Most small to medium-sized enterprises concluded a long time ago that financial process automation wouldn’t work for them. That's no longer true.
Large enterprises with deep pockets started down the road to P2P automation a long time ago, and have benefited from automating at least some parts, if not all of the process. For them, it made sense to invest in e-invoicing and workflow technologies that could cut these processes to size.
For companies under $250 million inrevenues though, the large capital outlays required, coupled with the prospect of long and expensive implementations and the difficulty of system transitions meant the adoption of such systems was a daunting prospect and unlikely to lead to a big return on investment. So, they've sat on the sidelines, laboring under manual processes with little of the visibility that could enable them to be more strategic.
That’s changed, says a new report from PayStream Advisors, underwritten in part by Coupa. The new generation of cloud solutions are bringing P2P automation within reach of smaller enterprises.
It’s time to for SMEs to rethink the cost-benefit equation, says PayStream. While long-held concerns about affordability, scalability and time to implement may have been valid in the past, cloud software subscription models are lowering barriers to entry and making integration with ERP and other systems easy and fast.
Because these solutions are hosted, there’s no need for on-premise IT involvement - services are web-based and can be accessed from any device with internet connectivity, including mobile devices. Plus, software as a service developers are increasingly conscious of user experience, so systems are designed with ease of use in mind and can be picked up quickly. With these cost and implementation hurdles lowered, many of the same benefits of automation enjoyed by larger enterprises are now within reach of smaller ones. And they're worth reaching for.
It’s not even necessary to automate the whole process in one fell swoop; even partial automation can yield a positive return on investment, moving you along the road to future automation and perhaps even helping fund it. The important thing is to evaluate your business needs and pick a place to get started. PayStream offers these steps toward P2P automation maturity:
Front-End Document and Data Capture –Invoices are scanned upon receipt, and data is extracted. Validation rules established at the beginning of the process ensure that the data extracted is accurate, with more advanced systems putting the responsibility of exception and discrepancy correction back onto suppliers. This is a massive advance over back-end imaging and a vital step in the process of centralization and integration of processes.
Front-End Capture with Matching and Workflow – In a more advanced form, invoice automation solutions combine front-end document and data capture with matching and workflow capabilities to for invoice receipt and approval processing. These solutions automate more of the invoice receipt-to-pay cycle than stand-alone document and data capture solutions, and they enable AP departments to define how different types of invoices are processed and routed. Many of these solutions are mobile, with approvers are typically notified via email when invoices require their approval, and some software even allows for direct invoice approval from the emails.
Combining Electronic Invoicing with Imaging and Workflow – The most sophisticated invoice automation solutions combine front-end document imaging and data capture with e-invoicing and automated workflow. This lets organizations process all invoices—whether they are submitted in paper or electronic format—through a single, common method. In this scenario, suppliers are transitioned from paper to electronic invoice submission, usually through a stand-alone portal or a shared supplier network. Most solutions offer suppliers multiple options for submitting electronic invoices, such as direct integration with ERP and billing applications, flipping purchase orders into invoices, and web forms and templates that can be used to generate electronic invoices.
T&E Management – Organizations of all sizes can benefit from automating their travel and expense (T&E) processes. Automation provides complete end-to-end control of report submission, approval, reimbursement, reporting with data analysis, and integration into back end accounting systems. Having this integration provides more visibility into spend, with accurate accounting and detailed reporting for every transaction and expense category.
E-procurement – Electronic procurement solutions let organizations connect to vendor catalogs, generate requisitions, use workflow tools for approval processing, and deliver purchase orders to suppliers electronically, making paperless environments possible. Proactive technology adopters have learned that in many cases automation diminishes procure-to-pay cycle time from weeks to days, delivering a rapid return on investment. Adopters can not only achieve productivity gains and cost reductions, but also obtain traceable Sarbanes-Oxley audit trails.
