Leveraging Artificial Intelligence, Machine Learning, and Other Innovative Technologies to Optimize P2P Processes.
Written by: Levvel Research
Underwritten in part by: Paramount WorkPlace
Q2 2019 | Featuring insights on:
- Current Procurement Trends in North America
- The Evolving State of Procurement Culture, Identity, and Technology
- Features of eProcurement Software Solutions
- An Overview of a Leading Procurement Software Provider
What Is Digital Transformation?
Digital transformation as a function is leveraging innovative technology to digitize and automate key business functions; as a result, it effectively enables companies to become nimbler and more competitive in their markets. Beyond this simple definition, the actual steps, implementation, and end state of digital transformation are vague, and the lack of agreement on its proper application leads many to dismiss it as a buzzword. Unfortunately, this dismissal causes organizations to miss out on its long-term, far-reaching value.
Digital transformation is not using the latest technology in order to check boxes or implementing automation for automation’s sake. Rather, it is a philosophy that drives action. The digital transformation philosophy entails viewing technology as an essential part of the business, yielding an advantage over its competitors, and enabling it to stay strong despite market disruptions. The digital transformation philosophy and its application entails:
»» A strategic vision of future business processes
»» A proactive rather than reactive approach to technology adoption
»» The company-wide application of technology
The way organizations think about and attempt to approach digital transformation often evolves over time. Levvel Research has identified three distinct ways organizations today are approaching digital transformation.
1. Digital transformation that involves digitizing processes that are analog to create a new, enhanced method or experience. This does not mean that technology is only used to transform manual processes alone—it can also involve improving digital processes. For example, a paper form could converted into an online form, or an online tool or application could be transformed into a more versatile and enhanced mobile version of itself.
Using digital transformation in this way has brought ease of use and innovation to common business functions. Recent examples can be seen in mobile banking and in more dynamic airfare searches and booking capabilities. This first method of digital transformation is often used to improve the process or experience for the customer.
2. Digital transformation that involves automating processes in the back-office. Whereas the previous approach improved the customer’s experience, this approach implements back-office automation systems to reduce costs across on-revenue departments. It also involves leveraging innovative technologies to automate high-cost, manual activities within business operations. One example is using robotic process automation (RPA) to automate low-value, repetitive tasks in invoice processing. This approach to the digital transformation philosophy improves the process and experience for the back-office, and results in reduced friction between the front and back-office as well.
3. Digital transformation that involves changing or creating new business models. With a transformed front- and back-office, businesses have the ability to create new revenue streams by selling something that could not exist without digital transformation or by fundamentally changing the way revenue is earned from an existing product (e.g., changing the product’s customer).
For example, Netflix transferred the old entertainment distribution model (video rentals from brick and mortars) and online by leveraging a website and mail delivery. Not only did Netflix eventually eliminate the need for physical locations from which to rent out videos, but they also contributed greatly to the declining use of hard copy media (e.g., DVDs). Netflix revolutionized the rental business model, and they changed the way media distributors earn revenue from their customers. All of this was possible because they built the company on a digital transformation foundation.
While these three ideas can be viewed as stages or steps, they are not linear. The success and sustainability of each stage is closely dependent on the others. A transformed user experience will not be successful from a cost and operational standpoint without a digital back-office, and a digital back-office is rendered irrelevant if the front office has not matured to a modern, digital state. Similarly, the ability to transform business models and stay adaptive in a changing market is almost impossible without a digital environment throughout the rest of the organization. In order for an organization to be truly agile, it must have a digital foundation in the back-office; otherwise, it will be hindered by broken processes that will hold it back, cost it money, and increase negative risk as it tries to grow.
Enacting all three methods and achieving a true digital transformation state enables a business to be disruption-resistant—or disruption-proof. The company will have the ability to be adaptive and nimble, and to react to market changes by leveraging technology. They will be able to respond more swiftly and completely to competition than a company that is solely focused on taking an analog process and making it digital.
In order to explore how digital transformation looks in the context of Procure-to-Pay (P2P), the following examines current trends among North American organizations around back-office technology usage and improvement goals and strategies.
Digital Transformation in P2P
One of the basic requirements of digital transformation is the implementation of technology into key business processes. Implementing procurement and AP automation alone does not enable full digital transformation, but it does create a technological foundation for an organization. Levvel Research surveyed respondents from North American organizations and found that overall market adoption of electronic procurement (eProcurement) solutions is just under 40% (see Figure 1).
