©2009 HP Confidential1©2010 HP

Jeff Fiorini

July 2010

HEWLETT PACKARD HOW TO INCREASE INVOICES PER

FTE BY 63% GLOBALLY

©2010 HP2

AGENDA– About HP

– Shared Services and the HP environment for Accounts Payable

– Current State of Accounts Payable

– The Roadmap to Best in Class

– Summary

– Q&A

© Copyright 2010 Hewlett-Packard Development Company, L.P.3

Today HP is the largest technology company in the world— committed to using our products and services to unleash new possibilities and have a meaningful impact on business and life

– Fortune 10 – U.S.– Fortune 32 – Global– Doing business in

approximately170 countries– 304,000 employees– 145,000 sales partners – 210,000 service partners– 88,000 retail locations

©2010 HP4

INVOICE PROCESSING FOR THE WORLD’S LARGEST TECHNOLOGY COMPANY– Q2 net revenue of $30.8B, up 13% Y/Y– Non-GAAP diluted EPS of $1.09; up 27% Y/Y– GAAP diluted EPS of $0.91, up 28% Y/Y– Cash flow from operations of $3.1B

Imaging & Printing Group

21%

Personal Systems Group

32%

HP Services 28%

Enterprise Storage & Servers

15%HP Financial Services and other

1% Software 3%

EMEA38%,

Asia Pacific18%,

Americas 44%,

Q2 FY10 revenue: $30.8BREVENUE BY SEGMENT REVENUE BY REGION

Global company structure and multiple product lines drive Accounts Payable complexity:•Shared Services for processing of 6.6M* invoices for > 60 different countries

•Centralized invoice processing for 6 different company segments

•Large process differences between services and product business

•Different procurement systems for direct and for indirect procurement

•Invoice processing back-end on 19 SAP systems

* Does not include pre-merger EDS invoice volume.

©2010 HP 5

GBS PORTFOLIO

Marketing Support

Quote to Cash (Order

Mgmt)

Finance & Admin/

Corporate Functions

Supply Chain (Inbound & Outbound)

Service Admin (EDS)

Hire to Retire

Global operations (APJ – AMS – EMEA – INDIA)

Reporting and analytics services

Strategy & planning

Compliance & controls

Global shared services solutions

Shared Services at HP: Global Business Solutions

©2010 HP 6

Existing Center

New Center

HP GLOBAL BUSINESS SERVICE FOOTPRINT

San JoseAMS Bangalore

Barcelona

Singapore

DalianBucharestWroclaw

Chennai

EMEA

APJ

India

Cordoba

Manila

Wuhan

©2010 HP 7

HP GBS – OUR STRATEGY JOURNEY

7

Decentralized

Regional Shared Services Global

Consolidation and

Adoption

Technology Enablement & Process Optimization

Business Value Add as End-to- end Process Owner

COSTS VALUE

TIME1990 2010

©2010 HP8

8

©2010 HP9

THE NEED FOR A ROADMAP– HP has successfully focused on building Shared Service Centers

– For years we have reviewed trends in our A/P metrics from year to year

– Transaction volume has grown organically and through M&A activity

– We implemented significant projects for Accounts Payables independent from each other (silo approach with no overall vision)

– How do we make the next step to best in class productivity?• Global end-to-end process owners drive standardization and methodologies in partnership

with stakeholders including IT, procurement, and operations

©2010 HP 10

CURRENT STATE OF HP’S AP PROCESS

HP (Compass):

Automated OB10 to keep efficiency

Metric Name Category HP FY08 HPFY09

APQC Top Performer

Hackett World Class

Hackett Large

Diverse

Best in Class Status

Cost of AP per invoice processed

Cost Effectiveness < $2.56 < $2.56 $2.61 $2.56 $3.29

# of Invoices per AP FTE

Process Efficiency

9.6K 9.9K 18.9K 21.2K 16.1K

Invoice line items matched the first time 57% 57% 93% 91% 61%

% of invoice line items received electronically 70% 72% 80% 80% 48%

OpportunitiesLeverage best-in-class P2P capabilities:•Front-end validations•Self Service •E.invoicing•Workflow

ChallengesNot in a position to effectively address:•Scalability of operations to respond to volume changes•Acceleration of off-shore wage inflation•Expansion of AP real estate footprint resulting from organic growth and M&A activity

©2010 HP 11

HP’S PROCURE-TO-PAY VISION

End to End Process Management• Integrated design• Alignment with Procurement• E2E Business Performance Measurement and

Benchmarking

Supplier Portal - Expand Self-Service Coverage• Purchase Orders• Invoice Status• Dispute Resolution• Inquiry Status• Vendor Master Data

Process Automation• Drive suppliers to e.Invoicing• Front-end, real time, quality edits• Deploy OCR capabilities • Manage exceptions via workflow

Achieve Best in Class P2P process through Automation, Standardization & Optimization

Transform the Process utilizing Best in Class Process Framework focusing on 3 Core Strategies

©2010 HP 12

AP ROADMAPHP vs. Large Diverse Companies

Supplier Setup Invoice Processing

Discrepancy Resolution

Supplier Payment

Customer Inquiry & Response

File, Store & Retrieve

Reconciliation Accrual &

Compliance

% of Updates • Workflow related•Self -Service

FTE Levers% Invoices• Electronic• Auto-posted

% of Exceptions% Expectation Mgt via Work flow

# of payment runs# bank accounts# of manual payments

% Self -Service # of paper documentsLocal Country Req’s.

