"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

Paper
PDF
XML INVOICES
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- Receival of Invoice Image

alone 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
ReadSoft leads the market around the world Helsingborg

Amsterdam

Over 6000 customers Copenhagen

Frankfurt

Helsinki

3500+ INVOICES Kuala Lumpur

London
installations
Madrid

New Orleans

500+ INVOICE COCKPIT Suite Oslo

Paris
installations
Santiago

São Paolo

Offering SAP Certified products Stockholm

Wroclaw

Sydney

Member of the SAP EcoHub

Certified by SAP

SAP Certified Software

SAP Software Partner
Member of SAP EcoHub
Our customers – diverse and worldwide
BP Retail DuPont

Glaxo Smith Kline Boehringer Ingelheim

Kellogg's BBC

Coca Cola Enterprises Bank of Ireland

Areva ArcelorMittal

John Deere Barclays

STARWOOD Siemens

Portugal Telecom VW

Rio Tinto Thyssen Krupp

NZ Telecom Vodafone

Raytheon Intel

And many Linde Material Handling

more…
PROCESS DIRECTOR
Why PROCESS DIRECTOR?

One thing that most organizations have in common

• Processes run manually and without any
• Phone based service
way to control them
• Email based service
• Incorrect changes in master data
• Paper based service
• People try to bypass established processes
• Maverick procurement
• People avoid using complicated systems
• Quality of service is low or varies in quality • Slow processes
and cannot be guaranteed
• Expensive processes
• No transparency
They are full of business processes • Wrong postings and excessive corrections
and those processes are often full • Low or no visibility into the process

of problems that cause additional • Difficulty in maintaining compliance

• Department’s reputation in the organization
expense or worse. is harmed
PROCESS DIRECTOR - The right solution
Why PROCESS DIRECTOR?
Delivery
Targets and improves General ledger notes
correction
business processes requests

– Uses a common platform

approach
SALE
– Provides workflows S DATA CAPTURE
DATA CAPTURE CONTROLLIN
G
– Gives you visibility into
BUSINESS
your processes SERVICES
Incoming RECEIVING
customer
– Can be used for orders
processes started
internally or externally PURCHASING

Requisitions
– Handles document
and request driven Master data
processes update/create
requests
 Financial Master Custome Delivery Remittanc Platform &
Requisitions
Postings Data r Notes e Advices Custom Processes
Orders
Unified process control

PLATFORM
 Financial Master Custome Delivery Remittanc Platform &
Requisitions
Postings Data r Notes e Advices Custom Processes
Orders
Choose a process
Defining the terms

Direct purchasing Total Transactio

– Procurement of materials purchased for use spend n volume
in the manufacturing or distribution supply
chain that are directly related to the 30
%
production of finished goods.
Direct
Indirect purchasing
66
– Procurement of materials not result directly %
in finished goods. These items include
Maintenance, Repair and Operations (MRO) 70
%
and Operations Resource Management
(ORM) items such as… Indirect

• Office products 33
• Travel services %

• Replacement parts
• Service
 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
Achieving ROI
$400,000,000 total spend
25% Indirect 75% Direct
spend

Direct spending can also be

$100,000,000 total indirect spend executed via PROCESS
assume DIRECTOR.
75% non-maverick spend
25%

When all spending is executed via PROCESS DIRECTOR, $25,000,000 Maverick

you can have a comprehensive overview of all purchasing, spend
which gives you the potential to improve total product and 208,000 orders (Average $120 per
supplier rationalization and bring visibility to the combination order)
of direct and indirect spending.
The spending that does follow an established process can be $10 reduction in 10% price
improved (perhaps it’s currently via paper or email) and process costs gives improvement gives
doesn’t have visibility or has slow workflow processes. Staff savings of savings of
can start spending time on high value work like price $2,080,000 $2,500,000
negotiations or supplier rationalization.
Requisitions
Business issues with poor requisitioning processes

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
Requisitions
Features

 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

Requisitions
Key benefits for the PROCESS DIRECTOR solution

 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)

Requisitions
Demonstration
Blake Evans is the buyer
and raises the requisition.
Later in the process, Barbara Jones is in the
he will create a procurement department
goods receipt and does the final
approval and creates
the purchase order

Roger Tillman
is his manager
and approves
the requisition and also
approves other invoices
for payment
Solutions for SAP: Moving Forward

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 – Partner portals and building SaaS

Partner communication
External Organization
Supplier interaction business
– Invoice and purchase
order inquiries partner
– Advanced Shipping
notifications Leading ERP
– Invoice creation
– Order confirmations
– Dynamic Discounting
Legacy ERP
Customer interaction
– Creating orders
– Checking order status Subsidiary
– Submitting payment ERP Subsidiary
advices ERP
 Questions

?
Technical architecture

Archive
ArchiveLink

(if required)
Namespace /EBY/ SAP
Optical archive

SAP Connect
Mailserver

SMTP

File upload
Catalog
RFC Connection (Data exchange OCI
and authentication based on XML)

Electronic
document

HTTP or HTTPS
Intranet Client PC
Web application GUI
Corporate directory
alternative
(LDAP, MSAD, SSO
J2EE compatible Web application server authentication supported)
PROCESS DIRECTOR
Order-to-Cash & Purchase-to-Pay Buyer areas
Various departments

Demand, need or requirement

Supplier areas Create PD or SAP PO

requisition

SALES PURCHASING

Process incoming RFP Request for RFP created (optional)

proposal
Create a quote Quote Process incoming quotes
Process incoming PO Purchase order Create purchase order
Create a sales order Order confirmation Process incoming confirmation

LOGISTICS EXECUTION LOGISTICS EXECUTION

Deliver goods or services Delivery note Process incoming delivery

notes
ACCOUNTS RECEIVABLES ACCOUNTS PAYABLE
Create outgoing invoice (bill) Invoice Process incoming invoices
Process PA and find open Payment advice Create remittance advice
items
Clear open items Payment Pay invoice