Figure 1: Majority of Organizations Place Orders Through Supplier or E-Commerce Websites
“How does your organization typically place the majority of its orders with suppliers? (Select one.) (n = 337)”
Another foundational solution, accounts payable (AP) automation, is used less than half of organizations; only 36% of organizations automate invoice data entry, while about 50% automate invoice routing (see Figures 2 and 3).
Figure 2: SMEs Are Most Likely to Manually Enter Invoice Data
“How is invoice information entered into your ERP, accounting software, or accounts payable software? (Select one.) (n = 258).”
Figure 3: Enterprise Organizations Are Mostly Likely to Use Invoice Workflow Automation
How do you typically route invoices for approval in your organization? (Select one.) (n = 258)
Unstructured invoice formats are much less efficient than structured formats, as unstructured formats typically require manual involvement, such as manual data entry into the ERP. Technology-enabled, structured formats can be used to automate much of the invoice receipt process, providing touchless invoice processing and approval. Therefore, a company’s degree of efficiency and innovation is often reflected in its ratio of manual-based invoices to electronic invoices.
Even though many of these organizations have technology in place in their backoffice, it is important to note that not all of them are using systems equipped to create sustainable digital transformation. Cloud technology is a key element of an organization modernizing their internal infrastructure, as it enhances flexibility, data storage, and scalability, but only a small portion of companies are using cloud-based tools for eProcurement and AP automation (see Figures 4 and 5).
Figure 4: Procurement Module is the Most Commonly Adopted Automation Tool
Which automated procurement solution does your organization primarily use? (Select one.)
(n = 132)
Middle market organizations are slightly more likely to have decentralized processes than enterprise companies. A contributing factor to this may be the possibility of growth within the middle- market—it is not uncommon that companies in the LMM and UMM experience some degree of expansion. Scaling companies are more likely to have partly centralized or decentralized processes as they adjust their back-office processes to meet changing demand.
Another example of how an organization’s current-state methods affect AP efficiency is how unstructured invoices are handled upon receipt. Survey results show that the majority of organizations manually enter these invoices into the accounting system, see Figure 5.
Figure 5: AP Automation Type Depends on Organization Size
If your organization is using an AP automation tool, which type of tool do you use for the majority of your AP processes? (Select one.) (n = 134)
Whether organizations are automated and/or cloud-based or not, using more innovative technology is a priority for companies. Leveraging emerging technologies is a moderate or critical concern for the majority of organizations (see Figure 6). In general, however, organizations prefer to tackle other tactical issues directly rather than using a digital transformation perspective.
Figure 6: Healthcare Organizations Are Most Likely to Require Individual Department Manager Approval
Which of the following best describes the typical internal approval process for purchase requests at your organization? (Select one.) (n = 257)
Despite these initiatives, P2P improvement strategies are lagging in implementation. When asked about whether they plan to use a P2P software solution—which Levvel Research identifies as the “digital transformation” strategy due to its technological approach—to integrate procurement and AP teams, the response was more tepid than might be expected. In fact, 40% of organizations do not plan on using this approach (see Figure 7).
Figure 7: Many Organizations Have Not Implemented Digital Transformation Strategies to Improve Their P2P Processes
Which of the following strategies for improving P2P interaction best describe your organization? (Select one.) (n = 258)
It is important to note that digital transformation enables organizations to meet many of their other improvement initiatives. The cohesive digital environment necessarily leads to improvements in visibility, maverick spend, supply chain processes, and many other key P2P areas.
A key digital transformation strategy in P2P is creating synergy across procurement, AP finance, and IT. This means implementing a unified system that creates a whole that is greater than the sum of its parts. Streamlining and unifying back-office spend operations with cloud-based, integrated P2P software renders a transformed process that adds new value to an organization. This integrated approach helps in both managing spend and increasing process efficiency. In addition, automation enhances many aspects of supplier transactions and encourages supplier collaboration, offering a more holistic and hands-on approach to supplier management.
A correlating strategy is data synchronization—particularly supplier data. Controlling the intake of supplier data using a centralized, automated data management platform leads to more secure and efficient procurement and payments processes, stronger supplier relationships, and lower financial and supply chain risk. Vital data can be continuously aggregated and analyzed.
