What does success look like? A successful program involving SAP Ariba solutions can take many forms – and likely changes over time. In this session, we'll walk through the various elements of a successful value realization effort, including sourcing coverage, enterprise efficiency, savings, customer experience, procurement evolution, and the road ahead.

1. Sheree Tipene, Global Process Lead – Procure to Pay, Fonterra Co-Operative Group
Andrew Hunt, SAP / August 31, 2016
Value Realization with SAP Ariba Solutions:
Approach, Measurement, and Success
Public

2. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Public
Agenda
Customer Perspective: Fonterra
Your SAP Ariba Solution Program
Program Value Drivers
Program and Measurement
Path to Adoption and Value
Value Management and Measurement
The Road Ahead

3. Fonterra Co-Operative Group Limited
Value Realisation – Our process journey
Sheree Tipene – Global Process Lead – Procure to Pay
Confidential to Fonterra Co-operative Group
August 2016

4. Page 4
About Fonterra Co-Operative Group Limited
BrandsCompany Overview
22,000

5. Page 5
On a journey to a
globally relevant co-op

6. Page 6
The wake-up call!
why we intensified the global process journey
• WPC80
• Complex business structure
• Multiple variations on processes, even the simple ones
• Comprehensive application architecture
Example of system landscape 2014

7. Page 7
Our Response
simplify, standardise, unify
• Multi year transformation programme

8. Page 8
Our Response
simplify, standardise, unify - solutions
Future state

9. Page 9
Velocity
change in priority
• Procure to Pay process business case approved – Dec 2015
• Vision – Transforming Fonterra Procurement with an integrated Cloud based system
Goals:
Makes it easy for the Business
to comply with and Procurement
to monitor Compliance to
Procurement Policies &
Procedures; including purchasing
from contracts at the contracted
price.
Provides Procurement with the
high quality information
required to realise savings
captured; and identify additional
savings in the future through
contracts and initiatives that are
aligned to the business need.
Is an integrated solution
across Strategic Procurement,
Operational Purchasing through
to invoice processing.
A global way of working for our
people which helps create a ‘One
Fonterra’ view of our business
leaving behind silo behaviours

10. Page 10
Procure to Pay
our process breakdown
Strategic Procurement
Operational
Purchasing
Accounts Payable &
Employee Expenditure
Category Management
Procure goods and services
- direct
Strategic Sourcing
Vendor Relationship
Management
Contract Management
Procure goods and services
– plant maintenance
Process Accounts Payable
Procure goods and services
- indirect
Process Employee
Expenditure
Receipt goods and services
Vendor Information
Partial scope for
Ariba

11. Page 11
Strategic Procurement
the value discussion
Implementation date: Live – 7th June 2016
Recognised Value
eAuctions
Expected value
• Better global data insights
• Consistent and sustainable Strategic Procurement processes
• Reduced contract leakage & improve compliance
• Improved management of savings and benefits
• Capability uplift (not necessarily Ariba driven)
• Better workload management
No of Events Savings Generated % Savings Range
2015 4 $1,202,887.01 35% 5% - 73%
2016 7 $5,641,502.66 48% 20% - 70%
Total:11 Projects $6,844,389.67 43%

12. Page 12
Operational Purchasing & Accounts Payable
the expected value discussion
Implementation dates: March to June 2017 *
Expected value
• Improved purchasing data quality
• Process efficiency
• Improved buyer experience
• Reduced contract leakage – contract to purchase order, purchase order to invoice
• Minimum / no touch accounts payable processing
• Scalability – global reach
* Dates vary depending on ERP deployment plan

13. Page 13
The challenges we face
• Inability to benchmark our starting point
• Competing priorities – short-term focus vs. long-term sustainable process
• Solution maturity - functionality vs. capability vs. capacity
• Ariba’s market presence
• Vendor adoption
• Contract / Catalogue content
• User adoption

14. Page 14
What does the road ahead looks like?
Key date: 31st July 2017

15. Page 15Confidential to Fonterra Co-operative Group
Thank-you

16. Page 16Confidential to Fonterra Co-operative Group
Appendix
Solution Overview
Programme timeline

17. Page 17
Solution Overview
Sourcing
Contract
Terms
Spend
Visibility
Contract
Mgmt.
Savings Pipeline Tracking
Vendor Management
Catalogue
Purchase
Order
Receipt InvoiceSourcing
CLID/
ACC
Spend
Visibility
Contract
Mgmt.
Savings Pipeline Tracking
Vendor Management
M M
P M
F I
Invoice
Captur
e

