workflowapprovals
Email based inquiries
Inquiry ticketing tool
Automated checks
validation and updates
©2010 HP15
E-INVOICING PROGRAM Invoice Processing
Best PracticeCurrent Process Future Process
• Require suppliers to submit invoices electronically for payment (mandatory electronic invoicing)
• OB10 rolled out in additional countries
• Move high volume suppliers to EDI or ERS
• Automated front end validations• Auto posting of OB10 invoices to
all transaction processing systems
• Paper invoice volume is still high• Low ratio of OB10 to paper
invoices in many countries• Vendor participation in the OB10
program is not mandatory• HP has not implemented OB10 in
all countries where OB10 is already tax compliant
• Some OB10 invoices are posted manually
• Manual validations
©2010 HP16
Today’s AP Architecture Future AP ArchitectureNew Workflow
Key Capabilities•Automatic Posting•Auto-routing•OCR intelligent data capture
•SAP Integrated Workflow
•Rule based Exception Handling
BenefitsContribution to overall AP Productivity
Improvement = 2.24K per annumOperational savings = 91 FTE
Current MetricInvoice Items Matched First Time =
57%Processing Productivity = 1.4K per
person per month
Future MetricInvoice Items Matched First Time =
84%Processing Productivity = 2.7K per
person per month
NEW WORKFLOWAutomate Posting and Exception Handling
Invoice Processing
Discrepancy Resolution
©2010 HP17
QUERY HANDLING STRATEGY Customer Inquiry and Response
Best PracticeCurrent Process Future Process
• Supplier contact center• Supplier Portal
• Payment information• Internal contact center
• Issues• Invoice status• Invoice discrepancy• Procedural issues/delays
• Use front-end validations to eliminate problem invoices and associated inquires
• Expand query types managed in self-service environment
• Route query types based on pre-established rules engine
• Enforce use of portal for level 1 inquiries
eInvoicing pre validationSelf Service• Supplier Portal
• Payment information• Invoice status• Master updates• On line training
• Internal Portal• FAQs• Query ticketing tool
©2010 HP18
Self-Service - Collaboration Portal
Guiding Principles: Paperless, Ensures Compliance, Promotes Collaboration
PROCURE TO PAY FRAMEWORK
Dynamic Market Place
Electronic Invoice Management
Supplier Financing
Payment Management
Invoice Capture Real Time Compliance Approval Routing
Dynamic Discount P-Card Supplier Financing
Payment Processing Remittance Processing
Purchasing
Treasury
A/P
Sales Order
Billing
Treasury
A/R
Standard Supplier Information
• Catalog Driven • Role - Commodity Based Buying Guides
• Electronic Order Delivery
StandardTerms
HP Supplier• Banking Relationships• Supplier Agreements
• Supplier Profile• Common Commodity Codes
©2010 HP19
THE HP ACCOUNTS PAYABLE ROADMAP
Process Assessment: Doing great on cost but lacking on productivity
Vision: Automation, Standardization, Optimization
Detailed Analysis based on APQC and Hackett benchmarks
Identified and defined improvement programs
Implementation and tracking of productivity changes: WIP
©2009 HP Confidential20©2010 HP
Q&A