GSS at a Glance

Innovation & Automation in Accounts Payable: Dramatic Shifts are Occurring, Is your Company Innovating Ahead of the Curve or Caught in Neutral?

5/31/2016 The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: Siemens Functional Shared Services NAM FSS at a Glance

AFS Portfolio: HRS Portfolio: . Accounts Payable . Recruiting & Staffing . Global Mobility . Accounts Receivable . Learning & Development . Expense Reimbursement . Closing & Reporting . HR Admin & Payroll . Health Management . General Ledger AFS Key statistics: . HRS Key . Employs 2,400 FTE1) statistics: . 12.5 Mio. accounts payable . Employs 2,300 FTE1) . 7 Mio. accounts receivable . 4.4 Mio. travel & expense claims . 330,000 pay checks per month . 200,000 pensioners FSS per month currently employs 1) 6,000 FTEs SCMS Portfolio: BSS Portfolio: . PO Processing . Global Marketing & Clearing Services . OneSRM User . Customer Management support Services . Catalogue . Mergers & Acquisition Management

BSS Key statistics: SCMS Key statistics: . Employs 450 FTE1) . Employs 650 FTE1) . 406,000 Purchase Orders / year . Calculated productivity of 3,265 purchase orders per FTE

1 Based on figures of FY12 (Actuals rounded)

Page 3 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Functional Shared Services North America Background

 Established in 2000 – at that time as a separate legal entity

 U.S. Headquarters in Orlando; offshore team in India

 Shared Services location decision driven by proximity to Siemens businesses

 No mandate: service-by-service, business-by-business; selling exercise still going!

 Dual reporting lines – to U.S. functional heads and to global in Germany

 Transactional billing model – expectation for ongoing price reductions

 Siemens U.S. business very decentralized: 4 strong, independent Sectors

 Sectors own ERP’s – sometimes local, sometimes globally; we work in approximately 16 ERP’s

 In-house I.T. team supporting H.R. platforms across North America and other tools (e.g., Workflow Solutions)

Page 4 May 2016 | Released Unrestricted © Siemens AG 2016 GSS FSS Organizational Structure Cluster: North America

Accounting & Finance Human Resource Services Supply Chain Management Services (AFS) (HRS) Services (SCMS) . Accounts Payable . Payroll . Indirect Material Procurement . Intercompany Accounting . HRIT . SRM Support . Sales/Use Tax . HR Administration . Import / Export Compliance . Property Tax . Global Mobility Services . Master Data Maintenance (vendor, . Relocation Services customer) . Recruiting and Staffing . Abandoned, Unclaimed Property Administration . General Ledger, Closing & Reporting . Expense Reimbursement . Fixed Assets . Accounts Receivable (Cash Apps)

Combination of on-shore Key Account Service Delivery Model Management, off-shore (captive) Procurement and SRM – offshore operations, and outsourcing Primarily onshore (captive) operations Import/Export - onshore

Support Functions

Finance / IT / HR / Quality / Project Management / Communications / CRM

Total Headcount Onshore: Offshore: 330 250

Page 5 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Moving to World Class will deliver significant benefits for Siemens

What is in it for Siemens?

. We take non-core processes of businesses and make them core to us

. We increase our customers’ productivity and generate savings

. We ensure transparency, quality and compliance in all processes

. We understand our customers’ business requirements

. We help the businesses to fulfill their growth targets

Page 6 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Siemens Global Shared Services NAM

Electronic Invoicing Journey, 2008 - 2015

Page 7 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Defined Objectives & Goals for Automation:

Objective • Increase eInvoice submission and eVouchering can assist EnableSOCs Siemens to reduce Business cost associated Units to with reduce Siemens cost 20%and SG&Aimprove quality in thecost Accounts reduction Payable initiative process through increased electronic invoice submission and vouchering. • Two primary goals: Aggressive rollout to exceed the Siemens 22% G&A cost reduction target− in 90%the area Electronic of Accounts Invoicing Payable submission within one year.

− 95% Electronic Vouchering Primary success Goals rate

80% electronic receipt of invoices

95% e-vouchering / posting rate of an electronic invoice

Page 8 May 2016 | Released Unrestricted © Siemens AG 2016 GSS8 Siemens Global Shared Services NAM

Vision of Siemens AP: 1.Take the AP function beyond transaction processing into more strategic partnership and value-add activities. 2. Provide significant cost savings to the Siemens operating companies that we support.