Digital transformation in P2P allows process synchronization and data aggregation to break down traditionally siloed business functions, improving process efficiency, spend control, and business decisions. For procurement, a digital state improves an organization’s ability to control costs and order management, which effectively allows it to better control cash flow and even enables strategic financial planning. Automation enhances many aspects of supplier transactions and encourages supplier collaboration, and automated software tools offer a more holistic and hands-on approach to supplier management.
Beyond the basic benefits of process automation, it is important to view backoffice digital transformation in line with how it leverages emerging technologies such as artificial intelligence (AI), machine learning (ML), big data, and blockchain to create true innovation for an organization. According to survey data, organizations are most familiar with AI and ML (see Figures 8 and 9); AI and ML are frequently used elsewhere in technology—even if only as a buzzword. In terms of familiarity within both AP and procurement contexts, artificial intelligence is the most well-known. When it comes to usage, however, big data is the most widely used among procurement (see Figure 10).
Figure 8: Enterprise Organizations Are Knowledgeable About Emerging Technologies
How familiar are you with each of the following technologies as they pertain to automated procurement solutions? (Selected “Very familiar”) (n = n = 346)
Figure 10: Most Organizations Do
Not Automate Because
of a Belief That Current
Processes are Working
“What is the primary
reason your organization
has not automated its
“Please select the standard
that best fits your
Digital Transformation in P2P Software
The following information provides a high-level overview of some key emerging, innovative, and disruptive technologies that are key components of a digital transformation within P2P.
Robotic Process Automation (RPA)
RPA does one thing well: It automatically takes any specific action taught to it by a human using a UI. RPA records what the user does, then does the same thing over and over as directed. For example, it might execute the entire process to place a frequent order on the buyer’s behalf. Its ability to endlessly perform mundane tasks makes it ideal for procurement. It takes the robot out of the human, allowing procurement departments to shift their focus to a more strategic role within the company.
Because RPA forms a good bridge to integrating AI, it is the single emerging technology that is foundational to effecting digital transformation in P2P. The adoption of RPA is an excellent first step for procurement departments to take that will help them integrate more advanced emerging technologies later on. Many procurement solutions with RPA complement it with an AI component. The RPA takes the action, and the AI does the thinking to ensure every action taken is better than the last.
A full RPA implementation can eliminate process inefficiencies and provide real cost savings in procurement, without requiring new staff to be hired. Current implementations, however, are usually not fully committed to, resulting in little or no change. If the full transformative potential of RPA is to be unlocked, and the gateway to other emerging technologies opened, then procurement departments must create a vision for a full, complete implementation of RPA.
Artificial Intelligence and Machine Learning
Levvel Research views AI and ML as the two emerging technologies that have had the biggest impact on digital transformation thus far. While some of the other technologies are in the theoretical use case phase, have yet to be incorporated into solutions, or are in the early stages of incorporation, ML and AI are further along maturity-wise and have already become key components of some P2P software. AI and ML can be used in many ways in both payables and procurement. Levvel Research has seen the technology used to improve optical character recognition (OCR) and data processing of purchase documents.
OCR with AI goes beyond imaging and digitizing information. The algorithm also handles tasks such as identifying errors and completing translations. Users can also recommend processes and feed software corrections to prevent errors from recurring. By itself, OCR is useful for documents that have a standard, identical format; invoices, however, vary wildly from country to country, supplier to supplier, and industry to industry. AI gives OCR the ability to continue to pull in the necessary information despite invoice idiosyncrasies. In the most advanced solutions, AI is being used to identify line items in invoices and match them to POs—even if multiple POs were placed and combined into a single invoice. ML take AI one step further, allowing the solution to improve with every document it processes. After enough exposure to invoices, for example, ML algorithms learn the patterns and habits of individual suppliers and know exactly where to find the information that needs to be captured.
