“The Value Proposition of an automated, centralized finance function” 3 rd October 2013

 ReadSoft at a glance  Finance automation and centralisation: 10 lessons learned  The Sappi experience: Koosh Panday  Q & A Agenda

ReadSoft at a glance SAP Customers: 1,500 + Oracle Customers: Shared Service Centres: 100 +

Which are best processes to automate? Already has identified process owner Current process is heavily document driven Has potential for continuous optimization over time Process has many branches and routings Has serial steps that could be made parallel High penalty for errors or mistakes in processing Geographically dispersed participants Current subject to load variations and log jams Restricted to one department Not mission critical Has potential for outsourcing In your experience, which FOUR of the following factors would you say are the best indicators that a BPM project would be successful? 0% Business Process Management Report

Ten Lessons Experiences in automation and centralisation

 Centralisation alone could mean resource duplication  Technology can facilitate substantial efficiencies and more effective processes to support a shared service business case  Technology will support both back office and front office functions – whether centralised, decentralised or (usually) a combination of the two.  Example 1: Large UK bus company, no access to ERP at depo’s so all functions performed by SSC. Technology supports real time data and data flow to support this.  Example 2: SA Provincial Government finance department: distributed document receipt, centralised capture, distributed AP processing 1.Automation is part of a centralisation business case

 BPO or SSC – back office functions often provide the best business benefit for centralisation  Both back office and front office benefit from automation  Often a decentralised front office/ centralised back office approach: example: –SA Leader in power and automation technologies: Scan documents centrally, process (capture) via an offshore BPO, finance processes managed internally: technology supports a seamless process –SA Leading petrochemical company: 18 affiliates, central shared service centre, local management of documents and finance processes – technology driven processes end to end. 2. Automation bridges back office and front office functions

 Electronic documents are a mix of formats and delivery methods  Example: Global law firm: 28 countries, centralised processing and systems, large range of input methods and formats : country/ vendor specific 3. Sole solutions are rare, blended models are a reality

 Business case is often built on operational benefits, but larger benefits are realised from increased efficiency and effectiveness.  Example: 4. Financial Benefits may start nebulous but eclipse operational savings R 9 Bn annual spend Spend that may provide early payment discount : 20 % = R 1.8 Bn Average early payment discount : 2.5 % = R 45.0 M Discount alreay taken = R 28.8 M Additional discount opportunity = R 16.2 M Duplicate payment reduction Lost discount, late payments Resource saving R1.350 M R324 K R M R M Additional early payment discount

 Map current and future processes  Identify bottlenecks or challenges in each  Measure the cost of these challenges: What is it now, what would you like it to be, and what is the value of the difference over time? 5. Start with the process

6. Break the process into components… Avg. AP Salary: R 238,000 / year Number of AP FTE‘s: % Invoice data entry Current time % % saving from automation 75 % Error correction Invoice handling Answering queries Other AP activities 4%4% 25 % 3%3% 75 % 8%8% 20 % 51 % 10 % Increase discount opportunity Increase visibility into AP process Free-up resources to focus on value add activities Objectives for AP automation % % time to be automated 1.1 % 0.8 % 1.9 % 5.2 % x = x = x = x = x = 32 % AP activity to be automated

 SARS and/or SOX compliance  Visibility across all processes  Control of all documentation  Ability to measure and identify bottlenecks  Continuous process improvement 7. Visibility, control and compliance: importance as outputs but can provide challenges in value measurement

8. Scale or expand process scope for continuous increasing returns Archive Web browser user interface Workflow engine User management Process log (audit trail) Purchase to Pay Master Data Order to Cash Finance Interfaces Archive services Data versioning Database persistence SAP user interface CAPTURE Core services Requisition Order Confirmation Delivery Note Accounts Payable Payment Approval Customer Order Remittance Advice Vendor Master Cost Center Profit Center GL Account Asset Financial Posting EDI

8. Scale or expand process scope for continuous increasing returns Archive Web browser user interface Workflow engine User management Process log (audit trail) Purchase to Pay Master Data Order to Cash Finance Interfaces Archive services Data versioning Database persistence SAP user interface CAPTURE Core services Requisition Order Confirmation Delivery Note Accounts Payable Payment Approval Customer Order Remittance Advice Vendor Master Cost Center Profit Center GL Account Asset Financial Posting EDI

8. Scale or expand process scope for continuous increasing returns Archive Web browser user interface Workflow engine User management Process log (audit trail) Purchase to Pay Master Data Order to Cash Finance Interfaces Archive services Data versioning Database persistence SAP user interface CAPTURE Core services Requisition Order Confirmation Delivery Note Accounts Payable Payment Approval Customer Order Remittance Advice Vendor Master Cost Center Profit Center GL Account Asset Financial Posting EDI

8. Scale or expand process scope for continuous increasing returns  Reduction of resource by over 50%  Volumes have doubled  STP 80% and have touched 95% on some days  Stock and non stock invoices and expenses all processed through scanning  Expenses and debit notes now scanned  Next: Automated approvals process  Next: On line storage of documents  Objective: Early payment discounts on twice the number of transactions through dynamic discounting Average monthly invoices42,44075,000 Average monthly debit notes390 Average monthly expenses400 Headcount AP Manager Team Manager Key Users AP Clerk Scan Operator Total Headcount Avg. Verify Non Touch Success Rate0.00%85.00% Avg. Cockpit Non Touch Success Rate (Stock) 0.00% 80.00% Oct 07 Original Sep 10

9. The importance of people in cross functional projects

 Example: One of largest global infrastructure companies  Initially, measurable costs and KPI’s were unknown, transaction cost estimated  Continuous process improvement became strategic objective 10. Start measuring : now, during and after

 Benchmark against best practise 10. Start measuring : now, during and after ReadSoft 2010

Robin Beetge ReadSoft 2013

Sappi Koosh Panday ReadSoft 2013