Transcript of Should We Convert from On-Premise to On-Demand Solutions? David Leonard Director, Solution...
- Slide 1
- Should We Convert from On-Premise to On-Demand Solutions? David
Leonard Director, Solution Optimization 2012 Ariba, Inc. All rights
reserved. CS
- Slide 2
- Our Speakers Kerry Green Union Bank of California Senior Vice
President Vendor Management and Shared Services Richard Bradbury
Chief Procurement Officer Commonwealth Bank of Australia 2 2012
Ariba, Inc. All rights reserved.
- Slide 3
- Options for On-Premise Customers 2012 Ariba, Inc. All rights
reserved. 3 Hybrid On-Demand Stay on On-Premise and deploy SaaS
Emerging Markets Stay on On-Premise but leverage SaaS for Spin-Off
/ Sub-Divisions Expansion Initial step toward SaaS and lowering TCO
Lower Cost and speed of Deployment / Support Clean way to keep data
separated Expanding footprint with OnD Conversion to On-Demand
Convert from OnP to SaaS Stay on 9r1 Take advantage of point
releases and innovation on the Cloud
- Slide 4
- Considerations Convert Upstream (Sourcing, Contracts) More
conversion activity with our Upstream customers Ariba LIVE 2011
showcased several upstream conversions Convert Downstream (Buyer,
Invoice) 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 4 2012 Ariba, Inc. All rights
reserved.
- Slide 5
- Union Banks Journey with Ariba Kerry Green, Senior Vice
President Vendor Management and Shared Services 2012 Ariba, Inc.
All rights reserved.
- Slide 6
- Agenda 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 6 2012 Ariba, Inc. All rights reserved.
- Slide 7
- Union Bank Corporate Overview 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. 7 2012 Ariba, Inc. All rights reserved.
- Slide 8
- Where We Started 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. 8 2012 Ariba,
Inc. All rights reserved.
- Slide 9
- Major Milestones and Future State Develop a Strategic Sourcing
Organization to support the Bank. 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. 9 2012 Ariba, Inc. All rights
reserved.
- Slide 10
- Building a Business Case Why Upgrade (or) Convert to On Demand?
Do Nothing 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. 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 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. 10 2012 Ariba, Inc. All rights
reserved.
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- Why Ariba On Demand Bank selected Aribas 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.
- Slide 12
- Project Highlights Converted downstream from CD to On Demand
and implemented the Sourcing and SIPM module Deployment Ariba
estimated approximately an 18- to 20-week deployment. Actual
implementation nine months. Capture of spend on PO Increase spend
on PO, with a goal of 50-70% Scalable, best practice,
Purchase-to-Pay program As the Bank grows, easier to scale and
expand Aribas automated platform vs. the Banks Ariba Buyer
platform. 12 2012 Ariba, Inc. All rights reserved.
- Slide 13
- New Process Sourcing and Procurement Process Requisition
Response Supplier Management Contract Negotiations and Terms Order
Lifecycle Mgmt and Tracking Invoicing and Reconciliation Spend
Analysis/ Demand Management Category Management Reporting &
Analytics Visibility real-time spend and supplier data Compliance
programs, process and contract terms Cash management auto triple
match, invoice and allocations Services Supplier Relationship
Management 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 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 13 2012 Ariba, Inc. All rights
reserved.
- Slide 14
- 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.
- Slide 15
- Commonwealth Banks Move to Ariba On Demand Richard Bradbury
Chief Procurement Officer Commonwealth Bank of Australia 2012
Ariba, Inc. All rights reserved.
- Slide 16
- Agenda 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 16 2012 Ariba, Inc. All
rights reserved.
- Slide 17
- Commonwealth Bank Corporate Overview Total Assets of $704bn
Market Cap of $80bn 14 million customers 52,000 staff 17 2012
Ariba, Inc. All rights reserved. 2 nd largest company in Australia
9 th largest bank in the world by market capitalization
Headquarters in Sydney
- Slide 18
- Procurement at CBA Regional, centre-led operational model $5 bn
non salary and wages annual spend Only capturing approximately
$1.3bn of spend on POs through Ariba today Upgraded to Ariba
version 8 in June 2008 Poor analytical and reporting capability
Procurement Transformation Program underway Project to migrate to
Ariba On Demand started February 2012 18 2012 Ariba, Inc. All
rights reserved.
- Slide 19
- Drivers for Change 19 2012 Ariba, Inc. All rights reserved.
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 Lack of visibility of spend and compliance to preferred
suppliers Inability to enforce policy How procurement
transformation can drive sustainable benefits 1 2 3 Maverick buying
and lack of contract management quickly erode value (10-50%)
Contractual compliance and continuous improvement Break through
performance improvement Time Demand and Sourcing (5-15%) Supplier
collaboration (2-5%) Efficiency benefits Strategic sourcing
Compliance and supplier relationship management Contract award 1 2
2 3 3 Sourcing capability P2P processes and systems Procurement
operating model Sustainable benefits at risk without systems,
streamlined process controls Typical procurement benchmark.
Indicative savings
- Slide 20
- 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 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 Functionality 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 20 2012 Ariba, Inc. All rights
reserved.
- Slide 21
- Our Evaluation Approach 21 2012 Ariba, Inc. All rights
reserved. Assessment CriteriaAssessment AreaAssessment Factors
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 Total Cost of Ownership Cost Project
implementation cost Operational costs including release support
Cost of future upgrades
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- Why Ariba On Demand? Strong business case Highest level of
usability Comprehensive process model Market leader Strong
functionality aligned to our services model Easiest to implement
Integrates well with other systems Simple to maintain and upgrade
Savings on infrastructure 22 2012 Ariba, Inc. All rights
reserved.
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- 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.
- Slide 24
- Dont Miss the General Session Panel Today at 5:15 p.m. 2012
Ariba, Inc. All rights reserved. 24 Sustainable Supply Chains
through Vested Trading Partner Relationships 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