It’s not your fault. Implementation was not supposed to take this long, nor was it supposed to cost this much. But what’s worse – it didn’t really get you the results you expected.
If you’ve implemented a Source-to-Pay (S2P) automation solution, this might sound familiar. But when you listened to vendors in this space, you heard a lot of the same keywords: “you’ll save X much”, “simplify your processes”, “automate”, “transform”, “gain visibility”…
Here’s the problem with that – actually, there are several problems. Here are some of them:
Problem One – Implementation
A typical S2P automation implementation could take between 4 and 24 months and cost a few hundreds of thousands of dollars. That does not account for the time and effort spent internally.
What you needs is a platform that can be implemented in a matter of weeks, where the bulk of the cost is usage-based. Also, the more your vendor participates in the implementation process, the less time you and your team will have to invest figuring out piles of instructional documents.
Problem Two – Processes
Most S2P process automation solutions were built to address indirect spend, which is simpler and more straight-forward than direct spend. Some are designed to automate discrete processes with limited visibility into their context.
If a significant portion of your spend is direct, you’ll need a platform that can address the associated complexity. Furthermore, your ideal platform will have the capacity to see the entire process and view each transaction within context.
Problem Three – Technology
If all you’re looking for is the automation of transactional activities, simple automation might work for you. But in most cases, you’d want a solution that can do this while handling complex vendor-management activities, coordination of multiple parties, contextual validations, and so forth.
Environments that have complex supply chains, which are capital intensive, deal with cross-border issues, or work with varied supplier types and sizes, require S2P automation solutions that have built-in flexibility and artificial intelligence layers.
Problem Four – Supplier Participation
S2P automation vendors describe supplier participation in different ways, typically referring to an initial level of outreach, screening, and payment setup. If you’re looking for full engagement in the automation process, you’ll find the industry standard does not exceed 30%. This is a big problem, first and foremost, because it means that you are severely underutilizing your automation solution and getting a suboptimal return on your investment.
You need the vast majority of your suppliers onboarded – at that point your platform could serve as a communication enabler between two sides of a discussion – you, and your suppliers. There is a lot that goes into creating that supplier buy-in, but what it really boils down to is (a) how easy is it for them to onboard and (b) what value do they get from it?
Imagine a Better World
What if you could implement an S2P automation platform in 10-12 weeks at reasonable setup cost and recurring cost that is contingent on your level of activity, and do this without having to replace your existing ERP system?
What if this platform automated processes across all spend categories, and had the capacity to manage high complexity levels?
Finally, what if you could secure over 90% of your suppliers as full participants in this automation process?
Some companies have already implemented such a platform and the impact that they see is tremendous.
For example, having implemented the Nipendo Platform with over 10,000 suppliers, the Israel Electric Company (IEC) has seen work processes shorten and become more efficient, the number of people required to process invoices reduced, and their ability to comply with payment obligations to suppliers improved significantly. They’ve gotten rid of almost all of their large filing cabinets, freeing up office real estate, and have done away with exhausting filing activities and manual data entry.
This was a major improvement given that prior to Nipendo, IEC had to manually process hundreds of thousands of physical documents and to archive them so that they could pull relevant information when needed. Invoice processing took forever, and suppliers were always paid late.
Times have changed. Old systems and processes may no longer serve their purposes. But replacing them could result in greater pains and limited ROI. The key is to identify those unique solutions that have a proven and demonstrable track record of success.