How To Transform Finance Transformation

(1)

Case Study: Leadership and Integration —

Redesigning the Procure‐to‐Pay Process to Link

Finance and Procurement

James

Copeland

Finance and Procurement

(2)

Agenda

BMC

Timeline

Transformation

SSC

at

BMC

P2P

Working

together

Results to date

Results

to

date

Questions

(3)

BMC by the numbers

Founded

in

1980,

8th

largest

independent

software

company

with

over

$2.2

billion

in

total

bookings

and

revenue

(Fiscal

Year

M

h 2012)

g

March

2012)

Corporate

headquarters

in

Houston,

with

more

than

6,000

employees

p y

around

the

world

IT

needs

to

be

structured,

managed,

staffed

and

deployed

as

a

service

– a

service

that

business

leaders

can

leverage

g

to

achieve

their

goals

and

objectives

- That’s exactly what we do.

We

serve

- 15,000 customers in 132 countries15,000 customers in 132 countries - Fortune 100: 94%

- Fortune 500: 81%

- Forbes Global 100: 96% - Forbes Global 500: 86%

(4)

Timeline

May 08‐Feb 09 Apr 09 BMC Finance Transformation ld d Apr 09 Oct 09 Aug 09 LSS – AP Holds Reduction FSSC Transitioned to Buss Ops

Feb 10 Apr 10 Jun10‐ LSS – IT Procurement Issues LSS – P2P Re‐Engineering Dec10 Feb11 g g P2P Team Formed Jun 12 P2P Status Update

(5)

Finance

Transformation

Project

– Objectives

and

Scope

 Project Objectives:

– Identify opportunities to increase efficiency within Controllers Group and FP&A

while maintaining/improving customer service levels

– Develop recommendations to maximize productivity returns from BMC’s investment

in the ERP implementation

– Recommend a future state organizational model to align Controllers Group and

FP&A with the needs of the business units

 Project Scope – as indicated in the diagramCFO below:

Finance Israel

Treasury/ Finance, Controller VP/ Investor

Amsterdam Israel Finance FP&A Treasury/ Operations IC and IA Investor Relations Controller VP/

CAO Corp Tax

Legend

In Scope In Scope Out of Scope

(6)

The

Realignment

Created a global Financial Shared Services (FSS)

organization and clarified roles between FP&A and CAO to eliminate redundancy

FSS

eliminate redundancy

CAO organization will own all actual results, including both statutory and management views of the business (e.g., producing fully allocated P&L’s)

CAO

p g y )

FP&A will be tightly aligned with the business, more focused on business analysis/decision support, and will devote less attention to tactical activities (e.g., detailed variance analysis,

b d t ti )

FP&A

budget creation)

FSS will focus on performing transactional accounting activities in the

most efficient, cost effective manner possible and be driven by Service

Level Agreements (SLA) with their customer base

(7)

Accounting centers prior to FSSC

Amsterdam

Mexico City _Houston,_TX,_USA

Pune, India Tel Aviv, Israel

Singapore

Brazil

(8)

Accounting centers after FSSC

Amsterdam

Mexico City _Houston,_TX,_USA

Pune, India Tel Aviv, Israel

Singapore

Brazil

(9)

Financial Shared Services profile

FSSC

‐

Pune

-

Global

accounts

payable



Invoices (TTM) 116k

FSSC

– Houston

Revenue

accounting

Invoices

(TTM)

116k

– Manual inv (TTM) 58k (50%) 

iExpense

(TTM)

72k



39

countries

S ff 9

-

Staff

4

Professional

services

accounting

-

Staff

4

(Houston)



Staff

19

-

Global

fixed

assets



32

countries



Staff 3



1

(Amsterdam)



1

(Pune)

Capitalized

software

accounting



Staff

3

-

General

ledger



EMEA

region

– 25 countries

p

g

-

Staff

7

Key

financial

applications

-

Oracle11i single WW instance

– Staff 10

-

Cash

application

EMEA

&

APAC



Staff

2

India statutory accounting

-

Oracle11i

single

WW

instance



Single

chart

of

accounts

-

Hyperion

HFM

and

planning

-

BlackLine

account

reconciliation

-

India

statutory

accounting

(10)

FY2012

– P2P

building

blocks

Manager P2P Manager P2P Operations Program Manager P2P Operations E-Commerce Administrator Project Manager P2P Operations P2P Reporting/Analysis >$50,000 • Category Managers Vendor Maintenance IS&T AP Resolution & Customer Service (CW) Vendor Marketing/Events Bhushan Chavan AP Resolution & Customer Service >$2,500 • Regional Buyers Dh lk (CW)

