Enterprise Process Innovation
Continuum (EPIC)
Applying integrated analytics to
process execution
© 2011 IBM Corporation 2
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 3
What is EPIC?
EPIC methodology is a philosophy of leadership, teamwork and problem solving
resulting in continuous process innovation and improvement throughout the
organization by:
– Flexible, iterative approach focused on the needs of the client
– Empowering employees
– Optimizing existing activities in the process to differentiate the business and achieve top
quartile performance
EPIC means:
– “Doing things right the first time”
– “Providing optimum quality at the right time and the right price”
– “Using the right tools for problem solving”
– “Innovating to the next level of performance”
EPIC delivers:
– Committed outcomes and cost optimization
– Reduced process complexity through simplification and standardization
– Increased visibility and stronger controls for sustained performance
– Proven method for driving the effectiveness of the end-to-end Finance organization
– Business agility to optimize competitive advantage
© 2011 IBM Corporation 4
Our end-to-end, analytics-driven methodology provides continuous
innovation for our clients’ business processes.
EPIC Enterprise Process Innovation Continuum
Assess process maturity
and analyze performance
in real time.
Implement innovative
technologies and build
quality into processes.
Evolve best practice
designs against IBM
benchmarks,
extending innovation.
© 2011 IBM Corporation 5
An optimization strategy captures the benefits of consolidation and delivers
immediate ROI while preparing your enterprise for IT integration.
-35% Globalization
scale & expertise
-25% Standardization
& automation
+7% Indirect procurement sourcing against spend
+25% Working capital against receivables & payables balances
Improved risk, controls, compliance & business agility
Consolidation Optimization IT Integration
Functional
Costs
Enterprise
Benefits
Annualized run rate savings range 30-60% from baseline.
Total Service Value
© 2011 IBM Corporation 6
We work with you to create a transformation roadmap that meets your
unique needs.
► Global footprint
► Centers of expertise
► Economies of scale
► Standards-driven granular
measurement
► Process simplification & standardization
► Automation with innovative technologies
► Integrated analytics
► End-to-end process harmonization
► Extension to clients’ retained
activities
► ERP implementation/
rationalization
► Data warehouse/
Business intelligence
Consolidation Optimization IT Integration
Lowest
cost, risk
and value
Highest
cost, risk
and value
© 2011 IBM Corporation 7
Integrated, iterative activities and an end-to-end approach consistently
deliver optimization with committed outcomes.
Assess process maturity
Identify gaps to IBM proven best practice
process models to
quickly strengthen controls &
design tactical roadmaps
Manage and analyze
performance at granular
level against standards and
benchmark targets
Deploy required tools to automate
manual tasks and drive
productivity, quality and outcomes
Eliminate errors,
exceptions and non-value added work to improve client
satisfaction and their
employees’ experience
Systematically manage end-
to-end process execution
against IBM best practice
process models, controls
framework and benchmarks
Create and extend
innovation & risk
management across
processes, technologies and people
Enable real-time
measurement
Implement innovative
technologies
Build quality into process
Institutionalize continuous
improvement
Innovate best practice designs
Improved efficiency
Improved agility
Best practice outcomes
Improved compliance & controls
Enterprise Process Innovation Continuum (EPIC) Powered by Integrated Analytics
© 2011 IBM Corporation 8
Each step is supported by assets, tools, process frameworks that
demonstrates the depth and maturity of E2E methodology.
Assess process maturity
Process
maturity
models,
process blue
books,
WebSphere
Business
Modeler,
process
reengineering
(BPR)
Standard
process/
activity
taxonomy,
patent-pending
Time-Volume-
Capture (TVC)
standard/
benchmark
targets,
Cognos
database
Rapid
workflow,
eInvoicing/
Portal, GERS,
ARCollect,
Payment
Systems,
account recon,
JIRA close
monitoring,
Service Flow
SLA mgmt
Auto e-mailer, auto-resizing,
QC tool, screen scraper, automation of
trackers, macros, hot
keys Six Sigma /
Lean initiatives, cross-client
comparisons, WebSphere
Business Modeler
Internal
benchmark
database –
subprocess
level, with key
work drivers,
external
benchmarks,
WebSphere
Business
Modeler, BPR
Advanced /
predictive
capabilities –
Insight,
collections
optimization
analytics, audit
recovery
analytics, B2B
Collaborative
Commerce
Enable real-time
measurement
Implement innovative
technologies
Build quality into process
Institutionalize continuous
improvement
Innovate best practice designs
F&A EPIC Intellectual Property
© 2011 IBM Corporation 9
Our unique methodology applies six key enablers consistently across clients to
institutionalize continuous improvement and achieve operational excellence.
Service level
agreement Financial
Business
controls Productivity Quality People
EPIC leaders:
Six Sigma Black Belts
Industrial engineers
Automation leads
Center productivity leads
QA leads
Tower best practices leads
EPIC
Business Objectives
© 2011 IBM Corporation 10
Analytics are integrated across our methodology, enabling actionable
business insight.
Business operations
How the business
applies information to
achieve its goals:
Policies
Activities
Procedures
Standards
Controls
Organization
Information and analytics How the business manages information and learns from it
IBM’s mature
process analytics
and optimization
capability provides
our clients with
differentiation and a
competitive edge.
