PREAMBLE
Magic & Logic
The Creative Challenge
Efficient Sourcing in Marketing
How Do You Support Marketing and Get a Grip on Agency Lifecycle Management?
Too Many Marketing Fingers in the Procurement Pie?
BONUS
Last month, the Hackett Group, as part of its Procurement Executive Insight series, released its “2014 Procurement Key Issues” report on Rethinking How Procurement Defines Its Value, Balances Risk, and Gets the Most from Technology Investments. It had some very interesting findings, including the fact that Procurement in 76% of companies surveyed indicated that a top priority was to expand procurement’s scope/influence. This is logical, but a little unexpected giving that the top Management priorities are to grow revenue and improve margins / profitability, at 66% and 61%, and most companies still see margin improvement in an uncertain market as cost reduction since limited or no-growth markets don’t generally take favourably to cost increases.
It seems that, as Hackett notes in its insight, we have the situation where many of the Procurement groups in Hackett’s survey stable have reached the upper limit of cost reductions possible in categories they actively source today and are interested in taking on new spend categories in an effort to unearth additional savings and meet the savings targets they are still being (implicitly) given for the organization to achieve it’s margin improvement.
While I applaud the long-needed alignment from this group of Procurement organizations that are obviously in the above-average and best-in-class categories — because savings are a thing of the past with (hyper)inflation returning to historical norms, raw materials in many categories become scarce (and supply barely meeting demand), and transportation costs continuing to increase — I worry that the finance organization is not yet aligned with the need and, when push comes to shove, will resort to a strong arm instead of a gentle hand, putting Marketing, Legal, and other non-physical product organizations on the defensive.
| Somewhere two fists are pounding And they don’t care what’s correct Somewhere somebody’s walking the wire Without a safety net … |
This will not only result in a push-back from the internal departments that Procurement needs to help, but from the vendors and third-parties that the Marketing, Legal, and other non-physical product departments rely on to keep the organization running. The disdain dripping from the forced smiles on all sides will be visible across the room …
| Somewhere some buyer’s crazy And some Rep’s half out of her head Now the CPO’s fearless And hopes they won’t wind up dead |
You have to remember these are vendors who are used to doing deals with a wink and a smile in the back room or skybox of their favourite entertainment venue and sealing them with a firm handshake. Terms? Conditions? Agreed Upon Rates? Performance Requirements? Contracts? This is a whole new ballgame to a vendor used to doing the work and sending a one-line invoice when it’s done.
| Where the rubber meets the road Welcome to Procurement mode Used to be deals were a firm handshake Now the rubber meets the road |
The vendors are going to try and bypass Procurement at every opportunity …
| Rep in the front seat Lawyer in the back seat Gettin’ it on the dotted line Got a snake in the bed Lord, hissin’ on the headboard Trying to lure you offside |
… and if the Marketing, Legal, and other affected internal departments aren’t onside with the new process 100%, any chance of savings and spend control are going to fly out the window. Not only will a side-stepped process result in a deal that is at least as expensive as last year’s deal (and probably more as the incumbent preferred vendor will probably cry poor due to inflation), but nothing will be done to reduce the demand side volatility, threat of competition (which often requires true partners and not just preferred vendors), and supply volatility that are the top three business drivers that Procurement has identified as needing to be addressed.
In summary, the fundamental Procurement focus is right, but has the rest of the organization caught up? And does Procurement really have a firm handle on what it needs to do to extend its reach and deal with all of the external business drivers that are hitting it hard, which also include the need for more (trained) talent and the skills gap, the increasing regulatory risk around the globe, and risk of a truly global economic crisis? Looking at the technology priorities, SI is not certain that it does.
In closing, the 2014 Procurement Key Issues report on Rethinking How Procurement Defines Its Value, Balances Risk, and Gets the Most from Technology Investments is an interesting and thought-provoking read and you should add it to the top of your reading stack.
Imagine what your company could do with invoice automation. As per this recent article over on Shared Services Link on how to turn payables into an opportunity and add $3M to your bottom line, Telus, a 10 Billion telecommunication products and services provider which typically receives 15,000 to 20,000 paper invoices per month, implemented a supplier portal, electronic invoicing, and a dynamic discounting solution that allows them to save 3 Million annually.