Maintenance Customer Service

AP Resolution & Customer Service Corporate

Services

<$2,500 • P2P Operations

Sourcing Manager Category Buyer P2P

Hardware/Software/

Telecom/AV/Printers/Copiers Sourcing Manager Category Buyer P2P Hardware/Software/ Telecom/AV/Printers/Copiers  Develop Strategy Dhargalkar (CW) AP Resolution & Customer Service CW/Consulting P-Card Admin HR/Legal/Facilities/Charities Office Supplies/Insurance Marketing/Advertising/Travel/ Events/Promotional Products

HR/Legal/Facilities/Charities Office Supplies/Insurance

Marketing/Advertising/Travel/ Events/Promotional Products

p gy  Build Organization  Prioritize Initiatives  Align Categories  Tiered Routing CW/SOW/PS/MDF/Teaming/

Royalties/Financial Services Sourcing Manager Category Buyer P2P CW/SOW/PS/MDF/Teaming/

Royalties/Financial Services Sourcing Manager Category Buyer P2P

g

 WW P‐Card Solution

(11)

FY2012

Results

Tiered routing introduced, which enabled Buyers and/or Sourcing Managers to focus

on more material transactions with higher impact and savings.

Team alignedg byy categoryg y g givingg Buyersy and/or/ Sourcingg Managersg higherg level of

support and providing P2P resources with cross training opportunities.

Approximately 80% of all purchasing transactions are now being processed through

supplier portals, on purchasing cards, or by our P2P team in India.

P2P team is now responsible for 100% of Corporate and Purchasing Card

administration globally.

Centralized help desk implemented globally for P2P and P‐Card.

The American Express Corporate Account Reconciliation (CAR) tool has been

implemented on a single platform throughout North America, EMEA, India, and will

be introduced in Latin America by end of quarter, providing a consistent global

process . Based an innovative idea suggested by the P2P team BMC is the first

company to implement this tool on a consistent platform globally.

Purchasing card transactions have increased 37% year / year and spend rose 20%.

Cardholder participation is now at 3.3%, which is more than double our enrollment

last year With international expansion and growth I feel we will continue to see an last year. With international expansion and growth I feel we will continue to see an

(12)

FY2012

Results

SharePoint repository introduced for P‐Card reconciliation documentation globally

simplifying the auditing process for AP, Tax, and IA.

36 online catalogsg were implementedp across 30 countries in FY12 (office( ff supplies,pp ,

promotional products, hardware, books & subscriptions, and software). XML

(eCommerce) purchasing transactions grew at an average of 5% year / year and

eInvoicing 3%. P2P’s focus in FY13 will be to expand online supplier catalogs and

rollout an eInvoicing solution that will complement our front end automation. Automated reminders developed to enable users to perform past due receipts via

email or blackberry significantly reducing # of invoices on hold for > 30 days. Program implemented to automatically close aged PO’s >120 days. Aged PO’s

maintained by P2P at an average rate of 5400 / Qtr.

PO’s processed outside of policy (after the fact) have fallen 3% since Q1. We will

continue to track and communication with those individuals not adhering to policy,

and escalate when necessary

and escalate when necessary.

First Pass Yield is at it’s highest in history, reaching 86% at the end of Q4FY12. This is

in part due to both verbal and formal written communication to our suppliers, but

also attributing to the improvement are multiple system enhancements such as

il i t i d tifi ti d t i i Th h thi fl t t

email receipts, improved notifications, and user training. Though this fluctuates

(13)

Purchasing

Card

– Trends

 Spend through the purchasing card program rose $4.5M or 20% in FY2012.  _A_37%_increase_in_transactions_for_the_year.

 _{Cardholder population grew 2% over the course of the year}

 _Cardholder_population_grew_2%_over_the_course_of_the_year.  EMEA program fully launched

 _LA_pilot_program_underway

 India office supply XML linked to Purchasing Card Program

(14)

FY2012

Late

PO

Analysis

(excluding non‐procured services and Intercompany)

