The Few Things That Make The Real Difference: a Profile of Oracle Purchase to Pay
This article is taken from the sharedserviceselink.com’s webinar series on P2P. Amy Aves, Senior Director Global Purchase to Pay, from Oracle was interviewed as part of the webinar, How to master the bumpy path to attaining a global P2P shared services platform on 20th August 2008.
Key stats:
- Number of staff in the global shared services: 1500
- Number of staff in the P2P organisation of the SSC: 300
- Cost of staff in India vs North America: 20%
- Cost of staff in Romania vs North America: 30%
- High level cost of staff savings from moving US roles to India: 80%
- Number of invoices per annum processed globally: 550,000
- Percentage of electronic invoices globally: 31%
- Percentage of electronic invoices in North America: 73%
- Average cost per invoice from receipt to post: $5
- AP process: Locally scanned and keyed in India
- Invoices processed per annum per FTE (with 50% of time spent on invoice handling): 7000
- Percentage of goods ordered through catalogues: total 60%; goods 88%
- Number of countries serviced from the SSC: 80
- Number of languages spoken and supported at the SSC: 25
Fact Number 1: Oracle operates a pretty unusual shared services organisation.
Fact Number 2: Oracle took a very aggressive approach to get this job done. Everyone in shared services has a different story to tell. The route to get to the same goal varies depending on a number of factors, but all roads really do eventually lead to Rome – in this case, F&A cost reduction and process improvement.
Oracle selected an interesting path to reach their objectives in 1998. On first consideration, it all sounds like standard stuff: they looked at their finance processes across 80 countries, identified practices, process and policies which could be standardised and centralised… So far, so normal. Companies often decide to standardise processes in-country first, and then centralise them. Oracle was no different, picking off one of the 80 at a time, and then bringing each country into the SSO which had three centres in the US, Sydney and Dublin. But it was around this point that exceptional methods seemed to kick in.
First off the bat, they decided to migrate the whole purchase to pay process into the SSO, from catalogue ownership, to vendor master database ownership, to payments. Second of all, within 20 working days of all 80 countries successfully migrated into the SSO, the executive team instructed Amy and the team to reduce the three centres to one global centre in India. This part of the development happened quickly, and for the past three years, massive energy and focus has been put into aggressive application of process improvements, especially around heading for touchless P2P.
Thirdly Amy and the team were given the green light to manage a P2P process team, whose responsibilities were detached from the operational function of P2P, allowing them to focus purely on delivering improvements to the P2P process.
Current focus:
Amy and the team are focusing on two main areas in AP over the next 6 to 12 months:
- E-invoicing in Europe. Oracle has seen 73% success in North America with XML, but as we all know Europe is a very different landscape. They are currently working with an accounting firm to see if they can get VAT approval from local authorities to do XML invoicing in Europe.
- Moving payments to automated payments, so 50% of the time an AP clerk uses to process payments today can be reduced to 25%, freeing them up to work on value add activities like supplier statement reviews.
The profile of a senior director in procure to pay
Amy has had multiple roles since she joined Oracle in 1994. But since 1998 the one role that has remained consistent is that of global process owner. Since then she has been responsible for implementing standard processes and creating standardised processes and technologies, ensuring that the same version of systems were being used in the same way, and ensuring that once countries were migrated, they followed standardised practices.
Following this, once the countries were in, it was her responsibility to measure and monitor the success and review the performance with the centre itself, and then with the stakeholders to ensure that the centre was meeting their needs.
Amy is constantly looking at other functions that can be migrated into the SSO, and recently moved part of expense reporting into Romania. In addition to this, since stepping into her global role 10 years ago, decisions get made quicker and implemented faster.
If this wasn’t enough, she is also working with strategic procurement on the standardisation of terms in supplier contracts.
Main challenges:
Amy talks of two main challenges, which may resonate with many a P2P director:
1. Change management: Employees are used to walking down the hall and tapping someone on the shoulder if suppliers aren’t getting paid. Clearly with shared services this relationship between AP and the business changes, which naturally leads to much resistance.
