Automatic Data Processing, Inc. · NASDAQ:ADP
Automatic Data Processing — Aberdeen Group and ADP Introduction to ePayables webinar (February 2011)
36 slides from Automatic Data Processing's conference presentation, Feb 23, 2011
Slide 1: Introduction to ePayables: Understanding Accounts Payable Automation
A IIntroduction An d i to ePayables Understanding Accounts Payable Automation Februaryy 23, 2011 Scott Pezza Senior Research Associate Aberdeen Group Sush Koka Senior Director, Product Marketing Procure-to-Pay Solutions © AberdeenGroup 2011
Slide 2: Understanding ePayables
U d t di ePayables Understanding P bl What Does “ePayables” ePayables Mean? The CPG Business Environment A Focus on A/P Automation Pressures and Responses Defining Best-in-Class Performance Capability and Technology Gaps Driving Savings and Justifying Investment First Steps Wrap-Up
Slide 3: What Does "ePayables" Mean?
Wh t D What Does ““ePayables” P bl ” MMean? ? Payables The documents and processes associated with paying suppliers for goods delivered or services rendered. © AberdeenGroup 2011 3
Slide 4: What Does "ePayables" Mean?
Wh t D What Does ““ePayables” P bl ” MMean? ? Payables The documents and processes associated with paying suppliers for goods delivered or services rendered. ePayables The electronic documents and automated processes associated with paying suppliers for goods delivered or services rendered.
Slide 5: What Does "ePayables" Mean?
Wh t D What Does ““ePayables” P bl ” MMean? ? Accounts Payable Documents Contract Purchase Order Invoice Goods Receipt © AberdeenGroup 2011 5
Slide 6: What Does "ePayables" Mean?
Wh t D What Does ““ePayables” P bl ” MMean? ? Accounts Payable Documents Contract Purchase Order Invoice Goods Receipt Accounts Payable Processes Invoice Receipt Imaging – converting a paper document to a digital image S Scanning i and dDData t CCapture t – converting ti a digital
Slide 7: The CPG Business Environment: Year-over-Year Performance Comparison
Th CPG Business The B i Environment E i t Year-over-Year Year over Year Performance Comparison CPG All Others ear Percentage e 14% 11.81% 12% 9.56% 10% 8.42% 8.04% ge Year-over-Ye Changee 8% 6.74% 5.79% 6% 5.06% 4% 3.39% 2% Averag 0% Revenue Revenue Operating Profits Operating Profits (Actual) (Expe
Slide 8: The CPG Business Environment: Sector Performance Indices
Th CPG Business The B i Environment E i t Sector Performance Indices PMI NMI 80 MI and NMI 70 60 50 ISM's PM 40 30 20 Date Source: Institute for Supply Management Historical Data Note: A PMI or NPI above 50 indicates expansion; below 50 indicates contraction © AberdeenGroup 2011 8
Slide 9: The CPG Business Environment: Goals for 2011
Th CPG Business The B i Environment E i t Goals for 2011 50% Organic revenue growth 53% 46% Profitability / margin growth 41% 27% Cost reduction 14% 23% Increase market share 25% 18% Improve brand awareness / value 29% 11% CPG Increased productivity 11% All Others 0% 10% 20% 30% 40% 50% 60% Percenta
Slide 10: The CPG Business Environment: Cost Savings Efforts Undertaken
Th CPG Business The B i Environment E i t Cost Savings Efforts Undertaken 64% Cut discretionary spending 73% Re negotiate supplier relationships Re-negotiate 56% 42% 44% Cut / defer capital projects 41% Reductions in personnel costs 43% 53% Travel restrictions - still in place 36% 43% 35% CPG Invest
Slide 11: The CPG Business Environment: Targets of Marketing Efforts
Th CPG Business The B i Environment E i t Targets of Marketing Efforts Businesses Consumers Both Percentage of Respondentts, n = 100% 22% 30% 80% 8% 60% 1577 35% 40% 70% 20% 35% 0% CPG All Others Source: Aberdeen Business Review, Q4 2010 Impacts of consumer focus: changing preferences, preferences c
Slide 12: Pressures Driving a Focus on A/P Improvement
