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SAN FRANCISCO—MasterCard announced at Oracle Corp.s OpenWorld show e-P3, a system that integrates purchasing, invoice presentment and payment.
e-P3 is designed to provide organizations with an alternative to todays slow, labor-heavy, paper-based purchasing grind. Prospective users of e-P3 are running Oracle Financials and use the MasterCard Corporate Purchasing Card.
MasterCard e-P3 automates the financial and information value chain for corporations and public sector organizations by integrating MasterCard settlement options into electronic invoice payment and presentment (EIPP) platforms.
MasterCard itself is an Oracle shop, running a number of different applications, according to Philip Philliou, vice president of MasterCards Global eBusiness (B2B) group. “Were an Oracle customer and a certified partner as well,” Philliou said. “This dual relationship allows us to do a lot of things that nobody else in the marketplace can do.” Phillious group develops and tests applications internally, then markets them externally.
e-P3 integrates purchasing information into Oracles purchasing modules. For example, say you want to buy a laptop for your office. Typically, youd create a requisition and send it to your firms purchasing group. Purchasing then creates a purchase order that they send to a supplier. Once the supplier gets the purchase order, assuming it can fulfill it, it creates an invoice that is mailed or faxed back to the purchaser. Finally, the company writes a paper check to the supplier.
Philliou says that there is a 20 percent rejection rate for invoices, due to errors or problems matching the original purchase order to the items received. “The typical purchasing cycle has a lot of steps in the dance, with quite a bit of negotiation back and forth,” Philliou said. “There could be 30 to 90 days baked into the transaction from inception to final payment.”
Today the process is very paper-based and depends on human input. To top it off, approximately 80 percent of business-to-business transactions are settled by check, since corporations need the data associated with the purchase. Typically, corporations need a three-way match—the purchase order needs to match the invoice, which must also match the receipt of goods.
To solve what Philliou describes as “an embarrassingly ancient system,” MasterCard has created e-P3, which combines the processes of procurement, presentment and payment. Leveraging a typical Oracle environment, a buyer generates a purchase order within their system. The purchase order gets sent to a supplier via e-mail, which is then converted into an invoice that gets sent back to the buyer.
“All the negotiation happens online,” said Philliou, “and once the invoice is approved within the buyers Oracle system, payment via MasterCard is initiated. Its all automated.” All the data associated with that purchase is married to the invoice detail, then the payment is linked to the credit card transaction and provided back to buyer.
MasterCard created the MasterCard-Oracle e-P3 Guide that explains how a company can implement the solution. Philliou said that the return on investment (ROI) should be easy to determine by checking out the tool online at the MasterCard site. “Companies running Oracle systems now already have everything they need to run e-P3,” Philliou asserted.
MasterCard looks at 2005 to be a big year for implementing electronic invoicing and purchasing. According to a study done by Ariba in May 2004, 69 percent of companies that dont currently utilize electronic invoicing expect that they will in the next two years. The key drivers behind this transition are the need to save time and money.
Philliou concluded, “The beauty of automating repetitive systems is that you can take some of the human element out of the equation. If you take a look at invoices and why they so often get rejected, its because of the mistakes inherent in the current process. One human is rekeying a document that some other human entered, and so on. In an automated system, mistakes are caught early and corrected, and information is entered once and then reused across applications.”