Business analytics and optimization
Command
and control
Common
Progressive
Real-time, pattern
based strategies
with situational
context
Task integration
(e.g. ERP)
Process
automation &
workflow
Business process
integration (e.g. F&A)
and collaboration
Spreadsheets and extracts
Data warehouses, governance and production reporting
Master data mgmt and dashboards/ scorecards
Contextual business rules and patterns
Pioneering Advanced analytics (e.g.,
predictive & behavioral
analysis)
© 2011 IBM Corporation 11
Our EPIC methodology, introduced early in the process, is delivering
accelerated benefits.
Phase
Contract signing Go live
First 3 to 6 months:
Up to 25% savings YoY continuous
improvement: 3 to 5+%
Ramp up
Transition Consolidation Integration
Year 1 6 Months
Optimization
Assess process maturity
Enable real time measurement
Implement innovative technologies
Build quality into process
Institutionalize continuous improvement
Innovate best practice designs
Next 12 months:
10% to 15% savings
Year 2 Year 3
© 2011 IBM Corporation 12
EPIC powered by integrated analytics offers clients game changing
capabilities.
Achieving process optimization is never easy and the ability to achieve it varies by client
IBM offers a unique, standard methodology that can accelerate the path to process optimization based
on client’s strategy and desired pace of change
EPIC in Motion
Our EPIC methodology consistently
Enables significant process visibility through
standards-driven granular measurement and
monitoring of activities
Embeds analytics at each step in the process to
accelerate optimization
Leverages innovative technology and benchmarks
to drive to top quartile performance
Delivers 20-50% FTE productivity, when combined
with labor arbitrage translates to 30-60%
annualized run rate savings
Extends E2E across IBM/client organizations
driving EPIC across the entire enterprise
Ultimately accelerates companies’ readiness for
integration
© 2011 IBM Corporation 13
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 14
IBM assesses a client’s process maturity to identify gaps and
roadmaps to best practices.
Assess process
maturity
Activities:
Understand key metrics, work drivers and
process characteristics to determine
current process maturity
Compare to standard and best practices
process models and identify gaps
Stabilize and standardize operations
based on process blue books
Design “art of the possible” roadmaps to
achieve client objectives
Assess process
maturity
© 2011 IBM Corporation 15
Comprehensive process blue books set the best practice standards
for people, process and technology to ensure consistency.
Standard best
practice process
models
Standard
process metrics
Standard location,
span of control and
staffing mix
Standard
business control
guidelines
Standard
SLA/ KPI/
CPI
Standard
process
taxonomy
Standard
regulations
Example:
Record to report
Outcome Metrics Driver
General Accounting (process)
Cost per Account Reconciled Activity analysis for General Accounting FTEs
Accounts Reconciled per Hour
Average cost of General Accounting FTE
Account Reconciliations (sub-process)
# of GL Accounts Reconciled per FTE hour # of accounts in COA
Cost per GL Account Reconciled % of time spent on preparing reconciliations
% of time spent performing reconciliations
% of time spent on resolving reconciling items
% of items auto-matched
Time to resolve reconciling items
Aging of reconciling items
Journal Entries (sub-process)
# of JE lines processed per FTE hour % manual vs. automated
Cost per JE line processed % of journal entry lines that are first time error free
Cycle time to perform monthly close Materiality thresholds for correcting journal entries
Reporting (sub-process)
# of financial/management reports generated per FTE hour # of Legal Entities
Cost per financial/management report generated # of Business Units
Cycle time to provide monthly flash reports
Tax Reporting (sub-process)
# of tax reports per FTE (not high priority at this point)
Cost per tax report
Intercompany Accounting (sub-process)
# of Inter/Intra company trading partner pairs administered per FTE hour # of Inter/Intra company trading partner pairs
Cost per Inter/Intra company transaction Materiality thresholds for correcting inter/intra company journal entries
Cost per Inter/Intra company trading partner pair % manual vs. automated
Fixed Assets (process)
Cost per Asset Record Activity analysis for Fixed Assets FTEs
Asset Records per Hour
Average cost of Fixed Assets FTE
Fixed Assets (sub-process)
# of Asset Tranactions processed per FTE Hour # of Fixed assets records
# of Fixed Assets Reports prepared per FTE Hour Capitalization thresholds
Cost per fixed asset transaction % manual vs. automated
Cost per fixed asset report prepared
Project Accounting (sub-process)
# of projects aministered per FTE Hour # of project settlements
Cost per project adminstered
Key Measures
Standard
enabling
technology
Assess process
maturity
© 2011 IBM Corporation 16
We leverage process standards, simulation and maturity models
to design “art of the possible” roadmaps leading to best practices.
Define “to-be” improvements Model “as-is” process
Metrics
budgets
– $’000
– FTE
TVC data Technology
capabilities
Client “as is” data
Client “as is” models
Using WebSphere
Business Modeler
Benchmarking
and
best practices (internal and external )
Client “to be”
models
IBM best practice
simulation models
Implemented
in transition
Assess process
maturity
© 2011 IBM Corporation 17
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 18
We measure activities, people and processes at a granular level,
enabling Lean / Six Sigma analysis and process improvement.
Measure and monitor
to standards
Activities:
Implement tools to track availability and
productivity
Measure performance at granular level
against targets
Manage performance deviations through
real-time feedback
Identify best practices and codify techniques
Reset targets to drive continuous
improvement
Level load work to manage peak processing
periods
Enable real time
measurement
© 2011 IBM Corporation 19
We have deployed industrial engineering methods to optimize both individual
and process performance.