AI and ML can also be used to improve the invoice and PO approval workflow process by learning where these documents should be routed to based on line items, dollar-amount thresholds, and spend categories/GL codes. Additionally, if software notices that a document has been waiting for approval for too long, or that the normal approver is unavailable, it can redirect it to the appropriate approver. While a lot of the use cases for AI and ML might seem task-oriented, the technologies can provide strategic and tactical capabilities as well. AI and ML programs are used to analyze organizational spend patterns and assess whether individual department or employee spend is off and flag it as potential fraud. It can also be used to improve the purchasing experience. Buyers can see which items are out of stock, receive predictions on when they will be available, and get recommendations on alternative items or suppliers. Because purchases, preferences, and habits are logged and analyzed by the software, buyers can receive insights such as recommendations for future purchases, suggested restocking dates, and items that are frequently bought in conjunction with what the buyer is purchasing.
Leading solutions offer a custom purchasing walkthrough and the creation of analytics dashboards and documents via chatbots using natural language processing (NLP), instead of via multi-step search processes. The user types in what they are looking for in conventional language, and the chatbot recommends which supplier they should order from and provides a price and estimated arrival date. These AI-enabled assistants also warn users when frequently purchased items are out of stock and either recommend a replacement item or provide an estimated restocking date. The prospect of ordering hardware for new hires by typing “order five laptops” or pulling custom reports by typing “biggest North American suppliers” is an example of the exciting capabilities that AI and ML bring to the table.
Big data is an understated emerging technology, but its usage can give a competitive edge to organizations of all sizes and industries. The large quantity of information generated and captured by P2P software has traditionally been seen as too big to grapple with or to generate any significant analysis from. Big data, combined with AI and ML, offers the ability to get insight into this information, yielding a strategic advantage to organizations that use the necessary technology. Big data applies traditional statistical modelling to all of the historical information stored in the software to generate trends, then goes a step further to make predictions that can support future strategic decisions. Because the predictions and key figures provided by this technology are based on real-time information and data pulled from a wider pool than has traditionally been digestible, the level of accuracy and reliability it maintains is difficult for any other technology to achieve.
AP software has always been used in conjunction with ERPs and other financial systems that store a large amount of important financial and supplier information; it is vital that payables management offers proper control of this data. Beyond data housing and control, AP providers have offered reporting and analytics to give organizations strategic insights into their own information. Recently, AP and procurement providers have begun to apply the concept of big data to take strategic analysis far beyond its traditional boundaries. Big data methods integrate traditional statistical modeling, then take the analysis multiple steps further. This allows providers to use their data to analyze past information and trends, and then make predictions that can support future decisions. Applying predictive analytics techniques and machine learning, this technology enables the C-suite to use information for strategic decisions. While most of the functional advancements thus far have been seen in procurement and sourcing technology, Levvel Research predicts big data will play a larger role in payables in the years to come, especially as more organizations try to use data to optimize their supply chain, supplier base, and cash flow.
For procurement, many organizations choose solutions that process and manipulate big data. Big data technologies parse extremely large sets of data—which are becoming more prevalent today as an increasing amount of transactional data is being recorded—using powerful computing capabilities. It draws real-time, actionable insights and visualizations, and, with its widely sourced data, generates more accurate KPIs and benchmarking.
Blockchain’s usage in P2P is still largely viewed as speculative. Very few solution providers have cited concrete plans on how they intend to incorporate blockchain technology, and even fewer have actually utilized it in their software. There are many promising use cases for blockchain in P2P—it has the potential to simplify, improve security, and add transparency to the P2P process in ways that none of the other emerging technologies can; but as of right now, it remains to be seen just how much or how soon blockchain will affect P2P. Its efficacy in payments (blockchain’s original design intention) is obvious and has already been adopted by technological leaders. It also has the potential to make the entire purchase order to invoice to receipt process redundant, speeding up and transforming the goods order operation as we know it. It would also make the process much easier to audit, with retention of all document and fund transfers permanently stored on a single ledger.
In relation to AP, blockchain is likely the newest emerging technology. Blockchain is not integrated into many mainstream payables platforms, and the concept is not yet widely enough known to be trusted and implemented by organizations. Blockchain has already been adopted by a handful of providers in their business-to-business (B2B) electronic payments tools, though, and as new innovations emerge in the realm of blockchain, Levvel Research predicts that its influence on AP will continue to grow. Currently, blockchain developers look to utilize it to increase the security of data and money transfers, facilitate connections among groups and individuals, and decrease latency in transfers between parties. Blockchain is not as well used or understood in the procurement space, but there are several potential innovative uses for a supply chain built on an immutable data record. With transactions that are constantly verified and recorded, organizations can have a dependable, transparent, and comprehensive log of all supplier transactions. Blockchain may experience wider adoption by mid-market organizations because of their greater flexibility in resources for adopting technology solutions than SMEs, combined with a more manageable number of suppliers than enterprises.