Late

PO’s

hovered

LATE PO % TTL FY12 TRANSACTIONS LATE PO % TTL FY12 TRANSACTIONS

between

6

‐

9%

throughout

FY12

and

the

top

10

Benchmarks

FY2011

P2P

Metrics

/

Benchmarks

Q1FY2011 Q2FY2011 Q3FY2011 Q4FY2011 Q1FY2012 Q2Y2012 Q3FY2012 Q4FY2012

TTL PURCHASING TRANSACTIONS 6670 6627 6784 7175 7589 7609 7203 8018 6693 BMC AVG

% MANUALTRANSACTIONS 1% 2% 1% 2% 1% BMCAVG

BENCHMARK

FY12

FY2011

P2P

Metrics

/

Benchmarks

Q1FY2011 Q2FY2011 Q3FY2011 Q4FY2011 Q1FY2012 Q2Y2012 Q3FY2012 Q4FY2012

TTL PURCHASING TRANSACTIONS 6670 6627 6784 7175 7589 7609 7203 8018 6693 BMC AVG

% MANUALTRANSACTIONS 1% 2% 1% 2% 1% BMCAVG

BENCHMARK

FY12

% MANUAL TRANSACTIONS 1% 2% 1% 2% 1% BMC AVG

% NON CATALOG WEBREQ TRANSACTIONS 68% 63% 62% 65% 52% 53% 38% 35% 28% Accenture

% AUTOMATED WEBREQ TRANSACTIONS 14% 17% 14% NEW

eCommerce (XML) % TTLTRANSACTIONS 14% 15% 18% 18% 16% 24% 22% 23% 15% IBM#784

% MANUAL TRANSACTIONS 1% 2% 1% 2% 1% BMC AVG

% NON CATALOG WEBREQ TRANSACTIONS 68% 63% 62% 65% 52% 53% 38% 35% 28% Accenture

% AUTOMATED WEBREQ TRANSACTIONS 14% 17% 14% NEW

eCommerce (XML) % TTLTRANSACTIONS 14% 15% 18% 18% 16% 24% 22% 23% 15% IBM#784

eCommerce (XML) % TTL TRANSACTIONS 14% 15% 18% 18% 16% 24% 22% 23% 15% IBM #784

% P‐CARD TRANSACTIONS 26% 33% 36% 35% 47% 46% 47% 45% 57% Accenture

P‐CARD SPEND $ 5.30 $ 3.85 $ 4.28 $ 4.45 $ 6.71 $ 5.98 $ 4.84 $ 4.85 4.5M BMC AVG

P‐CARD % MANAGED SPEND 5% 4% 4% 4% 6% 5% 4% 4% 1.39% CAP #10

eCommerce (XML) % TTL TRANSACTIONS 14% 15% 18% 18% 16% 24% 22% 23% 15% IBM #784

% P‐CARD TRANSACTIONS 26% 33% 36% 35% 47% 46% 47% 45% 57% Accenture

P‐CARD SPEND $ 5.30 $ 3.85 $ 4.28 $ 4.45 $ 6.71 $ 5.98 $ 4.84 $ 4.85 4.5M BMC AVG

P‐CARD % MANAGED SPEND 5% 4% 4% 4% 6% 5% 4% 4% 1.39% CAP #10

P‐CARDHOLDERS % TTL FTE 1.3% 1.3% 1.6% 1.3% 1.8% 2.5% 2.7% 3.3% 1.4% BMC AVG

PO TRANSACTIONS <$2,500.00 57% 59% 61% 59% 60% 63% 65% 63% 60% BMC AVG

PO TRANSACTIONS >=$2,500.00 35% 34% 34% 36% 33% 31% 30% 30% 34% BMC AVG

P‐CARDHOLDERS % TTL FTE 1.3% 1.3% 1.6% 1.3% 1.8% 2.5% 2.7% 3.3% 1.4% BMC AVG

PO TRANSACTIONS <$2,500.00 57% 59% 61% 59% 60% 63% 65% 63% 60% BMC AVG

PO TRANSACTIONS >=$2,500.00 35% 34% 34% 36% 33% 31% 30% 30% 34% BMC AVG

PO TRANSACTIONS >=50K 7% 7% 5% 5% 7% 6% 5% 7% 6% BMC AVG

TTL VOUCHERS 16705 17827 16616 17939 16394 16558 17538 17591 17272 BMC AVG

% eInvoicing/Integrated VOUCHERS 14% 13% 17% 17% 18% 17% 19% 17% 15% BMC AVG

PO TRANSACTIONS >=50K 7% 7% 5% 5% 7% 6% 5% 7% 6% BMC AVG

TTL VOUCHERS 16705 17827 16616 17939 16394 16558 17538 17591 17272 BMC AVG

% eInvoicing/Integrated VOUCHERS 14% 13% 17% 17% 18% 17% 19% 17% 15% BMC AVG

% INVOICES ON HOLD 16% 18% 19% 18% 17% 18% 19% 14% 18% BMC AVG

FIRST TIME PASS RATE 84% 82% 81% 82% 83% 82% 81% 86% 85%/95% HACKET

% INVOICES ON HOLD 16% 18% 19% 18% 17% 18% 19% 14% 18% BMC AVG

(16)

How

do

we

get

there?

Automation

and

/

or

elimination

of

purchasing

transactions.

Develop

efficient

process

to

route

high

volume

transactions

offshore.

Centralize

customer

service

and

support

Align

resources.

Reduction of supplier onboarding maintenance and inquiries

Reduction

of

supplier

onboarding,

maintenance

and

inquiries.

Decrease

manual

invoices

and

improve

FPY

Improve

DPO.

