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B2B Spend Management Survey Brought to you by MasterCard International and Ariba

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B2B Spend

Management Survey

Brought to you by MasterCard International

and Ariba

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Page 1

About MasterCard

MasterCard International provides payment solutions via member financial institutions that enable organizations of all sizes to optimize the financial and information supply chain. The MasterCard advantage lies in the company s ability to understand and respond to the unique needs of businesses in implementing e-B2B payment solutions. Now, more than ever, organizations are concerned about corporate accountability, regulatory compliance, and financial transparency. The MasterCard eB2B ChoiceTM strategy provides companies with flexible platforms and a range of vendors from which to choose. MasterCard s goal is to enable organizations to benefit from the efficiencies of a fully automated supply chain with minimum implementation costs.

For further information, please contact: MasterCard International

e-Commerce and e-B2B Center of Excellence 2000 Purchase St.

Purchase, NY 10577 USA

Philip Philliou

Vice President, e-Business and Emerging Technologies (eB2B) Tel: (914) 249-6841

E-mail: philip_philliou@mastercard.com Shari Krikorian

Vice President, e-Business and Emerging Technologies (eB2B) Tel: (914) 249-5871

E-mail: shari_krikorian@mastercard.com http://www.mastercardbusiness.com/e-B2B/

About Ariba

Ariba Inc. is a leading enterprise spend management (ESM) solutions provider. Ariba helps companies develop and leverage spend management as a core competency to drive significant bottom-line results. Ariba Spend Management software and services allow companies to align their organizations with a spend-centric focus and deploy closed-loop processes for increased efficiencies and sustainable savings.

For further information, please contact: Ariba Inc. (650) 390-1000 http://www.ariba.com/ Ingrid Bell PR Manager 650-390-1525 ibell@ariba.com

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Contents

1. Introduction ... 3

2. Summary of Quantitative Responses Overall ... 4

2.1 Demographics ... 4

2.2 Purchasing and Corporate Card Programs... 8

2.3 Enterprise Resource Planning System... 10

2.4 Electronic Invoice Presentment and Payment System ... 12

2.5 Automated Expense Management System ... 16

2.6 Satisfaction... 18

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Page 3

1 Introduction

MasterCard International and Ariba recently conducted a survey of 153 professionals with decision-making or influencing power over corporate purchasing methods. The survey found that two out of every three companies with annual revenues exceeding $500 million now use some form of Electronic Invoicing Presentment and Payment (EIPP) to streamline their financial management processes. The survey characterized forms of EIPP as solutions that enable either EDI or non-EDI electronic invoice receipt or presentment, or the ability to accept or make electronic payments.

Highlights of the B2B Spend Management Survey include:

• 66 percent of respondents currently use some form of an EIPP system (including both electronic data interchange [EDI] and non-EDI);

• 62 percent rely on such technology to make electronic payments to suppliers; and 35 percent use the technology to receive payments from customers

• More than half the respondents (51 percent) cited the reduced processing time and resulting lower costs as the primary benefits of using EIPP

• Survey respondents cited cost (25 percent), complexity (22 percent), and aversion to making changes to their IT systems (19 percent) as the top reasons for not deploying an EIPP system

• 69 percent of respondents whose companies currently do not have EIPP systems reported plans for a future deployment; 48 percent of those implementations are expected in the next year and an additional 32 percent are planned for the next one to two years

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2 Summary of Quantitative Responses Overall

2.1 Demographics

(seven questions)

Below is a summary of the demographic characteristics of the survey group. Question 1: Which job title best describes you?

1% 2% 47% 3% 34% 4% 4% 5% 1% 0% 10% 20% 30% 40% 50% 60% Other CPO VP Finance VP Purchasing VP Travel VP Procurement Manager A/R Manager A/P eBusiness

eBusiness professionals make up nearly half of survey respondents. Just over one-third of total respondents noted that they work in other departments including:

• IT Manager or Director

• Manager of Procurement

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Page 5

Question 2a: Your company s annual revenue:

16% 8% 4% 7% 66% 0% 10% 20% 30% 40% 50% 60% 70% 500 Million - 999 Million 1 Billion - 1.49 Billion 1.5 Billion - 1.99 Billion 2 Billion - 2.49 Billion 2.5 Billion and Over

Over 60% of the companies represented by this survey have annual revenue of over $2.5 billion.

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Question 2b: The areas in which your company has a physical office: 97% 58% 47% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% United States Europe Asia Other

Nearly all of the companies represented by this survey have offices in the United States — a large percentage have offices around the world. Approximately 58% also have offices in Europe, and 47% have offices in Asia. Other regions noted by respondents included Latin America, South America, Canada, Africa, India and Australia.