Real-time payments (RTP) is a new rail for clearing and settling transactions between accounts at financial institutions. First launched in 2017, RTP was created by The Clearing House (TCH) to better meet business and consumer expectations for a faster, smarter, more secure ubiquitous payments solution. RTP tremendously improves traditional payment processes, both by making the transfer of funds immediate and by supporting the attachment of additional messages, such as remittance or other payment-related information. Levvel Research anticipates that RTP will continue to be integrated by large banks and downstream to smaller financial institutions in the coming year, with 90% adoption by 2020. Once it is available as a payment option for consumers and businesses, RTP may replace more traditional payment rails such as credit cards or ACH.
Levvel Research sees RTP impacting the P2P space in transformative ways. Instant payments reduce payment delays and increase organizations’ rate of capture for early payment discounts. The inclusion of payment information in an RTP transaction will reduce the burden on AP departments, as billers can send messages (either attached to an accompanying payment or by itself) to any of their customers on the network and can receive an immediate response, all with access to real-time status of payments or invoices. RTP messaging capabilities offer unprecedented visibility into payments for businesses and create new value propositions for clients. RTP may change the focus and functionality of supplier portals and disrupt existing invoice workflows.
From a digital transformation perspective, RTP might be used to differentiate a current service. For example, business payments providers will have access to a new, faster supplier payment method to offer their customers. However, it remains to be seen just how much RTP will affect current invoice automation providers, as it potentially eliminates the need for invoices altogether.
App Networks and Partner Ecosystems
Some providers have taken the approach of treating their solutions as more of an app network, often via a partner ecosystem. This could create a new normal in the back-office in which providers get both the comprehensive view of spend and transparency offered by P2P and the flexibility and customizability of a best-of- breed approach.
In procurement, we have seen providers create app network environments via acquisitions, internal research and development, and increasingly via partnerships with other software companies. The partnership approach blurs the lines of companies once considered competitors, creating a symbiotic relationship in which each provider focuses on their core competency to give end users the best product possible. Additionally, apps are constantly being updated and refreshed, and as advanced technology becomes available, new apps become available. The app network and partner ecosystem also means that organizations are able to add features and capabilities of different software solutions as they see fit. As organizations grow in size and their processes become increasingly complex, they are able to supplement their back-office and add automation when and where they see fit—without much of the long rollout, training, and implementation a traditional best-of-breed adoption would require.
In response to this challenge, several P2P solution providers are moving their software offerings to platform and/or business network approaches. Again, this is occurring via acquisitions, extensive in-house development, and an increasing number of partnerships between eProcurement and payables providers and other, niche tools for functions such as supplier validation and spend master data file management. Levvel Research predicts that the increasing permeation of digital transformation through the back-office will increase the importance of P2P platforms over the next few years, at least for upper middle market, enterprise, and/or multinational companies.
Emerging technologies lay the groundwork for advanced solution platforms, which can support various widgets and applications that target specific purchasing functions. The ability to add the features and capabilities that different applications provide as they become necessary to the business enables the solution to truly scale with the organization. Since new apps are being added as technology evolves, the platform-based approach provides a level of dynamics and access to emerging technology that traditional solutions cannot offer.
Because a platform brings all of these capabilities into one place, users can easily access what they need without switching browsers or systems, and use applications that mirror consumer applications in UI and UX. Many of these platforms also support partner solutions, creating ecosystems that maximize both functionality and ease of use. When platforms are connected to a network, the applications can work together in the backend and streamline all data processing.
Emerging technologies also lay the foundation for networks, which allow for increased collaboration and connectivity. They give buyers and suppliers into a unified space to discuss terms and handle exceptions, and they give visibility into the life cycle of the supplier relationship. When as many suppliers and buyers are on the network as possible, all parties have real-time visibility into their supply chain operations. At its fullest potential, the network enhances every facet of the supply chain. On a global scale, these networks can seamlessly connect international players.
