Optimizing Financial Services Operations with Process Intelligence

Art Sarno Product Marketing Director

Agenda

• Lexmark Enterprise Software

• Organizational Environment and Challenges

• Financial Process Automation

• Defining Operational Process Intelligence

• Pay to procure and the AP Automation Cycle

• Comprehensive Process Intelligence for AP Automation

Content metrics – Process Metrics – Process Intelligence

• Typical customer results

• Q & A

• Resources

• www.lexmark.com -> Financial Process Automation

• You tube presentations

Lexmark Enterprise Software

Lexmark Enterprise Software

Organizations we work with are dealing with a wide array of problems resulting from these challenges:

Tracking alignment with operational best practices for

• Procure to Pay

• Quote to Cash

• Record to Report (e.g., financial close)

Monitoring compliance with Service Level Agreements (SLAs)

Measuring financial and operational performance

Organizational Environment

• Regulation and compliance are more stringent than ever. Providing full accountability from document receipt to final archive is vital.

– SOX, PD0008, ISO9001, are just some examples of the importance of document centric processes being compliant.

– Failure to comply to these standards and regulations can result in penalties and litigation costs.

• So the challenge is:

How can we make sure our processes are optimized and compliant, when we don’t have a view of the entire end to end process?

Quote to Cash Record to Report

Sourcing

Contracting

Requisitioning/Other purchasing

Receiving

Invoicing

Payment

Supplier Inquiry

Pricing, Quoting & Contracting

Sales Order creation

Order fulfillment

Billing

Collection

Cash Application

Disputes

Accounting Close

Journal Entries

Period Close

Reconciliation

Consolidation

Presentation

Procure to Pay

Core Financial Processes

Pain Points in Financial Process Automation

Example: The P2P Process

------AP Automation cycle------

The AP Automation Cycle

-------SCAN – EXTRACT – CODE - VALIDATE---------

Requirements for Visibility

LEXMARK CONFIDENTIAL

11

Gain

insights into business processes

3

!

View customized dashboards in real-time, on demand

1

Access consistent, accurate data and metrics

2

Comprehensive Scope of Financial Process Visibility

Process Metrics

How many invoices did we process today?

How long did it take?

Which users were most

productive?

Content Metrics

What is my cash position?

How many early

discounts did I achieve?

What’s my average creditor days?

Process Intelligence

Why were process steps skipped?

What process paths did

our invoices actually follow?

What is the quality of

my AP process?

True Operational Process Intelligence

KPI Metrics and Changes in Operational Data

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Dash-boards through which the user can quickly observe the status of invoices in capture, posted for payments; as well a key performance indicators.

Workload by user Queues Past Due invoices Errors Duplicate invoices Extraction monitor

Workload Allocation

Working Queues Status

Productivity - Process Metrics

16

Scanner Utilization

Multi-Channel Source Activity

Invoice Touch Activity

Data Entry Activity

Invoice Coding Activity

Invoice Validation Activity

Suspended Invoices

Cash Management – Content Metrics

24

Payment Activity

Supplier Performance

Quality of Service – Process Metrics

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Invoice Matching Activity

Line Item Matching Activity

Data Extraction Outcomes

Extraction Benchmark

• the field TotalAmount can be skipped 66% of the time (true +) • the user has to press Enter 1% of the time (false -) • The user has to correct the TotalAmount 31% of the time (true -) • and 3% of the time the user skipped over invalid TotalAmount

(false +)

Actionable Analytics – Real Time Impact

Drill down

Actionable Analytics

• We are only so far focused on Process Metrics and Content metrics. We are yet to see any intelligence or analytics related to the quality of the process.

• A great example of a process metric is turn around time. How long did it take to process the invoice end to end. But that is only measuring two data points… the start and the end data and times.

• We have no view or vision of what happened during the process, and the quality of the process steps that were taken.

We need Process Intelligence!

Comprehensive Process Intelligence

Process Intelligence

– Provides a new understanding of your data

– Identify areas of inefficiencies

– Gain insight into compliance and risk exposures

– Discover “dark processes”

36

• Process analytics generally relates to time-related measurements of process performance

• Process quality (or process compliance) deals with

how well processes comply with expected behaviors These analyses are done across a population of process instances to better understand patterns of execution

Key Attributes of Process Intelligence

– Many Business Intelligence I tools only provides discrete, point-in-time metrics and cannot tell you what is really happening in your business processes

– BI tools have no idea of what is supposed to happen in a process – you must build all of this logic in code to provide context

– Using BI, managers must make decisions based on only a piece of the operating picture

Process Intelligence - Differentiation

Consider a simple process: Receive Order -> Ship Order ->Send Invoice ->Collect Payment • Metrics and Records allow you to calculate the revenue, number

of orders, average order size and so on • However you may also want to know what the average time is

between receiving the order and sending the invoice? • Which orders required sending invoices several times?

• How much time was lost because of it? Which orders are stuck in the system for more than 24 hours?

Mailroom Automation Process Chart

Process Visualization

• 6864 transactions received • 6372 sent to scan • 198 sent to other processes • 21 sent to extraction along with

5795 from scan

Sub Process Review

--------------198 transactions allocated across these activities with 21 transactions sent to extraction

Dependency Analysis

Swim Lane Analysis

Swim Lane Drill Down

Swim Lane Data Filtering

Broad Application -The Underwriting Process

Typical Accounts Payable Story

12,000 300,000 79 Dozens >95% 3 Invoices

active

vendors

paper/e

mail

invoices

annually

active

countries

of

languages PO-based sites for

invoice

entry

in every

local

currency

21 data entry FTEs Processing an invoice took 2-14 days Frequently “lost” batches or invoices Multiple Off-cycle Payment Runs

• Faster time to entry

• Fewer errors

• No late payments

• Better visibility

• Streamlined approval processes

• Better communication with

Vendors

Ob

ject

ives

BEFORE implementing

Typical Accounts Payable Automation Result

12,000 300,000 79 Dozens >95% 3 Invoices

active

vendors

paper/

email

invoices

annually

active

countries

of

languages PO-based sites for

invoice

entry

in every

local

currency

50% reduction data entry FTEs Processing an invoice takes < 1 day No “lost” batches or invoices Off-cycle Payment Runs are rare

Faster time to entry

Fewer errors

No late payments

Better visibility

Streamlined approval processes

Better communication with

Vendors

RES

ULT

S

AFTER implementing

Comprehensive Scope of Financial Process Visibility

Process Metrics

How many invoices did we process today?

How long did it take?

Which users were most

productive?

Content Metrics

What is my cash position?

How many early

discounts did I achieve?

What’s my average creditor days?

Process Intelligence

Why were process steps skipped?

What process paths did

our invoices actually follow?

What is the quality of

my AP process?

True Operational Process Intelligence

Additional Resources

https://www.youtube.com/watch?v=ZnCt5axV4Ag https://www.youtube.com/watch?v=MgNr9lAvWXI https://www.youtube.com/watch?v=Zc2OtQorFTo

• www.lexmark.com ->financial process automation • YouTube Presentations:

Questions ?

Thank You!

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Art Sarno Product Marketing Director Kofax from Lexmark art.sarno@kofax.com