18. Page 18
Project Timelines
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Collaborative Sourcing (Global)
Jan
Ariba Procurement Content (ERP 1)
Feb Mar Apr MayJan
2016 2017
Procure to Order (ERP 1)
P2P / Invoice Pro / Strategic Payables (ERP 1)
Network Automation (ERP 1)
APC / P2P / Network / Invoice Pro (ERP 2)
Collaborative
Sourcing
Go-Live
7th June 2016
APC / Procure-to-
Order
Go-Live
26th Sept. 2016
Network / Invoicing
Solutions
March 2017
Full Suite Rollout
ERP 2
May 2017
Extend to P2P
/ Invoice Pro

19. Andrew Hunt, SAP / August 31, 2016
Value Realization with SAP Ariba Solutions:
Approach, Measurement, and Success
Public

20. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 20Public
Important information
This information reflects the status of SAP Ariba solution planning as of June 2016. All such
information is the confidential information (per the contract between our companies), and must
not be further disclosed, as stated in the confidentiality clause of that contract. This
presentation contains only intended guidance and is not binding upon SAP or Ariba to any
particular course of business, product strategy, and/or development. Its content is subject to
change without notice. SAP and Ariba assume no responsibility for errors or omissions in this
document. SAP and Ariba shall have no liability for damages of any kind including without
limitation direct, special, indirect, or consequential damages that may result from the use of
these materials.

21. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 21Public
Agenda
Your SAP Ariba Solution Program
Program Value Drivers
Program and Measurement
Path to Adoption and Value
Value Management and Measurement
The Road Ahead

22. Your SAP Ariba solution program
What does success look like?
A successful SAP Ariba solution program can take many
forms – and likely changes over time
 A successful program requires
– Defined vision of success
– Widely communicated and comprehended
– Support that is continuously earned
– Measurement plan
Vision Strategy Value
© 2016 SAP SE or an SAP affiliate company. All rights reserved. 22Public

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Program value drivers
Prioritize and plan according to your organization’s objectives
Cost reduction
Rationalize supply base through spend visibility and
centralized sourcing
Negotiate better pricing based on advanced
negotiation tools and insights into consumption
history
Realize savings on ad hoc purchases through
demand management and spot quoting
4%–15% in average unit price reduction
Process efficiency
Drive sourcing productivity through deep spend
analytics and immediate supplier discovery
Reduce supply chain operation costs (such as
content management, supply chain
planning/execution, and order processing)
Reduce cycle times and increase AP productivity
through invoice process automation
40%–60% in operating cost reduction
Fiscal control and compliance
Control maverick spending, risk, and fraud through
use of contracted suppliers and preferred specs with
standard, repeatable buying processes
Ensure supplier compliance to preferred terms with
reconciliation of invoice, PO, receipt, and contract
$20M in contract leakage per $1 billion of spend
Cash management
Avoid unintended cash flow drainage with a
formalized payment terms strategy
Realize early payment discounts and/or SCF margin
sharing via shorter invoice processing cycle times
and greater % of spend on discount or financing
Capture rebates on high-volume, low-value spend
through card programs
$1–$2M in savings per $1 billion of target spend

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Value lifecycle management
Proven approach to drive and derive value
Value optimization
Measure, monitor, and report
Value discovery
Identify and quantify
Value
lifecycle
Commerce
planned
Commerce enabled
Commerce
adopted
Value realization
Value enablement
People, process, and technology
 Articulate drivers / goals
 Identify opportunity
 Develop vision
 Solution implementation
 Define processes
 Prepare your people
 Prioritize projects
 Governance and
compliance
 Metrics, KPIs, and scorecards
 Benchmark and insights
 Continuous improvement

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Value management and measurement
Benefits are well worth the effort
Increased sponsorship and engagement
Increased internal alignment
Tight strategy-to-execution loop
Improved end-user adoption
Quantitative1
Strategic
(1) Performance of companies with high level of best practices adoption compared to those with low levels of adoption
Source: SAP Value Management Best Practices Survey; 630+ respondents
Projects delivering value on or ahead of time
1.9X
On time
1.5X
On budget
1.5X
On value
Projects that
deliver value on or
ahead of schedule
Projects delivered
on or below
budget
Business benefits
achieved
Companies with active value management overachieve on all value drivers

