All posts by Eric Wilson

Data Is The Alpha And Omega Of The Future

Do you feel like your procurement team is in good shape when it comes to your existing e-procurement solutions? Sure you won’t get  “stuck” with an obsolete system? Eric Wilson talks on the importance of data. The event might be over, but you can still  register for The Big Ideas Summit Chicago to access footage  from the event. 

It’s not an exaggeration to say 90 per cent of today’s procurement technologies will be obsolete in the coming years. While much of today’s tech has some great functionality, when you put it up against the backdrop of a world where the big value is in the data more than the tactical functionality, it’s clear that they’ll simply be left behind!

Don’t believe me? Think this is “out there”? Let me elaborate…

Why can’t Alexa answer my questions?

Nowadays, many of us use Amazon’s intelligent personal assistant, Alexa, or similar AI applications. If you have, you’ll know that they’re not always adept at answering the questions we ask of them. Why? It’s simply because they don’t have enough data…yet!

Imagine machines that could:

  • Manage all your discrepancies for you
  • Detect fraudulent procurement
  • Code your non-PO invoices

This is the point at which technology gets a lot more exciting, and we’re not far from reaching these dizzying heights. The question procurement teams must ask is whether their organisation has the volume, quality and completeness of data to allow these machines to learn, provide accurate predictions and take accurate actions on the organisation’s behalf.  And to be sure of that, we need to look ahead…

The here and now won’t help you tomorrow!

I’ve spoken before on the downfall of Siebel as an example of what happens when organisations only live in the here and now, solving the problems of today without looking ahead to tomorrow.

In 2017, the situation hasn’t changed. But this time, it’s not just about Software-as-a-Service (SaaS). Procurement technologies, and technologies in general, have fully embraced SaaS and the big tech shift that’s coming next is data.

If the system you’re looking to install is not capable of actually capturing all your transactional data – and doing so in a centrally architected manner such that you can get more value from data beyond just the data that your organisation itself generates – then all those snazzy pieces of functionality, all that beautiful user interface, all those pretty little graphs aren’t worth a dime!

Not only will your existing business case completely fail.

Not only will you not receive the ROI you planned on today.

Tomorrow the system will be obsolete, and you might as well have selected Siebel!

When it comes to selecting SaaS procure-to-pay systems, business cases are built on the ability to:

  • Eliminate maverick spend
  • Identify opportunities for strategic sourcing
  • Consolidate the supply base
  • Automate approval processes
  • Automate matching
  • Eliminate paper
  • Take advantage of terms discounts.

Indeed, organisations build up very detailed business cases based on these factors. But the basic assumptions and prerequisites for those components of the business case to actually generate real ROI are based on three things:

  1. You get 100 per cent of your suppliers connected to the system
  2. You get 100 per cent of your end users actually using the system – all the time (not just some of the time)
  3. You run all your invoices through the system – 100 per cent of them – not just the indirect invoices, but also direct, facilities, vertical specific invoices, non-PO invoices, the whole gamut!

In procure to pay, if you don’t have those three things, not only does today’s business case fall apart, but more critically for this conversation, you can’t leverage the power of all that data in the future.

There’s no two ways about it: You can’t use artificial intelligence if you don’t have the centralised data for those machines to learn from. It is data that feeds AI and other emerging technologies – you need data more than anything else for success in the future.

And so, my key takeaway now and always is: when you are putting together your RFPs for systems, data better be first and foremost on your mind.

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How to Make Sure You’re Not Being Sold Smoke And Mirrors

Can you spot the difference between theoretical and real ROI? Basware’s Eric Wilson gives the run-down on preventing value leakage in Purchase-to Pay. 

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Buying enterprise software is no easy undertaking – there’s a lot of factors to consider, multiple stakeholders to please and a lot of due diligence that must happen to ensure you can get the ROI that is being promised. Unfortunately, in the world of Purchase to Pay (P2P), most systems available today cannot truly deliver the ROI that is being touted across marketing channels and promised by sales reps because of inherent limitations in the solution.

So, how can you be sure that you are looking at real numbers when comparing P2P solutions and not some fabricated figure that is only attainable on paper?

