Without a defined network growth strategy and relevant tracking metrics, your efforts to move off paper and automate the management of orders and processing of invoices will not gain much momentum. In this session, you will hear experts discuss how you can develop and implement a strategy that will effectively engage suppliers for e-commerce over the Ariba Network and ensure broad internal and external support for your e-invoicing or procure-to-pay initiative.

1. Growing Electronic: Developing an
Ariba Network Strategy that Promotes
Business Case Achievement
Etosha Thurman, Managing Partner – Network Programs, Ariba
Zach Turner, Procurement Analyst, Flint Hills Resources
March 19, 2014
#AribaLIVE
@ariba
© 2014 Ariba – an SAP company. All rights reserved.

2. Why Is Strategy Important?
•
•
2
Enables an individual or entity to tell where they are, where
they are going and the way to get there
Responsible for the coordination of all activities to achieve
a shared vision
© 2014 Ariba – an SAP company. All rights reserved.

3. Business Case Framework - Example
•
•
•
3
45% of Spend not under Compliance
75% of supplier transactions submitted via paper
Average number of days to pay is 62 (vs. Net 60 terms)
© 2014 Ariba – an SAP company. All rights reserved.

4. A Defined Network
Strategy ensures that
we are “rowing in the
right direction”.

5. A Strong Network Strategy Includes:
Dynamic
Elements:
Review and
Update
Regularly
Supporting
Infrastructure
• Executive support and oversight
• Established program charter
• Regular Steering Committee meetings and quarterly reviews
Focus on Program
Goals/ROI
Foundational
Pillars
Strong Leadership
Commitment
• Documented goals and success metrics
• Program scorecard regularly reviewed through Steering Committee
• Ongoing benchmarking and continuous improvement focus
Supplier Flight
Plan
Communication
Plan
• Flight Plan for supplier onboarding: Pilot, Waves, and Timing
• Comprehensive analysis based on ROI and probability of successfully
transacting across the Ariba Network
• Internal communication plan educating organization and driving adoption
• External communication plan for suppliers focused on compliance (see below)
and Ariba Network benefits
Compliance
Management
• Agreed upon approach for making sure sellers participate in initiative
• EDICT with: Expectations, Deadlines, Incentives, Consequences, and
Enablement
Lead/Team
• Dedicated team that manages enablement process
• Team members understand sellers and internal stakeholders and are change
Togetherness Messages
agents within the organization

6. Key Metrics – Guidance along the way
Inv /
FTE
6
© 2014 Ariba – an SAP company. All rights reserved.
%
e-PO
SE
Yield
•
•
•
•
•
•
•
Supplier Enablement Efficiency
% e-PO/e-Invoices
% Spend Under Compliance
% Discounts Captured
% Touch-less POs/Invoices
# Invoices/FTE
# Days Payables Outstanding

7. Flint Hills Resources
7
© 2014 Ariba – an SAP company. All rights reserved.

8. Flint Hills Resources (FHR)
Direct, wholly owned subsidiary of Koch Resources LLC, (wholly owned by Koch
Industries, Inc.), a privately held company involved in most aspects of the oil and
gas industry. The operations of FHR and its subsidiaries include the following:
Three crude oil refineries (approximately 816,525 bpd of crude oil refining capacity)
Six chemical production facilities
Five ethanol production facilities and two biodiesel facilities
A 50% interest in Excel Paralubes, a general partnership engaged primarily in the
manufacture of lubricant base oils
Proprietary pipelines and pipeline investments (located principally throughout the
Mid-continent and Gulf Coast regions of the United States)
FHR’s is the United States’ 9th, and the World’s 24th, largest refiner.
In addition, FHR is the United States’ 5th largest producer of ethanol. FHR is
also a leading producer and marketer of petrochemicals, producing about nine billion
pounds of building-block chemicals.
8
© 2014 Ariba – an SAP company. All rights reserved.

9. Zach Turner
•
Procurement Analyst for the Center of Excellence
Ariba Administrator
Drive initiatives to drive to improve P2P process
Develop knowledge processes
Maximo/Ariba training and support
Develop metrics to monitor performance and drive action
9
© 2014 Ariba – an SAP company. All rights reserved.

10. Why did FHR Implement Ariba?
•
Improve e-commerce capabilities for business advantage
Conduct business with over 2,500 suppliers on the materials side
and several thousand on the services side
Legacy, EDI-based tool offered only basic PO transmission
functionality and basic electronic invoice processing
Enabling one took significant IT efforts for FHR and its suppliers
–
10
Established connections with only five suppliers
© 2014 Ariba – an SAP company. All rights reserved.

11. Why did FHR Implement Ariba?
•
•
Enable business commerce collaboration to improve supplier
interactions, optimize P2P processes and improve visibility
into transactions
Supported by Ariba PO and Invoice Automation, FHR aimed to create
a sustainable competitive edge in its P2P process by:
Reducing accounts payable costs through a zero-touch P2P process
Improving spend control through better transaction data visibility
Eliminating hidden P2P transaction costs between FHR and its suppliers through
better business process
11
© 2014 Ariba – an SAP company. All rights reserved.