A Focus F on A/P Automation A t ti Pressures Driving a Focus on A/P Improvement Top-down cost-reduction mandate 55% Difficulty of working with information in 51% paper format Difficulty managing cash 24% Risk of fraud 19% Impact of process inefficiency (late or 14% duplicate payments, etc.) 0% 10% 2
Slide 13: Visibility into AP Operations and Processes
A Focus F on A/P Automation A t ti Visibility into AP Operations and Processes 5% 15% Real-time visibility Good visibility Limited visibility No visibility 48% 32% Additional Room for Improvement: 64% of Best-in-Class enterprises stated they had Good or Real-Time visibility of AP operations and proc
Slide 14: Sources of Incoming Invoices
A Focus F on A/P Automation A t ti Sources of Incoming Invoices of Respondentts, n = 152 100% 94% 94% 93% Small Midsize Large 80% 75%77%73% 71% 67% 60% 53% 53% 50% 40% 31% 25% 22%21% 22% Percentage o 20% 13% 3% 0% Regular Mail / E-Mail Fax Purchasing Electronic data Supplier Portal Paper p Card stat
Slide 15: Methods of Invoice Processing
A Focus F on A/P Automation A t ti Methods of Invoice Processing Manual Back-end document capture Front-end document capture Front-end data capture Large Enterprises 25% 35% 15% 25% Midsize Businesses 50% 8% 16% 25% Small Businesses 63% 9% 15% 12% 0% 20% 40% 60% 80% 100% Percentage of Respondents, n
Slide 16: Types of Outgoing Payments
A Focus F on A/P Automation A t ti Types of Outgoing Payments Checks ACH Commercial cards Wire transfer Other Large Enterprises 30% 28% 12% 21% 8% Midsize Businesses 42% 18% 11% 21% 9% Small Businesses 46% 17% 12% 15% 10% 0% 20% 40% 60% 80% 100% P Percentage off Total T l Payments P Behind cost and
Slide 17: Defining Best-in-Class Performance
A Focus F on A/P Automation A t ti Defining Best-in-Class Best in Class Performance Definition of Maturity Class Mean Class Performance Best-in-Class: $4.84 cost to process a single invoice Top 20% of aggregate performance scorers 3.7-day cycle time to process a single invoice Industry Average:
Slide 18: Competitive Framework – Part One
A Focus F on A/P Automation A t ti Competitive Framework – Part One Best-in-Class Industry Average Laggards Process Clear policies for invoice receipt-to-payment workflow 59% 40% 27% Organization Executive support for imaging and workflow automation 46% 34% 21% Knowledge System-level controls for se
Slide 19: Competitive Framework – Part Two
A Focus F on A/P Automation A t ti Competitive Framework – Part Two Best-in-Class Industry Average Laggards Technology Automation of header data validation / duplicate invoice verification 54% 24% 22% A/P solutions providing: 68% - Payment 47% - Payment 45% - Payment scheduling scheduling sche
Slide 20: Implications of Performance Differences
Di i S Driving Savings i and d JJustifying tif i IInvestment t t Implications of Performance Differences Measure Best-in-Class All Others Number of invoices processed per month 14,080 9,409 Value of invoices processed per month $67.8m $45.9m Percent of invoices that are PO-based 63.1% 62.0% Invoice
Slide 21: Implications of the Choice of Payment Method
Di i S Driving Savings i and d JJustifying tif i IInvestment t t Implications of the Choice of Payment Method Payment Method Cost per Transaction Paper Paper Checks $7.15 Electronic ACH $4.72 Commercial Cards $3.96 Wire Transfer $9.86 Measure Overall Number of invoices processed per month 10,367 Inv
Slide 22: First Steps
Fi t Steps First St Review current receipt and approval policies and identify major program gaps. © AberdeenGroup 2011 22
Slide 23: First Steps
Fi t Steps First St Review current receipt and approval policies and identify major program gaps. Measure compliance to enterprise invoice / purchasing policies. © AberdeenGroup 2011 23
Slide 24: First Steps
