PitchbookUS'pot

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April 21, 2004
 E - P A Y A B L E S   S O L U T I O N S T O A
U T O M A T E A / P a n d P R O C U R E M E N T
Gregory KerwickJPMorgan e-Payables Product
ManagementVice President
S T R I C T L Y   P R I V A T E   A N D 
 C O N F I D E N T I A L
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Agenda

• E-Payables
• Market Evolution
• E-Payables Value Proposition
• ROI and Case Studies
• Next Steps

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2
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EIPP Market Evolution
1998-2000
2004-2005
2001-2003
EIPP (A/R) market challenges point to success of
Payer-side
EBPP and EIPP Receivables Solutions introduced

• Though there is value with both models,
  Payer-Centric EIPP is poised to dominate

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JPMorgan Proprietary ResearchInterest in
E-Payables Product
1998-2000
2004-2005
2001-2003
EIPP (A/R) market challenges point to success of
Payer-side
EBPP and EIPP Receivables Solutions introduced
JPMorgan research identifies immediate ePayables
demand

• 85 of respondents had Moderate to High interest
  in E-Payables product concept

Interest in E-Payables
Importance of ePayables Features
Appeal Factor
Appeal of Features
50
More
Less
40
30
20

• Electronic invoice receipt and matching
  represented the dominant value proposition

10
0
Invoice
Invoice
Dispute
Integration
Payment
Approval
Receiving
Matching
Resolution
Features
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E-Payables The Order-to-Pay Opportunity
Enterprise Procure-to-Pay Process
Sourcing
Procurement
Order-to-Pay Order-Invoice-Payment
Order Delivery (PO, ASN) 1-3 days
Send Invoice 4-7 days
Receive and Route Invoice 10-50 days
Process and Approve Invoice 2-10 days
Transmit Payment 4-7 days
Resolve Exceptions 10-50 days
30-120 Day Cash Conversion Process

• Average DPO/DSO gt 42 days
• Over 50 invoices past due when they arrive at AP
• Available discounts (2 net 10) out of reach for
  many payers
• 10 - 20 of invoices involve an exception
  process
• Cost to process/pay an invoice estimated over
  10.00
• Cost triples to 30.00 per exception item

Millions of dollars trapped inside the
Order-to-Pay cycle
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JPMorgan E-Payables - How JPM/Xign Works
Buyer
Supplier
Order Mgmt
Purchasing
Billing

• Approval Routing
• E-mail based
• Auto Routing/STP
• Dispute Mgmt.

• Real-time Filter
• Business rule driven
• Exception mgmt.

• Invoice Capture
• Web template
• P.O. flip
• eFile/EDI

Treasury
Treasury
Discount Management

• Payables Financing

• Discount Manager

AP
AR

• Payment Processing
• Authentication
• Timing control

• Remittance Processing
• Format mapping
• Email, EDI, FTP, CTX
• Supplier maintains bank info

Buyer Bank
JPMorgan
Straight Through Processing
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E-Payables - Value Proposition

• E-Payables delivers dramatic operational
  efficiencies and working capital management to
  your organization
• Operational Efficiency
• Invoice Receipt Eliminates paper invoice
  receipt, data entry costs, keying errors and cost
  of scanning
• Invoice Validation Filters invoice data prior
  to ERP receipt and allows suppliers to
  self-correct invoices - reduces exception
  processing
• Visibility Real-time invoice and payment status
  for suppliers and your A/P, reducing payment
  status calls into A/P
• Workflow - Online routing and email-based
  approval, with line-item dispute resolution and
  detailed table-driven posting to the G/L
• Payments - Conversion to ACH payment suppliers
  self-administer banking info.
• Sarbanes-Oxley Archived tracking of financial
  actions supports new financial audit requirements
• Supplier Network drives increased supplier
  adoption and ROI
• ROI (Return on Investment) - often 6-9 months
• Working Capital Management
• Supplier Discounts - automated capture of
  discounts (up to 3 net 5 days)
• Payment terms presented during enrollment
• Approved invoices have Pay Me Now option

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Operational Cost Comparison
Paper vs. Electronic Cost ComparisonGartner
Research
8.50
9.00
8.00
7.00
6.00
5.00
4.00
3.44
4.00
3.00
3.00
2.00
1.50
2.00
0.75
0.69
1.00
-
Data Entry
Reconciliation
Payment
Total
(Invoice - PO)
100,000 invoices/year 500k net savings
Source Gartner Research
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JPMorgans E-Payables Business Case Findings
Results of over 35 business case assessments

• Business Case Process
• Onsite interviews (AP, Procurement, Treasury, IT)
• Client data on volumes and costs
• Assumptions validated by client finance teams
• ResultsImmediate Payback
• Breakeven average 9 months
• Blended hard operational savings with accelerated
  discount capture

• Three-Year e-Payables Net Savings

lt 1 Billion
Between 1B and 2B
gt 2B
Annual Spend
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Q A
Greg Kerwick VP Electronic Procurement, Invoicing
and Payables 212-552-8567 gregory.w.kerwick_at_jpmcha
se.com