Category Archives: Procurement Innovation

Still Not Convinced You Need Your Invoices Under Control?

Then, for starters, maybe you need to dwell on the following:

  • You’re probably overpaying your suppliers by 1%
    because that’s what an audit recovery firm expects you are, and why they make a killing auditing the 20% of suppliers that constitute 80% of your purchase volume, because it’s not that hard for these specialist firms to identify overpayments of 0.5% that typically generate 500K or more in a gain share agreement for a few man months of work (or less)
  • There’s a 2 in 3 chance you are being defrauded of 2% of your revenue
    and that you’ll never notice because you aren’t able to verify all invoices
  • Up to 75% of your AP-related overhead is completely wasted
    on manual data entry, supplier inquiries, and other tactical work that adds no value to Finance or Procurement
  • At least 1 in 10 invoices have an error
    which could be as simple as missing payment information or as involved as incorrect pricing on every line item for a 200 line Bill of Materials because the supplier forgot to apply the discount
  • One Million invoices requires at least 100 standard 4-drawer filing cabinets
    if you get 1 M invoices a year, after 10 years, that’s 1,000 filing cabinets — where are you going to store them all??? (With today’s Storage Area Network densities, that’s 1 SAN. Which can be replicated in 3 places at almost zero cost compared to the seven figure cost of replicating and storing 10 Million invoices at three different locations.)

SI could go on, but the reality is that, especially if your organization is growing, it really, really needs to get its invoices under control. To find out how it can do this, download SI’s new white paper on An End-to-End Invoice Automation Framework Benefits & Best Practices, sponsored by Nipendo. (Registration required.) Once you understand the requirements for a true end-to-end invoice automation solution, you will be well on your way.

Basware: P2P for the Global “E”

Basware is one of the largest players in the global procurement arena. Founded in 1985 in Espoo, Finland (as Baltic Accounting Systems) to deliver enterprise finance software solutions, the company (which is now public and traded on the NASDAQ OMX Helsinki Ltd. as BAS1V) has grown from a small country player to a global platform with over 2,000 international P2P customers that collectively do business with almost 1 Million companies in over 100 countries. Basware supports its global customer base through its operational footprint that spans over 50 countries on 6 continents and includes over 100 partners and resellers.

It’s solutions span the entire P2P (purchase to pay) process, from requisition through payment and post-transaction analysis and includes the Basware Commerce Network that enables over 425 Billion of e-commerce annually. The network currently lists 1.9 Million suppliers and processes over 60 million e-invoices annually through the 60+ e-invoice formats it currently supports, including XML, EDI, and Virtual Printer formats. The network is growing and transaction growth is currently running at 60% year-over-year, and now that they have partnered with MasterCard to provide their customers access to MasterCard’s suite of payment products, it is likely that network growth will accelerate even more now that customers have even more payment options.

One of the most unique features of the platform is the fact that it spans the full AP and P2P cycles, whereas many of the smaller P2P and e-Procurement platforms are Procurement centric, with little support for AP. However, Basware started as a provider of finance solutions and migrated to the e-Procurement space with the birth of e-Commerce, and, as a result, has a firm command of the order-to-cash cycle from both organizational viewpoints.

From the procurement side, the platform contains modules for analytics, basic sourcing (RFX), contract management, catalog management, e-Procurement, and e-Invoicing. From the AP side, the platform contains modules for e-Invoice Processing, e-Invoice Matching, e-Payment, and Analytics. All modules are integrated with a consistent look-and-feel, and all modules are available on top of Basware’s new cloud-based Alusta platform which supports (multi-)enterprise private cloud instances. In addition, the collaboration capabilities and social integrations span the entire platform and all data in the platform is available to the analytics module.

Another unique feature is that Basware has decided that they are a procurement platform, and not a sourcing platform, and that their sourcing capability will remain basic. Basware recognizes that Procurement experts are not Sourcing experts and vice-versa, and have decided that they are going to partner to delivery an industry leading sourcing solution for those customers that need end-to-end Source-to-Pay functionality. As a result, they recently announced a major partnership with BravoSolution to deliver a comprehensive source-to-pay solution that covers all key steps of the sourcing, procurement, and finance process.

In future posts, SI will dive into key capabilities of the Basware Commerce Network; the e-Invoice processing, matching, and payment capabilities; and the analytics platform.

What’s the Most Often Overlooked in e-Procurement Solution Selection?