2008 2015

Siemens Business Unit Divisions 26 50+

Invoices Processed 1.4 million per year 1.5 + million per year

Global Supplier Base 63,000 over 100,000

Siemens Real Estate, A Division of Siemens Corporation Siemens Financial Services Siemens Industry, Inc.- INC-MVSG Siemens Capital Company FSS North America, A Division of Siemens Corporation Omnetric Corp Siemens Corporation, Corporate Technology, A Division of Siemens Credit Warehouse, Inc. Siemens Corporation Siemens Medical Solutions (P40) Siemens Energy, Inc. SMI Holding LLC Siemens Healthcare Diagnostics (P40) Siemens Generation Services Company Siemens Philanthropic Fund Siemens Medical Solutions (P41) Siemens Fossil Services Inc. Siemens Foundation Siemens Healthcare Diagnostics (DPC/BAYER)(P40) Siemens Power Generation Operating Services Company Siemens Caring Hands Siemens Canada Limited Siemens Power Generation Service Company, Ltd. Siemens Industry, Inc - SBT Siemens Building Technologies (Canada) Siemens Power Generation Service Company, LTD - Mexico Branch Siemens Industry, Inc - SEA Corp Siemens Transformers Siemens Power Generation Service Company, LTD - Puerto Rico Branch Siemens Industry, Inc. - SII Siemens Milltronics Process Instruments Inc. Siemens Energy, Inc (Wind Division) Siemens Electrical, LLC Trench Limited Siemens Demag Delaval Turbomachinery, Inc. Siemens Industry, Inc.- SII-RA-SII-CT, RITS Siemens Healthcare Limited Siemens Energy Inc, Oil and Gas Division Siemens Postal, Parcel & Airport Logistics, LLC Siemens PLM Siemens Corporation Siemens Industry, Inc. - STS Siemens PLM Canada

Page 9 May 2016 | Released Unrestricted © Siemens AG 2016 GSS AP Automation Key Performance Indicators FSS (US & CAN)

2008 2009 2010 2011 2012 2013 2014 2015

Accounts Payable

Invoice 1.2M 1.8M 1.8M 2.1M 1.8M 1.7M 1.7M 1.8M volume Electronic 41% 56% 69% 77% 77% 81% 84% 86% Invoice Submission Electronic end 26% 48% 55% 62% 63% 69% 70% 71% to end Electronic 61% 67% 76% 78% 82% 82% 85% 88% payment Inquiries per NA 31,770 16,447 9,420 8,367 6,922 6,468 6,257 Mo IOL Mo Hits NA 39,796 53,599 74,488 75,858 76,144 70,704 67,075

Page 10 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Electronic invoice submission breakdown

Submission method 2015 Invoice Vol % Corporate EDI 22.72% Direct Insite (IOL) EDI 6.17% Paper 16.39% Web Non PO (IOL) 1.97% Web PO Flip (IOL) 52.74%

Page 11 May 2016 | Released Unrestricted © Siemens AG 2016 GSS E-invoicing and end to end process automation

Page 12 May 2016 | Released Unrestricted © Siemens AG 2016 GSS E-invoicing and end to end process automation

Page 13 May 2016 | Released Unrestricted © Siemens AG 2016 GSS E-invoicing and end to end process automation

Page 14 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Customer self service inquiry tool

Self Service Invoice Inquiry All employees and Vendors have access to IOL to look up the status of any invoice. They simply search for the invoice in IOL:

Page 15 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Customer self service inquiry tool

If assistance is still required after researching and reviewing an invoice status in IOL, an inquiry can be sent to the customer service support team. Select the invoice (1) and click the “Inquiry” icon (2) to open a pre- populated form for questions. (3) Complete the form by entering your question in the “Please Enter Inquiry Details” and then select “Submit Inquiry”.

Page 16 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Customer self service inquiry tool

(3) Complete the form by entering your question in the “Please Enter Inquiry Details” and then select “Submit Inquiry”. 3

Page 17 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Customer self service inquiry tool

For Non-invoice inquiries or when the invoice cannot be found in IOL, use the “General Inquiry” found under the “Non-Invoice Inquiry” section. The form will be pre-populated with the user’s contact details. Required fields are inquiry reason, Siemens Operating Company and the Reason for Inquiry. After completing the required fields, select “Submit Inquiry”.

