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CS Should We Convert from On-Premise to On-Demand Solutions? David Leonard Director, Solution Optimization © 2012 Ariba, Inc. All rights reserved. Our Speakers • Kerry Green • Richard Bradbury 2 Union Bank of California Senior Vice President Vendor Management and Shared Services Chief Procurement Officer Commonwealth Bank of Australia © 2012 Ariba, Inc. All rights reserved. Options for On-Premise Customers 3 Stay on 9r1 Take advantage of point releases and innovation on the Cloud Stay on On-Premise and deploy SaaS Emerging Markets Lower Cost and speed of Deployment / Support Stay on On-Premise but leverage SaaS for Spin-Off / Sub-Divisions Clean way to keep data separated Expansion Expanding footprint with OnD Hybrid On-Demand Initial step toward SaaS and lowering TCO Conversion to On-Demand Convert from OnP to SaaS © 2012 Ariba, Inc. All rights reserved. Considerations • Convert Upstream (Sourcing, Contracts) • Convert Downstream (Buyer, Invoice) 4 More conversion activity with our Upstream customers Ariba LIVE 2011 showcased several upstream conversions Steady conversion activity with our Downstream customers Typically see this as part of a broader initiative within the organization (i.e. not “just an upgrade”) Both conversions discussed today are P2P conversions © 2012 Ariba, Inc. All rights reserved. Union Bank’s Journey with Ariba Kerry Green, Senior Vice President Vendor Management and Shared Services © 2012 Ariba, Inc. All rights reserved. Agenda • • • • • • • • • 6 Corporate Overview Where We Started Major Milestones and “Future State” Why Ariba On Demand Building a Business Case Current Ariba Footprint Project Highlights New Process Change Management – Keys to Success © 2012 Ariba, Inc. All rights reserved. Union Bank Corporate Overview 7 • Union Bank, N.A., is the primary subsidiary of UnionBanCal. UnionBanCal Corporation is a financial holding company with assets of $89.7 billion at December 31, 2011. • UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world's largest financial organizations. • Union Bank is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. • The bank has more than 11,000 employees and operated 414 banking offices in California, Oregon, Washington, Texas, and New York, as well as two international offices, on December 31, 2011. • Corporate headquarters are in San Francisco, CA • Masashi Oka is president and CEO. © 2012 Ariba, Inc. All rights reserved. Where We Started 8 • Ariba Buyer implemented across the Bank for Purchasing. • Only capturing approx 10% of commodity spend on POs through Ariba Buyer. • Not capturing complex spend (e.g. software and professional services, marketing, etc.). • A/P was a paper-based process. • No end-user visibility into PO status (e.g. ability to see remaining funds on PO or payments against PO). • Limited access to financial information to support sourcing projects. © 2012 Ariba, Inc. All rights reserved. Major Milestones and “Future State” • Develop a Strategic Sourcing Organization to support the Bank. 9 Capture and actively source spend areas across the Bank to leverage spend and increase price performance. • Design an integrated Source-to-Pay program to increase control and provide detailed commitment and spend data at an end-user level. • Increase use of POs to capture spend. • Automate the Accounts Payable process. • Ability to proactively manage our vendor expenses at the user level. © 2012 Ariba, Inc. All rights reserved. Building a Business Case Why Upgrade (or) Convert to On Demand? • Do Nothing • Upgrade current system • Pro: Keep similar feel and functionality as what we have today and get benefits included in each upgrade. Con: No additional functionality to capture complex spend on POs; Behind-the-firewall software upgrades and enhancements will be less frequent; Continued maintenance and infrastructure costs. Replace Buyer with On Demand 10 Pro: Keep the functionality and technical interfaces we have today. Con: Maintenance increased due to Retired Product Support Program; UB concerns on support of older version over time; Limited functionality to capture complex spend on POs. Pro: Capture significantly more spend on POs through Ariba; Greatly increased functionality; Automates more business processes; Directionally same cost as annual maintenance; Eliminate internal infrastructure costs; Ariba upgrades and enhances more frequently included in the annual cost. Con: May impact how we interface technically with Buyer today; Bank no longer “owns” the software. © 2012 Ariba, Inc. All rights reserved. Why Ariba On Demand • Bank selected Ariba’s On Demand (SaaS) model. Strong return on investment, plus greatly increased functionality. Ease of implementation, maintenance and ongoing upgrades. • Ariba is ERP-agnostic. • Improves business process by tying together Purchasing and Payables and automating the functions. • Ability to leverage best practice and market leading processes. • No additional infrastructure needed, all hosted by Ariba. Reduces existing infrastructure and expense by removing Ariba Buyer and other ad hoc tools. • Access to Ariba Discovery for real time market based pricing knowledge. • Ariba On Demand made it cost effective to add upstream modules (e.g. Sourcing and SIPM). 11 © 2012 Ariba, Inc. All rights reserved. Project Highlights • Converted downstream from CD to On Demand and implemented the Sourcing and SIPM module • Deployment • Capture of spend on PO • Increase spend on PO, with a goal of 50-70% Scalable, best practice, Purchase-to-Pay program 12 Ariba estimated approximately an 18- to 20-week deployment. Actual implementation nine months. As the Bank grows, easier to scale and expand Ariba’s automated platform vs. the Bank’s Ariba Buyer platform. © 2012 Ariba, Inc. All rights reserved. New Process Sourcing and Procurement Process Category Management Spend Analysis/ Demand Management Visibility Supplier Management Contract Negotiations and Terms Requisition Response Compliance Order Lifecycle Mgmt and Tracking Invoicing and Reconciliation Reporting & Analytics Cash management real-time spend and programs, process and auto triple match, supplier data contract terms invoice and allocations Services Supplier Relationship Management • • • • • 13 Unifying sourcing, purchasing and supplier management Streamlines buyer and supplier collaboration More efficient and