Saeed Rezavi, SAP Ariba / October 26, 2016

1. Buy Right ‒ Pay Right:
How Procurement, Accounts Payable, and
Treasury Can Work Together for Procure-to-Pay
Transformation and Working Capital Excellence
Saeed Rezavi, SAP Ariba / October 26, 2016

2. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Public
SAP Ariba solutions are part of the digital core
A core component of our global digital agenda:
 The entire value chain is digitized,
including the digital core that
serves as the foundation for
business innovation and
optimization.
 The digital enterprise
interconnects all aspects of the
value chain to drive and anticipate
business outcomes in real time.
 Enterprises across industries can
lead the digital transformation by
completely reimagining business
models, business processes,
and work.
Security
SAP HANA Platform
Digital Core
Suppliers
& networks
Customer
experience
Workforce
engagement
loT
& big data

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FX management
Debt and investment management
Correspondence framework
Limit management
Hedge management and accounting
Risk management
Payments
In-house bank
Bank statements
Monitoring
Status management
Signatory
Marketplaces
SAP
Treasury applications from SAP
AP/AR, logistics…
Market data
Trade repository
Cash position
Cash forecasting / liquidity management /
simulation
Bank account management
Hedge management
Treasury management reporting
SAP HANA platform + SAP S/4HANA Finance
One exposure
Natively built on SAP HANA
Enabled for SAP HANA
Forecasted transactions, planning data, TRM, CML
SAP Financial
Services Network
Treasury applications from SAP and SAP Ariba solutions
Others …
Finance networks
Business networks
FXall
360T
Reuters
Bloomberg
DTCC
REGIS-TR
Swift

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Part of networked business collaboration
Source and contract Request and buy Invoice and pay
Indirect – nonmerchandise
Travel and expenses
Labor and services
Direct – merchandise
End-to-end
 Enables source-to-pay integration
 Aligns procurement and finance
 Provides a one-stop shop for sellers
 Lowers IT costs Networked collaboration
 Connect to a global community of
trading partners
 Discover, connect, collaborate,
and gain insights
 Engage across a wide range of
interactions
Comprehensive
 Is not “one size fits all”
 Offers comprehensive capabilities
 Covers 100% of your spend and
supply base
SuppliersBuyers

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Payment
terms
Discounts
Invoice
automation
Ariba Strategic Payables
New capabilities to monetize trading collaboration
Ariba Network
Over $1 trillion in commerce
>2 million companies
worldwide
>130 million business
documents
More than 76% of the Global
2000 use the Ariba Network
Over $500 million
investment by SAP into
the Ariba Network
Funders
SuppliersBuyers
Optimize days sales
outstanding (DSO) and
A/R management with
early payment or
financing options
(dynamic discount and
supply chain finance)
Reduce working capital;
increase free cash flow and
earnings before interest,
taxes, depreciation, and
amortization (EBITDA);
and drive additional
revenue
Customer value
Extend days payments
outstanding (DPO), unlocking
millions in free cash flow
Increase EBITDA with
incremental supplier
discounts
Strengthen and tighten
relationships with strategic
suppliers
Reduce risk with outsourced
supplier bank account info
and e-payments
Increase A/P management
efficiency providing visibility
through vendor portal and
outsourced payment services
Payment
processors
Mitigate liquidity risks:
true multifunder
options
Low rate funding
Optimize the payment
process: electronic
payments (SEPA compliant)

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Ariba Strategic Payables: combined
capabilities for higher value
1. Pay right: Connect payment to procure-to-pay
(P2P) process to drive adoption and capture
value for procurement
2. Pay early: Leverage approved payables to help
treasury earn dynamic discount savings,
optimize working capital management, and
free up cash flow
3. Pay well: Remove risk and provide value to
suppliers with certain, secure, and simple
business-to-business (B2B) payments
Working capital
(DPO and discounts)
Security and
simplicity
(B2B payments)
Acceleration
(Process
automation)
Combined on a single platform, technology, risk management, resource, and experience enable payables to
become a strategic asset.

