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The following article, written by Hart's E&P Technology Editor, Jeanne Perdue, is an independent description of Anadarko's successful pilot of the Oildex Invoice Connect service. Issue September, 2002 Update: Since the article was published, the Invoice Connect service has been adopted by a number of additional companies and it was recently re-named "Spendworks".This year the 1000+ users of Spendworks™ are on pace to process: |
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| Re-engineering the invoice process | ||
| Anadarko and Oildex collaboratively developed an electronic invoice workflow product. In 1992, Union Pacific Resources built an electronic invoicing application in-house. After merging with Anadarko, the legacy technology was considered a dead end, but the application had so much rich functionality, Anadarko decided to rebuild the application as a Web-based program with an Oracle database under the hood. The company collaborated with Oildex, a Transzap company, to re-engineer the digital invoice process by developing and deploying Invoice Connect. The redesigned system streamlines the invoice approval process, provides online vendor dispute resolution and gives engineers access to original field tickets. Invoice Connect integrates with Anadarko’s Excalibur accounting software and electronic document repository. Oildex is commercializing the system because it has industrywide application. “We partnered with Oildex to combine the strengths of our original electronic invoice process with sophisticated Internet-based technology and vendor management tools. We plan to work with Oildex to encourage our vendors to use the system and develop simple approaches for electronic invoice submission. Our objective is a win-win solution, with our vendors also reducing their costs,” said Paul Burleson, Anadarko’s manager of business systems integration. In 2000, Anadarko processed 650,000 invoices per year, about 25% of which were electronic data interchange (EDI) and 75% of which were in paper form. The long, tortuous paper process workflow involved 62 steps per piece of paper, whereas the EDI process had eight to 10 steps. Anadarko figured it could save US $2 million to $4 million a year if 50% of these invoices could be routed over the Internet, Burleson said. Gerry Conroy, vice president of product management for Transzap, said, “We talked to a lot of folks in accounts payable (throughout the industry) to find the points of pain. There were a lot of lost invoices, and 30- day invoices were taking 45 to 60 days to be paid. Now with Invoice Connect, a daily report will tell you what invoices are still out so you can take action. |
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Charles Jones, IT manager for QV Services, one of the vendors participating in the pilot program, said, “Oildex worked closely with vendors, offering a variety of simple formats to send electronic invoice data. Each vendor is given the ability to submit an invoice online and track its approval and payment status. We recognize that this is a better way of doing business.” After the 6-month pilot test, 4,500 invoices had been done and more than 5,400 field tickets had been processed. The successful 10-vendor Freestone pilot led Anadarko to consider rolling out Invoice Connect to as many as 70 to 100 more vendors. “A vendor fair was planned at Freestone to work out all the kinks,” Burleson said. “We’ll have the next phase of vendors converted this year.” One of the niftiest solutions to the invoice workflow puzzle was smart mapping, a computerized way of coding the transaction. For example, diesel can be purchased for truck fuel, as a degreaser or to inject downhole. By properly coding diesel purchases, meaningful data can be obtained to analyze corporate spending and set up more favorable purchasing contracts. With the smart mapping feature, 85% of the coding can be done by machine, with only 15% of the purchases requiring a human touch. More bells and whistles will be added to the next version of Invoice Connect, including more robust collaborative workflow and a link to the human resources department for spending authority verification and delegation. Peter Flanagan, president of Transzap, said: “The successful development of Oildex Invoice Connect exemplifies the adage ‘the whole is greater than the sum of its parts.’ The Oildex Connect team worked closely with Anadarko and its vendors to address workflow complexities unique to the E&P procurement accounts payable process. It has been a gratifying experience for Oildex to make this breakthrough solution a reality.” For more information about Invoice Connect, visit www.oildex.com. |
| E-mail alerts have been set up to jog someone to approve an invoice or field ticket, and monthly roll-up reports are available on demand.” The application enables companies to outsource the technology, complex workflow, routing and approvals required to process invoices electronically so they can focus on their core competencies. The browser-based software minimizes demands on a company’s information technology (IT) staff. It provides online collaborative workflow with vendors, facilitating invoice dispute resolution and short-pays, while keeping suppliers fully informed about payment discrepancies. When Anadarko or vendor employees log in, the rights and roles assigned to them determine their views of the invoice data. For example, a pumper can only see the wells for which he or she is responsible. Chain of custody can be followed easily because a date and time stamp is added each time a person touches an electronic invoice. Any duplicate invoices or field tickets are kicked into a special “box” for human intervention. Invoice Connect provides an integrated field ticket module that gives engineers full access to the original field documents needed to approve invoices for payment. The service can be seamlessly integrated with a company’s accounting software to facilitate the analysis of goods and service purchase decisions. Implementation One of the biggest obstacles to implementing Invoice Connect was change management. “Culture is a huge thing,” Burleson said. “People are very attached to paper.” The plan was to start with a small victory, a pilot project with the Anadarko business unit at the Freestone, Texas, office between Houston and Dallas. A letter was sent to 10 vendors, one without Internet access, to get their buy-in.
The implementation workflow was: Engage => Build => Test => |
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