This is a tough question, but SI knows one feature that’s almost always overlooked:

Order Automation Integration

A good e-Procurement Solution will contain, or integrate with, a good invoice automation solution because the average organization takes at least 16.3 days to process an invoice and spends somewhere between $30 and $40 on that invoice, if everything is A-OK with the invoice. If it’s not, the invoice could take months to get processed and the processing could well exceed $200. Furthermore, manual data entry of (e-) paper invoices can account for as much as 75% of overhead in an Accounts Payable department, and if the organization gets hundreds of thousands, or millions, of invoices a year, less than 10% will get any reasonable level of review or validation. (For a deeper insight into the value of invoice automation, download SI’s recent white paper, sponsored by Nipendo, on An End-to-End Invoice Automation Framework: Benefits & Best Practices, registration required.)

You’ve got your invoices under control, and this is good. But where are these invoices coming from? Your suppliers. And why are they coming from these suppliers? Because you’re issuing your suppliers hundreds of thousands, or millions, of purchase orders a year. Hundreds of thousands, or millions, of purchase orders that these suppliers have to get, process, and push into their fulfillment systems in order to fulfill the orders for you.

If you need these invoices received, acknowledged, processed, and fulfilled quickly, then the supplier has to be able to get these orders into their system quickly. And if you happen to be sending a supplier 20,000 purchase orders a day, because you’re a retail or restaurant chain with that many locations that needs product refilled on a daily basis due to space constraints and freshness requirements, you need to know that if an order is sent 30 minutes before the cut off, it’s going to be processed when it gets to the supplier.

The only way the supplier that is getting tens of thousands of purchase orders a day is going to be able to process and acknowledge the order as soon as it is received is if the order is in a file format compatible with their order automation system and is picked up by the order automation system as soon as the order is received.

This indicates that a key requirement of a good e-Procurement solution is support for the file formats used by the popular order automation systems and support for the protocols used by the popular order automation systems to transport the invoices and accept the acknowledgement, or error messages, that then need to be appropriately handled by the e-Procurement system.

Supplier Portal, Supplier Network, and e-mail delivery of orders only works if you are delivering a small number of orders to a set of suppliers without order automation who have a few days, or more, to process the orders — not a few hours.

Are Your Invoices Still out of Control? Ready to Do Something About it?


Paper, paper everywhere
all the desks do warp.
Paper, paper everywhere
enough to fill a thorp.

And it shouldn’t be that way. But, as per our previous post, despite the recent appearance on the market of some modern solutions that can revolutionize invoice management and automation at even the largest Fortune 500 and Global 3000 companies, the state of e-invoice and AP Automation today is dismal. The 2012 AP Automation Survey Report found that 9 in 10 organizations still deal with paper invoices and that 90% of invoices are paper-based in half of the organizations that responded!

Moreover, Aberdeen’s 2012 study of of 180 organizations, reported in AP Invoice Management in a Networked Economy, found that laggard organizations, which represent the bottom 30% of organizations, require an average of 16.3 days to process an invoice from receipt to approval. The good news: this is a significant improvement over their 2009 study on E-Payables: Invoice Receipt and Workflow that found laggard organizations required an average of 32.9 days to process an invoice. The bad news: it’s still a very large amount of time, especially if an organization wants the opportunity to take advantage of early payment or dynamic discounting.

As a result, the average organization spends somewhere between $30 and $40 just to process a single invoice! In other words, with the exception of best-in-class organizations that heavily employ modern invoice automation solutions and only spend an average of $3 to $4 to process a single invoice, invoices are out of control in 4 out of 5 organizations. But they don’t need to be!

There is an answer, and the answer is the end-to-end invoice automation, as detailed in SI’s new paper on An End-to-End Invoice Automation Framework Benefits & Best Practices, sponsored by Nipendo. (Registration required.) Download it today and find some of the answers you seek.

Vinimaya: Taking Their Procurement Marketplace Global, Part IV

In Part I we noted that since we last covered Vinimaya, the B2B Search Engine that was the next wave in product catalogue management, they have continued building out their base platform, adding (more extensive) auditing capability, workflow-based catalog management, quick-quote (RFX), e-Forms, deep analytics, mobile, and social integration on top of a base platform that supported content management, federated search, powerful connectivity options, personalization and customization, globalization, and an easy to use shopping cart. Then, in Part II and Part III we focussed in on their vTransport technology and their new vQuote, vRank, vCatalog, vAudit, and vAnalytics solution modules. Today, in the final part of this four-part series, we are going to talk about vSocial, vMobile, and their up-coming market indices.