SMEs are feeling the most pain - and losing the most revenue - due to the manual routing of invoices, so e-invoicing can be a great place to dip your corporate toes in the water for P2P transformation. Or, maybe e-procurement is the right place to start. Every organization will have different needs and resources; the point is, there are a wide variety of new solutions to choose from. The important thing is to pick a place and get started.
To learn more, get the full report, Automating P2P for Small to Medium Enterprises:
We’re feeling rather bold this week, with advice on how to do everything better. The brains at McKinsey have the C-suite covered, with advice for CEOs, CFOs and CIOs. For CIOs and IT pros in banking, we’ve got a little extra advice on services procurement just for you. We’d be remiss to leave out CPOs and procurement types; Tania Seary weighs in on how to be a great procurement boss.
Three ways CEOs can improve the supply chain - McKinsey
What can your supply chain do for you? Too many companies maintain a rudimentary supply chain, perhaps because they don’t realize the strategic advantage that a nimble, adaptable supply chain can confer. McKinsey’s Glatzer, Niemeyer and Rohren provide examples to help us visualize what a more strategic supply chain could look like, and tips on using the supply chain to maximum effect.
The CFO’s role in the pursuit of growth - McKinsey
CFOs need to step up their game when it comes to driving growth, according to a recent McKinsey survey. CFOs and non-CFOs alike identified finding new sources of growth as the most pressing of six growth-related challenges. Notably absent: strategic cost-cutting and process improvement, which while less sexy, does grow the bottom line.
McKinsey’s latest survey on business technology finds CIOs have little influence in shaping corporate strategy and confidence in IT’s ability to support growth and other business goals is waning. This is perhaps not surprising. The role of IT is in flux as many traditional IT tasks shift to off-premise cloud providers, leaving many wondering what their role should be. There's a crying for data management and analytic talent, says the report, so IT needs to sit up, take notice and get to work reinventing itself. And, it needs a seat at the table so it can understand and apply its capabilities to the evolving business context and regain strategic importance.
Five top tips: How to be a great procurement boss - Supply Management
With procurement talent in short supply, competition for proven professionals is fierce. Assuming you've got good people, it’s a lot easier to keep the talent you have than find new talent. The best way to retain talent is to be a great boss - a rare gift in itself. Tania Seary, founder of three procurement related businesses, shows how to be the kind of boss people love to work for and will keep working for.
Banking Procurement: It's Time To Think About Value - Procurement Leaders
Banks aren't known for being technological innovators, yet as bricks and mortar banking fades away, that's exactly what they must become - by providing a user friendly, customer centric, always-on mobile presence. The most successful banks in terms of leveraging mobile media outsource this function to a third party. As their less successful counterparts catch up, they’ll need to become savvier in the procurement of these services in order to retain their edge says Harry John, industry intelligence manager at Procurement Leaders.
If you’ve ever been part of implementing a new enterprise software system, you know how much work goes on prior to the purchase, identifying requirements, making a business case and determining what the return on investment is likely to be. Once the purchase is made, the real work of achieving the projected ROI begins.
Getting widespread user adoption – as close to 100% as possible -- is critical to meeting your projection. Even with the best software, there’s bound to be pushback from people accustomed to doing things the old way. Change is difficult; it’s natural and human to prefer doing things the way they’ve always done it - even if it’s slow and inefficient. Here are 11 field-tested strategies for getting widespread user adoption, and maybe even winning raving fans.
Not all of these steps are necessary for every project, and some may or may not be suited to your situation or company culture. Nor is this list exhaustive; you may need to get creative in finding solutions for unique challenges you’re facing. The important thing to remember is that once the system is purchased, adoption is job one, and 100% adoption isn’t going to happen on its own. Don’t leave it to chance. Be proactive and use these best practices as a starting point. If you come up with any great ideas that work, tell us about them. We’d love to add them to this list.
Kevin Turner is vice president, customer success at Coupa. He was previously director of eCommerce integrations for Dell.