12. Management Approval Value Proposition
•
•
Based solely on accounts payable headcount reduction through the
receipt of electronic invoices
Other expected benefits that were not quantified include:
Optimization of confirmation process, so buyers can focus on higher-value tasks
Data visibility leading to better analysis
Better visibility to supplier issues on a real-time basis
–
(Un-invoiced, bad pricing, delivery issues, etc.)
Forced business process consistency
12
© 2014 Ariba – an SAP company. All rights reserved.

13. Company Buy-In
•
Change management as a significant consideration
Buyers don’t interact directly with Ariba, but Ariba implementation
introduced changes in the way they processed POs
Used metrics to help buyers and category managers understand
that there was a “problem”
–
13
Ariba helps the business resolve the problem and achieve its vision
© 2014 Ariba – an SAP company. All rights reserved.

14. Strategy
•
•
Phase 1 (Pilot): Enable five current OCS-enabled suppliers
Phase 2 (Full): Enablement to achieve Base Case
Work to solicit and integrate suppliers is done by Ariba as part of the
subscription price
79 out of top 100 vendors already Ariba-enabled
•
Phase 3 (Quality): Slow down on enablements and focus on quality
of transactions vs. quantity
Use metrics to find problem areas and focus on higher efficiency rates
from top suppliers
Drive down support cost
14
© 2014 Ariba – an SAP company. All rights reserved.

15. Achieved Value Proposition
•
Payable invoice automation/optimization through electronic processing
Accounts payable personnel cost savings due to elimination of keyed invoices
44%+ of our invoices come in via Ariba and are touchless
Time saved researching invoices that come in without complete/valid information (PO number, Work order or Location)
Reduced calls to AP to find invoice status (received, payment date)
•
Buyer optimization
Through automation of the confirmation process we have freed up, on average, two hours per day for each buyer
(We expect to capture more value in this area as we enable additional suppliers.)
60%+ of our PO lines run through this automation logic with a majority being touchless
•
Data visibility
Suppliers return their catalog code and contract/catalog price on the confirmation, so we can better analyze the data.
Prior to Ariba: limited visibility to detail spend data unless we asked the supplier for it (high number of “material” orders)
Identify issues between our expected price and the supplier’s ask price. Using this data to better manage our suppliers
•
Forced business process consistency
Internal – forces all our sites to conform to defined processes
External – forces our suppliers to transact in a compliant manner (accurate and complete data)
15
© 2014 Ariba – an SAP company. All rights reserved.

16. Metrics
•
•
•
16
Currently transacting with 400 suppliers
Processing 68,000 Purchase Orders annually through the network
Processing approximately 150,000 invoices annually “touch-less”
through the network
© 2014 Ariba – an SAP company. All rights reserved.

17. 2,000
-
17
1,2701,667
1,667 1,692
1,667
1,667
May-11
Jun-11
Jul-11
Aug-11
Sep-11
© 2014 Ariba – an SAP company. All rights reserved.
5,000
5,000
5,000
Jul-13
Aug-13
Sep-13
6,667
5,000
Jun-13
Nov-13
5,000
May-13
6,667
5,000
4,498
2,907
5,137
5,094
3,659
3,870
3,880
4,030
3,680
2,469
2,851
1,427
1,750
2,577
4,554
4,487
3,032
3,319
3,240
2,347
3,515
3,659
2,038
2,089
2,009
8,000
Oct-13
5,000
Apr-13
3,333
Sep-12
Mar-13
3,333
Aug-12
5,000
3,333
Jul-12
Feb-13
3,333
Jun-12
5,000
3,333
May-12
Jan-13
3,333
Apr-12
5,000
3,333
Mar-12
Dec-12
3,333
Feb-12
5,000
3,333
Jan-12
Nov-12
3,333
Dec-11
5,000
3,333
Nov-11
2,164
4,082
6,000
Oct-12
3,333
Oct-11
4,000
3,032
2,108
1,667 744
Apr-11
Touchless Invoices
12,000
10,000
Above
Plan
Plan

18. 18
© 2014 Ariba – an SAP company. All rights reserved.
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Cancel/Rejection Rate
8.0%
7.0%
6.0%
5.0%
Cancel Rate
4.0%
Reject Rate
3.0%
Target Line
2.0%
1.0%
0.0%

19. Key Lessons Learned
•
•
•
•
Clear strategy and performance metrics are essential
Need buy-in across the entire organization
Include support cost with Ariba in value proposition
Your implementation pain/joy is directly related to how well the
supplier handles their enablement.
Notify-train key participants within the supplier’s firm
(to reduce the surprises)
–
–
19
Corporate offices vs. local branch processing
Billing, Order Fulfillment, Account Management
© 2014 Ariba – an SAP company. All rights reserved.