Amy and the team anticipated this, so put huge effort into knowledge transfer, especially around local tax and banking knowledge. Local requirements were understood and documented, then standardised (so an invoice in Peru is entered into Oracle in the same was as an invoice in Belgium), and centralised.
2. Staff turnover: Attrition is a fact of life, especially in a low cost country. Amy met with HR to look at retention rates, and realised that they were losing too many employees between the 6th and 12th months.
Energy was invested into training programmes as a result. In India training is considered a key part of the employment package, so significant budget was channelled into this, with the result of an increase in retention.
Traits of a shared services dand P2P process owner:
Amy says she’s lucky – she loves her job, and things happen quickly as they have senior level sponsorship, but the tricky bit comes from having great ideas, but not enough time or resource to realise them.
One key charateristic of someone doing her job is the ability to communicate and sell. She is selling to stakeholders, finance directors, and senior management all the time in order to get things done.
Similarly, Amy recognises that people doing this kind of job won’t necessarily make friends, and shouldn’t fear rocking the boat. Amy’s view is that friends come with success, so you have to do the hard stuff to get the success first, and that might make you unpopular in the short term.
What Amy would do differently given her time again:
Hindsight is really a wonderful thing. We can all learn from the ‘what if we did that’s. Amy’s ‘lesson learnt’ is that she would have implemented a manager for 6 to 18 months, who knew Oracle well, and would have served as the ‘implant manager’. This person would have freed Amy up so she could have worked on the more aggressive application of continuous improvement tools. Oracle is looking at OCR today as a possible long term tool to support their invoice automation tools. ‘Maybe if we’d had an implant manager in place, we would be doing OCR right now, rather than talking about it’ Amy said.
Three tips:
Amy’s message was clear: firstly she was allowed to build a team that focused on process that was separate from the operational P2P activities. The team’s single responsibility was to focus on process improvements, rather than paying invoices.
Secondly this model was blessed by the senior management, which Amy and others would claim as the number one success factor. Without this results seen and enjoyed today just wouldn’t have been possible.
The third tip she swore by was that a large part of the Oracle success has come from the fact they standardised first, before they centralised.
Key stats:
- Number of staff in the global shared services: 1500
- Number of staff in the P2P organisation of the SSC: 300
- Cost of staff in India vs North America: 20%
- Cost of staff in Romania vs North America: 30%
- High level cost of staff savings from moving US roles to India: 80%
- Number of invoices per annum processed globally: 550,000
- Percentage of electronic invoices globally: 31%
- Percentage of electronic invoices in North America: 73%
- Average cost per invoice from receipt to post: $5
- AP process: Locally scanned and keyed in India
- Invoices processed per annum per FTE (with 50% of time spent on invoice handling): 7000
- Percentage of goods ordered through catalogues: total 60%; goods 88%
- Number of countries serviced from the SSC: 80
- Number of languages spoken and supported at the SSC: 25
Fact Number 1: Oracle operates a pretty unusual shared services organisation.
Fact Number 2: Oracle took a very aggressive approach to get this job done. Everyone in shared services has a different story to tell. The route to get to the same goal varies depending on a number of factors, but all roads really do eventually lead to Rome – in this case, F&A cost reduction and process improvement.
Oracle selected an interesting path to reach their objectives in 1998. On first consideration, it all sounds like standard stuff: they looked at their finance processes across 80 countries, identified practices, process and policies which could be standardised and centralised… So far, so normal. Companies often decide to standardise processes in-country first, and then centralise them. Oracle was no different, picking off one of the 80 at a time, and then bringing each country into the SSO which had three centres in the US, Sydney and Dublin. But it was around this point that exceptional methods seemed to kick in.
First off the bat, they decided to migrate the whole purchase to pay process into the SSO, from catalogue ownership, to vendor master database ownership, to payments. Second of all, within 20 working days of all 80 countries successfully migrated into the SSO, the executive team instructed Amy and the team to reduce the three centres to one global centre in India. This part of the development happened quickly, and for the past three years, massive energy and focus has been put into aggressive application of process improvements, especially around heading for touchless P2P.
