June 13, 2017
In the first part of this two-part blog, we discussed how cloud ERP adoption is growing while on-premise ERPs are in recession, and how the driver for this growth is innovation, rather than cost reduction. While industry studies substantiate the cost savings of cloud ERPs, it’s the opportunity to look at systems and processes with a fresh eye for innovation that’s inspired a revolution.
In part one, we explored how the “great cloud ERP migration” is more about looking for smarter ways to do business than simply cutting costs. That attitude and approach is what has led organizations to look at ways to address the most painful parts of their existing processes while evaluating whether they need a new engine to drive the data underlying their business operations.
In a recent analysis of intelligent automation solutions that pair human intelligence with software to handle repetitive, mechanistic, and/or those which require rational and very precise data analysis, Accenture forecast a 30% to 40% gain in employee productivity over the next three to five years – even for already heavily-automated functions.
Where will those productivity gains come from? Think about the most routine, repetitive steps in any current process within your organization and start there. Apply automation to those steps to multiple processes through various departments within your organization and Accenture’s forecast starts to look conservative.
Intelligent Capture and the Business Transformation Opportunity
Take for example, any task that involves handling documents and managing data. Intelligent capture solutions that can identify documents by their content, automatically sort, route and file those documents AND extract meaningful data can automate tasks that consume the majority of the effort for transactional processes like accounts payable and accounts receivable.
In many cases, data entry and document handling account for 80-90% of the effort, with exception handling accounting for much of the remainder. Integrating intelligent capture with a cloud-based ERP solution can lead to the kind of process transformation that has real impact on a company’s ability to concentrate on its core mission.
Cloud ERPs eliminate much of the IT and infrastructure overhead that prevents IT departments to think and act strategically. Intelligent capture can do the same for Finance, particularly for transactional functions like AP or AR. With automated systems in place, the focus goes from how to process thousands of orders and invoices in a timely fashion to how to better manage cash flow, negotiate more favorable contract terms, eliminate late payment penalties and capture early pay discounts.
Accounts Payable as Low-Hanging Fruit
According to findings from a recent Institute of Finance & Management survey, only one-third of AP departments have automated their AP processes, while as little as one-eighth have a cloud solution in place. Most often, the drive to adopt a new ERP is driven by the CIO and by the needs of finance, so any organization considering a cloud ERP is also going to take a serious look at other aspects of their business processes and their impact on the financial health of the organization.
Industry statistics about manual accounts payable process inefficiency are well established, with benchmarks for manual versus automated approaches maintained for years by independent organizations like the Association for Information and Image Management (AIIM). Studies like AIIM’s 2015 Capture to Cloud survey demonstrates that firms relying on AP automation and intelligent capture reduce AP invoice processing costs by 50% and achieve an ROI in 12 months or less.
Transforming Other Document-driven Departments and Processes
AP is often a driver for process automation because organizations have less control over the volume and format of invoices generated by outside vendors. Automating AP creates all kinds of new efficiencies and also establishes a framework for automating more internally-driven processes like travel/expenses reporting, sales order processing and check remittances.
Beyond finance, intelligent capture and business process automation often migrates ‘across the hall’ to other document- and data-dependent departments like human resources. Gaining a better handle on processes like job requisition, application tracking and employee onboarding can transform internal process from an exercise in compliance management into an advantage that leads to selecting and hiring talent more effectively than the competition.
The benefits of process automation are clear. The studies and statistics are well established. The drive to cloud ERPs in finally creating momentum for the kind of business transformation that will lead companies of all sizes to be more informed, more effective and more strategic at every level of their organization.