accurate invoice to payment cycles Real-time visibility for spend and supplier analysis Single platform for any time, milestone or fee-based service © 2012 Ariba, Inc. All rights reserved. Change Management Keys to Success • Change Management is a key to success. Implementation of an overall Communication Plan, including Webex and personal training for super-users; multiple communications to all end users; ad hoc training; etc. • Required more resources than suggested. Ariba guidelines severely underestimated the number of hours/resources to implement the system. • Recommend strong joint planning sessions with Ariba prior to signing the agreement to understand current environment and future state to streamline implementation. Develop a both a business and technical plan. • If moving from behind the firewall to an on-demand system, ensure IT completely understands the impact of the move to their role. • Aggressively move spend into the system and have senior management support. “Stealthing” in the spend is not effective as it is wasting the value of the investment. 14 © 2012 Ariba, Inc. All rights reserved. Commonwealth Bank’s Move to Ariba On Demand Richard Bradbury Chief Procurement Officer Commonwealth Bank of Australia © 2012 Ariba, Inc. All rights reserved. Agenda • • • • • • • 16 Commonwealth Bank of Australia (CBA) Procurement at CBA Drivers for Change Options and Criteria Our Evaluation Approach Why Ariba On Demand Simple and Easy Program © 2012 Ariba, Inc. All rights reserved. Commonwealth Bank Corporate Overview • • • • 17 Total Assets of $704bn Market Cap of $80bn 14 million customers 52,000 staff © 2012 Ariba, Inc. All rights reserved. • • • 2nd largest company in Australia 9th largest bank in the world by market capitalization Headquarters in Sydney Procurement at CBA • • Regional, centre-led operational model • Only capturing approximately $1.3bn of spend on POs through Ariba today • • • • Upgraded to Ariba version 8 in June 2008 18 $5 bn non salary and wages annual spend Poor analytical and reporting capability Procurement Transformation Program underway Project to migrate to Ariba On Demand started February 2012 © 2012 Ariba, Inc. All rights reserved. Drivers for Change • • • • • • • 19 Lack of ability to leverage spend and source effectively Inability to manage expenses, contracts and supplier at a user level Current platform will be unsupported and incompatible with other systems Incomplete data and therefore visibility of opportunities Poor user experience Compliance and supplier relationship management Strategic sourcing Break through performance improvement Typical procurement benchmark. Indicative savings Supplier collaboration (2-5%) Contract award Demand and Sourcing (5-15%) Contractual compliance and continuous improvement Maverick buying and lack of contract management quickly erode value (10-50%) 1 Efficiency benefits How procurement transformation can drive sustainable benefits © 2012 Ariba, Inc. All rights reserved. 3 2 2 1 Sourcing capability 2 P2P processes and systems 3 Procurement operating model Time Sustainable benefits at risk without systems, streamlined process controls Lack of visibility of spend and compliance to preferred suppliers Inability to enforce policy 3 Options and Criteria for Selection OPTIONS • Do Nothing • Upgrade Ariba On Premise • Move to Ariba On Demand • Move to alternative software (including ERP) CRITERIA • Useability and support of benefits delivery • Functionality • 20 Making it easy for users to do the ‘right thing’ and comply with policy; Adoption of standard processes; Efficiency of standard tasks; e.g. raising a purchase request Quality data capture and clear reporting and analysis Can the solutions deliver best practice in capability and effectiveness of processes? Reporting and analytics (BI) formed part of this review Total Cost of Ownership © 2012 Ariba, Inc. All rights reserved. Our Evaluation Approach Assessment Criteria Assessment Area Useability and support of benefits delivery Useability Intuitive User Interface (likely adoption of CBA preferred spend channels) Simple and easy processes Change Management demands Functional and Technical Fit Functional (40%) Fit against Procurement Services Model (Demand, Source, Fulfil and Manage) Emphasis on delivering leading practice capability and processes. Consideration given to BI requirements Implementation (15%) Ease and time to implement Resource availability (internal and external) Level of configuration and customisation Data migration Operational (15%) Integration Flexibility Availability of support skills (internal and external) Strategic (30%) Ability to support our business strategy Alignment with ES Strategy Multi-entity / multi-currency capability Analyst view Cost Project implementation cost Operational costs including release support Cost of future upgrades Total Cost of Ownership 21 © 2012 Ariba, Inc. All rights reserved. Assessment Factors Why Ariba On Demand? 22 • • • • • Strong business case • • • • Easiest to implement Highest level of usability Comprehensive process model Market leader Strong functionality aligned to our services model Integrates well with other systems Simple to maintain and upgrade Savings on infrastructure © 2012 Ariba, Inc. All rights reserved. • • 12 month program to implement Ariba on Demand in two phases Address our pain points • Change is the key 23 © 2012 Ariba, Inc. All rights reserved. Don’t Miss the General Session Panel Today at 5:15 p.m. • Sustainable Supply Chains through Vested Trading Partner Relationships 24 Long-term, mutually beneficial partnerships between buyers and suppliers are increasingly being described as vested relationships, defined by a shared vision, agreed-upon desired outcomes, transparency, trust, and win-win. Developing such trading partner relationships pays dividends in many ways, particularly when your goal is ensuring a sustainable supply chain. Join Tim Minahan, chief marketing officer for Ariba, as he explores the concept with Kate Vitasek, author of Vested Outsourcing, and Tim McBride, general manager for global finance shared services at Microsoft. Mr. Minahan and his guests will engage with Ariba customers who will talk about such investments at their companies, and the impact they have on their comprehensive sustainability programs. 5:15 p.m. – 6:00 p.m. – Florentine III and IV © 2012 Ariba, Inc. All rights reserved.