Question 2c: The number of your company s employees:

11% 32% 30% 14% 8% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% < 10,000 10,000 to 49,999 50,000 to 99,999 100,000 to 149,999 150,000 to 199,999 200,000 +

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Page 7

Question 3: Identify the industry your company represents:

3% 1% 1% 1% 6% 9% 7% 3% 22% 17% 2% 6% 11% 12% 0% 10% 20% 30% Other Healthcare Discrete Manufacturing CPG/Retail High Tech Financial Services Diversified Chemicals Public Sector Logistics & Transportation

Oil & Gas Pharmaceutical Software & Services

Telecom Utilities & eEngergy

Respondents industries varied fairly equally across the board. Financial Services characterizes a majority of respondents with 22%, but other popular choices included High Tech and CPG/Retail. Approximately 17% of respondents choose other to describe the main industry their company is engaged in. Some of these other responses included Manufacturing, Specialty Materials, Automotive, Consulting, Distribution, Document Finishing, eCommerce, Electronics Distribution, Entertainment, Mining, Port Services, Printing Ink, Process Manufacturing, and Research and Development.

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Question 4: How has your company addressed the need to comply with new corporate governance procedures? (check all that apply)

64% 66% 34% 71% 48% 0% 10% 20% 30% 40% 50% 60% 70% 80% Automating Existing Manual Processes

Implementing New Technology Systems Establishing Digital Paper Trails

Improving Internal Controls Instituting a Monitoring Process for Continued

Compliance Over Time

In order to comply with new corporate governance procedures, most respondents noted that their companies have improved internal controls, implemented new technology systems and automated existing manual processes.

2.2 Purchasing and Corporate Card Programs

(three questions)

Question 5a: Does your company have a purchasing card program?

83% 17%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Yes

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Page 9

Question 5b: What percentage of spend is purchased via payment cards?

18% 39% 24% 18% 0% 10% 20% 30% 40% 50% < 1% 1% > 5% 5% > 10% > 10%

Question 6: Do you have a corporate card program (for travel and entertainment expenses)? 89% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No

Just over 80% of those surveyed noted that their companies have a purchasing card program, while nearly 90% have a corporate card program for travel and entertainment expenses. Almost 40% of those surveyed note that less than 5% of their spend is purchased via payment cards.

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Question 7: The number of business travelers in your company: 2% 62% 23% 9% 4% 1% 0% 10% 20% 30% 40% 50% 60% 70% < 10,000 10,000 to 49,999 50,000 to 99,999 100,000 to 149,999 150,000 to 199,999 200,000 +

At 62%, a majority of respondents note that less than 10,000 of their company s employees travel for business, although 23% have between 10,000 and 49,999 traveling employees.

2.3 Enterprise Resource Planning System

(three questions)

Question 8a: Do you have an enterprise resource planning (ERP) system?

77% 23%

0% 10% 20% 30% 40% 50% 60% 70% 80% Yes

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Page 11

Question 8b: Which ERP do you use?

25% 16% 21% 36% 2% 0% 10% 20% 30% 40% Other Oracle PeopleSoft SAP GEAC

Of the 77% of survey respondents who use an enterprise resource planning (ERP) system, a significant percentage use SAP, Oracle and People Soft. Responses in the other category included Computron, CODA, MFG/PRO, Invensys Protean, JDedwards, Lawson, Legacy, ManufacTech, Microsoft Navision, Mincom MIMS and Trams. 15% of this group noted they use various systems and 5% were not sure what their organization uses.

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Question 8c: How satisfied are you with the integration of payment card data with your company s ERP system?

10% 30% 42% 10% 9% 0% 10% 20% 30% 40% 50% Very Satisfied Satisfied Neither Satisfied or Dissatisfied

Somewhat Dissatisfied Very Dissatisfied

Overall, respondents are satisfied with the integration of payment card data with their company s ERP system although 42% are neutral.

2.4 Electronic Invoicing Presentment and Payment System

(four questions)

Question 9a: Which of the following types of electronic invoicing presentment and payment (EIPP) systems does your company use? (check all that apply)

35% 62% 13% 58% 35% 43% 23% 0% 10% 20% 30% 40% 50% 60% 70% None of the Above

Electronic Invoice Presentment (EDI) Electronic Invoice Presentment (non-EDI) Electronic Invoice Receipt (EDI) Electronic Invoice Receipt (non-EDI) Electronic payment to suppliers Electronic payments from customers

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Page 13

Question 9b: How long has your company used each of the EIPP systems? (if applicable) (a) Electronic Invoice Presentment (EDI)

7% 14% 28% 52% 0% 10% 20% 30% 40% 50% 60% 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 + Years

(b) Electronic Invoice Presentment (non-EDI)

9% 13% 26% 52% 0% 10% 20% 30% 40% 50% 60% 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 + Years

(c) Electronic Invoice Receipt (EDI)

9% 17% 24% 50% 0% 10% 20% 30% 40% 50% 60% 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 + Years

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(d) Electronic Invoice Receipt (non-EDI) 17% 20% 30% 33% 0% 10% 20% 30% 40% 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 + Years