(17)

Accounts

Payable

and

P2P

– working

together

Reduce

Touch

-

Best

case

– don’t

touch

the

invoice



Current scenario

Current

scenario

– 30,000 invoices per quarter » 15,000 are manual

Increase

P2P

first

pass

invoice

yield

(target

>

90%)

(18)

Symptoms of the problem

Historical trend of invoices on hold

500 600 400 500 300 200 100 0 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11

(19)

Increase

FPY

•

1

‐

Train

procurement,

facilities

and

other

key

users

•

2

‐

Restrict

WebReq access

to

“Superusers”

•

3

‐

Notify

suppliers

that

“No

PO

‐

No

Payment”

is

our

policy

•

4

‐

Implement

the

Oracle

iSupplier Portal

•

5

‐

Adopt/Require

“Tiered

Routing”

globally

for

all

shows

violators

of

“No/Late”

PO

policy

•

8

‐

Ensure

procurement

professionals

are

NOT

entering

their

own

name

on

ANY

Oracle

WebReqs – that

is,

ALWAYS

enter

the

name

of

the

actual

requisitioner

•

9

‐

Revise

process/procedure

on

2

‐

3

way

match

PO’s

and

(20)

Decrease

touch

•

10

‐

Develop

&

implement

a

systemic

solution

to

the

“Fieldglass

Receipt”

issue

11 E l

l

i

f

d AP

•

11

‐

Evaluate

alternative

front

end

AP

process

•

12

‐

Implement

Kofax

scanning

improvements

•

13 Formal plan/approach to accelerate the rate of catalogue

•

13

‐

Formal

plan/approach

to

accelerate

the

rate

of

catalogue

integration

outside

of

the

USA

•

14

‐

Need

formal

plan

and

execute

a

“Supplemental

P

‐

Card

(MC

or

VISA) i l

I t

ti

l C

t i

(21)

(22)

Historical trend – all regions and total

Year over year decrease – 76%

From December High – down 83%

Region Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

APAC 7 2 0 6 4

The holds problem was primarily

India EMEA and North America _ISREAL ₇ ₉ ₂ ₉ ₈

INDIA 31 12 8 4 6

EMEA 29 39 29 60 7

LAM 0 4 0 7 1

NA 80 85 97 126 11

India, EMEA and North America.

Significant improvement in North

America.

(23)

North America Region

81%

drop

in

holds

for

the

quarter.

No expense reports on hold This

No

expense

reports

on

hold.

This

was

during

Q4,

a

high

volume

invoice

and

expense

report

period

period.

For North America (US + Canada) total 11 invoices amounting to $65K are on Hold.

No invoices for US/ CA are above 30 days hold.

Specifics for North America (7 invoices) 2 No PO

4 Insufficient funds on PO 1 No receiptp

(24)

North America – Process Control Chart

Green Line is the average

Red Lines are the UCL and LCL

- Set 3 standard deviations from the mean

Data points outside the red lines indicate something outside the norm has happened

- Only 5% chance that this was a random event

(25)

North America – Invoices on hold greater than 30 days

•Objective was to

eliminate any holds

30

greater than 30

days

•No excuses weekly

20 25

What

Changed?

video conference

with the P2P team

•Deep dive in all 15

older invoices

•Pick up the phone

5 10

0

(26)

Assess your metrics weekly

Measurement details Week 29 Jan Week 05 Feb Week 12 Feb Week 19 Feb Week 26 Feb Week 04 Mar Week 11 Mar Week 18 Mar Week 25 Mar Week 01 Apr

Measurement details Jan Feb Feb Feb Feb Mar Mar Mar Mar Apr

Invoice Volumes 262 435 422 567 341 538 329 471 288 467

1st Time Pass Rate

82.06 % 79.08 % 83.41 % 82.19 % 83.28 % 87.83 % 84.50 % 85.99 % 84.72 % 89.08 %

Cycle Time (Avg./ St Dev) Days – Invoice went on Hold to Hold resolved date 8 & 11 10 & 14 13 & 26 17 & 32 21 & 36 7 & 10 15 & 16 9 & 11 12 & 10 15 & 21

Total Hold Invoices Received in

Week 47 91 70 101 57 87 51 66 44 51

Total Holds Resolved 56 63 105 65 97 56 80 92 69 61

PO Vs Non PO (%) 58 & 42 72 & 28 73 & 27 84 & 16 57 & 43 86 & 14 65 & 35 79 & 21 84 & 16 66 & 34

(27)

First

Pass

Yield

90%

90% 92%

Objective is 90% FPY for FY13

83% 82% 86% 85% 85% 86% 87% 84% 86% 88% 8 % 81% 78% 80% 82% 76%

Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Actual Plan

Assuming 5,000 manual invoices Per month, we will need to eliminate:

From our low of 81% ‐need to eliminate 450 exceptions per month

F d t i f 86% d t li i t 200 ti th

(28)

Closing

thoughts

Single largest contributing factor to success

No PO No Pay

E

l

t t

(29)

(30)