I heard an interesting perspective on that question while discussing an accounts payable (AP) automation project with the CFO of a medium-sized distribution company recently. In their use case, the challenges were typical: manually validating and entering invoice data which lead to errors, delays, duplicate payments and missed discounts. The business can also have significant swings in their invoice volumes, and during those upticks, closing out the monthly financial statements can be highly stressful and expensive due to overtime and additional temporary staff costs.
As part of our discussion on implementation and licensing costs, the CFO mentioned that he would need to build a strong ROI and business case to get approval from his Board of Directors. I jumped right in and mentioned Esker has an easy-to-use and customisable ROI calculator tool that does a nice job of capturing internal costs and projecting accurate productivity and performance improvements. When I suggested that we start to collect data for the calculator, I thought I heard the CFO sigh a bit.
“I think I ‘heard’ you roll your eyes,” I said to the CFO! He laughed and confirmed that he had, in fact, rolled his eyes. His view on a vendor ROI was somewhat skeptical; he had two main concerns. The first was how to account for the change management impact on his team and their existing AP processes. The second was how he could accurately gauge the ramp-up period on a new AP platform. Obviously, both are valid concerns and challenges that we hear a lot from other customers. One of these can be reasonably accounted for in a good ROI calculator, while the other is a bit more difficult to handle, but is absolutely a key point in a successful business case. For this particular AP automation project, we are able to adjust invoice types and volumes captured by the new system during the ramp-up period and negotiated a graduated pricing model to help better forecast productivity gains. The change management impact, however, is much harder to measure in a calculator tool, but it is key — if not the most important component of a business case.
“We change therefore we are.” There can be a lot of anxiety within AP teams when planning to change to a new system and especially when introducing emerging technologies like artificial intelligence (AI), machine learning or robotic process automation (RPA) bots. Questions like:
- How is AI or a bot going to replicate all inside knowledge?
- Why change at all? Our processes work just fine!
- More importantly, what’s going to happen to my job?
These concerns are exactly why change management consideration in your P2P business case is so vital. One of the best practices we’ve seen customers do is regularly communicate the project plan to their stakeholders. Familiarising colleagues with the goals and milestones of the plan can help alleviate resistance to the new solution and identify risks before they become major obstacles. Also, helping your team see the big picture on the “Why change?” question is another sound strategy when communicating project goals. When you’re able to align your AP or P2P project with another highly visible organisational strategy like digital transformation or customer experience improvement, it not only helps substantially bolster your business case but that strategic initiative may provide new opportunities for anyone whose role may be directly affected.
As for the answer to the question and the topic of this post, “How important is an ROI to your P2P Automation Business Case?” the answer is, not very much. The reason (beyond the above example) is because people primarily decide to buy based on emotional factors vs data-based criteria. I’ve seen research where it’s 80-20 in favor of the emotional impulses driving the purchasing decision. Of course, the ROI has to at least show that the solution is affordable; that covers the 20%! For the distribution company, the business case for change is personal to the CFO, as he’s attempting to position himself as the leader of the company’s transformation to a more agile and technology driven organisation.
The lesson learned: We often hear from prospective customers that their P2P initiative has stalled due to not having built a successful business case. It’s confusing, as often the ROI for the project is compelling. In some of those cases, there might be an opportunity to boost the ROI with a business case that clearly addresses change management (e.g., how is the staff going to adopt, thrive and contribute in their new roles). And if we can identify the emotional factor … we’ll be good to go!
Cheers, and let me know if I can help. At Esker, we have tools and resources to help you develop your P2P ROIs and business cases.
Written by Paul Tucker