# of reconciliations# of accruals# of suspect duplicates

37Current HP 213 169 12 135 20 79

21Large Diverse 145 75 29 58 17 70

• Integrated Vendor Updates • Introduce Supplier Self Service

Process Automation Projects

• OB10 Supplier Enablement Campaigns• Introduction of next generation Workflow and OCR capabilities

• Enable OB10 Front End Quality Edits • Identify, Route, and resolve via workflow• Introduce PO Flip

Already at Best Practice

• Enable OB10 Front End Quality Edits•Expand capabilities of AP On-line tool

OB10 Supplier Enablement Campaign

• Tools to automate Reconciliation Process• “Fuzzy” logic to proactively ID duplicate payments

665

415

Traditional Process Taxonomy based on APQC and Hackett Benchmarking Methodologies

(16)Variance (68) (94) 17 (77) (3) (9)(250)

7217 120 81 12 83 20FY13 FTE 405

©2010 HP13

11 October 2010

BEST IN CLASS “PAPERLESS” PROCESS FRAMEWORK

Current 72% 57% 45%

Metric Percent Electronic Invoice Items Matched First Time Percent Self-Service

Future 83% 84% 72%

Current Productivity

9.9K

FutureProductivity

(Timeless Model)

16.3K

©2010 HP14

IMPROVEMENT STRATEGY Supplier Setup

Multiple request processes/tools

Workflow and manual

approvals

Supporting data sourced by purchasing

Manual checks validation and

updatesSingle Master

File

Single request process and tool Supplier Portal

Supporting data submitted with

requestSingle Master

File

• Best Practice Drivers• Single Master File• Supplier Self Service• Request submitted with supporting data• Workflowed approvals• Automated validations/checks

Current Process

Future Process

CurrentProcess

Best Practice

FutureProcess

Updates/FTE 3,341 3,493 > 5,000

Turnaround time; days

Best 4Avg. 13

1 to 2 2

Total FTEs 37 21 17

Workflowapprovals

Email based inquiries

Inquiry ticketing tool

Automated checks

validation and updates

©2010 HP15

E-INVOICING PROGRAM Invoice Processing

Best PracticeCurrent Process Future Process

• Require suppliers to submit invoices electronically for payment (mandatory electronic invoicing)

• OB10 rolled out in additional countries

• Move high volume suppliers to EDI or ERS

• Automated front end validations• Auto posting of OB10 invoices to

all transaction processing systems

• Paper invoice volume is still high• Low ratio of OB10 to paper

invoices in many countries• Vendor participation in the OB10

program is not mandatory• HP has not implemented OB10 in

all countries where OB10 is already tax compliant

• Some OB10 invoices are posted manually

• Manual validations

©2010 HP16

Today’s AP Architecture Future AP ArchitectureNew Workflow

Key Capabilities•Automatic Posting•Auto-routing•OCR intelligent data capture

•SAP Integrated Workflow

•Rule based Exception Handling

BenefitsContribution to overall AP Productivity

Improvement = 2.24K per annumOperational savings = 91 FTE

Current MetricInvoice Items Matched First Time =

57%Processing Productivity = 1.4K per

person per month

Future MetricInvoice Items Matched First Time =

84%Processing Productivity = 2.7K per

person per month

NEW WORKFLOWAutomate Posting and Exception Handling

Invoice Processing

Discrepancy Resolution

©2010 HP17

QUERY HANDLING STRATEGY Customer Inquiry and Response

Best PracticeCurrent Process Future Process

• Supplier contact center• Supplier Portal

• Payment information• Internal contact center

• Issues• Invoice status• Invoice discrepancy• Procedural issues/delays

• Use front-end validations to eliminate problem invoices and associated inquires

• Expand query types managed in self-service environment

• Route query types based on pre-established rules engine

• Enforce use of portal for level 1 inquiries

eInvoicing pre validationSelf Service• Supplier Portal

• Payment information• Invoice status• Master updates• On line training

• Internal Portal• FAQs• Query ticketing tool

©2010 HP18

Self-Service - Collaboration Portal

Guiding Principles: Paperless, Ensures Compliance, Promotes Collaboration

PROCURE TO PAY FRAMEWORK

Dynamic Market Place

Electronic Invoice Management

Supplier Financing

Payment Management

Invoice Capture Real Time Compliance Approval Routing

Dynamic Discount P-Card Supplier Financing

Payment Processing Remittance Processing

Purchasing

Treasury

A/P

Sales Order

Billing

Treasury

A/R

Standard Supplier Information

• Catalog Driven • Role - Commodity Based Buying Guides

• Electronic Order Delivery

StandardTerms

HP Supplier• Banking Relationships• Supplier Agreements

• Supplier Profile• Common Commodity Codes

©2010 HP19

THE HP ACCOUNTS PAYABLE ROADMAP

Process Assessment: Doing great on cost but lacking on productivity

Vision: Automation, Standardization, Optimization

Detailed Analysis based on APQC and Hackett benchmarks

Identified and defined improvement programs

Implementation and tracking of productivity changes: WIP

©2009 HP Confidential20©2010 HP

Q&A