It’s time to overcome challenges with state-of-the-art automation technologies.
Billy Williams. Chief Technology Officer
As we enter a new decade, we can expect extraordinary change and improvement when it comes to source-to-pay (S2P) automation. Overall, companies are doing a pretty good job getting away from paper and creating efficiencies across the financial supply chain. Some companies, however, have yet to do any modernization and others have only dipped their toes in the automation waters.
In a recent webinar on the future of S2P automation, hosted by the Institute of Finance & Management (IOFM), I talked with my colleague Mark Brousseau about how S2P professionals are using technology to address five key issues in the never-ending quest to find better, more efficient ways of doing business.
The vast majority of webinar attendees agreed that the technologies set to have the biggest impact on S2P in the next few years include data capture automation, robotic process automation, intelligent analytics, the cloud, and machine learning/AI. In this post, we’ll talk about how to apply these technologies to the issues S2P professionals care about most.
S2P Issue #1: Lack of Visibility
A fundamental lack of data visibility among trading partners opens the door to misunderstandings, which often result in frustrating credit holds, disputes, and phone calls in the “financial supply chain.”
The solution to this problem is an obvious one: break down your data silos and make information accessible—via the cloud—to suppliers and staff through a secure, online portal.
One particular difficulty in creating such a single source of truth, however, lies in the commitment to change management: efforts are often met with mediocre supplier participation rates. The key is to find a partner with a proven track record for supplier onboarding, great technology, and experienced people to implement awareness campaigns across large numbers of suppliers and employee users. Strong policies and procedures also play a key role in ensuring maximum usage.
S2P Issue #2: Systems Are Pretty Dumb
Many S2P systems have been written with rigid rules. They can lock companies into bad processes, with little flexibility to learn from previous inputs and improve.
One of the most exciting emerging technologies in the S2P space is machine learning. With this type of artificial intelligence, we’re already helping companies encode invoice data automatically, make better OCR guesses, create chatbots to answer supplier questions, and flag transactions that warrant audit review.
AI might not be exactly where we want it to be quite yet, but we’re making fast progress.
S2P Issue #3: Repetitive Tasks & IT
As we all know, finance workers are burdened with busywork. IT departments, struggling to keep up with user requests, often have difficulty thinking ahead and offering new and creative ways to adapt and connect systems to reduce repetitive tasks in finance.
Many finance departments have therefore devised elaborate processes to cut and paste data between systems and bulk-load data. While these processes can work, they are time-consuming and error-prone.
Robotic process automation (RPA) has proven to be a good short-term method of automating these types of tasks. Because RPA automates and streamlines repetitive tasks without a big implementation burden, we sometimes call it a “poor man’s” integration tool.
One big problem, however, is that bots can break as user interfaces change over time. Misbehaving bots can cause security issues and also wreak havoc like randomly canceling POs or approving invoices that shouldn’t be approved.
I look at RPA as a band-aid solution: it can be a good temporary fix while you’re looking for a more complete solution for getting your ERP, procurement, inventory, and other systems to talk to each other.
S2P Issue #4: Some Data Is Difficult to Share Securely
As we mentioned with Issue #1 about visibility, many S2P problems arise because trading partners don’t share key details with one another. Companies are naturally cautious about who should have access to sensitive financial data, such as invoices, purchase orders, and payments.
As disputes arise due to a lack of transparency, so do the costs of invoice processing. But what is a company to do?
For many businesses, the cloud is enough. But for others, blockchain has proven to be a better answer. This technology, commonly associated with cryptocurrencies like Bitcoin, can provide a secured, distributed repository for sharing relevant data among shippers, receivers, vendors, customers, warehouses, and others who need to collaborate in financial and supply chain processes.
Basically, blockchain is a digital ledger that contains transactions distributed across many independent nodes. One good example of a blockchain solution in the S2P space is the work that Walmart, Albertsons, and others are doing with the IBM Food Trust, to track items in the supply chain and ensure food safety.
S2P Issue #5: Too Much Data, Too Little Time
Swimming in data makes it difficult to look at trends over time, but having massive amounts of data means that valuable insights are waiting to be discovered.
With intelligent analytics technologies, companies can immediately identify risk and performance issues and take action.
These solutions can give you incredible predictive and prescriptive powers, so you can understand what will happen next, get answers for what to do about it, and ultimately prevent problems from occurring in the first place.
Plan for the Future Today
During the webinar, we asked attendees which S2P automation initiatives they had planned. 54% are looking into RPA, 38% into intelligent analytics, 35% into machine learning/AI, and 20% have no plans at all. (I hope these folks are already on the automation path, or will use the occasion of the new decade to get inspired!)
At the end of the webinar, someone asked how to build a roadmap for deploying new technologies to improve S2P automation.
The real key is to keep on top of the trends by attending webinars, going to trade shows, reading white papers, listening to analysts, and talking to as many people as possible—people like me, for instance.
One Google trick I like to do is search for things like “RPA vs.” or “OCR vs.” and see what alternatives the search engine comes up with.
Once you see what’s out there, you can marry that information with your own processes and values. The best advice I can give you is to find a partner or partners you can trust, and who will deliver early wins quickly so you can get things off the ground and build on your success. I’d love to start a conversation with you, so email me at email@example.com.
Happy New Year!