When you consider that 10 Billion is big, but not that big these days, that a lot of organizations receive 15,000 to 20,000 paper invoices a month, or more, and that a supplier portal is pretty primitive from an automated invoicing viewpoint, you quickly see that there is quite a lot of opportunity for your organization to save quite a lot of money from invoice processing. In some organizations, the overhead alone from manual processing exceeds a million dollars, and this barely covers a detailed review of 10% to 20% of the invoices. Proper automation insures m-way matching on 100% of invoices with exception-based processing on the 10% to 15% that contain issues or errors.
You see, when you implement the right invoice automation solution:
And then, instead of spending $30 to $40 to process an single invoice, you’ll be spending $3 to $4. So, if your organization is processing 10,000 invoices a month, you’ll see your overhead costs drop about $300,000 and you’ll save upwards of 3 Million a year before dynamic discounting or other supply chain financing solutions are put into the mix!
For more information on how your organization can save 3 Million, download Sourcing Innovation’s recent white-paper on An End-to-End Invoice Automation Framework – Ten Keys to Success (registration required), sponsored by Nipendo.
In today’s post, we continue our introduction to Basware, a Finnish provider of enterprise finance solutions that serves the global e-Commerce, P2P, and AP Automation marketplace with over 2,000 international customers that collectively do business with over 1 Million companies in over 100 countries. In Part II we discussed the AP Automation and Invoice Processing solutions, the full Purchase-to-Pay process coverage from the Procurement and AP perspective, and the full compliance with e-Commerce, Taxation and Digital Signature Requirements that they offer in over 50 countries. Then, in Part III, we discussed the Basware Commerce Network (BCN). An open commerce network that connects almost 1 Million companies in over 100 countries through 170 partner networks, the BCN currently delivers over 60 Million e-invoices per year with a combined value in excess of $420 Billion and Basware expects to be processing over 150 Million e-invoices a year by the end of 2015 with a combined value in excess of $1 Trillion dollars. Part of this increase will be as a result of Basware’s new partnership with Mastercard, which provides suppliers’ a guaranteed payment once the invoice has been approved, and an early payment option as well. In addition, buyers can have extended payment time if they need it. In addition, cross-border payments, which take over a week on average, are simplified and generally executed at a reduced cost to both parties.
Today we are going to focus on their analytics capability, called Basware Analytics. Basware built their analytics platform on top of Tableau Software‘s Data Visualization Engine, a high-performance data engine designed to allow for real-time data analysis, visualization, and reporting. Using this engine as a foundation, they focussed on designing an analytics application that was useable by the average Spend Management professional and that presented that professional with over 80% of the information across the P2P cycle that a Spend Management professional needs immediately upon log-in.
Over time, Basware has built a suite of package reports that cover 80% of a Spend Management and Finance organization’s need for process and spend visibility to drive process efficiency. In addition, they provide a suite of templates that can be easily altered in such a way that, in most organizations, users are able to build reports that quickly cover most of the reporting needs not covered out-of-the-box within a few hours of deployment, and gradually build reports, possibly with the help of Basware’s services organization, that will let them achieve the remaining 20%.
The solution was designed from an AP and Procurement perspective and in addition to standard procurement reports which include, but are not limited to, total spend, geographical spend by organization or cost centre, top suppliers, top products, invoices received, procurement KPIs, and maverick spend, there are accounts payable reports which include, but are not limited to, invoices received, invoices received with or without a contract or PO, cash flow analysis, spend by supplier analysis, AP KPIs, AP Process and Cycle Times, and AP Financial metrics. Each report allows for real-time drill down and filtering on any dimension. Because the underlying analysis engine has been built to sit on top of all invoiced spend and related P2P data, the platform can address spend visibility, supplier performance, procurement performance, contract compliance, catalog coverage, cash forecasting and management, accounts payable and invoice management. With the visibility provided, you can dive into opportunity identification, process optimization, and rationalization.
