Whitcoulls signs five-year contract with Oxygen

By ADAM GIFFORD

Carter Holt Harvey subsidiary Oxygen Business Solutions has signed a five-year contract to manage Whitcoulls' accounts payable.

The bookseller estimates the deal will cost it about 30 per cent less than doing the work internally.

Some of the savings will come in staffing costs. Whitcoulls financial manager Stana Pezic said of the 12 staff who did the work now, only four had opted to shift to Oxygen.

Mike Smith, Oxygen chief executive, said that was ample to do the work once most of the processes were automated.

In the past, firms that offered accounts-payable outsourcing had stopped at data entry and managing correct invoices, leaving the customer to chase up the exceptions.

"What we do is extract the data, which we can do with OCR [optical character recognition], and use that data to automate the closure of payments when the information is complete," Smith said.

"When the information is incomplete, we can automate the workflow required to finish the transaction. For example, if a purchase order is missing off an invoice, it can be routed back to the person in the supply chain who should have provided it, rather than bounce it back through clerks."

He said the process was used at Carter Holt, saving the company more than $1 million a year.

Smith would not put a figure on the Whitcoulls deal, but said it was the largest Oxygen had done outside the Carter Holt group.

Oxygen has a $250 million contract over five years to run Carter Holt's IT infrastructure, and in particular its SAP enterprise management system, and is allowed to seek outside business. That will come from SAP-related consultancy, infrastructure and business process outsourcing.

Smith said Oxygen was on track for $68 million revenue this year and pushing to break $70 million.

It was initially targeting the 400 organisations in New Zealand and Australia that use SAP, but he said Oxygen would also build links between its workflow software and Oracle and PeopleSoft.

Whitcoulls, which has revenue of more than $200 million, pays about 350,000 invoices a year.

"The agreement we have with Oxygen includes standards that exceed what we have been able to achieve manually," said Pezic, "so there will be an improvement in quality as well as efficiency."

Oxygen Business Solutions