The role traditional e-commerce plays in influencing eProcurement is evident. For insight into the future of purchasing, examine the current process for personal shopping. Employees increasingly wonder why their purchasing experience at work is disparate from their purchasing experience at home, and are increasingly demanding that their purchasing process at work look and feel similar to their personal purchasing process. Leading eProcurement providers already borrow from the consumer experience to offer a clean and easy to navigate UI, powerful search capabilities, and useful filtering. eProcurement players that have not already done so will be forced to mimic a modern online shopping experience or risk losing business to traditional e-commerce players.
While Amazon is traditionally known as a consumer marketplace, it is unavoidable in today’s procurement world. Amazon offers Amazon Business and Business Prime in an effort to lure business customers away from their traditional procurement methods. They also offer purchasing cards, approval workflows, reporting and analytics, and business and quantity discount pricing to present
their offering as a legitimate, standalone procurement platform. Additionally, Amazon integrates with many ERPs and even cloud-based eProcurement systems. It has been the goal of seemingly every eProcurement software to present an “Amazon-like shopping experience,” but now they must determine how they will interact with the company their solution is based on—as a competitor, or as a partner.
A dated e-commerce experience poses a risk to organizations in the form of end users relying on the same sources they utilize in their personal lives for business spend, which leads to increased off-contract expenses. As more vendors offer their products on online marketplaces or their own e-commerce platforms, buying organizations must approach their supplier research and product
purchasing differently—that is, with greater control, transparency, and diligence.
Communication and Collaboration Tools
Within procurement, purchasing approval and order placements are being upended by communication and collaboration tools such as Slack, which remove the need for email chains or logging into systems and which ultimately save time for individuals. For example, employees can directly contact higher-level managers in an organization and receive an immediate response to their request for a new laptop. While this is an interesting use case and an example of innovative technology improving back-office efficiency, it reduces the procurement department’s control over spend activity. It also contributes to the challenges and risks that come from digital transformation technology gaps.
These responses on the barriers to automation adoption are likely a result of the varying goals and perceptions around technology and process improvement that different roles have. Despite these differences, it is important for organizations to address hesitations at every level to gain buy-in from all parties. For example, an organization will need buy-in from upper management, particularly the C-suite and above, to make a final decision on technology investment, but they will also need consideration and feedback from middle management in order to choose a solution suitable to their unique business needs. Furthermore, they will need the enthusiasm of those at staff-level positions, like AP clerks or analysts, as those employees’ participation with and mastery of an automation software is essential for ensuring the return on investment (ROI) from that tool. Staff-level employees are also the most aware of the day-to-day challenges of a manual AP process and can be valuable in helping to identify where to start with payables automation adoption.
Qualifications for Digital Transformation
In order to prepare for digital transformation within P2P, organizations should consider the following key qualifications.
A holistic approach to transformation essentially means creating back- and front-office synchronization. There is the temptation to approach front-office transformation first because it is what outside parties—primarily customers—see and interact with, and organizations do not necessarily worry about the inside. However, if organizations do not take advantage of back-office transformation, the inefficiency and problems of back-office processes will eventually affect the rest of the company.
Customers will be able to tell or feel if an organization is not holistically investing in technology, and it will affect their user experience. For instance, when an individual goes to pay a medical bill online with a healthcare institution that has not invested in modernizing the core infrastructure behind the scenes (e.g., payment technology) the process will be difficult and in some cases, prone to
failure. An example within P2P is if a retailer’s online storefront is excellently designed for the end user, making the actual shopping process so easy and intuitive that it leads some customers to choose that retailer over a competitor with an inferior website. If that retailer’s procurement processes are completely manual, however, it is likely that eventually a disruption in order fulfillment will
cause negative effects to the consumer, such as delays in final product delivery. Beyond the customer experience perspective, organizations gain more value by bringing automation and modern capabilities to the back-office from an economic perspective.
When organizations have a digital transformation environment and a strong technology foundation, they are often able to grow with greater efficiency and at a faster rate than many of their competitors. In fact, digital transformation is changing the current business landscape by allowing small upstarts to challenge long-standing giants in certain marketplaces. One example of this is how peer-to-peer payment applications such as Venmo and Zelle have greatly disrupted the market for banks and other financial service institutions. Virtually any business in any industry can enable this competitive advantage if they create a strong digital foundation.