Review practitioner
performance against
standards
Review of weekly availability and efficiency of account by manager
Cross-account
comparisons
Identify opportunities
through reviews and
prepare execution plan
DMS Generic Front End
0.871.061.141.181.241.321.341.361.451.461.501.501.561.581.591.591.601.641.741.761.791.821.821.83
1.962.132.14
2.32
2.77
3.39
4.60
0
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2
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3
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4
4
5
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e p
er
tran
sacti
on
(m
in.)
0
50
100
150
200
250
300
350
Vo
lum
e
Time per transaction Volume
Set standard times Create and install
TVC instance
© 2011 IBM Corporation 20
General Accounting
Our common taxonomy of activities and metrics enable consistent
data collection across clients and delivery centers.
Finance
and
Admin
Solution Process Subprocess Activity
Accounts Payable
T&E Processing
Fixed Assets
Order-to-Cash
(Accounts Receivables)
Gather information
Prepare Entry Only
Post Entry Only
Prepare JE-Template
Prepare JE-Manual
Prepare JE-Automated
Review and approve JEs
JE rework-Client
JE rework-Internal
GA JEs-Client Meeting
GA Account Reconciliations
GA Journal Entries
GA Reporting
GA Consolidations
GA Cash & Banking
GA Acctg System
Maintenance
GA Client Requests
GA Other - Projects
IC Account Reconciliations
IC Journal Entries
Tax Acct Reconciliations
Tax Journal Entries
Tax Reporting
GA Journal Entries
Enable real time
measurement
© 2011 IBM Corporation 21
Functionality:
Measures time and volume at activity level by
individual, by account against standards
Standardizes processes and shares best
practices
Drives continuous improvement as standards are
achieved and reset
Provides insights for solutioning new deals
User-friendly design:
Unobtrusive, yet always visible
Easy to select activities (only shows activities
specific to agent)
Auto-break if system unused for more than 5
minutes
Triggers actions to drive up utilization
Our TVC tool enables consistent, granular performance
measurement to standards.
ACT Reporting 5Sub
ActGovernment reports Vol Break XPCV1.6d
Client closing calls – Rept: 15
Government reports – Rept: 20
Internal closing calls – Rept: 16
Maintain Database Tbls. & Syst. Interf. – Rept: 21
Prep/Maint/Close of ERP system – Rept: 17
Prepare report – Rept: 18
Tax report – Rept: 19
ZZ – Assistance: 10007
ZZ – Break: 10000
ZZ – Client-driven waiting time: 10005
ZZ – Computer system downtime: 10002
ZZ – General Meeting: 10001
ZZ - IBM Required Tasks: 10004
ZZ – Industrialization (DE): 10006
ZZ – Training: 10003
TVC utility installed on each individual’s
desktop to monitor sub-activity times
Time-Volume-Capture
(TVC) tool
Enable real time
measurement
© 2011 IBM Corporation 22
By setting standards at the activity level, we quickly optimize
individuals’ performance and reduce variability across clients.
Analysis:
Analysis highlighted wide variability in individual performance
TVC data used to identify low-performing individuals Team leaders implemented actions to improve
performance, such as: – Training – Work allocation – System constraints
Results:
Real-time performance feedback Individual’s motivated to improve performance Individual performance closely clustered around
average points for availability and efficiency Overall productivity of up to 10-20% on some accounts
BEFORE TVC: Individual Efficiency/Availability
Availability %
Eff
icie
nc
y %
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00
Below average efficiency
Belo
w a
vera
ge a
vailab
ilit
y
Top quartile
Availability %
Eff
icie
nc
y %
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00
Top quartile
Below average efficiency
Belo
w a
vera
ge a
vailab
ilit
y
AFTER TVC: Individual Efficiency/Availability
Enable real time
measurement
Example: Individual
Efficiency/Availability
© 2011 IBM Corporation 23
TVC data identifies opportunities to improve utilization by level
loading work and managing peak processing periods.
Analysis:
Used TVC data to pinpoint non-critical work performed
during peak, month-end GL period
Analyzed necessity of performing this work during peak
periods
Where possible, reconfigured work/timing to be
performed during non-peak periods to improve capacity
utilization
Results:
Work pushed to non-peak periods included:
– Systems maintenance
– Desktop documentation
– Non-essential reconciliations
Overall productivity of 5-10% on some accounts
BEFORE TVC: Non-critical work
performed during peak periods
Example:
Level loading work
AFTER TVC: Non-critical work performed
during non-peak periods
Date
Total hours per day
Current staffing levels
Future staffing levels
Total hours per day
Current staffing levels
Date
Enable real time
measurement
© 2011 IBM Corporation 24
TVC data identifies opportunities to improve utilization by
“right skilling” work and cross-training resources.
Analysis:
Used TVC data to identify amount and frequency of
“client-driven waiting time” by process and individual
Identified opportunities to reallocate resources to
different activities during peak and lean periods
Results:
Increased efficiency in terms of overall FTEs needed
Elimination of “forced idleness” from low volumes and
cyclical processes
Transaction processing teams cross-trained for back-up
purposes
Overall productivity of 5-10% on some accounts
Example:
Pooling resources
FTEs required before and after cross-training:
400
350
300
250
200
150
100
50
0
Jan Feb Mar Apr
Client-driven waiting time trend
Ho
urs
344
215
115
58
Reporting & GA
Pre cross-training
Post cross-training
GA (JE) Reporting
Canada 9 FTEs
Canada 6 FTEs
14 FTEs
I / C & GA
Pre cross-training
Post cross-training
GA (JE) IC
US 9 FTEs
IC 3 FTEs
11 FTEs
Enable real time
measurement
© 2011 IBM Corporation 25
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 26
Through the smart use of technology, we drive productivity, improve
quality, fill functionality gaps and enable end-to-end processes.