Users can access the template behind any report and quickly customize it by adding or removing available dimensions, customizing filters, and tweaking the layout. A user can select which of the available data sources1 (which have been mapped to a common schema) she wants to use, specify the dimensions of interest (to build the cube), define the default ranges and allowable filters, choose the graph types, and modify the layout. The application supports all of the standard graphs and charts, including cloud charts (which is great for looking at search term history or the most common products and/or services being bought) and tree-maps, which give a quick visual representation as to which supplier, cost centre, product, etc. is accounting for the most (maverick) spend. It’s one of few, and most effective, implementations of cloud charts and tree maps that SI has seen to date.
The user does not require any technical skills to modify the templates to adjust or create new reports. This solution is optimal for giving more people within the organization real-time access to spend and process metrics, and allows the Procurement and Finance organizations to begin their spend analysis journey immediately. (In addition, if the user needs help or wants to add custom data sources, Basware has professional services personnel in North America, Europe, and Asia Pacific and offers a broad suite of support services, including supplier activation/onboarding, in 10 languages: English, Finnish, Swedish, Norwegian, Danish, Dutch, German, French, Spanish, and Portuguese.)
1 Even though reports are limited to Basware’s data sources out of the box, the customer has an option to extend the reporting solution to other data sources through the use of other Tableau Software tools leveraged by Basware.
In yesterday’s post, we continued our introduction to Basware, a Finnish provider of enterprise finance solutions that serves the global e-Commerce, P2P, and AP Automation marketplace with over 2,000 international customers that collectively do business with over 1 Million companies in over 100 countries. Yesterday, we focussed on the AP automation and invoice processing capabilities. Today we are going to discuss the e-Invoicing functionality and the Basware Commerce Network.
The Basware Commerce Network (BCN) is an open commerce network that connects to almost 1 Million companies in over 100 countries through over 170 partner networks which include B2BE, Cortex, Crediflow, Crossgate, Danske Bank, Edisoft, Elemica, GHX, GXS, Hubspan, Tradex, Unified Post, Ximantix and over 150 others. Customers on the Basware Commerce Network can send and receive e-Invoices and e-Documents to any company connected to the BCN through one of the partner networks free of charge1. The BCN, which has implemented tax compliance in more than 50 countries, currently delivers over 60 Million e-Invoices per year (with a combined value in excess of $420 Billion) and Basware expects to be processing over 150 Million e-Invoices a year by the end of 2015 (which will have a combined value in excess of 1 Trillion dollars).
A key feature of the BCN is that it was designed to be used by, and equally support, senders and receivers. Note that we are not using the standard terminology of buyers and suppliers because, whereas some networks were designed to be buyer centric and support the buyer who is receiving tens (or hundreds) of thousands of invoices a year, the solution was designed for companies who are receiving tens (or hundreds) of thousands of invoices a year and for companies who are sending out tens (or hundreds) of thousands of invoices a year. Since Basware started out as a enterprise finance platform, and not an e-Procurement platform, they have a unique take on P2P and design their solutions to enable both senders and receivers (and suppliers and buyers) equally. As a result, the solution is just as likely to be acquired by a large (CPG) manufacturer or apparel distributor which only receives a few invoices for raw materials but sends out ten to one hundred times as many to its customer base of all sizes that orders frequently and in small amounts.
Another key feature is that when the BCN is working flawlessly, it’s invisible. The entire point of the network is automatic delivery and automation of e-Invoice and other e-Document processing, which will either be done through a module in Basware’s application suite or your existing ERP, MRP, or AP solution. As per our last post, Basware has already integrated with over 250 ERP, MRP, AP, and other back-office systems and, if you already have a system for processing the e-Invoices, purchase orders, and other e-Documents sent over the network, it will push the documents into (and pull the appropriate documents and confirmations from) those systems. If your existing system is “plugged in” to the network, you’ll never have to use the portal2. Typically, a person in the receiving party will only log into the portal to verify that an invoice has been received when he gets a call from an individual in the sending party3 (and does not have access to the processing system — for example, the supplier might call up the account rep to ask if the invoice was received instead of someone in Accounts Payable). And typically the only senders who will sign into the portal are small suppliers who haven’t integrated the BCN into their Accounts Receivable / Back Office invoice management software and want to send an invoice over the BCN (to insure prompt receipt, processing, and payment capability).
