"Purchase to Pay"

Tommy Rugsveen

26.10.2011

Agenda

General challenges

Automatic posting and Master data

E-Invoice

Challenges in the Purchase 2 Pay process

– Requisitions and purchase orders

– Goods receipt

– Invoice handling

Demo

Purchase to Pay Challanges

Large proportion of FI Invoices

Reduced usage op MM Purchases due to complexity in SAP

Missing Goods receipts

Automatic posting not possible due to:

– Wrong Master data

• Vendor/Bank info

• Material master

• Prices

Limited use of item scanning and item handling in SAP workflow

E-Invoices slowly evolving

Automatic posting and master data

Why does automatic posting fail?

– Missing/wrong data from scanning

– No line item handling

– Error in master data

– Error in Purchase orders

• Price

• VAT

• Payment terms

– % of FI Invoice to high

How can this be resolved?

Electronic Invoice handling

How to handle E-invoices?

– Will it fit my current invoice handling system

What format should be selected

What are my options

– Point to point

– Usage of a Invoice Hub

– E-mail

Solutions

– Skye solution

– ReadSoft Smart XML

– ReadSoft Collector

Formater – Dokumenter og innhold

UBL 2.0

XML Schema

CENBII Full

NESUBL

XML Schema

EHF/

BII Core

E-invoice Options

How to receive an E-Invoice

Sender

Receiver

Invoice HUB I

Invoice HUB II

INVOICES

Paper

PDF

XML

File

ReadSoft Collector

Now also with XML support, directly through collector

Skye Solution for Electronic invoice

Solution Objective

System overview and description

PI based solution

ABAP based solution

Message standards and protocols

Solution package deliverables

Solution Objective

The solution is designed to give SAP customers an easy way of integrating E-invoices into their SAP system using the most common standards for E-invoices.

The end users should have the same look and feel for handling all invoices regardless if they are scanned or received as an E-invoice

Solution is designed to fit most SAP customers regardless of version or invoice handling workflows in SAP

System Overview

System description

Module based solution – Supports Process Integration (PI/XI)

– Supports ERP stand-alone (No PI / XI)

– Can be used with different message protocols

– Compatible with different invoice solutions

• Skye Simple Invoice

• ReadSoft Invoice Cockpit

• Other Invoice workflow solutions

Supports a number of different standards – EHF and E2B (Norwegian standards)

– EDIFACT

– SAP IDOC

PI Based E-invoice solution

PI is used as the recipient of the message from the external E-invoice provider

Standard PI Component for mapping from all supported formats to SAP IDOC or directly to a Function Module

E-invoice will trigger either: – Skye Simple invoice

– ReadSoft Invoice Cockpit

– Any other SAP Workflow solution

Standard Integration process for storing incoming images in Content Server or any other ArchiveLink certified archive, such as Open Text or IBM CommonStore

Standard Style sheets for generating Invoice images based on incoming XML message

ABAP Based E-invoice solution

An ABAP program is used to read the data from a file into SAP.

The communication with the external E-invoice provider is handled through FTP or an other message broker than PI

The ABAP program for E-invoice will trigger either: – Skye Simple invoice

– ReadSoft Invoice Cockpit

– Any other SAP Workflow solution

Standard Integration process for storing incoming images in Content Server or any other ArchiveLink certified archive, such as Open Text or IBM CommonStore

Standard Style sheets for generating Invoice images based on incoming XML message

SAP Processing of E-invoices

Standard SAP IDOC handling in SAP

– Here the invoice is handled as a standard IDOC using the SAP standard functions

Skye Simple Invoice

– A custom cockpit solution for receiving and handling E-invoices without workflow, the data is entered into SAP and standard transactions can be triggered from the cockpit

ReadSoft Invoice Cockpit

– A complete invoice solution for handling all types of invoices

Any other Workflow solution

– The E-invoice can be connected to any existing workflow solution.