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Measurement terms
A compilation of numbers used to indicate how
effectively the organization is achieving its
objectives
KPI
Scorecard /
dashboard
Benchmark
A number, a measurement – data / event focusedMetric
Comparison of your organization’s performance
against peers / industry
Assembled metrics and KPIs that capture
overall progress in a snapshot

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Program and measurement
Start simple, advance, and adjust

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Path to adoption and value
Metrics that matter lead to meaningful scorecards
Leadership / sponsors
Constituents
Team
Individual
Report frequently, solicit feedback, revise, and expand
Corporate objectives
360s
SAT / NPS

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SAP Ariba benchmark program
Peer comparison and insights
 200+ customers across 23 SAP industry sectors
 Incorporates data from VLM Benchmark survey and
data from SAP Ariba solutions
 Benchmarking survey covers strategic sourcing,
operational procurement, and treasury and accounts
payable processes
 SAP Ariba solutions covered are Ariba Spend
Visibility, Ariba Sourcing, Ariba Contract Management,
Ariba Procure-to-Order, and Ariba Procure-to-Pay
* $53B sourcing spend, $50B contracts, $175B in P2X, and $73B in spend visibility

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SAP Ariba benchmark program
Compare to all, compare to industry peers (example only)
Value lever Metric Bottom 25% Value continuum Top 25%
Price reduction and spend under
management
Cost reduction: savings as a % of spend – indirect 0.85% 3.8%
% addressable spend under management in sourcing 59% 88%
Projects per sourcing FTE 0.7 12.8
Control & compliance
Savings due to contract compliance 1.6% 3%
% of addressable spend under management in SAP Ariba Procure-to-Pay TBD TBD
Process efficiency
POs per procurement FTE 1,332 10,721
Invoices per AP FTE 5,958 24,371
% of invoice spend via SAP Ariba Network 21.7% 99%
% of invoice volume / count through SAP Ariba Network 45% 99%
% of invoices matched to a PO, contract, or BPO TBD TBD
% of electronic POs through SAP Ariba Network (as a % of total SAP Ariba POs) 59% 99%
% of POs based on contract or catalog TBD TBD
PO cycle time for non-catalog POs (ad hoc based purchases) 40 hours 12 hours
Cash management
Supplier discounts realized (per $B in invoice spend) TBD $2M
Days payable outstanding 35.8 45
Discount capture rate TBD TBD

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SAP Ariba benchmark program
Key observations
Sourcing spend under management (60.5%) is lower than peer (69%) and
top quartile performers (80%)Spend managed
Orders per FTE (4,702) is lower than peer (5,887) and top quartile
performers (10.721), indicating opportunities to continue to support self-
service requisition for material and service items, using online catalogs with
rules-based checks enabled
Invoice approval cycle time (18 days) is longer than peer (15 days) and top
quartile performers (6.9 days) with opportunities to continue to automate
invoice capture is and validation via e-invoicing solutions to alleviate the
workload of AP
Productivity and
cycle times
Electronic
connectivity
Electronic PO count (85%) is higher than peer but trails top quartile performers
(99%)
PO spend on catalogs (18%) is lower than peer (26.8%) and top quartile
performers (36%), indicating opportunities to enable more on-line catalogs
Working capital
DPO (30.5 days) is lower than industry peer (36 days) and top quartile
performers (45 days)
Percent of maverick spend (15%) is comparable to peer (15.9%) but higher than top
quartile performers (5%)Compliance
Cost as a percent of spend (0.63%) is lower than peer (0.67%)
Number of strategic sourcing FTEs per $B in spend (11.4) is comparable to peer but higher
than top quartile performers (6)
FTE and costs
Best practice
Top quartile performers:
 Play a strategic role within the organization and participates in decision-making
 Manage procure to pay as an end-to-end process with a single point of accountability
 Conduct regular spend reviews to identify new areas of contract opportunity
 Use an integrated platform for indirect, direct, and services procurement
 Support self-service requisition for material and service items using online catalogs with
rules-based checks enabled
 Have a formal request for information proposal and quotation to collect multiple supplier
responses for new and renegotiated buys
 Have a compliance program to optimize working capital

