Don’t confuse workflow automation with process automation

The 15-year old workflow technology is enjoying a new found glory with e-invoicing solutions.  But does it really make sense? 

These workflow solutions route incoming electronic invoices to the appropriate people to  review, approve, and reconcile with purchase order and receiving records. 

Automated routing is a good thing. It’s faster and less prone to errors compared to manual  routing. It also allows everybody to see where an invoice is in the process and who is holding  it up, so there are fewer opportunities for invoices to get lost or stuck. 

But workflow automation also means that the most critical parts of the process are still  performed manually. The invoice can be routed to the right person, but we are still relying on  this person to look at the invoice, check that the data is correct, match it against the purchase  order and receiving records, verify tax and foreign exchange rates, type the invoice data into  the ERP system, etc. 

Process automation means that instead of investing time, energy, and money in a workflow  solution, we can bypass the manual process altogether with preconfigured decision  algorithms that implement rules, logic, validations, and reconciliation of the entire Procure to-Pay process. 

Take Clalit Health Care Services for example. Clalit is the world’s second largest healthcare  organization. It has 37,000 employees and hundreds of healthcare facilities serving over 4  million members. It has 9,000 suppliers and 10,000 service providers. Due to the decentralized  nature of the organization, over 1,500 employees are involved in purchasing and accounts  payable functions, processing over 2 million invoices a year. 

Implementing workflow automation at Clalit would have been a major undertaking. With the  manual reconciliation process still in place, the solution would have required a massive  training effort, with no guaranteed reduction in processing errors. 

Instead, Clalit decided to completely automate the Procure-to-Pay process. Fast forward a  year, and 89% of supplier invoices are processed straight-through to their SAP system, error free, ready to pay without any manual touch, allowing Clalit to reallocate more than a fourth  of the people involved in purchasing and accounts payable to other tasks, dramatically 

reducing processing cost and time (invoices are approved now within minutes), and pretty  much eliminating any errors from entering their ERP system. 

Not only is the level of efficiency significantly higher than could ever be achieved with  workflow automation, the implementation and training effort was quicker and easier too. 

Workflow does have a role in P2P process automation. It can help facilitate the management  of exceptions, such as the 11% of invoices that are not processed automatically at Clalit  (although the number keeps going down as the automation rules are fine-tuned over time). 

More importantly, workflow has a role when it involves the supplier in the reconciliation  process, enabling buyer-supplier collaboration. Prompting suppliers to invoices that failed  validation and enabling them to correct invoice data in a self-service mode allows suppliers to  comply with the business rules set by the buyer. In the case of Clalit, suppliers are alerted  when an invoice fails validation before it ever enters Clalit’s SAP system, creating a self correcting workflow that plays an important role in achieving the level of automation Clalit is  enjoying today. 

So here are three takeaways to keep in mind: 

1. Workflow automation is an important part of process automation, but don’t  confuse the two! 

2. Start with process automation as a goal, then see where workflow automation is  needed. 

3. When you think about P2P workflow, think outside your enterprise firewall.