It’s estimated that U.S. companies will spend $186 billion on travel and expenses in 2015, accounting for 10-12% of total budget and making it the biggest cost after payroll. Where is the money going? About 22% to meals, with the rest about equally spread out across flights, hotels, gas and miscellaneous items.
Perhaps a better question: Are all expense claims legitimate? With 59% of people surveyed reporting T&E policy violations on one in five expense submissions and 66% reporting having made risky expense claims, it’s clearly that the need for digital expense management goes beyond financial issues.
It’s time to fix T&E, and the first step is diagnosing the issues. We’ve compiled this handy infographic to help.
Master data management is critical to the success of any purchase-to-pay (P2P) or spend analytics initiative, since enhancing master data leads to the ability to make better decisions and drive sourcing and compliance benefits. While it is not often considered a fun and rewarding project like a P2P implementation, and thus often an overlooked piece of the puzzle, many of the benefits ascribed to P2P and spend analytics are the result of rigorous and proactive master data management. The quality of the input determines the quality of the results. It’s the classic “garbage in, garbage out” scenario.
There are typically two key master data components that serve as input into the P2P processes: vendor master data and item master data.
For vendor master data, “garbage in” is when you have missing or wrong data elements, such as payment terms, contact information, vendor tax identification numbers and PO transmission email. This results in multiple records with mismatching information as well as outdated vendor information.
For item master data, “garbage in” is duplication and inconsistency across data elements. This usually results from the lack of a well-defined taxonomy and further exacerbated by poor governance, yielding multiple versions of the same item, many of which then have differing or incomplete information.
The taxonomy chicken and egg
My colleague, Dipan Karumsi, has written in this space before about the importance of a well-defined taxonomy. It’s a bit of a chicken and egg argument because the lack of a defined taxonomy creates a lot of dirty data, however if you’ve had a poorly-defined taxonomy all along, you cannot just take your dirty data and put it into your new and improved taxonomy. You have to first cleanse the data, and then categorize it into your new taxonomy.
One of the biggest challenges we see in our clients’ organizations is decentralized data management with no enterprise-wide governance. There may be multiple owners across business units or regions and data resides in numerous different systems. Additionally, conflicting policies lead to inconsistent processes around creation/updates of master data elements thereby complicating maintenance and increasing total cost of ownership.
Loading low quality vendor master data into your P2P system can result in a number of challenges, ranging from users selecting the wrong vendor when creating a requisition, to purchase orders being transmitted to an incorrect vendor email address, to payment delays to the vendor. Similarly, data inconsistencies in the item master make it difficult to roll out catalogs and aggregate enterprise-wide demand.
All of this is compounded in a global organization. Even something as basic as the definition of master data may vary from geography to geography. As each may treat master data differently, the processes associated with the setup and maintenance of that data may vary significantly.
First step: An as-is assessment
One of the first things we do with clients is conduct an as-is assessment to gain an understanding of their current state practices and unique requirements related to setting up, updating, and de-activating master data records.
A data quality assessment is conducted in parallel to gain insights into the consistency, completeness, and accuracy of the data. This information allows us to analyze the client organization’s maturity and decide whether a tool needs to be deployed to facilitate a data cleanse and enable master data governance. The choice is usually directly related to the size of the company and scale of the project.
If we are looking at a global implementation with a large number of records across different plants, geographies, and business units, we probably need an enabling tool. A tool-based approach also works best when there are multiple back-end systems. The tool then sits on top of all of them to standardize and control the flow of data into each one. For small to mid-tier companies where all of the data is housed in a single ERP, manual cleansing is a possibility.
Defining a target state
Regardless of whether or not a tool-enabled approach is selected, it is critical to define and implement a target state operating model that can maximize and maintain the quality of master data on an ongoing basis after the initial cleanse is completed. This entails enterprise-wide standardization with variations only to accommodate for specific language, legal, tax, and regulatory requirements across the multiple dimensions of process, governance, and organization.