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SAP Ariba benchmark program
Top quartile performance results
1. Assuming an average wage rate of $105K for a strategic sourcing FTE
2. Assuming an average wage rate of $52.5K for an AP FTE
3. Assuming an average discount rate of 1.5%
Average performer Top quartile
Top quartile achieves $2.9M efficiency savings per $B
in spendProcurement cost (% of spend)
Sourcing spend under management
0.67% 0.38%
68.6% 80%
Strategic sourcing FTEs per $B in spend
Number of bids placed per event on
SAP Ariba Network
11.5 6.1
11 15
Orders per FTE
PO lines on catalog (as % of SAP Ariba total
transaction lines)
5,887 10,721
68% 96%
Invoices per FTE
% of spend under discount
18,013 24,371
6.1% 7.0%
Top quartile manages 1.2X more sourcing spend than
average performers
Top quartile requires 5.4 fewer FTEs, which
translates to $567K1 efficiency savings per $B
Top quartile obtains 36% more bids per event on SAP
Ariba than average performers, driving higher supplier
competition
Top quartile processes 82% more POs
per FTE
Top quartile has 41% more transaction lines that are
catalog-based
Top quartile processes 35% more invoices per FTE,
which translates to $76K2 savings per 100K invoices
processed
Top quartile has 14% more spend under discount, which
translates to $135K3 savings per $B
Overall
Sourcing
Procurement operations
Accounts payable /
working capital

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The road ahead
Guiding principles to derive value
Develop a detailed view of spend across the
entire organization
Craft a vision that encompasses people, process,
and technology
 Program linked to corporate goals grounded in a
business case
 Defined KPIs / scorecards that roll up to corporate
objectives
 Strong governance and ongoing executive
sponsorship
Be a steward of procurement benefits across the
organization
 Prioritize efforts – where can you truly help
 Demonstrate and announce wins
 Use frequent readouts to enlist support, drive adoption,
and refine program
Participate with SAP Ariba solution teams and
your peers
Benchmark program (it’s included)
Work closely with your CEE
Attend Customer Success Days

34. Thank you
Contact information:
Andrew Hunt
VR Industry Director
a.hunt@sap.com
+61 466 508 012
#SAPAribaLive

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Locate Session Click Surveys Button Select Breakout Survey Rate Session

36. Appendix

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Success measurement approach
SAP recommends a success measurement scorecard using operational metrics (enablers) and savings metrics (results). Following is a summary:
 Value levers – are groupings of metrics by source of benefit: price reduction, spend compliance, process improvement, cash management
 Savings levers – are typically quantified in development of a business case to define the ultimate goal of process transformation
 Operational indicators – serve as leading indicators of performance that enable the savings lever; primarily industry-recognized benchmarks
 Data metrics – are transactional inputs needed to derive the operational indicators and savings levers
Example:
Process
improvement
Invoice
processing FTE
reduction
% of invoices
electronic
Invoices per
FTE
Total invoices
AP FTEs
Avg time to
process an
invoice
Value levers Savings levers
Operational
indicators
Data metrics

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Ariba Spend Visibility
Value drivers
Best-in-class procurement organizations using Ariba Spend Visibility source 63% more of their addressable spend and manage
significantly higher percentage of overall enterprise spend (88% vs 54%).
Customers with Ariba Spend Visibility are significantly better at identifying and prioritizing opportunities for savings within a
spend category.
Customers using Ariba Spend Visibility in their strategic sourcing efforts report 36% higher annual savings than ones that do not.
The benefits of Ariba Spend Visibility result in 30% to 50% faster analysis in strategic projects.
Improvements in the ability to monitor spend internally and externally result in a 29% increase in spend brought into contractual
compliance and savings hitting the bottom line.
Increased spend under
mgmt
Identification of savings
opportunities
Sourcing process
Improved compliance
Source: Ardent Partners, 2011; Aberdeen Group, 2008, 2005

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Ariba Sourcing
Value drivers
Organizations that leverage e-sourcing achieve an average of 9%–14% greater savings than those that do not.
Fully integrated Ariba Discovery increases supplier discovery and overall quality and savings. On average there is a 15% savings
when using Ariba Discovery in sourcing processes.
Access to better information and streamlining the sourcing process by eliminating tactical work related to sourcing reduces
sourcing events cycle time by up to 50%.
Improved category and market data, easier best practice sharing, better stakeholder collaboration, and adherence to standardized
processes enable optimum sourcing savings over time.
Enhanced sourcing
savings
Increased supplier
discovery
Reduced sourcing cycle
times
Continuous improvement

