The Business Case for Automating Invoice Processing A-SAP February 19, 2008
Posted by Bernd Kosnar in : eBusiness , trackback
Whether you’re the CFO, CIO or Accounts Manager, the financial, management and operational advantages of adding invoice automation to SAP certainly add up – to 95% cost and efficiency savings. Bernd Kosnar of Basware explains how.
Deploying SAP helps to put certain key business processes in the fast lane. Unfortunately, for many companies, this can leave accounts and billing processes stuck in the bus lane.
These either remain tethered to paper-based manual processes or are the victims of dead end attempts at automation. AP and order-to-cash cycles may still involve printing, mailing or faxing of invoices and other accompanying documents, driving up costs and eating into profitability.
Any stage in the accounts process that involves manual processing acts as a further drag on efficiency. So it’s no surprise that SAP users are turning their attention to extending process automation across the organisation, beyond core processes to traditionally paper-intensive areas such as procurement and invoice processing.
If critical financial data from key documents such as orders, invoices, goods received notes and so on, is taken into digital form that is usable in the SAP core and other management systems, it’s possible to make a real dash toward efficiency.
So exactly what benefits would your organisation see from automating invoice processing? How would it improve overall financial management, and what impact would it have on the existing IT infrastructure and day-to-day operations?
Doing the maths
Put simply, while traditional invoice management and workflow solutions deliver savings up to 40-50%, in a full
e-invoicing environment automation of invoice processing activity can bring about cost savings of 70% to 95% - making it a compelling business proposition for CFOs and finance managers.
Let’s be honest, the CFO probably doesn’t care about how invoice processing works, what he cares about is the numbers, and how to cut down on operational expenditure. Automating it meets this requirement by reducing the need for manual intervention to a minimum, delivering tangible cost savings and measurable efficiency gains.
Another key consideration for the finance department is clarity, and the ability to plan and forecast. By establishing an invoice automation solution and digitising invoices and collateral documents, valuable business data is unlocked. The resulting full visibility of the order and payment pipelines not only aids cash flow and projected cash flow planning but via the analysis of spend patterns and supplier activity, it enables increased innovation in supply chain management.
As a result, finance managers get a clear, top-level picture of what is happening now and what is going to happen in the future. Processes and business rules are more easily shared, understood and complied with by users, enabling better planning and easy identification of further savings opportunities. This ensures sound cash management and means that funds can be invested as effectively as possible, supporting continuous business improvement.
Data from invoice processing and accounts payable also provides a rich resource of information on how to improve business processes, and can easily demonstrate the investment value of changing business models and processes.
Making invoice automation fit into the SAP jigsaw
The advantages of real invoice automation are compelling, but what’s the best way to go about it, and how will it impact on existing SAP systems and business processes?
What’s needed by users – from CIOs to IT and credit control managers - is a solution that is easily and seamlessly integrated into the existing SAP platform, without requiring timely and costly upgrades and custom coding, a solution which fits snugly into the SAP picture and keeps the rest of the SAP implementation in its ‘vanilla’ state.
There are two ways of approaching this: to use a tool installed inside SAP or an SAP-accredited third-party tool working alongside SAP. You’d assume that a product programmed inside SAP would be the perfect fit, developed with the latest functionality and easily integrated. You would be wrong on both counts.
Much like SAP’s databases, office and business intelligence tools, which are often eschewed in favour of third-party specialist tools, third party IP workflow software inside of SAP is not as advanced or as flexible as some “outside” solutions. So-called ‘open-heart surgery’ solutions which operate from within the SAP environment also need to be professionally installed, integrated and maintained by SAP engineers, which can be costly and can require key systems to be newly customized or even re-done.
The fact that companies often run multiple new, old and acquired SAP systems within their organisation makes the open heart surgery approach an even worse idea. Implementation and permanent synchronisation could prove to be an IT nightmare. And that’s without factoring in any non SAP systems that need to be integrated into the overall process.
Plug it into the SAP interface, and go
The time and cost involved in implementing an ‘internal’ SAP invoice processing tool is precisely why many companies opt for an external third party expert system that is a module of a state-of-the-art purchase to pay solution.
SAP has well-defined interfaces which have been designed to support SAP-accredited tools and systems operating outside of the SAP environment. The advantage of this approach which is more analogous to key-hole surgery is that SAP organisations get the benefit of specialised third-party solutions, which involve minimally invasive installation, and which also have no impact on the running of core SAP systems.
The advantage of this is that you get a focused extensible invoice automation solution which delivers clear business benefits and extends process automation, yet also operates independently from SAP, and is as a result unaffected by any SAP upgrades, installs or changes for greater operational stability.
Adding up the benefits
Extending automation into the finance department provides strong functional and business benefits and unlocks very real potential for future enhancements. As a result, CFOs will be able to realise immediate and sustained cost savings, as well as having the clarity to optimise business processes and maximise investment opportunities. Financial managers will be able to exercise more control on the spending processes and make payments more accurately and timely.
In addition, true Invoice Automation will bring significant added value to ERP, by removing the need for dedicated data validation, cleansing and enrichment tools for purchase-to-pay processes. As a result, the quality and context of invoice data is improved, supporting greater overall visibility of processes and enabling effective implementation of corporate policies.
By opting for a SAP-accredited third-party automation solution, you’ll also get the buy in of the CIO, who has the reassurance of simple out-of-the-box installation and easy integration via certified SAP interfaces (Certified for SAP NetWeaver™) – meaning no downtime, no impact on SAP resources and minimal set-up cost.
The business case for real invoice automation and going beyond this certainly adds up. Isn’t it time you looked to deployment, A-SAP.