vSocial
vSocial is the social interaction component of the Vinimaya platform. Taking a cue from Amazon, which teaches us that not only do people tend to gravitate to products with reviews but they also want the ability to comment on the products and services they receive and be part of the community, Vinimaya added social interaction capability to their platform. Buyers can post feedback on the goods they procure, suppliers can respond and provide additional details, and procurement can include explanations as to why certain products or services are preferred. In addition, the platform is artificially intelligent, so if there is no feedback for a 14.4 V cordless drill from a given manufacturer, but there is for an 18 V cordless drill from that same manufacturer, the platform will pull the feedback in for the 18 V drill in when a user is viewing the 14.4 V drill to give the user as much information as there is available about the potential purchase. It’s a simple platform, but it works quite well.

vMobile
vMobile is the mobile instantiation of their platform, and one of the most unique offerings on the marketplace. Not only was the Vinimaya platform the first to do real-time federated search across punch-outs, catalogs, and databases and present the results to a user through a single buying platform, but it’s now the first platform to do the same on a mobile device. Designed for a smart-phone, a corporate buyer now has access to all of the goods and services available through the Vinimaya platform on their corporate smartphone, and despite the small amount of real-estate, it is very useable. Vinimaya put a lot of thought into their solution and made search and product retrieval very easy. In addition to the standard keyword search, the mobile solution also supports artificially intelligent barcode based retrieval. If the buyer happens to have the packaging for an item of interest in close proximity (such as the box for the last printer cartridge that requires an immediate reorder when used), she just has to scan the barcode and the solution will find all instances of the product. And if an exact match is unavailable, because the solution is intelligent and retrieves the manufacturer and product description, the search application will find all related products. Maybe the Brother cartridge is currently unavailable from your current suppliers, but a third party Staples replacement cartridge is. The platform will find that option and present it to you. The results are returned in a list and choosing an option brings up a summary of the product details which has an option to add the product to the cart. The cart can be accessed at any time from the app menu bar, which also allows quick access to search, favorites, and history functionality, and checkout can be as easy as one-click as your data is pre-populated. It’s a very slick catalog-based Procurement solution.

Market Indices

Sometimes, not a week goes by where a Procurement doesn’t hear “your contracts suck — I can get the same printer cartridge 5-pack on Amazon today for 5% less” from an office manager or “prove to me that our prices are as good as you say they are and that we are beating the market average because I don’t believe you” from the CFO who only seems to notice Procurement when, a year after a contract has been cut, market prices for a given commodity drop or when the CIO complains that the organization is spending too much on hardware as it’s forced to buy from an overpriced supplier at last year’s prices that are no longer the best price.

In order to get the monkeys off its back, Procurement really needs to be able to demonstrate how good it’s doing — how the majority of it’s contracts are at, or better than, market price, how paying slightly more for that printer cartridge gives it a discount on a range of electronic products from the same provider at 5% below market average pricing, and how IT isn’t factoring in the huge end-of-year rebate the organization is expecting once it meets the million-dollar spend threshold. But to do this, Procurement needs three things:

  1. index data, to know what market prices are,
  2. pricing data, to know what it’s really paying, and
  3. deep analytics, to put two and two together and map reality to potential.

Vinimaya has the pricing data. Not only does Vinimaya manage all of an organization’s punch-outs, catalogs, and pricing databases — but they save every search result to maintain historical pricing data for all products in the database. And, with the recent release of vAudit and vAnalytics, they have the audit trails and the analytics to analyze purchases in detail. That just leave one element to go — the pricing indexes.

The Vinimaya platform crawls a large number of consumer sites (including Amazon, Alibaba, and other online storefronts) and has a huge database of commercial pricing in its archives. This provides the foundation for a consumer price index that will allow an organization to compare its pricing for a product in many consumer categories with the average price charged to a consumer. Vinimaya serves a large number of public sector clients and since public sector pricing is public, this provides the foundation for a market index that will allow an organization to compare its pricing for a product with the average price charged in the public sector for products for which Vinimaya has a lot of data. If you’re beating the public index, you’re doing good but not great. If you’re beating the consumer index, you’re doing okay but not that good. Better shape up. And if you’re not even beating the consumer index, better get your house in order before trying to enforce your contracts on the rest of the organization!

In conclusion, since we last covered Vinimaya, they have made many advancements to their base platform in the last 5 years, but the best may be yet to come. The market indexes are just the tip of the iceberg! More to come in 2014!