Activities:
Deploy productivity tools to automate
manual tasks and reduce errors, cycle
time and nonvalue-added activities
Implement tools that wrap around client
ERPs
Implement enabling
technologies
1
AP T&E Record-to-reportRevenue Cycle (O2C) Payment Systems
Workflow Tools: RAPID, DCIW, Issue Escalation Management (JIRA)
Operational Excellence Tool: Time / Volume Capture (TVC)
Document Management Tools: Document imaging (Xerox), Electronic forms (eForms)
Standardization Tools: Desktop Procedures & Policies Repository (Quickr) , Service level management (Service Flow)
Expense
reporting
(GERS) Suite:
Purchasing Card,
Travel Booking
Integration,
Standard Reporting
ARCollect Suite:
CDR,
Dashboard,
Smart Search,
Unified Dialer,
Knowledge Management
(Knowlagent)
Payment Systems
Suite
(Transaction Processing
Engine, Integration Tools,
Value Add Features)
General Accounting
Suite:
Account Reconciliation,
Close Monitoring,
Audit Tracking,
Quicker Repositories,
Journal Entry,
Reporting Process Tracking
Accounts Payable
Suite:
Invoicing/Portal
AP Recovery/ Duplicate
Payments
Invoice Translation
Transaction Processing
Operational Excellence Automation Enablers: Auto e-mailer, Auto-resizing, QC tool, Scrapper, Automation of trackers, Macros, Hot Keys
Implement innovative
technologies
© 2011 IBM Corporation 27
We bring enabling tools that wrap around our clients’ ERP, providing process
standardization and improving performance.
Transaction Processing
Record-to-report Payment Systems AP T&E Revenue Cycle (O2C)
Analytics Tools: Time-Volume-Capture (TVC), WebSphere Business Modeler, ACL, Insight, Cognos, SAS / SPSS
Workflow Tools: RAPID, DCIW, Issue Escalation Management (JIRA)
Document Management Tools: Document imaging (Xerox, Iron Mountain), Electronic forms (eForms)
Standardization Tools: Desktop Procedures & Policies Repository (Quickr), Service level management (Service Flow)
Expense
reporting
(GERS) Suite:
Purchasing
Card,
Travel Booking
Integration,
Standard
Reporting
ARCollect Suite:
CDR,
Dashboard,
Smart Search,
Unified Dialer,
Knowledge
Management
(Knowlagent)
Payment
Systems Suite
(Transaction
Processing
Engine,
Integration Tools,
Value Add
Features)
General Accounting Suite:
Account Reconciliation, Close Monitoring, Audit Tracking, Quicker Repositories, Journal Entry, Reporting Process Tr
Accounts
Payable Suite:
Invoicing/Portal
AP Recovery/
Duplicate
Payments
Invoice
Translation
EPIC Automation Enablers: Auto e-mailer, Auto-resizing, QC tool, Scrapper, Automation of trackers, Macros, Hot Keys
© 2011 IBM Corporation 28
We deploy process-enabling tools that “wrap around” client ERPs to
drive productivity and enhance quality.
Benefits:
Days Sales Outstanding (DSO) reductions up to 90% on past due debt
Cost savings of up to 60% Dispute resolution time reductions up to 80% Cash application improvements up to 80% Significant reductions in profit leakage, bad debt reserves
and write-offs Removes subjective decisions by individual staff
Benefits:
Visibility into issues types and resolution cycle times enables transparency and accountability
High-quality information enables proactive measures vs. tactical reactions
Improved dispute detection times Improved compliance and control Improved customer experience
Functionality: Comprehensive customer segmentation and
prioritization capabilities
Automated customer behavior scoring based on past
performance
Flexible strategy setting at multiple levels and times
Advanced workflow for role segregation and work
allocation to the “right skilled” resources
Web portal with automatic correspondence and
escalations to drive disputes to quick resolution
Comprehensive task, staff and workflow analytics
Drill-down capability enables management by
exception
Example:
ARCollect tool suite
Implement innovative
technologies
© 2011 IBM Corporation 29
We also provide BPO platforms that offer cloud-enabled Software-as-a-
Service (SaaS) solutions.
Benefits:
Full end-to-end integration
Highly standardized business model in an open
architecture
Multi-tenant platform
Flexible client adoption points
Benefits:
Operational run rate savings of 60-75%
Compliance only spend savings of 2-4%
Compliance + sourcing spend savings of 6-8%
Low-cost automation and process standardization
Increased insight into travel spend
Increased visibility and management control
GERS
Policy Rules
Receipt Management
Table Maintenance
Interface File
Process Call Center Argentina
Corporate
Card
Agency
Booking
Data
Staging
expense travel / administration
support
Data
Repository Dashboard visibility
Insight
Business Analytics
Management Standard
Reporting
Back Office Policy Audit
Receipt Management
thru OCR
technology
Legend
Client
IBM Research
IBM BPD
IBM RMDS
IBM BusinessTone®
Travel Partner
Corporate Card
User Book travel
Travel spend
Travel and expense
management
© 2011 IBM Corporation 30
We implement a variety of “small scale” tools to automate manual
tasks and reduce errors, cycle times and nonvalue-added activities.