Ask these two questions

There are two primary questions you should ask when reviewing solutions and providers:

  1. Is the ROI real, or is it fabricated?

Often what happens in the solution seeking process is that a business case is written, either by an internal person, or a consultant, or a solution provider.  The business case includes all kinds of detail about the cost savings and efficiencies the company will achieve by implementing the solution. In the case of P2P, these cost savings are in things like reducing off-contract spend, negotiating better pricing, taking advantage of terms discounts, eliminating paper from the process, reducing or redeploying accounts payable (AP) processing headcount, and similar cost efficiencies. But there are real obstacles to achieving the level of savings being promised, and organisations need to choose a provider that can meet those challenges with real answers (more on overcoming these obstacles later).

2. Will the solution continue providing value in the future, or will it be a short-term win that sends you searching for a replacement system in a few short years?

Too often we are only looking five inches in front of our face when making a technology investment decision. The organisation is only looking at the current problem, not the long-term value. Little functional enhancements in P2P may offer some incremental value, but are not what the future of P2P is about. The future of P2P is all about deriving more value from centrally capturing and leveraging all that transactional data, all those POs and invoices, across millions of organisations. The future of P2P (and even today to a large extent) is about using applications sitting on top of that transactional data to create a competitive advantage. Apps like these will empower you to answer questions like: How am I doing against industry benchmarks? Are there opportunities for better leveraging spend in buying groups to get better pricing? Can I fund company growth initiatives through working capital optimization solutions?

Find out if the solution can process 100% of your transactions

Back to the obstacles we mention above – where do those come from and how can you overcome these challenges? Obstacles arise because of one simple factor: all the cost efficiencies in the business plan are assuming you get 100% of your purchasing and accounts payable (AP) transactions running through the system, and most P2P systems cannot accomplish that level of automation.

You must choose a provider that can help you achieve:

  • 100% Supplier On-Boarding

First, you have to get all of your suppliers connected to your P2P system.  If you don’t, you can’t access all available terms discounts; you can’t truly eliminate paper; you can’t achieve all of the supply chain efficiencies from the business case. Most P2P systems are only designed to connect to the sophisticated suppliers, who can send XML or EDI transactions. What about that long tail of mid-size and small suppliers, who aren’t that technologically advanced? What about those suppliers that still send paper invoices? You must have a solution for connecting them to your P2P system, and it has to be easy for them to do so.

  • 100% User Adoption

Secondly, all your procurement must be processed through the P2P solution, which means the end users have to use it – not just some of the end users, or most of the end users, but truly all of your end users have to be putting 100% of their purchasing through the system. You can’t achieve that status by mandating it, and you can’t even achieve it by having a procurement system that is “user friendly.” The P2P system has to actually be designed to fit seamlessly into the way that end user is already doing their job. In other words, employees use the procurement system because it is truly the easiest way to get the stuff they need, not because it’s been mandated by the procurement department.

  • 100% Spend Visibility

Lastly, all your invoices – for both direct and indirect spend – must be running through the P2P system. This is very rare in the reality of most P2P systems. Most P2P systems are only good at automating the invoices that originated from the indirect procurement solution. What about all your direct invoices? What about all your non-PO invoices, facilities invoices, invoices generated from manufacturing? If the P2P system can’t effectively handle 100% of your invoicing transactions, your ROI just got reduced tremendously, or perhaps even eliminated. The AP side of the P2P system must be a true AP transaction hub for all your invoices, regardless of type of invoice.

So, what does all of this culminate to in the end? One word: data. If the system you choose can deliver real ROI, you begin building a critical asset – a data set of all your financial data in one single location. Then, you can begin using innovative add-ons, like predictive/prescriptive analytics, robotics, artificial intelligence, etc. and see that ROI multiply.

Interested in getting started with Basware? Register for our weekly demo to see how Basware can help you build the business case for real ROI.

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The New Age Of Procurement Technology

Procurement technology went full sail and you eagerly jumped on board. But now 90 per cent of all technology is about to become obsolete. Are you prepared for the new age? 

As the vice president of Basware’s Purchase-to-pay solution it goes without saying that I’m involved in a lot of procurement technology selection decisions. And over the years, I’ve noticed a recurring pattern in the process, across numerous organisations. It tends to play out a little bit like this:

A CPO of a large organisation is at the end of their tether thanks to a messy purchase-to pay process. It’s the age-old story with AP and procurement operating independently, maverick spend with unapproved suppliers, late payments and paper absolutely everywhere.