Page 18 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Automated Survey and results providing feedback for process improvement

Automatic Survey – A survey is emailed to all AP inquiry submitters (both phone and IOL) when each C&O ticket is resolved. The results of the survey are compiled in Survey Monkey and sent monthly to our Customer Service Team where they generate the USI score and analyze the feedback. This feedback provides us valuable data to: • Identify areas for process improvements and re-train agents if necessary • Educate vendors and employees on the AP process to further reduce inquiries • Constructive feedback from customers on how we resolved their inquiry – both positive & negative • Red Alerts for ratings of 4 and below - we reach out to the customer and determine the root cause for the negative rating and any corrective actions

Page 19 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Page 20 May 2016 | Released Unrestricted © Siemens AG 2016 GSS Customer Survey scores

. No more paper Suppliers . All invoices converted to one standard 100,000+

Direct 16+ ERPs Workflow Paper Insite Invoices Solution

Vendor Self 50 EZ-AP Service Inquiry Web Entry, Operating50 PO Flip & OperatingCompanies Spreadsheet 50 Vendor Validation, Invoices BusinessCompanies Increased Invoice eVoucher UnitsSAP success rate SAP Data Store Direct Direct SAP integration Integration

Scan for Paper Invoices invoices (EDI or XML) New PO/PO Change

Invoice

 Aggressively targeted high-volume suppliers

 Targeted problematic, poor quality paper invoice suppliers

 Established a Vendor Adoption Committee with representatives from all Business Units and weekly meetings

 Changed the Bill To Address on the PO to reflect the electronic submission method

 Established and promoted e-invoicing as “the way of doing business with Siemens”

 Provided Procurement groups with standard communication and quick training guides for suppliers

 Required by contract in Terms and Conditions that all new vendors submit invoices electronically

6% of Suppliers produce 79% of Invoices

 Established a “Vendor Adoption Committee” with representatives from all divisions.  Internal Education is as important as external communication  Goal of the committee is to set clear objectives, measure results and report to executives Example of Key Drivers tracking chart:

Division Division Division Division Key Drivers - eInvoicing Requirement SOC SOC SOC SOC SOC SOC SOC SOC SOC SOC SOC SOC SOC SOC Standard Onboarding package for Vendors Vendor Master VM E-form back end automation eInvoicing Awareness Campaign (MarCom Insert, RFP, Contract Renewals, update T&Cs) Paper address excluded from Purchase Order 1

eInvoicing info included on Purchase Order

VAC Team members & Communication of Targets Target TPA/CSP Strategy - Approved E-invoicing N/A Met Target Target IOL Strategy - Approved Met Met Target Target - Vendors identified - Target 7/16/10 Met Met Target Target - 1 letter sent - Target 7/30/10 Met N/A Met Target Target - Invoices rejected - Target 8/16/10* Met N/A Met

E-invoicing requirement placed for new vendors 25 EFT Campaign (combined with IOL letters) E- N/A N/A payment Automate payment runs

Vendor Adoption Committee Representative Page 25 May 2016 | Released NAME NAME NAME NAME UnrestrictedNAME NAME © SiemensNAME NAME AG 2016NAME NAME NAME NAME NAME NAME GSS Lessons Learned

Internal Support . Procurement support is crucial to adopt and sell e-invoicing . Executive Sponsorship is necessary at business units level in Shared Services . Encourage e-invoicing mandate or define criteria for e-invoicing process before Go Live with internal departments Supplier On boarding . Accurate Contact Information is Key for Recruiting Suppliers . Target 3 types: high volume, high $ value & traditional “problematic” suppliers . Training & Support must be available - including on demand . Prepare quick guides using screen prints . Realize that Behavior Change is hard . Make Service FREE to Suppliers . Sell tool to suppliers – explain benefits . Allow different methods of electronic invoice submission . Ensure dedicated helpdesk and set expectations on supplier support . Self Registration to e-invoicing portal for suppliers is critical Straight Through “Touch less” Processing . Updated PO data must be available in the portal to enable PO Flip . E-invoice with bad information is almost as bad as a paper invoice . Encourage PO Flip . Establish P2P end to end true EDI process if possible . Ensure up to date vendor master data to ensure match with vendor

Increase and improve Web AP Inquiry Customer Service AP Inquiries / Year No more e-mails & fewer phone calls All inquiries must be submitted through web portal: . External / Supplier Inquiries . Internal / Employee Inquiries Global Vendor on Boarding Portal . Data input from Supplier . Reduction in manual effort

. Improved data accuracy Sept 09 Sept 10 Sept 11 Sept 12 Sept 13 Sept 14 Sept 15 Inquiries by . Quicker PO placement Calls 7,260 4,458 2,312 2,411 1,854 1,338 1,477 . Reduced payment errors Inquiries by Emails 24,510 10,325 899 1,043 761 301 497 . Central repository of Supplier data IOL Web Inquiries 1,664 6,209 5,102 4,345 4,647 5,296 Invoice Submission Total Inquiries 31,770 16,447 9,420 8,556 6,960 6,286 7,270 IOL Website . Up front invoice validation Hits 39,796 53,599 74,488 75,858 76,144 75,199 74,791 Early Payment Discounts . Projects in place to increase supplier ability to take early payment discounts Page 27 May 2016 | Released Unrestricted © Siemens AG 2016 GSS27