Message Standards

Standard SAP PI SAP ECC Stand-alone

Receival of invoice image

Invoice Image generation

E2B Yes Yes Yes Yes

EHF Yes Yes Yes Yes

EDIFACT Yes Yes No Yes

IDOC Yes Yes No Yes

Protocols Overview

Protocol SAP PI SAP ECC Stand-alone

Fil Yes Yes

HTTP(S) (Plain) Yes Yes

HTTP(S) (SOAP) Yes Yes

FTP Yes 3rd party

SMTP (Mail) Yes No

AS2 3rd party No

Solution Deliverables

Solution Package

– SW components

– Best Practices configuration

– Solution design documentation

– Preconfigured standard E-invoice formats

– Image generation component

– System and user documentation

Technical Implementation

– Implementation

– Customer adjustments

The power of ReadSoft

Over 6000 customers

3500+ INVOICES installations

500+ INVOICE COCKPIT Suite installations

Offering SAP Certified products

Member of the SAP EcoHub

ReadSoft leads the market around the world Helsingborg

Amsterdam

Copenhagen

Kuala Lumpur

Frankfurt

Helsinki

London

Madrid

Santiago

New Orleans

Oslo

Paris

São Paolo

Stockholm

Wroclaw

Sydney

Certified by SAP

SAP Certified Software

SAP Software Partner

Member of SAP EcoHub

Our customers – diverse and worldwide

And many

more…

BP Retail

Glaxo Smith Kline

Kellogg's

Coca Cola Enterprises

Areva

John Deere

STARWOOD

Portugal Telecom

Rio Tinto

NZ Telecom

Raytheon

DuPont

Boehringer Ingelheim

BBC

Bank of Ireland

ArcelorMittal

Barclays

Siemens

VW

Thyssen Krupp

Vodafone

Intel

Linde Material Handling

PROCESS DIRECTOR

One thing that most organizations have in common

They are full of business processes and those processes are often full of problems that cause additional expense or worse.

Why PROCESS DIRECTOR?

• Processes run manually and without any way to control them

• Incorrect changes in master data

• People try to bypass established processes

• Maverick procurement

• People avoid using complicated systems

• Quality of service is low or varies in quality and cannot be guaranteed

• Slow processes

• Expensive processes

• No transparency

• Wrong postings and excessive corrections

• Low or no visibility into the process

• Difficulty in maintaining compliance

• Department’s reputation in the organization is harmed

• Phone based service

• Email based service

• Paper based service

PROCESS DIRECTOR - The right solution

Targets and improves business processes

– Uses a common platform approach

– Provides workflows

– Gives you visibility into your processes

– Can be used for processes started internally or externally

– Handles document and request driven processes

Why PROCESS DIRECTOR?

Requisitions

Master data

update/create

requests

SALE

S

CONTROLLIN

G

PURCHASING

BUSINESS

SERVICES RECEIVING

DATA CAPTURE

Incoming

customer

orders

General ledger

correction

requests

DATA CAPTURE

Delivery

notes

Unified process control

PLATFORM

Requisitions Custome

r

Orders

Delivery

Notes

Financial

Postings

Platform &

Custom Processes

Master

Data

Remittanc

e Advices

Requisitions Custome

r

Orders

Delivery

Notes

Financial

Postings

Platform &

Custom Processes

Master

Data

Remittanc

e Advices

Choose a process

Defining the terms

Direct purchasing

– Procurement of materials purchased for use in the manufacturing or distribution supply chain that are directly related to the production of finished goods.

Indirect purchasing

– Procurement of materials not result directly in finished goods. These items include Maintenance, Repair and Operations (MRO) and Operations Resource Management (ORM) items such as…

• Office products

• Travel services

• Replacement parts

• Service

70

%

30

%

66

%

33

%

Total

spend

Transactio

n volume

Direct

Indirect

Requisitions Achieving ROI

Studies by Gartner and Hackett reveal the following:

On average, one third of the total spending comes from indirect spending

On average, 30% to 45% of indirect purchasing is ‘maverick purchasing’ which is ordering over the phone

Investigation shows that maverick purchasing, on average, is 35% higher in price than common comparable agreement prices. This gives a savings potential of 26%

Average indirect order value is $120

Average processing cost is between $20 - $30 per transaction

Average processing costs can be reduced to $10 per transaction

Requisitions

25% Indirect

$400,000,000 total spend

assume

25%

$100,000,000 total indirect spend

$25,000,000 Maverick

spend

10% price

improvement gives

savings of

$2,500,000

$10 reduction in

process costs gives

savings of

$2,080,000

75% non-maverick spend

The spending that does follow an established process can be

improved (perhaps it’s currently via paper or email) and

doesn’t have visibility or has slow workflow processes. Staff

can start spending time on high value work like price

negotiations or supplier rationalization.

