Assessing the Larger Value of a Broad Platform
BY STEVE SMITH

Today virtually every organization recognizes the value of eliminating manual accounts payable processing to gain the efficiencies that automation brings. If any were not convinced, the recent economy and its affect on financing costs should be enough to erase any doubt.

Businesses know they can no longer overlook the high costs and inefficiency of having staff spending so much time scrambling to enter invoices, get the necessary signatures for approval of payment, file invoices and retrieve them. While companies may have tolerated this situation in the past, most can not afford to miss out on savings and run risks to their credit rating and regulatory compliance standing. They need to capture invoices quickly and accurately, be able to prioritize top vendors, know where invoices are in the approval process, monitor processing metrics such as time and volume, and have immediate access to the documents as needed.

Research by The Hackett Group has found that top-performing companies process a higher percentage of vendor invoices electronically in comparison with their peers. The Institute of Management and Administration (IOMA) reports that major drivers for implementation of automated accounts payable are large transaction volumes, pressures to reduce costs, and impact on cash flow. Still, justifying the investment is one of the biggest implementation challenges companies face today.

Making Automation Happen

Any strategic value assessment of accounts payable automation should consider a key factor: The fundamental issues driving automation of AP are also present with other processes. Many companies have automated some processes while others still rely on printing documents and manually processing them. Often, each business unit has its own applications and processes. Processes span different locations and departments, and applications typically do not communicate directly with another. And as the number of suppliers and customers increases, communication becomes less efficient and more costly.

Because all business processes in an organization are essentially intertwined, inevitable delays when documents are received by mail or fax start a chain reaction that affects the entire enterprise — adding time and cost to the procure-to-pay and order-to-cash cycles. By automating as many of these processes as possible, starting with accounts payable, companies can capitalize on valuable opportunities to improve cash flow and overall profitability.

What is making automated AP a practical reality for many companies is not simply technology that actually works to streamline invoice processing. It is the larger value of the functional capabilities and operational benefits as part of a platform to automate any process in the procure-to-pay and order-to-cash cycles. Companies are finding that they can leverage the same platform they use for vendor invoice processing to automate procurement, accounts receivable and sales order processing as well. With such a solution in place, organizations have a platform to automate virtually any business process that runs on documents, including automated delivery of outbound purchasing documents and customer invoices.

Automating document processes across the entire enterprise adds value to existing systems, reduces document costs, and streamlines business communications. “People are really amazed at what this technology can do for them,” said Brenda Britt, Assistant Vice President, Financial Services at Sea Star Line. “And it’s great to see so many people from groups across the company thinking about how they can use it to improve processes in their departments as well.”

On Premise or On Demand

The advantages of this broad automation strategy are available either as a traditional on-premise software implementation or through on-demand services. Vendors who offer a comprehensive document process automation platform typically also offer access to that platform as a set of Software as a Service (SaaS) solutions to automate specific business processes. While managing the software in-house gives some companies levels of flexibility and control that they require, others take the SaaS approach to shift cost from the project level to the document level (moving from capital to operational expenditures) for immediacy in ROI.

Either way, the automation typically cuts processing time and costs by at least 50 percent, brings complete visibility to every document processed, reduces paper filing by up to 100 percent, reduces staff requirements by at least one FTE and literally saves tons of paper — not only in accounts payable, but everywhere it is used.

Software or SaaS Decision Matrix

Who Participates

While CFOs and CEOs are striving to improve profitability, CIOs are feeling pressure to simplify the IT infrastructure and increase return on existing technology investments. Decades of accumulated technology have left many companies with complex IT systems that are difficult and expensive to manage. Enterprise resource planning (ERP) solutions have done much to address IT issues by integrating and standardizing business systems, but challenges still exist everywhere manual document processes remain.

IT leaders are often reluctant to add new technology or tamper with existing systems, as this can be time-consuming and risky. Though effective inbound and outbound document delivery management presents obvious business advantages and financial benefits, a successful technology solution must work within the existing IT framework without adding complexity.

Responding to one specific automation need at a time creates a complex mix of point-to-point solutions. In this environment, getting all applications to work well together is an unending challenge and a maintenance nightmare. Replacing point-to-point solutions with a single automation platform allows IT departments to free themselves from tasks that burden their budget, and at the same time frees hours of work that can be redeployed to new projects.

Where to Start

For many executives, getting a clear picture of their organization’s total communication infrastructure seems difficult if not impossible. They simply don’t know where to start. Effectively assessing and quantifying the business value and the impact of implementing document automation requires enterprises to fully understand key aspects of their current processes, including:

• Procure-to-pay and order-to-cash performance: Measuring the time the cycles take from beginning to end
• Quality: Identifying process errors that impact daily business and slow down reactivity
• Quantity: Calculating the volume of documents processed for customer and supplier communications
• Document-based costs: Assessing the amount of money currently spent on creating, processing, handling, and delivering business documents
• Archaic information exchange: Determining how much delivery methods such as traditional mail and manual fax limit profitability
• Archiving: Calculating potential for automating current means of storing documents

Addressing these issues requires a flexible solution that is easy to implement, does not impact existing systems, and is low-risk. Once such a platform is the organization’s disposal it can be used to automate other processes including:

• Electronic delivery of purchase orders and supporting documents by fax or email directly from ERP systems or other applications, with delivery status monitoring from within the ERP interface.
• Routing of inbound fax sales orders directly to customer service desktops, eliminating the need for paper copies of orders to be created.
• Processes within Accounts Receivable, such as electronic delivery of customer invoices, statements and collection letters.

What it Takes

To deliver this additional value, the platform must provide all functionality and components necessary for automated document processing in a single package encompassing:

• Document capture and workflow management functionality, including OCR plus content recognition, prioritizing capabilities and the ability to make data available to ERP applications
• Document formatting capabilities to create high-usability documents from raw data to multiple media (fax, PDF, HTML, XML, etc.)
• Fax server capabilities or secure connection to a vendor-hosted fax service, with the ability to automatically send and receive faxes and notify of successful delivery
• Web-based document workflow to automate the approval process, including support for mobile devices
• Electronic document archiving capability to store and easily retrieve documents
• Reporting capabilities to produce management reports on Key Performance Indicators for the process

All of these elements should be accessible and controlled by a single set of business rules to allow automation of the process from end to end without the need for any third- party products. This allows each process to be automated and measured as an entity rather than as a collection of different functions.

As part of a centralized and comprehensive platform, accounts payable automation can be the first step toward paperless business, leading companies into the next era of process efficiency.

STEVE SMITH
U.S. Chief Operating Officer, Esker, Inc.

Steve Smith joined Esker in 2003 as the Director of Sales, and is currently responsible for all operations in North and Central America. Upon graduating in 1984 from the University of Wisconsin-Whitewater with bachelor's degrees in Marketing and in Finance, Steve spent two years in sales at Pitney Bowes and 17 years at Equitrac Corporation where he was the Senior Vice President of Worldwide Sales.