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Ariba Contract Management
Value drivers
Gain enterprise-wide visibility into agreements and ability to accurately monitor and access satisfaction of contract commitments
Get visibility into expiring contracts for timely renewals
Reduce time spent researching/reviewing contracts
Reduce contract leakage with noncontract suppliers
Drive more spend to contract suppliers
Help ensure more purchases are compliant with contract pricing
Strong contract
compliance
Efficiency and visibility
Enhanced
administration
Process standardization
Reduce contract duplications
Receive notification of expiring contracts for improved renewal management
Improve rebate/discount management
Empower enterprise users to create contracts from predefined templates
Drive internal compliance and assists with regulatory compliance
Allow legal to manage by exception

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Ariba Supplier Information and Performance Management
Value drivers
Underperforming suppliers can be identified and weeded out more quickly.
Supply risks (such as safety issues and recalls) are easier to identify and react to.
Visibility is gained into financial status, insurance certificate expiration, and service-level agreements.
Suppliers with visibility into performance issues and quality problems address problems proactively.
High-performing suppliers get the opportunity to be awarded more business because incentives are based on high performance.
Improved supplier
relationships
Improved quality and
performance
Mitigation of supply risk
Formal systematic SPM programs are associated with at least a 20% improvement in price, quality, on-time delivery,
and service level.
70% of best-in-class enterprises measure the performance of at least 51% of their supply base.

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Ariba Procure-to-Pay – requisition to PO
Value drivers
Rationalized and normalized line-level purchasing data
Lower supplier cost to service your business leads to mutual savings
Purchase requisitions automatically matched to contracts
Complex price structures (discounts, tiered, formula pricing) automatically applied
Workflow rules to proactively deter maverick purchases
Easy enforcement and streamlining of purchasing policies and approvals
Better identification and aggregation of purchases
Helping ensure that users only buy what they are entitled to buy
Demand management
Better contract compliance
Re-sourcing savings
Req to PO process cost
reduction
Reduced PO transmission
cost
Streamlined req/PO creation and approvals
Reduction of tactical buying and order tracking activities
Elimination of costly manual transmission (mailroom, postage, transit time)
Elimination of costly electronic transmission (fax servers, EDI VAN charges, and more)

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Elimination of paper/manual processing (mailroom costs, manual data entry, and more)
Elimination of EDI costs, other
Proactive invoice validation and PO/contract matching (for example, PO-Flip, price/quantity validation)
Detection and auto-rejection of duplicates
Lower number of invoice errors to process
Streamlined workflow and matching rules (2-way/3-way/contract)
Increased electronic payment and streamlined payment scheduling
Invoice / payment
processing cost reduction
Reduced invoice errors and
duplicates
Reduced invoice receipt
costs
Improved capture of
payment discounts
Reduced supplier inquiries
Ability to receive, match, and approve invoices in hours instead of days
Capture of lost payment term discounts
Dynamic discount capture, improved return on working capital
Invoice/payment status driven to self-service portal
Automatic confirmation of invoice receipt
Up-front invoice validation rules that reduce delays due to inaccurate invoices
Ariba Procure-to-Pay – invoice to pay
Value drivers

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SAP Ariba services for working capital management
Value drivers
Early payment discounting (Ariba Discount Professional)
 Is available to some or all suppliers
 Is an optional program suppliers can use to manage their liquidity
 Applies to some or all invoices
 Delivers client savings at an average ROI of 24%
Pay terms rationalization
 Helps ensure you are paying suppliers to term and not early
 Enables reviewing multiple vendor numbers per supplier and by commodity for inconsistencies
 Drives consistent supplier payment experience
 Delivers client DPO improvement and uplift adoption for early pay program
Pay terms extension
 Aligns corporate DPO with industry peers
 Is rationalized across the Ariba Network
 Positions extended net terms to specific suppliers/categories
 Delivers client DPO improvement and uplifts adoption for early pay program
All three program options work together in a balanced approach.
Top performers use all three to drive maximum supplier participation and ROI.
Typically drives $2–$3M in savings per $1B in
spend; average return is 24% APR
Creates 2–3 days DPO improvement