Direct spending can also be

executed via PROCESS

DIRECTOR.

75% Direct

spend

When all spending is executed via PROCESS DIRECTOR,

you can have a comprehensive overview of all purchasing,

which gives you the potential to improve total product and

supplier rationalization and bring visibility to the combination

of direct and indirect spending.

208,000 orders (Average $120 per

order)

Achieving ROI

Requisitions

Manual process are slow

People avoid established processes that are too complicated

Difficult to see process, poor visibility

Difficult to achieve good price negotiations when you don’t know what you bought

Business issues with poor requisitioning processes

Requisitions

Controlled collection of all requisitions

Integrated approvals of requisitions by authorized persons

Single point of access for all users in the process

Simple to use web browser interface and a familiar SAP look and feel interface for professional users

Integration to e-catalogs

Requisition creation and approval, good receipt creation, and invoice approval through the same application

Optimization of existing SAP infrastructure

Features

Requisitions

Better basis for price and conditions negotiations

Reduced costs for purchasing, logistics and accounting

Improved incoming invoice processing

Improved reporting ability

Optimized supplier selection

Optimization of existing SAP infrastructure

Low TCO (total cost of ownership)

Key benefits for the PROCESS DIRECTOR solution

Requisitions

Blake Evans is the buyer

and raises the requisition.

Later in the process,

he will create a

goods receipt

Roger Tillman

is his manager

and approves

the requisition and also

approves other invoices

for payment

Barbara Jones is in the

procurement department

and does the final

approval and creates

the purchase order

Demonstration

Collaboration StreamWork

SharePoint

…

Interaction on the go On-Device (BlackBerry, iPhone, Android, iPad)

Mobile applications and functionality

Workflow approval and rejection

Data interaction / drill down

Alerts and metrics

Business Analytics

Solutions for SAP: Moving Forward

Moving forward – Partner portals and building SaaS

Partner communication

Supplier interaction – Invoice and purchase

order inquiries

– Advanced Shipping notifications

– Invoice creation

– Order confirmations

– Dynamic Discounting

Customer interaction – Creating orders

– Checking order status

– Submitting payment advices

Solutions for SAP

Organization External

business

partner

Legacy ERP

Subsidiary

ERP

Leading ERP

Subsidiary

ERP

Questions

?

Technical architecture

alternative

authentication

ArchiveLink

(if required)

Corporate directory

(LDAP, MSAD, SSO supported)

HTTP or HTTPS

Namespace /EBY/

Archive

J2EE compatible Web application server

Intranet Client PC

SAP Optical archive

Web application GUI

SAP Connect

SMTP

Mailserver

Electronic

document

File upload

Catalog

OCI RFC Connection (Data exchange

and authentication based on XML)

PROCESS DIRECTOR

ACCOUNTS RECEIVABLES

LOGISTICS EXECUTION

PURCHASING

Buyer areas

SALES

Supplier areas

Create a quote

Create a sales order

Demand, need or requirement

Create outgoing invoice (bill)

Pay invoice Clear open items

Create remittance advice

Process incoming invoices

Process incoming delivery

notes

Process incoming confirmation

Process incoming quotes

RFP created (optional)

Create PD or SAP PO

requisition

LOGISTICS EXECUTION

ACCOUNTS PAYABLE

Deliver goods or services

Payment

Payment advice

Invoice

Request for

proposal Quote

Purchase order

Order confirmation

Delivery note

Process incoming RFP

Process incoming PO

Various departments

Process PA and find open

items

Create purchase order

Order-to-Cash & Purchase-to-Pay