One way to translate this to P2P software implementation means simply selecting a solution that can scale with the organization. Not only should the solution provider offer a strong technical foundation (e.g., cloud-hosted software) and innovative technology such as emerging tech or a B2B marketplace, but they should also offer software that is robust enough to support a company’s growth needs. Many procurement and payables providers offer their capabilities in modules, allowing customers to purchase new capabilities within their overall software suite as they grow.
Digital transformation does not mean that a small organization must completely transform their entire back-office in one go; small organizations generally have small accounting and purchasing needs and therefore modest technology needs. Digital transformation does mean that small organizations should look into the future and proactively leverage technology. This will allow them to stay nimble and broaden their competitive landscape. It also means potentially avoiding the obstacles and growing pains that many of today’s enterprise organizations, founded decades ago, had to overcome or are still overcoming, such as trying to reduce huge volumes of paper invoices only after they have cost the organization millions of dollars in processing costs.
Organizations may become fixated on implementing an emerging technology du jour; while technologies such as blockchain and ML have their place for larger organizations, they cannot just be thrown at a company’s current operations. These are tools that are meant to be placed on important building blocks—a stable technology foundation at the core of the business. For many organizations
this means adopting public cloud technology, modernizing internal technology development using more flexible project management methods (e.g., Agile), and installing technology infrastructure that supports dynamic business change and improvement (e.g., DevOps).
For example, ML is built into many of the valuable online services today like Google and Amazon, and therefore it is much more accessible to an organization than before when that business had to buy servers to support the tech. However, this means the business is required to be able to leverage public cloud technology and allow some of your data to be used in the cloud.
An Innovative Solution Provider
Digital transformation is the hot term amongst P2P providers right now. Interest in the term started to pick up steam in late 2017 and early 2018, but since the start of 2019, it has exploded as every provider is anxious to present their solution as having the capability to digitally transform organizations’ business processes. Many P2P solution providers will espouse digital transformation in their marketing and messaging to try to attract customers, without actually enabling a digital transformation for these customers. The same is true for technologies like AI and machine learning; these providers may pitch a revolutionary AP or procurement solution leveraging these technologies, but in reality they may be only using these tools in very basic, rudimentary ways that do not provide a great deal more efficiency than a tool without the tech. For example, many providers say they use AI technology but are only leveraging it with their OCR tools, which has been a standard capability for that product for years. Is the provider also using machine learning to improve OCR accuracy over time? If the provider using machine learning in any other areas, like invoice workflow?
It is important to evaluate a solution provider than leverages innovative technology in truly impactful ways, and that demonstrates a commitment to digital transformation not only in their business model, but in their own business. It will become evident after proper vendor evaluation if they have taken the digital transformation philosophy to heart in their own practices, and if they can truly offer AI, machine learning, data analytics, and other tools in ways that improve strategically P2P processes. The use of these tools will often determine whether a P2P solution improves an AP or procurement department according to solely tactical parameters, or enables it to become a strategic arm of the
Because back-office departments do not explicitly generate revenue for the company, it is easy to deprioritize them when it comes time to invest in digital transformation. However, it is important the P2P teams and the greater business understand that digital transformation is necessarily a holistic strategy. It is not only a high-level and front-office consideration, but an initiative that inherently benefits the entire organization and allows back-office teams to discover and take their rightful place as a strategic operational arm—not just a collection of cost centers. In a true digitally transformed state, finance and purchasing teams
play a key role in driving their company forward. This holistic perspective is a requirement if a digital transformation is to be successful and an organization it to achieve the end result of agility, competitive advantage, and innovation in its market.
The findings presented in this report are based on an online surveys conducted by Levvel Research in the spring 2019 among more than 500 procurement and AP decision makers and influencers in organizations with at least $1M in total revenue across all industries. Respondents were screened for their familiarity with their organization’s accounts payable, invoice receipt, and invoice routing processes. The data was weighted to represent the proportions of SME, midmarket, and enterprise organizations in Levvel Research’s database. This distribution is shown below.
About Paramount WorkPlace
Paramount WorkPlace develops, sells, and supports advanced web-based and mobile requisition, procurement, accounts payable, and expense solutions for mid-market and enterprise organizations across a range of industries worldwide. WorkPlace Payments provides enterprise users with the option of adding automated ACH payments within the WorkPlace Spend Management solution for a fully centralized standalone P2P platform. The user interface offers flexible P2P automation and robust expense reporting that is easy for employees, effective for management, and powerful for accounting.