(e) Electronic payment to your suppliers

4% 22% 24% 49% 0% 10% 20% 30% 40% 50% 60% 0 - 6 Months 6 - 12 Months 1 - 2 Years 2 + Years

(f) Electronic payments from your customers

64% 2 + Years

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Page 15

Below is a snapshot of the length of time companies have used each of the following EIPP Systems:

• Electronic Invoice Presentment (EDI) — more than 2 years

• Electronic Invoice Presentment (non-EDI) — more than 2 years

• Electronic payments from customers — more than 2 years

• Electronic Invoice Receipt (non-EDI) — more than 1 year

• Electronic Invoice Receipt (EDI) — more than 2 years

• Electronic payments to suppliers — more than 2 years

Overall, it appears that companies using any of the EIPP systems have done so for over 2 years, although one third of companies using the non-EDI version of electronic invoice receipt have used the system between 1 and 2 years.

Question 9c: What is the No. 1 benefit your company has gained since implementing EIPP? 14% 3% 51% 10% 12% 10% 0% 10% 20% 30% 40% 50% 60% Other

Reduced processing time resulting in reduced processing costs

Enables the capture of early payment discounts Enables redeployment of manpower Provides timely and reliable data

Reduces exceptions

Overall, companies that use EIPP systems benefit from reduced processing time, which reduces processing costs.

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Question 9d: If your company does not use an EIPP system, why not? (check all that apply) 14% 44% 25% 22% 19% 3% 0% 10% 20% 30% 40% 50% Other Cost Complexity Don’t want to make any IT changes to the system

Don’t trust the technology Security concerns

Respondents whose companies do not have an EIPP system note cost as the number one reason; complexity and an aversion to making IT changes also came up frequently. Other survey responses explaining why some companies do not already have an EIPP system noted that organizations were in the process of implementing an EIPP system, they don t know or they are not ready.

2.5 Automated Expense Management System

(two questions)

Question 10a: Which automated expense management system do you use?

7% 5% 23% 42% 12% 1% 8% Other Ariba Concur Necho Oracle PeopleSoft SAP

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Page 17

• Interplex

• Organic

Question 10b: Why do you choose not to use an automated expense management system? (check all that apply)

50% 22% 28% 13% 9% 0% 10% 20% 30% 40% 50% 60% Other Cost Complexity Don’t want to make any IT changes to the system

Security Concerns

Complexity is the main reason some of the companies surveyed are not currently using the Automated Expense Management System followed by cost and an aversion to making IT system changes. Significant other responses include respondents with companies that are resistant to change. In addition, respondents noted controller s concerns, corporate politics, the use of in house tools, limited application, and other priorities.

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2.6 Satisfaction

(four questions)

Question 11: How convinced are you of the ability of payment and spend management solutions to deliver ROI/cost savings?

50% 32% 16% 1% 1% 0% 10% 20% 30% 40% 50% 60% Very Convinced Somewhat Convinced Neither Convinced or Unconvinced Somewhat Unconvinced Very Unconvinced

Overall, this group is very convinced that payment and spend management solutions have the ability to deliver ROI/cost savings.

Question 12: How satisfied are you with your organization s current ability to aggregate vendor contracts across various departments?

12% 30% 29% 22% 7% 0% 10% 20% 30% 40% Very Satisfied Satisfied Neither Satisfied or Dissatisfied

Somewhat Dissatisfied Very Dissatisfied

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Page 19

Question 13: How satisfied are you with your organization s current ability to leverage supplier discounts by meeting early payment deadlines for invoices?

14% 33% 20% 25% 8% 0% 10% 20% 30% 40% 50% Very Satisfied Satisfied Neither Satisfied or Dissatisfied

Somewhat Dissatisfied Very Dissatisfied

Question 14: How satisfied are you with the current level of information you can access/view regarding your company s organizational spending?

10% 27% 30% 26% 9% 0% 10% 20% 30% 40% 50% Very Satisfied Satisfied Neither Satisfied or Dissatisfied

Somewhat Dissatisfied Very Dissatisfied

Overall, respondents are not overwhelmingly satisfied or dissatisfied with their organization s ability to aggregate vendor contracts across various departments, their ability to leverage supplier discounts by meeting early payment invoice deadlines, or their current level of information regarding their company s organizational spending that they can access.

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3 Respondent Profile and Survey Methodology

An online survey (https://www.infosurv.com/mst.html) was administered to participants in the Ariba LIVE convention. All valid survey respondents must have indicated decision-making or influencing power over corporate purchasing methods (i.e., credit card, check, etc.)

Respondents were invited to take the survey at a convention kiosk, and responses were collected from 5/3/04 until 5/4/04. Ultimately, 153 respondents submitted a response yielding a statistically significance of +/- 7.92% confidence interval at the 95% confidence level.

References

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