Part 1 of Paul Tucker’s blog series on how to build a business case for accounts payable (AP) automationprompted me to share some trends that I’ve noticed over the last 20 years. In that time, I’ve seen leaders in finance and procurement both succeed and fail in getting projects funded, resourced and scheduled. In some cases, projects went ahead but there was a 3-7 year wait.
In Part 2, I go on to explore five key points surrounding this topic that have only grown more important over the last few years.
1) “No Brainer” Projects Still Need Bottom-Line Appeal for the C-Suite
In the book Let’s Get Real or Let’s Not Play, Mahan Khalsa illustrates the benefit of breaking down the value of initiatives into time savings, dollar savings, and getting a sense of scale of importance from the top execs on a level of 1-5.
Projects are often decided based on emotion — the Shared Services Director may be passionate about this digital transformation initiative,
I’ve worked with CIOs who have commented that the AP automation project is a “no brainer” in their mind — that’s when I know we need to team up to quantify when the savings will come. Because while many c-level folks are keen to launch a digital transformation project and they do want to free up their staff to do less mundane work that is beneficial to the P2P operation and employee morale, they need financial numbers to help them justify the project over other projects.
2) IT Resources — as Rare as Gold
It seems like over a decade since the norm was for companies to seek to build solutions themselves as the default. Today, most IT teams are stretched thin working on ERP upgrades, migrations, transport and warehouse management projects, or e-commerce initiatives, etc. One of the top reasons projects do not move forward is a lack of IT resources to work on the project. As Ardent Partners note in its 2018 research, common barriers to automation in purchase-to-pay (P2P) include: lack of internal resources, lack of IT support and lack of a compelling business case.
A compelling business case will certainly help the leadership team influence the projects the CIO sanctions; after all, there may be 50-100 other projects the CIO is being asked to launch or support. And, even if the business is moving ahead with a “shadow IT” project, IT resources are needed to help with activities such as setting up security access for the vendor, replicating data, etc., pulling them away from other projects.
There is also a risk that if IT is not invited to be part of the project until later on, they may overestimate the effort that is really needed and could become defensive about getting another project dumped on them without an upfront conversation and time to strategise. Many IT Directors I talk to are overloaded on projects already and the thought of another one can be overwhelming and lead to push back/revolt. In some cases I have seen that the expected effort can be cut in half by simply engaging with the IT folks early on, getting them up to speed, and providing simple, yet detailed project plans and resource requirements. With IT resources being as rare as gold nowadays, make sure the PMO and CIO understand when you want to use the resources and for how long — otherwise, they might assume you are trying to raid the bank!
3) Hitching a Ride on the “C Train”
They say that organisations going through pain or significant change are the ones that are more likely to invest and launch projects. In my experience, it seems that there’s often a trend, initiative or a directive that is a little like a train running through the organisation. The trick is how can you get a seat on that train?
One of the most effective approaches I have seen procurement and finance folks use is to look at the projects that are going on and identify if their AP automation project might be seen as aligning with existing key business objectives. For example, many CIOs will regard P2P automation, order-to-cash (O2C) automation or simply cleaning up EDI exceptions as necessary steps of digital transformation. Alternatively, treasurers and CFOs may be seeking to extend their liquidity in order to make acquisitions or simply improve working capital and/or lower the weighted average cost of cash. I will often ask stakeholders how this initiative aligns with other key initiatives or approaches that their peers are working on or that the c-suite is keen on. Sometimes, those dots have not been connected and, yet, when they are, it’s amazing how fast your project can travel from the “idea stop to the approved stop.”
4) Efficiency & Savings Are Critical … But Execs May See Another Angle
I’ve worked on a number of AP automation projects where AP managers, directors and finance leaders were focusing on one thing (e.g., efficiency savings, lowering invoice processing costs, duplicate prevention, etc.), yet the execs signing the project were endorsing the project for different reasons altogether. For example, we worked with a manufacturing company of doors and windows in the U.S. Its COO viewed the project as a means to scale and compete with a major competitor. While the COO was keen on efficiency savings, his goal for the project was different than that of the project team.
Sometimes, it has simply been that the CFO, after an ERP deployment or moving to your organisation, may have lost the visibility of spend and cost controls they were was used to having and are willing to invest to get that control back. I’ve also seen c-suite offices move quickly when the average lead time to pay suppliers extends because they realise excellent customer experience extends through the supply chain. Organisations cannot afford to be put on credit hold or have raw materials restricted due to delays in approving supplier invoices.
5) Staying on Top of Market Trends
Last but not least, it’s my view that authorities in the market (e.g., Hackett Group, Gartner, Mckinsey, etc.) have a powerful influence on the c-suite and the direction of enterprise organisations as a whole. Currently, there is huge interest and focus in projects that will harness technology like Artificial Intelligence (AI), machine learning and Robotic Process Automation (RPA), especially if those projects can be shown to help the CFO: lower costs, prevent fraud, take advantage of early payment discounts, harness supply chain finance, or eliminate the costs of check payments. Therefore, it’s worth looking at market trends and describing your proposed P2P initiative in the right language.
One of the false assumptions in the market is that the sales rep providing AP automation can rustle up a business case that will ensure your project gets a rapid green light. Instead, I think good reps should help you identify areas that may need more research and to calculate the value that will come in terms of time, money and overall strategic value of a project. The real selling takes place when the rep has left — it is the P2P teams that need to discuss the project and effectively understand internal drives and initiatives, and carefully maneuver and sell the project to a consensus group.
At Esker, I feel our team can certainly help you generate ideas for the business case and also identify the common roadblocks and issues that often need to be onboard to ensure your project doesn’t get derailed.
Stay tuned for Part 3 of this series, where Paul Tucker will pick back up where he left off after Part 1, covering how to identify your Key Performance Indicators (KPIs) and calculate ROI.