Thirdly Amy and the team were given the green light to manage a P2P process team, whose responsibilities were detached from the operational function of P2P, allowing them to focus purely on delivering improvements to the P2P process.
Current focus:
Amy and the team are focusing on two main areas in AP over the next 6 to 12 months:
- E-invoicing in Europe. Oracle has seen 73% success in North America with XML, but as we all know Europe is a very different landscape. They are currently working with an accounting firm to see if they can get VAT approval from local authorities to do XML invoicing in Europe.
- Moving payments to automated payments, so 50% of the time an AP clerk uses to process payments today can be reduced to 25%, freeing them up to work on value add activities like supplier statement reviews.
The profile of a senior director in procure to pay
Amy has had multiple roles since she joined Oracle in 1994. But since 1998 the one role that has remained consistent is that of global process owner. Since then she has been responsible for implementing standard processes and creating standardised processes and technologies, ensuring that the same version of systems were being used in the same way, and ensuring that once countries were migrated, they followed standardised practices.
Following this, once the countries were in, it was her responsibility to measure and monitor the success and review the performance with the centre itself, and then with the stakeholders to ensure that the centre was meeting their needs.
Amy is constantly looking at other functions that can be migrated into the SSO, and recently moved part of expense reporting into Romania. In addition to this, since stepping into her global role 10 years ago, decisions get made quicker and implemented faster.
If this wasn’t enough, she is also working with strategic procurement on the standardisation of terms in supplier contracts.
Main challenges:
Amy talks of two main challenges, which may resonate with many a P2P director:
1. Change management: Employees are used to walking down the hall and tapping someone on the shoulder if suppliers aren’t getting paid. Clearly with shared services this relationship between AP and the business changes, which naturally leads to much resistance.
Amy and the team anticipated this, so put huge effort into knowledge transfer, especially around local tax and banking knowledge. Local requirements were understood and documented, then standardised (so an invoice in Peru is entered into Oracle in the same was as an invoice in Belgium), and centralised.
2. Staff turnover: Attrition is a fact of life, especially in a low cost country. Amy met with HR to look at retention rates, and realised that they were losing too many employees between the 6th and 12th months.
Energy was invested into training programmes as a result. In India training is considered a key part of the employment package, so significant budget was channelled into this, with the result of an increase in retention.
Traits of a shared services dand P2P process owner:
Amy says she’s lucky – she loves her job, and things happen quickly as they have senior level sponsorship, but the tricky bit comes from having great ideas, but not enough time or resource to realise them.
One key charateristic of someone doing her job is the ability to communicate and sell. She is selling to stakeholders, finance directors, and senior management all the time in order to get things done.
Similarly, Amy recognises that people doing this kind of job won’t necessarily make friends, and shouldn’t fear rocking the boat. Amy’s view is that friends come with success, so you have to do the hard stuff to get the success first, and that might make you unpopular in the short term.
What Amy would do differently given her time again:
Hindsight is really a wonderful thing. We can all learn from the ‘what if we did that’s. Amy’s ‘lesson learnt’ is that she would have implemented a manager for 6 to 18 months, who knew Oracle well, and would have served as the ‘implant manager’. This person would have freed Amy up so she could have worked on the more aggressive application of continuous improvement tools. Oracle is looking at OCR today as a possible long term tool to support their invoice automation tools. ‘Maybe if we’d had an implant manager in place, we would be doing OCR right now, rather than talking about it’ Amy said.
Three tips:
Amy’s message was clear: firstly she was allowed to build a team that focused on process that was separate from the operational P2P activities. The team’s single responsibility was to focus on process improvements, rather than paying invoices.
Secondly this model was blessed by the senior management, which Amy and others would claim as the number one success factor. Without this results seen and enjoyed today just wouldn’t have been possible.
The third tip she swore by was that a large part of the Oracle success has come from the fact they standardised first, before they centralised.