Analysis:
Journal entries (JEs) received via email
Some required interpretation and caused errors
Caused delays at month-end for error correction
Deployed IBM JET Express
Results:
JEs submitted via standard templates with upfront
validation (at the source and at receipt in IBM
delivery center) and auto-upload and archival
Estimated 10-20% reduction of journal entry
processing time
A. Prepare JE
input outputtool
B. Verify JEin
pu
t
tool
output
C. Process JE (prepare file for upload)
input outputtool
D. Archive JE
(save JE as separate file, print hardcopy)
inp
ut
too
lin
pu
tin
pu
tto
ol
too
l
outputoutput
Example:
JET Express (journal entry tool)
Implement innovative
technologies
© 2011 IBM Corporation 31
We implement a variety of “small scale” tools to automate manual
tasks and reduce errors, cycle times and non value-added activities.
Analysis:
Follow-up emails generated manually
No mechanism to track responses and issue closure
Deployed Auto Mailer tool
Results:
Better accuracy by using standard templates
Improved controls using tracking and follow up
Improved productivity on query follow up and
tracking
Functionality:
Automatically sends emails and reminders
(on non-receipt of response)
Uses predefined templates to improve
data quality and enable quicker responses
Triggers actions to drive up utilization
Tracks status through closure
Example:
Auto Mailer tool
Implement innovative
technologies
© 2011 IBM Corporation 32
We have deep “small scale” automation skills to optimize ERP
functionality and implement “quick hits.”
Objectives:
Automate sub-ledger reconciliation process
Minimize repetitive labor-intensive tasks
Create error free reconciliation environment
SAP script setup:
Automate comparison between open items on bank
Results:
Up to 75% reduction in the amount of manual work
effort for a particular task or set of tasks
Error prevention as SAP script auto-populates
necessary data
Summary of reconciled company codes presented
to the user
Before: Run for each company code
one at a time
After: Run and reported for all
companies at once
Example:
SAP scripting: Subledger reconciliation
Implement innovative
technologies
© 2011 IBM Corporation 33
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 34
Our standard approach “builds quality in” upfront to prevent defects
before they occur.
Activities:
Reduce opportunity for errors in process
design
“Build quality in” vs. “inspect it in” later
Implement tools to automate quality
assurance
Monitor error rates and diagnose root
causes
Build quality
into process
Build quality into
process
© 2011 IBM Corporation 35
Simple process redesign and automation quickly “builds quality in.”
Analysis:
Labor-intensive intercompany process with many
steps and repetitive manual entries
Process deconstructed into individual steps, which
were timed and evaluated to assess “value add”
Experimented with several process designs to arrive
at optimal solution
Results:
Macros built to automate manual, repetitive tasks
Improved quality
Streamlined process from 18 to 6 steps
Reduced work effort by more than 50%
Simple, quick to implement
Redesigned Process: 6 steps*
Process After Before IC-Automation
Download Table Data from
SAP & E-HUB
Save All Files in excel
format
Save SAP and Hub Files in
data Folder
Select your Recs in Master
Sheet & run the Macro
Prepare Master Sheet
Download Data from SAP
Baseline Process: 18 steps
Process Flow Before IC-Automation
Go to SAP and check
type of reconciliation
In Hub reports in LC A1 GRA
File Find Entries for TP A1 &
A2 GRA’s & copy
Update data in summary
sheet
Download Data from
SAP
Insert a New Sheet as Hub in
the recon File
Update data in Recon
Template
Save All Files in excel
format
Paste Copied Cell in Hub
Sheet Insert Heading delete
unwanted rows & columns
Update balances in
Recon template sheet
Repeat the Process for
All LC & TP Pains
Attach LC and TP Files
and Save the sheets into
one File
In SAP Look For LCA1
GRA and TPA1 and A2
GRA’s
Attach Recon Template &
Summary Sheet to the File
Now Based on Rec Type
Match LC, TP, Hub Sheets
Color the verified identified &
timing items w/ diff colors
Update reconciler details
in Recon template sheet
Repeat the Process for
All reconciliations
For Currency Recs
prepare timing template
repeat all steps except
TP & HUB related steps
Baseline Process: 18 steps
Process Flow Before IC-Automation
Go to SAP and check
type of reconciliation
In Hub reports in LC A1 GRA
File Find Entries for TP A1 &
A2 GRA’s & copy
Update data in summary
sheet
Download Data from
SAP
Insert a New Sheet as Hub in
the recon File
Update data in Recon
Template
Save All Files in excel
format
Paste Copied Cell in Hub
Sheet Insert Heading delete
unwanted rows & columns
Update balances in
Recon template sheet
Repeat the Process for
All LC & TP Pains
Attach LC and TP Files
and Save the sheets into
one File
In SAP Look For LCA1
GRA and TPA1 and A2
GRA’s
Attach Recon Template &
Summary Sheet to the File
Now Based on Rec Type
Match LC, TP, Hub Sheets
Color the verified identified &
timing items w/ diff colors
Update reconciler details
in Recon template sheet
Repeat the Process for
All reconciliations
For Currency Recs
prepare timing template
repeat all steps except
TP & HUB related steps
Build quality
into process
Example:
Macros to automate manual tasks
© 2011 IBM Corporation 36
“Small scale” tools automate manual tasks, reduce posting errors and
increase productivity.
Analysis:
Data manually entered from ERP to workflow application Time-consuming data entry prone to errors Deploy Screen Scraper tool
– Highlight page in ERP – Tool “cuts and pastes” data to a notebook for
reconfiguration – Reformatted data is pasted to workflow
Results:
Reduced processing time by 25 seconds per
invoice, or 15-20%, by eliminating need to re-
key data
Eliminated errors from manual keying
Before: Manual data entry to workflow After: Data auto-populated from ERP to workflow
Build quality
into process
Example:
Screen Scraper tool
© 2011 IBM Corporation 37
Eliminating exceptions focuses on diagnosing and reducing the
client-driven root causes that prohibit straight-through processing.
