Implementing SAP Invoice Management at Tullow OilVish Somaia – Pathway SAP Project Manager

Monday 24 November 2014

Implementing SAP Invoice Management

Vish Somaia – Pathway SAP Project Manager – Monday 24 November 2014

• Business Context

• Requisition To Pay Process

• Solution Overview

• Key Benefits

Contents

3

Implementing SAP Invoice Management

Tullow has experienced exceptional growth over the past 5 years, resulting in more complex business operations

Increase in global operations: •4 new basins in 5 years •74% exploration and appraisal rate•Cost recovery exposure increasing year on year

• Increase in complexity of business operations• Continue to progress with operations in Ghana and Uganda and continued focus on growth in Africa and the Atlantic Margin

•Sales revenue has grown by 80% over the past 5 years

•Operating profit has increased by 198% over the past 5 years

4

KENYA

ETHIOPIA

TANZANIA

MADAGASCAR

NAMIBIA

UGANDA

UK

NETHERLANDS

GHANA

GABON

MAURITANIA

IVORY COAST

5

Global Operations across remote developing geographies, spanning 3 continents.

GUYANA

SURINAME

FRENCH GUIANA

SIERRA LEONE

LIBERIA

SENEGAL

EQ. GUINEA

CONGO

Business Regions

Europe, South America, Asia

North and West Africa

South and East Africa

London

Cape Town

Dublin Corporate Hubs

NORWAY

Reduce rework by minimising errors from infrequent Requistioners, Manage quality of requisition data input

Budget visibility in SAP

Delegation of Authority (DOA) authority applied for budget holder approvals to spend

Efficient approval process with full visibility Introduction of material & service master in requisition

Simplified low value purchasing process Introduction of p-card & blanket order buying options

Introduction of the Nominated Requisitioner Model

3 way matchIntroduction of service receipting

Increases early recognition, visibility and control of services spend

Increases early recognition, visibility & control of spend

Real time reporting of commitments compared to budgets

Greater budget holder control commitments against their budgets

Automated bank reconciliation clearing

No DoA approval required for three way matches

Automated partner billing

Commitments should only be raised against approved budgets

Invoice scanning

Reduced manual processing and

increased process time efficiency and accuracy

Automated interface to RBS, Citibank and Standard Chartered

Reduced manual processing and shift of AP from one of processor to monitoring and managing of exceptions

Reduced misstatements in Joint Venture books

reducing cost recovery exposure

warning messages

when budgets are consumed (e.g. when AFE

is 100% consumed)

JV module fully integrated with the Finance system

Ability to produce Venture specific audit support documentation

SAP Implementation

The Pathway Transformation Programme brings People, Process and Technology Change across Tullow

6

Rising to the challenge – The Pathway Programme helped position us for future growth

Fit for purpose, timely and auditable end to end processes and ways of working

Accurate and timely information, allowing effective performance monitoring and decision making

Scalable Finance and Supply Chain system solutions to automate critical processes and allow value adding activities

Strong unified global team with capability to flexibly support the Business Units

For Finance & Supply Chain For our business

Applying the right level of process to drive efficiency and assurance

Providing the right information to help us manage the business and make the right decisions

One standardised and integrated system to support business growth

Clearer roles and responsibilities to empower our people and help them work more effectively

Process

Data

Systems

People7

8

Requisition to Pay Process

Identification of Need

Raise Requisition

Budget Holder Approval

Purchase Order Raised by C&P

Receipt (either service or goods)

Invoice Arrives

Payment Run Review if Required

Check Against the PO Scan Invoice

If there is a mismatch thencheck with Supply Chain/Requisitioner

Finance

9

Vendor Invoice Management – Benefits

Vendor Invoice Management (VIM) is a software solution used to manage invoice processing.

VIM aims to tackle inefficiencies in the business by reducing the manual keying of invoices into the Finance system and automating the process as much as possible.

VIM offers controlled and automated exceptions handling, ageing, escalation, and reporting, resulting in reduced cost of processing invoices.

Depending on classification, invoice exceptions are routed according to established business rules and policies. Workflow policies determine where invoices are routed and what approvals or next steps are required.

VIM integrates seamlessly with SAP and the majority of its functions are run through SAP itself.

10

Vendor Invoice Management – Process Overview

YES

NO

11

Vendor Invoice Management – Solution Overview

VIM

ICC

Archive Server

VIM – Vendor Invoice Management is where the invoice is first sent after scanning, and once validated in Invoice Capture Centre (ICC) , it comes back into VIM for further processing including exception checks and workflows.