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Support all invoices and funding scenarios, complementing SAP Ariba solutions
 Electronic payments to
suppliers
 Bank account data
stored externally
 Supplier self
management of bank
account data
 Rich remittance info to
match invoices with
payments
 Ability to track and
trace status
Working capital management advisory and supplier services
Buyer
Sourcing,
procurement, and
invoicing
…Pay rightBuy right...
Funded by
Operated on
and with
Banks and capital markets
AribaPay
Ariba Strategic Payables
A comprehensive set of payables solutions
(Payment terms standardization, rationalization, extension, and supplier outreach)
Direct spend
Large to midsize suppliers
Indirect spend
Small and midsize suppliers
 Supplier sells approved invoices to
funder at a discount rate based on
buyer’s creditworthiness
 Supplier accepts being paid by
buyer at prorated discount prior
to due date
Ariba Discount Professional Ariba Supply Chain Finance

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Buyer electronically transmits
payables data to the system –
no change to existing invoice
approval process
At invoice maturity date, buyer
funds buyer-controlled clearing
account. The system executes
payment instructions to pay…
…the funder, if supplier has
sold receivable
…the supplier, if supplier has
not sold receivable
Supplier views receivables
via the Web – has option to
sell receivables and
determine their collections
date or wait until maturity
1 2
3 Funder(s) receives and
processes early payment
requests – provides
funding to supplier
4
How supply chain finance works
Suppliers
Buyers
Funders
Supply chain
finance

9. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 9Public
Ariba Strategic Payables
A single solution for multiple goals and needs
Buyer goals Supplier needs
Increase cash flow (DPO)
Low
High
Financialvalue
Low
High
Financialvalue
Earn discounts
Make secure electronic
payments
Provide payment status and
approved invoice
Low-cost financing
and lower DSO
Early payment
Payment remittance details
Visibility to payment status and
approved invoice
Ariba Supply Chain
Finance
AribaPay
(2017 - Japan)
Ariba Network
and ERP
adapter
Ariba Discount
Professional

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What’s the value for treasury?
 Average discount client: up to 24% risk-free return on cash
 Average supply chain finance client: up to $100 million in
cash flow improvement
 Live operation that’s earning value in 3 months
 Banks’ core competency: lending money
Our core competency: technology
 Selecting SAP Ariba solutions is not deselecting a client’s bank
+
 Business as usual for the majority of a large corporation
 IT resource effort: 200 hours
+
High value and speed to benefit
Nominal change management
and IT resources
+
+
Bank

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Buyer benefits
Total: $6,600,000
Controls
Reduce inquiries
High-, low-risk APR
Supplier benefits
Low-cost, on-demand
financing
Online payment
visibility
Accelerated
payments
Income statement impact Free cash
flow impact
Invoices and
payments:
300,000
A/P automation
savings:
$600,000
Savings per
transaction
$2.00
Spend:
$3 billion
5% adoption:
$150 million
Avg. discount:
1.60%
Discounts:
$2,400,000
25% DPO increase
Free cash flow:
$120 million
Return earned: 3%
Return earned:
$3,600,000
15-day DPO
extension
DPO extension
Free cash
flow:
$120 million
Added benefits
Illustrative payables business case

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Annualspend
# of suppliers~300 ~3,000 ~10,000+
* Available today via Ariba
Supply chain financing Virtual / settlement card
Multiple payables working capital strategies
address large, midsize, and tail suppliers
LOW
HIGH
Focus on high-spend suppliers Focus on tail suppliers with low spendFocus on small / midsize suppliers and spend
EXTEND PAY TERMS
Free cash flow
SUPPLIERS:
LOW-COST, ON-DEMAND
FINANCING
Reduce costs, no debt
EARN EARLY PAY DISCOUNTS
Net income
SUPPLIERS:
FASTER COLLECTIONS
Lower DSO
EARN REBATE
Income
SUPPLIERS:
FASTER, CARD BASED COLLECTIONS
Lower DSO
Early payment (dynamic) discounts

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Payables success stories
Earning discounts Payment
automation
Extending
payment terms
Fortune 50 pharmaceutical company
• >$5 billion spend moved to net 60
• 38,000 suppliers in 40 countries
• >$300 million cash flow gain / ~$10 million
P&L benefit
Fortune 500 transportation company
• Extended $200 million spend to 45 days
• Increased DPO 1 day
Fortune 100 telecom
• Payment volume: $12 billion
• 95% of spend activated within 7 months
across 1,700 suppliers
• P2P acceleration: Already had 800
suppliers registered and ready to transact
Fortune 500 utility
• 2015: Earned $11.3 million in discounts
• 50% discount improvement 2014 to 2015
• Average discount: 1.6%
Fortune 300 retailer
• 2015: Earned $3.4 million in discounts
• Average discount: .84%
• ~75% of spend merchandise focused

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