Activities:
Analyze activities to identify and eliminate
exceptions and nonvalue-added work
Identify exceptions early in the process
Diagnose root causes of exceptions
Work with clients to reduce the incidence
of exceptions at the source
Escalate exceptions through agreed
management process
Build quality
into process
Eliminate exceptions
and nonvalue-added work
© 2011 IBM Corporation 38
Cross-client metric comparisons enable us to highlight gaps in
performance, isolate root causes and drive improvement.
Analysis:
Cross-client analysis highlights accounts with highest defects/exception rates
Analytics by defect type identifies root causes attributable to client’s upstream procurement processes
Team with the client to: – Increase accuracy
– Reduce procurement-related exceptions
– Increase exception resolution rates
Root causes and remedies
No goods receipt: Identify repeat offenders of goods receipts not processed timely, monitor and manage defects out
Incorrect GL info: Implement validation edits in PO system against COA and vendor master file
Incorrect/missing PO info: Implement/automate pre-processing validation of PO invoices
Vendor setups: Automate/implement self-service for vendor setups tied to invoice submission
Example:
Accounts payable exceptions
Build quality
into process
© 2011 IBM Corporation 39
We continuously analyze processes to identify and eliminate
unnecessary work.
Reporting Activity Analysis
20% 18% 17% 14% 13% 12% 9% 9% 8% 8% 8% 7% 6% 6% 6% 5% 5% 5% 5% 4% 4% 4% 4% 2% 2% 2% 1%
0%
10%
20%
30%
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
clie
nt
Account Name
% C
on
trib
uti
on
% Contribution
Client Report Segmentation
14%
29%
57%
% Client Reports % Mgmt Reports
% Internal Tracking Reports
Client Report Category
19%
14%
10%
57%
% of Process Related % of General Management
% of Control Report % of Information Report
Reporting % Reduction
4.5%
7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Before
% C
on
trib
uti
on
After
Analysis:
Analysis of TVC data shows time spent on AP reporting activities varied from 1-20% across clients
Analyzed outliers (>10%) by segmenting and categorizing reports
Optimized report population by: – Eliminating duplicate reports – Eliminating reports no longer required by the client – Merging similar reports – Automating manual efforts in various reports
Root causes and remedies
Rationalized and validated set of reports
Reduced the number of reports by 30%
Reduced work effort (time) by 36%
Example: Accounts payable reporting
activity analysis
Build quality
into process
© 2011 IBM Corporation 40
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 41
We leverage internal and external benchmarks to identify specific
actions to achieve top quartile performance.
*External benchmark sources include APQC and other leading benchmarking firms
Activities: Encourage culture that promotes
experimentation to pursue potential
improvements
Perform internal (cross-client) and external
comparisons at the individual, process and
account levels
Identify gaps to IBM standards and top
quartile best practice process designs
Design “art of the possible” roadmaps to top
quartile
Reengineer processes and deploy technology
to address gaps
Leverage predictive analytics to strengthen
compliance and reduce spend
Best-in-class companies realize better
business outcomes than average
performers
Cycle Time in Days to Resolve Adjustments
Figure 50
Top
Performers
All
Participants
Median
Bottom
Performers
45
21
5
Days Sales Outstanding
Figure 49
Top
Performers
All
Participants
Median
Bottom
Performers
50
26
50
58
Invoices Processes
Figure 42
Top
Performers
All
Participants
Median
Low
Performers
Top
Performers
All
Participants
Median
Low
Performers
$1.24
$1.41
$1.95
619,252
78,320
32,395
Cost* Productivity**
*Total cost per invoice processed
** Number of invoices processed per FTE
Total Cost of Processing Accounts
Receivable per $1,000 Revenue
Figure 43
Top
Performers
All
Participants
Median
Bottom
Performers
$0.99
$0.33
$0.07
Drive to best practice
outcomes
Institutionalize continuous
improvement
© 2011 IBM Corporation 42
Our corporate culture promotes experimentation to pursue potential
improvements.
Principles
Council, comprised solely of “frontline” practitioners,
established following initial Delivery Excellence period
Ideas generated by practitioners
Prioritized ideas presented to management monthly
Team selects ideas to implement based on cost /
benefits
Benefits
Ingrains a sense of individual ownership and
accountability
Promotes creative thinking, idea generation and
team work
Improves employee job satisfaction
Innovative process improvement ideas are
generated from a variety of sources, including
– Global process leaders
– CI team
– Account teams
– Clients
– Operations staff
“Frontline” practitioners have unique perspective
Local CI councils established to formalize
collection and evaluation of these ideas
Institutionalize continuous
improvement
Example: Accounts payable
reporting activity analysis
© 2011 IBM Corporation 43
We use WebSphere Business Modeler as our standard to perform
end-to-end process comparisons and simulations.
43
Client A: New client
Close
AccRec
process
Confirm
reconcili...