Archive Server is the content repository where the Invoice scanned image is stored.

ICC – Invoice Capture Centre enables the use of Optical Character Recognition (OCR) technology to record details from the scanned invoice and then allows the user to validate/update these details.

12

VIM Invoice Processing Flow

13

VIM Invoice Scanning and Ingestion

• Received via email

• Received in the postIncoming Invoice

received

• Paper invoices received scanned and emailed to generic AP mailbox per location

Invoice scanned to Generic Accounts Payable mailbox

• Invoice received into SAP

• Automated processInvoice transferred to

SAP

• DP document created

• Invoice saved to the Archive Server

• Invoice sent to ICC for Character recognition and Validation

Invoice ingested into VIM

The first step in the VIM Invoice Processing flow is Scanning the invoice into VIM:

14

VIM Invoice Processing Flow

15

Invoice Recognition and Validation

Invoice Capture Centre (ICC) works in conjunction with VIM to completely automate the capture of data from paper invoices.

ICC uses optical character recognition (OCR) to extract invoice data and eliminate intervention in the invoice capture stage of AP processing.

• Extracts the essential invoice data (date, amount, PO number etc) from the scanned invoices.

• Uses a knowledge base that has been trained on samples of thousands of invoices from multiple countries around the world.

• Maps the read data – such as names, addresses, vendor numbers, purchase order numbers etc. – to SAP vendor master data and SAP purchase order data during analysis.

• ICC can be ‘trained’ to increase recognition on future invoices.

Field Recognition Logic

VendorVendor determination uses an extract of SAP vendor master data downloaded from the SAP system of the invoice receiving party.

Company Code

Company code determination uses the SAP extract of Company code names and Addresses

POnumber

PO Number is recognised only if they are in the valid range of SAP PO numbersExamples:

16

VIM Invoice Processing Flow

Purchase Order Invoice Scenarios

Finance Invoices

17

Invoice Processing

Invoice for Goods Purchase Order

Matched against Goods Receipt

Posted as 3 way match without any additional

approval

Invoice for Service Purchase Order – SES

relevant

Matched against Service Entry Sheet

Posted as 3 way match without any additional

approval

Invoice for Service Purchase Order – Non

SES

Sent for Verification to Requisitioner/Nominate

d Invoice verifier

Posted as 2 way match with invoice verification

Finance InvoiceSent for Approval to Budget Holder as per

DoAPosted with approval

18

Invoice Reporting

VIM provides a standard suite of reports to help monitor and review invoices:

VIM Reports Description Role

VIM Analytics Report

Provides you with clear data reports on your documents with exceptions as well as the Invoice Exception workflows

AP Processor & AP Supervisor

Key Process Analytics

Reports about a variety of key figures regarding the VIM process: It shows the accumulated amounts of all documents in the DP workflow, in parked state and in posted state.

AP Supervisor

Productivity Report

Reports about the productivity of users/roles and the activities of users/roles.

AP Supervisor

Summary report

Provides a summary of all documents processed through VIM AP Processor & AP Supervisor

Aging Report Reports about the aging of documents and work items in the current system

AP Processor & AP Supervisor

Current Liability Report

This report is part of VIM Analytics, It offers you a clear data report on documents that are parked in the system

AP Processor & AP Supervisor

Exception Report

Reports all work items with exceptions, grouped by exception, company code or vendor

AP Processor & AP Supervisor

19

Invoice Processing in VIM vs. SAP

The general rule is that all invoices are processed through VIM. However, exceptions exist:

The following invoices are processed through VIM:• Non-PO invoice• PO invoices• Only exceptions should be processed directly in SAP

Exceptions that need to be processed manually in SAP:• Non-PO Invoices which are loaded from

spreadsheet (Winshuttle) e.g. Employee expenses

• Emergency scenario invoices that can’t be processed through VIM (PO and non-PO)

• Down Payment Requests

VIM

Vendor invoice Management

Direct entry in SAP

20

Why is Invoice Management important for Tullow?

Drive a uniform approach to invoice processing across all Tullow Oil locations.

Support an up front, “scan once” process.

Streamline invoice entry to SAP with the use of Optical Character Recognition (OCR) technology.

Deliver transparency of invoice processing through enhanced reporting and analytics.

Provide integrated SAP workflow to support Invoice Management and Resolution.

Efficient early approval process with full visibility of commitments, resulting in reduced manual processing time, increasing efficiency and accuracy.

Introduction of service receipting – Increases recognition, visibility and control of services spend.

21

Questions?