The easiest, and seemingly smartest, solution to the problem is the implementation of a new purchase-to-pay system, which said CPO requires, being extra savvy, to be a Software-as-a-Service solution. The CPO knows they can get a decent ROI on whichever supplier they choose.

So what’s the problem?

Unfortunately, our CPO is only looking 5 inches in front of their face! It’s no exaggeration to say 90 per cent of today’s procurement technologies will be obsolete in the coming years. And so procurement needs to start looking much further ahead!

Remember Siebel? We can’t either…

You’d be pretty hard pushed to find an organisation that uses Siebel nowadays. You might even struggle to find someone who knows what it is!

Siebel was the cream of the Customer Relationship Management (CRM) crop in the late 90’s and early 2000’s. It was the absolute best at its time.  Hundreds of millions of dollars were spent on licensing and implementing Siebel, with the promise of visibility, efficiency, and improved customer satisfaction.

Fast forward a mere ten years and…nobody uses it.  It turned on a dime thanks to Software-as-a-Service and, more specifically, Salesforce. An enormous technology shift took place, and suddenly Siebel and everything like it was utterly obsolete. More than a few CMO’s were fired as a result.

What can we expect from the next tech shift?

What can we expect from the next technology shift? We hear about  AI, machine learning and cognitive computing all the time and there’s a lot of concern amongst procurement professionals that it’s going to displace our workforce.

But it’s coming to procurement whether we like it or not. There’s a glaringly obvious application of AI for procurement professionals.

One word: data.

When today’s CPOs try to objectively evaluate the functionality of potential new solutions, they’re often bypassing  a crucial aspect (opting to solely measure tactical functionality); the game-changing competitive advantage their organisation can achieve through the power of the data.  There are two major considerations to be made here.

  1. Is the system architected for centralised data capture?

    The system should be able to capture your data, the data of all organisations using the solution  and, ideally, be able to connect with other solutions.  The more the system is designed for centralised data capture, the better chance you have of being able to take advantage of the latest  data-driven tech changes.

    My advice is that you eliminate anything that focuses solely on you and your data.  If it’s not central, you can be sure you’ll get stuck behind and end up like one of the organisations using Siebel.   But, of course, design alone is not enough.

  2. Does the system actually capture that data?

To capture all of this data, there are three parties that matter: suppliers, requisitioners, and AP. This is where tons of business cases fall apart.

  • Suppliers: To capture data you have to get all your suppliers on the system. Not just your big sophisticated suppliers, every single one! You have to get them connected, or you will fail, if not today then most definitely in the imminent future
  • Requisitioners: Who are the worst employees when it comes to using a procurement system? It’s fair to say that it’s often the sales and exec teams;  the people driving revenue for the company. These groups are only going to use a new procurement system if it’s the easiest and fastest way for them to get their jobs done, which means it has to fit in seamlessly with how they work.   If you don’t give them a system that they want to use, you won’t have them, and again you won’t be capturing the data from their transactions.
  • AP:  This is probably the most important part but so often an afterthought when looked at from a Procurement perspective. Consider how many hundreds of thousands or millions of invoice transactions are processed within your company. Now multiply that by the thousands of other companies out there and you’ll get a sense of how quickly that data can scale. Most P2P systems can’t process all of those different kinds of invoices. And that’s where we end up in Siebel world, yet again!

By committing to finding and using a system that captures all of this data, and does so not just for your organisation, but in a truly centralised platform, procurement will soon be able to achieve the following:

  • Fraud detection
  • Machines that know when you need something. Doesn’t it seem miraculous when Amazon knows what you need and presents it to you when you login?  Let me tell you that it’s not. It’s data
  • Dynamic discounting marketplaces
  • Exceptions handled without any human intervention, based on patterns of prior behavior in the data. This might not be behavior that humans can readily identify, but machines can with ease by crunching all of that data

Procurement would do well to remember that, In today’s world, the big value is in the data, not in tactical functionality.

Eric Wilson is the head of Basware’s Purchase-to-Pay business for the Americas and APAC.