Run
necessary
Resolve
recon
issues
Identify
Issues &
Reconcile
Generate
recon
Gather
recons data
2 2.1 6 107
Assemble
recons
inputs
Supervisory
review &…
0 seconds
IBM
2 minutes9 minutes
4 minutes 3 minutes5 mins
30 secs10 mins
40 secs
2 mins
20 secs
1 min
36 secs
IBM
1
+ +5 11 12
+ + + + + ++
Data Gathering:
2 min vs 40 seconds
ERP set up without
auto match: 9 min vs 5 min
Issue resolution associated
with Journal Entries: 3.67 min vs 0
Extra Review by
Supervisors: 2 min 20 secs vs 30 secs
Total process time: 38.1 minutes
Client B: Recognized best practice (internally and externally validated)
5 minutes6 minutes 0 seconds4 minutes 0 seconds 50 seconds
1 min
30 secs
Close
AccRec
process
Run
necessary
Resolve
recon
issues
Identify
Issues &
Reconcile
Generate
recon
Gather
recons data
2 2.1 6 107
Assemble
recons
inputs
Supervisory
review &…
IBM
+ +5 11 12
+ + + + + ++
40 seconds
Total process time: 18 minutes
Institutionalize continuous
improvement
Example: Account
Reconciliation
© 2011 IBM Corporation 44
Cross-client metric comparisons enable us to highlight gaps in
performance, isolate root causes and drive improvement.
Analysis:
Cross-client analysis highlighted a gap
Analytics isolated the gap to non-PO transactions
Process simulation used to:
– Compare to best practice model
– Diagnose drivers of gap
– Size the impact
Analysis identified two extra steps and three
significantly more labor-intensive activities: – Completeness verification: 2.5x more effort
– Approver selection: 8x more work effort
– Exceptions: 20% more volume
Cost per invoice comparison Invoices per FTE comparison
Pro
du
ctivit
y
Accounts
160
140
120
100
80
60
40
20
0
Approval / Coding
Process Design
Process
Complexity Client Specifics
Top
Drivers
2009 2008
$ 10.00
$ 9.00
$ 8.00
$ 7.00
$ 6.00
$ 5.00
$ 4.00
$ 3.00
$ 2.00
$ 1.00
$-
Pro
ductivity
Accounts
Cost per Invoice
External benchmark
Results
Targeted improvement: 20%+ reduction in hours
Example:
Accounts payable
Institutionalize continuous
improvement
© 2011 IBM Corporation 45
We utilize our granular cost driver analysis and external
benchmarks to create client roadmaps to optimized processes and
shift to transaction pricing.
Analysis
Analysis of top AP cost drivers identified significant gaps to
best practices
Most of the activities to close gaps require client action
(with IBM support): – Adopt OB10 with 70% e-invoicing
– Enable PO flip and validation
– Utilize vendor query portal and workflow for self-service
inquiry resolution
– Increase first pass yield rate, reduce exceptions and time to
resolve
Price decomposition required for apples-to-apples
comparison to benchmark
Results
Composite price per invoice aligned to best practice
and better than target set by client
Client / IBM alignment on key drivers of AP cost
Agreed transaction pricing model based on client’s
process characteristics
Client objectives: Achieve best practices benchmark price per
invoice through automation of paper invoices
Extend accounts payable (AP) automation
program and drive to “e-everything” within 2
years
Migrate to a transaction pricing model
Key Drivers Today Gap
% Electronic 23% 67%
Elec. Invoices / FTE 30,000 15,000
% PO 73% 17%
AP Spend ~$2.4 MM
Cost / Invoice $3.45
Example:
External benchmarking
Institutionalize continuous
improvement
© 2011 IBM Corporation 46
We design client-specific “art of the possible” roadmaps to quantify
the actions required to achieve top quartile performance.
Change Benefit IBM actions Client actions
Contact
Center $88K
Limit calls to 2,000 per month
Extensive supplier usage of OB10 VQP
Extensive employee usage of workflow query
Scanning $52K
Eliminate need for Tulsa oversight of third-party provider scanning
Push third-party provider to be self-sufficient
Workflow
User
Maintenance
$12K Integrate this activity with SAP Admin team
Leverage EMEA process team Streamline “RequestEZ” process
Exception
Management $80K
Workflow automation of Accounts Payable
– Invoice Processor role
Increase quality of invoice to improve first pass
yield %
Invoice
Processing $206K
Workflow automation of Accounts Payable
– Invoice Processor role
70% e-invoice volume Enable PO flip/validation to improve inbound E-
invoice quality Timely resolution of exception queues
Indexing $106K 70% e-invoice volume
Upload Error Correction
$30K Stabilize Workflow/SAP interface Stabilize workflow/SAP interface
TOTAL $574K
Example:
External benchmarking
Institutionalize continuous
improvement
© 2011 IBM Corporation 47
Agenda
EPIC overview
– Optimization
– Certainty of outcomes
– Accelerated benefits
EPIC
I. Assess process maturity
II. Enable real time measurement
III. Implement innovative technologies
IV. Build quality into process
V. Institutionalize continuous improvement
VI. Innovate best practice designs
© 2011 IBM Corporation 48
Advanced analytics bring predictive capabilities that improve
compliance and enable outcome commitments.
Behavior Shift Models – Identify category-specific behavior patterns that are anomalous
Game Theoretic Models – Use game theoretical models to prioritize expenses for audit
Abnormal behavior patterns are identified at various levels of granularity for further investigation.
Policy exceptions are prioritized for audit and recommend policy updates to reduce potential fraud.
Example:
Predictive Analytics
Innovate best
practice designs
© 2011 IBM Corporation 49
O2C analytics suite includes collection optimization analytics
that improve working capital and process efficiency.