Standardized data setup and maintenance processes across the enterprise help drive consistency in master data. Up front duplicate checking drives the creation and sustainment of a single, golden record based on the established taxonomy. Streamlined approval flows increase the possibility of timely sign-off from appropriate parties prior to setting up or updating a record.
Clearly defined policies and data standards along with metrics and reports to measure process performance, data quality and data usage allow for enterprise-wide governance of master data activities.
Setting up an organizational framework that includes a centralized governing body that provides strategic vision and direction as well as along with localized groups to support day-to-day master data quality needs helps establish clear ownership and stronger controls.
Taking the time to focus on master data management is critical to drive an optimal outcome from your P2P initiative. Greater accuracy and completeness of master data plays a significant role in obtaining P2P business case benefits resulting from increased spend visibility and enhanced compliance.
Yatin Anand is Director, Operations Advisory Services, at KPMG in Chicago. He focuses on business transformation across the supply chain within various industry sectors.
By now it’s a foregone conclusion that the future of computing is in the cloud. Most companies are now using cloud solutions of some kind, even if it’s only Dropbox or Google Docs. However, younger companies unburdened by legacy IT systems that have adopted all-cloud or cloud-first IT strategies are already reaping the benefits of leaner, more nimble and cost-effective operations.
It’s very hard to imagine a new company today buying on-premise software and investing in the IT infrastructure that goes with it. With the current churn rate of the S&P 500 approaching 75%, it’s clear that mature enterprises risk being eclipsed by upstarts unless they follow a path of relentless innovation and improvement. The cloud must play a strategic role, but mature enterprises need to approach it differently.
Rip and replace is not the answer
For these companies, investments in legacy on-premise solutions and the processes tied to them are too big to walk away from, so rip and replace is not a viable path to the cloud. In my previous post, I talked about how IT can assess their portfolio of solutions to identify medium risk, medium difficulty projects to start transitioning to the cloud.
Here we are in February, and the predictions for 2015 keep on coming. We just couldn’t resist these last two on expense management and the trend away from traditional ERP systems, two themes that are near and dear to our cloud-y little heart. After this we’re done – promise.
On to ideas for setting the wheels in motion to make some of these predictions come true: More supplier innovation, and building the role of CPO into a more strategic one, for starters.
All the hype of recent years around cloud, cloud, cloud has made everyone aware of the new concept of delivering software as a service. We are now at a once-in-a-generation inflection point where companies have realized that to remain competitive, sooner or later they will need to leave on premise infrastructure behind and shift a lot of IT to the cloud. Yet many remain daunted by the prospect and unsure of where to start.
We have been here before. As microcomputers became cheaper and more powerful throughout the ‘80s and ‘90s, the client-server architecture of the ‘60s and ‘70s gave way to fat clients – high functioning computers with less need to access a central server.
The economy is back, and so is business travel, with more options and convenience for travelers than ever before. There is a dizzying array of travel booking sites, but now you can also just type in any two airport codes and buy a plane ticket straight from the Google search results page. Taxi alternatives Uber and Lyft are gaining ground, and Airbnb is becoming a viable alternative to hotels.
Fortunately, the same forces of innovation are moving travel and expense management forward as well. The trick for managers is not to get distracted by all the shiny new toys, and stay focused on moving from processing expense submissions to optimizing and driving how the company spends money.
What makes a great procurement professional? We all know procurement is growing in stature and importance, and being asked to take on more within the organization. One of the biggest challenges to executing on that is finding top talent. With that in mind, we thought it would be interesting to share one professional’s perspective.
Bruno Alvarez is a twenty-year procurement professional, blogger and author of the e-book “Procurement Stories.” He’s often called on to recommend candidates, and based on his experience, has come up with a short list of common traits he sees in the best, excerpted from a recent blog post:
1. People person
Being at the top of the collaborative work, procurement is very much about relationships and networking. Most contracting and procurement professionals score high in people relations, as high as sales people. This stands to reason, as deals are made every day internally with stakeholders and externally with vendors, contractors and suppliers.