Fi t Steps First St Review current receipt and approval policies and identify major program gaps. Measure compliance to enterprise invoice / purchasing policies. Engage upper management in strategic and technological A/P initiatives. © AberdeenGroup 2011 24
Slide 25: First Steps
Fi t Steps First St Review current receipt and approval policies and identify major program gaps. Measure compliance to enterprise invoice / purchasing policies. Engage upper management in strategic and technological A/P initiatives. Investigate electronic invoicing for a streamlined A/P pro
Slide 26: Wrap-Up
W Wrap-Up U ePayables is focused on improving the efficiency of of, and visibility into, the accounts payable function © AberdeenGroup 2011 26
Slide 27: Wrap-Up
W Wrap-Up U ePayables is focused on improving the efficiency of of, and visibility into, the accounts payable function Key elements to keep in mind are: The form of incoming invoices The method for handling paper invoices The rules in place governing the approval process The choice of pa
Slide 28: Wrap-Up
W Wrap-Up U ePayables is focused on improving the efficiency of of, and visibility into, the accounts payable function Key elements to keep in mind are: The form of incoming invoices The method for handling paper invoices The rules in place governing the approval process The choice of pa
Slide 29: About ADP
About ADP • Automatic Data Processing, Inc. (ADP) - Global leader in business outsourcing solutions - Over 570,000 clients worldwide; 50+ 50 MM employees served - $1.3 Trillion in client funds moved - World Class, secure payment environment - Leading the industry in compliance accuracy - 1 of 4 AAA
Slide 30: Moving from Paper to Electronic Invoices
Moving from Paper to Electronic Invoices Problem Solution Paper invoices and manual ADP Invoice • Shared supplier network with processes thousands of supplier transacting • Invoices received in paper format • Comprehensive suite of supplier • Manual M l routing ti and d approvall enablement services
Slide 31: No More Missing Goods/Services Receipts
No More Missing Goods/Services Receipts Problem Solution ADP Receipt Missing goods/services • Fully integrated with ADP Invoice receipt information • Suppliers can enter receipt detail in portal, which is then sent to buyers • Manual process for entering for review and approval/dispute receipt infor
Slide 32: Ensure Compliance with Negotiated Prices
Ensure Compliance with Negotiated Prices Problem Solution ADP Invoice L k off compliance Lack li with ith • Load and maintain price books and contract pricing pricing information within the system • Procurement negotiates contracts • Leverage ADP’s experienced service team to load and update but AP
Slide 33: Maximize Early Payment Discounts
Maximize Early Payment Discounts Problem Solution L Lengthy th processing i cycles l ADP Invoice lead to late payments and • Electronic invoicing and automated missed discounts workflow significantly compress the invoice processing cycle • Procurement negotiates discounts • Easily see invoices avail
Slide 34: ADP Procure-to-Pay – A Complete Solution
ADP Procure-to-Pay – A Complete Solution 34 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.
Slide 35: Other Webinars in This Series
Oth W Other Webinars bi iin Thi This S Series i Making Progress – Best Practices for Performance Improvement and Supplier Participation Wednesday, April 27th at 2:00pm ET Advanced Topics in A/P Automation – Improving Savings, S i Accuracy, A and d Compliance C li Wednesday, June 22nd at 2:00
Slide 36: Questions?
Questions? Scott Pezza Senior Associate, Aberdeen Group Phone: 617.854.5380 Scott.Pezza@Aberdeen.com Sush Koka Senior Director, Product Marketing Phone: 832.308.3581 832 308 3581 Sushmitha_Koka@adp.com © AberdeenGroup 2011