Editor’s Note: Ardent Partners is excited to announce the launch of its 2015 “State of ePayables” market research survey, available here. All participants of this landmark research survey will receive a complimentary copy of the resulting research report in late May. (While the survey is comprehensive, participants can expect to spend only 15 minutes of their time answering the questions.)
Automating the accounts payable (AP) process, while important to garner cost efficiencies, is not always a simple project. In fact, when it comes to selecting the right accounts payable (AP) automation solution, there are certain interests, factors, and requirements that are going to be more specific to one enterprise versus another. Nonetheless, commonalities also exist and should be evaluated. The most important factors in selecting an AP automation solution are discussed below:
- Solution Price – As with any technology investment, price is one of the main decision criteria in selecting the best solution. Frequently an initial project budget will serve as the primary means to identify a shortlist of providers. ePayables solutions may have license or subscription fees as well as access and transaction fees; as such, Ardent recommends that AP groups use a total cost of ownership approach in making their selection
- Delivery Method – The budget may impact whether the enterprise prefers a solution that is installed on-premise (usually charges a one-time license fee) versus one that is cloud-based. Additionally, the IT department may have certain hard requirements that will impact the solution selection criteria; therefore, it is important to involve them from the beginning. Some key differentiators between the two methods:
- Installed On-Premise – In this model, software is usually installed on the servers at the user’s site. Doing so typically involves heavier involvement from the user’s IT department and/or a third-party systems integrators. These types of installations typically have a larger one-time upfront license fee with installed software which allows for the perpetual usage of the solution. With installed software, implementation periods can be longer due to the need to develop the entire site/instance infrastructure including hardware configuration and possibly a higher level of software customization.
- Cloud-Based – Software delivered in the cloud (also referred to as “on-demand” or SaaS) is typically hosted, managed, and maintained (on the application and hardware infrastructure sides) by the cloud solution provider. Cloud solutions generally follow either a subscription-based fee structure, a usage-based model, or some combination of the two.
- Integration – With AP solutions, integration to internal ERP systems is critical due to the transactional and financial nature of the activities. Invoices must be appropriately coded to the correct GL account, validated against vendor master data, and matched to POs, goods received notes and/or contracts. All of this requires seamless integration of the solutions in as short a timeframe as possible due to the impact on the investment. It may be helpful to note that certain solution providers have pre-built integrations to certain ERP systems, which allows for a much quicker and easier integration process.
- Reporting and Analytics – The ability to quickly and easily gain visibility into key AP metrics and perform analysis on invoice and payment data makes AP very valuable. Therefore, the solution that is chosen should have advanced reporting capabilities, including a dashboard with dynamic charts and the ability to drill-down into line-item detail. Reporting should also include operational or productivity metrics, which allow AP to identify bottlenecks in processing and keep the group aware of its performance. When working towards certain goals (e.g., reductions in invoice cycle time, increases in eInvoices received or touchless processing) advanced reporting can be a great motivator and enabler.
- Automation of the entire AP process – Processes must be aligned and well-defined to maximize the return on technology investments. Ardent’s research shows that enterprises increasingly look for solutions that automate the entire AP process, from invoice receipt and processing to payment management and settlement. From a reporting perspective, having an aggregated view of invoices and payments can provide intelligence that is useful to treasury in its cash management objectives and to procurement in its quest to optimize supplier relationships and P2P processes. Whether budgets and stakeholder allow for an end-to-end transformation, projects begun in 2015 and beyond should contemplate an eventual future state with full AP automation and make initial decisions with the end-game in mind.
Final Thoughts
Selecting an AP automation solution is not a simple task. There are a number of considerations that every enterprise must plan for, as well as significant investment of time and money that must be put aside in order to choose and install the proper solution. If this process is not done properly, then there is a very real possibility that the enterprise would end up wasting money on a poor installation. Consider all the factors above, in addition to any enterprise-specific ones, and the project will have a higher chance of success.
Check out these related articles:
Who Benefits from AP Automation?
How Cloud Infrastructure Simplifies AP Automation in SMBs
What Does the Future Hold for AP Automation?