With the BCN, it’s possible for an organization to achieve 100% e-Invoice penetration. Because the BCN supports receipt of invoices by EDI, XML, inter-operator networks, direct connect, virtual printer, Scan-and-Capture, Cloud-scan, e-mail (Lite)4 and even keyed-in by the supplier, which covers every methodology a supplier may use to send an invoice, customers of the BCN can achieve 100% paper-free invoice processing (and have in countries with strict e-Invoicing requirements, such as Brazil, Finland, Sweden and Norway). Note that they have multiple scan solutions — you can scan it and key it in locally through the BCN portal, and attach the scan; you can have it sent to your OCR provider that is plugged into the BCN; or use Basware’s Cloudscan which will take the scan, process it, and push it into your e-Invoice solution, flagging any exceptions or scanning issues that need to be manually addressed.
The supplier portal is designed to be quick and easy to use, and is divided into four main sections, current work-view, inbox, sent and purchase orders. In the current-workflow, the supplier sees all of the incoming events that need to be processed; in the inbox, the supplier sees the incoming purchasing orders, associated messages, and status updates from the buyer; in the sent tab, the supplier sees the invoices they sent through the network, associated messages and status updates they provided; and in the purchase order tab they can search purchase orders and dive into the details of the purchase order, view line items, retrieve attached files, view the processing history, and pull up associated invoices that they sent to the buyer.
Since the network is designed to integrate with the buyer’s current ERP, MRP, AP and back-office systems and Basware P2P modules, the buyer portal is equally minimal and easy to use. The buyer can log in to search and view incoming invoices, send messages or queries to the supplier about those invoices, and run reports on the invoices in the system to query the number, and ids, of open invoices, invoices by supplier, invoices unpaid, etc. Since there was no need to duplicate the functionality in the other Basware modules and/or the other back-office systems currently in place in most customer organizations, Basware designed the portal to support quick and simple confirmational queries and messaging between the buyer and supplier, and it does this quite well. In addition, all discussions are included in the audit trail and can be retrieved at any time.
And the proof of the value is in the e-Invoice pudding it supports. A Major Engineering firm in the Netherlands that was receiving over 150,000 (paper) invoices a year was able to replace over 50% of these paper invoices with e-Invoices in less than six months and automatically match more than 80% of them, which translated into a 60% reduction in manpower required for invoice processing (which had an associated cost of 6.5 FTEs). A leading energy company in Europe which received over 700,000 (paper) invoices a year was able to convert over 50% of its suppliers to e-Invoices in six months by partnering with Basware to help it with a global supplier activation (on-boarding) program. A leading mining, construction, oil & gas, and pulp and paper company in Brazil was able to achieve 100% e-Invoice penetration with the help of Basware which, with its Cloudscan solution, was able to help the company help its suppliers push 100% of its 200,000 plus annual invoice volume through the BCN. And it’s not just buyers who have invested heavily in the BCN. One of the largest CPG companies (with a market cap in excess of 30 Billion) uses the platform to send over 400,000 invoices electronically in Scandinavia and nearby countries in the EU. No matter how big your e-Invoicing need, Basware and its BCN can handle the volume.
1 Free of charge is conditional on delivery mechanism used. Portal (invoice key-in and PO flip) and sending e-invoices via email are free for the supplier and a buyer can receive e-Invoices through the portal free of charge from a sender.
2 However, you still may want to use the value added services of the portal which include, but are not limited to, tracking invoice status and collaborating with your business partners.
3 Who could log into the supplier portal to get the same information, but, due to technical issues on the supplier side, is unable to do so at that particular point in time.
4 Scan-and-capture refers to in-house scanning and OCR (optical character recognition), cloud-scan refers to outsourced scan-and-capture, and e-mail Lite is Basware’s solution for receiving invoices via e-mail.