High Days Sales Outstanding (DSO) due to delinquent Accounts Receivables Business Challenge
Reduced Days Sales Outstanding due to
reduced delinquent receivables
Enhanced customer satisfaction
Reduced cost of collections
Reduction in bad debt charges offs
Collect historical
payment data
Segment customers
based on historical
payment behavior
Assign risk based
collection score
Apply differential
treatment strategies
Commercial terms
Habitual late payers
AP Process limits
#1 Collections focus
Results swingers
Complex accounts
Pays on time and in
terms
Occasional disputes
Requires collections
discipline
Low Days to Pay - Variation
Days t
o P
ay
High
1
2
3
Close focus a/c
High
Our Approach
Benefits / Impact
Increased cash collections for a large US
based News and Business Information
company by 20%
Increased cash collection from high risk
accounts for a Global document
management company by 80%
Case Study
Example:
Predictive Analytics
Innovate best
practice designs
© 2011 IBM Corporation 50
Our new B2B Collaborative Commerce solution for S2P offers significant
savings.
Collaborative Commerce is an
overall roadmap / architecture for
how a business should employ
best practices, standardized
processes and technology to
achieve high performance from
their supplier spend.
Up to 10X is the business
outcome and value proposition¹
that we can offer to clients when
they outsource their Source-to-
Pay processes to IBM since the
value they will receive is
significantly greater than what they
can achieve on their own.
Suppliers
Performance
Analytics
Integrated
Supplier
Relationships
Transaction
Automation
Bids
Contract
Orders
Invoices
Scorecards
Collaborative Commerce Workplace
Strategic Sourcing
Buying Operations
Payables
Performance Analytics
Portal Client
Requirements
Catalog Buys
Requisitions
Receipts
Queries
Reports
Suppliers
Performance
Analytics
Integrated
Supplier
Relationships
Transaction
Automation
Bids
Contract
Orders
Invoices
Scorecards
Collaborative Commerce Workplace
Collaborative Commerce Workplace
Strategic Sourcing
Buying Operations
Payables
Performance Analytics
Portal Client
Requirements
Catalog Buys
Requisitions
Receipts
Queries
Reports
Collaborative Commerce Roadmap
Savings
Price (Cost)
Up to 10X Value Proposition¹
¹ Dependent on scope and client maturity
© 2011 IBM Corporation 51
Powered by integrated analytics, EPIC offers clients game changing
capabilities.
Achieving process optimization is never easy and the ability to achieve it varies by client
IBM offers a unique, standard methodology that can accelerate the path to process optimization based
on client’s strategy and desired pace of change
Our EPIC methodology consistently
Enables significant process visibility through
standards-driven granular measurement and
monitoring of activities
Embeds analytics at each step in the process to
accelerate optimization
Leverages innovative technology and benchmarks
to drive to top quartile performance
Delivers 20-50% FTE productivity, when
combined with labor arbitrage translates to 30-
60% annualized run rate savings
Extends E2E across IBM/client organizations
driving EPIC across the entire enterprise
Ultimately accelerates companies’ readiness for
integration
EPIC in Motion
© 2011 IBM Corporation 52
Examples of our integrated analytics that enable actionable insight and
powers our commitment to outcomes.
Business operations
How the business
applies information to
achieve its goals:
Policies
Activities
Procedures
Standards
Controls
Organization
Information and analytics How the business manages information and learns from it
IBM’s mature
process analytics
and optimization
capability provides
our clients with
differentiation and a
competitive edge.
IBM integrated analytics
Common
Progressive
Process blue
books
Pioneering
TVC: “Right
skilling” of
work
Process
maturity
models
WBM: Process simulations
Cross-client comparisons
Lean: Ids outliers / eliminates NVA work
Six Sigma: Performance deviations
TVC: Granular performance measurement to standards and roadmaps to best practices
TVC: Real-time performance feedback
ARCollect: Customer segmentation / predictive paying patterns
GERS: Behavior shift models / statistical fraud analysis
© 2011 IBM Corporation 53
Market maturity continues to increase the demand for more complex services
and increasing value … EPIC helps clients keep pace!
Market Maturity
To
tal
Serv
ice V
alu
e
Labor Arbitrage
Efficiency
E2E Process Harmonization
Integrated Analytics
Virtualization
© 2011 IBM Corporation 54
Backup
© 2011 IBM Corporation 55
Skill Number Major focus
Six Sigma
Black Belts 22
Drive process improvement through error/defect analysis Analyze improvement opportunities through detailed analysis and
process decomposition
Industrial
engineers 10
Identify improvements by deconstructing a process into component steps to identify optimum process
Analyzes activity/efficiency data to identify improvement opportunities
Automation
team 12
Develop “small IT” tools and applications Review processes for automation opportunities Deploy IBM’s standard toolkit
Operations
staff 6
Bring operations experience and best practice knowledge Work with operations teams to identify and implement process
improvement opportunities
ERP experts 3 SAP and Oracle experienced team to ensure ERP functionality is
maximized
Consultants 2 Run process improvement workshops
Project management
The IBM core process innovation team
IBM operates a 55 strong global process innovation team
© 2011 IBM Corporation 56
Multiple, micro improvements achieved during initial phase collectively add
up to significant savings.
24% average FTE reduction from 3 to 6 month initial period, followed by
ongoing year-on-year continuous improvement
Delivered to 40+ F&A outsourced accounts
7 IBM Centers of Excellence
2008 savings of 490 FTEs
2009 savings of 510 FTEs
America APAC EMEA India Total
PTP 26% 21% 22% 32% 27%
RTR 20% 21% 22% 21% 21%
OTC 15% n/a 22% 18% 20%
Total 22% 21% 22% 25% 24%
Thank You
For more information, visit:
www.ibm.com/services/process