Tag Archives: Basware

Superfinance – The Merging Of Mind And Machine In Finance And Procurement

Are we facing a future where automation displaces the human mind and traditional procurement  and finance careers?

By Gorodenkoff / Shutterstock

Technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.

The worlds of finance and procurement are about to change forever, and we are now at the turning point of this revolution. Often regarded as the most conservative echelon of the modern enterprise, today’s CFOs and CPOs are embracing new technologies, deploying automation, deep analytics and machine learning techniques to simplify financial and procurement operations and spend smarter.

As technology advances into the workplace, the traditional roles of finance personnel are changing as more processes are automated and data “crunching” takes the heavy lifting out of day-to-day routines. The change challenges professionals too, whose previous core competencies are now the primary remit of AI algorithms.

The concern for many is whether we are facing a future where automation displaces the human mind and therefore the traditional careers within finance. A major challenge for the modern CFO and CPO is to transform teams to take advantage of these new technologies. Employees in our industry are concerned that jobs are threatened, but the upcoming era of artificial intelligence will enable a new partnership between mind and machine that liberates humans’ natural skills through superior intuition and decision-making.

The concept of Superfinance looks to the visible horizon of the future and defines a modern finance and procurement function that is based on a Mind-Machine partnership. Here, technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.

Humans remain valuable because of our ability to reason in a way that goes beyond executing calculations on available data. Many examples exist where this new combined man-machine hybrid has been more powerful than either human or computer alone.

What we can do that computers can’t is combine information from AI with the information coming from the real world, apply creative and critical thinking, make decisions and take care of customers.

Making better decisions

So, the combination of Mind and Machine holds considerable potential to expose, streamline and automate financial operations from their current state, from purchasing to payment, and offer new levels of competitive advantage.

Of course, digitisation of business processes isn’t anything new and has been around for some time now. It has already dramatically changed how businesses operate and professionals perform. Finance and procurement functions have already been permanently affected by this change. So, what does the future of mind and machine really look like and what should industry professionals do now to prepare for the evolution?

Digitisation of finance and procurement is evident within distinct phases:

At the heart of financial digital transformation is, of course, data. By consolidating procurement and finance information into the cloud, the power of machine learning can be deployed to create impactful results. This data provides the foundation for automation. Many businesses have already embarked on this journey of standardisation, simplifying and outsourcing financial processes for greater efficiency and cost savings.

The final step involves insights-driven Purchase-to-Pay: Here, the result of automation is aggregated data from the entire Source-to-Pay business process, which is changing the trajectory of finance and procurement.

We are now entering the phase of cloud-based big data, predictive analytics, artificial intelligence and machine learning. Professionals are already equipped with the timely, accurate and complete data they need to make better decisions and support business agility.

So, with the era of data-driven finance already here, does the increased amount of information really help us make better decisions?

Even with the advantage of data at our fingertips, our human condition can still get in the way when we approach decisions, and we may often look for confirmation instead of confidence.  Our gut feel is so real it can often override data-driven insights and enable us to make important decisions instinctively, and then retroactively fit information to support our conclusions.

Big promises

This behaviour hampers business results more than we are willing to admit. So, to make data-driven finance real, professionals have to become behaviourally aware and refrain from asking for the wrong answers from AI. AI can arrive at different results than we as humans would from the same data. Our role therefore is to try to connect the real-world phenomena into the results provided by the data, and make decisions that best benefit customers, as well as the business itself.

While the data era is making big promises about what the future may hold and what people and companies can do with the unlimited power of information at their fingertips, there are still many unknowns about what this will look like in practice.

But there are areas where finance and procurement professionals can focus to begin preparing for this future and developing our uniquely human talents. To achieve true Superfinance, finance teams need to upskill and develop in three specific new areas:

From a technology perspective it requires Automation through data, analytics, AI and machine learning. In terms of skills, behavioural awareness, data analysis and new job requirements are needed, before considering the final element of ‘Transformation’, which includes managing change, cultural shifts and talent development.

On a more granular level the following is a good roadmap for the transformation:

  • Improve data: Collecting and aggregating 100 per cent of financial data is always the first step to being ready for the future, as emerging technologies feed on that data. But presuming you’re doing that today, the next steps are cleansing and augmenting that data. This includes purchase orders, invoices, collaboration between suppliers and customers, and supplier information. All of this data can be improved by creating a team structure for data ownership, delegating maintenance to the data owners and augmenting the data sets with third party data for completely new insights.
  • Leverage cloud solutions: As businesses get a unified and accurate view of their data, they will be better equipped to answer new questions and challenge their colleagues with better reasoning. You can build confidence using cloud-based solutions so that procurement and finance professionals rely on their data and analysis of that data to make decisions and recommendations.
  • Become a business partner: Having data is one thing – using it effectively across the business is another. Data must be properly analysed for the right insights before collaboration across finance, procurement and business units to effectively deliver that information in a meaningful way – building and nurturing relationships across the business to hit strategic goals.
  • Make unbiased decisions: People often interpret information in a way that confirms their preconceptions today. It’s important to educate your teams to be aware of their biases and the right way to approach data analysis. This involves applying scrutiny and objective reasoning to the data-driven insights.
  • Manage talent: Moving from siloed execution to collaborative data-driven finance requires proper development and management of the right skills. You need to systematically manage talent, endorse an analytical mindset and improve financial processes and job descriptions to put data at the core.

Nimble and adaptable businesses that follow these steps will thrive, having rapidly sensed and responded to opportunities, and seized the advantage in the AI-enabled landscape.

Over the next decade, AI won’t replace people, but people who use AI will replace those who don’t. The future will transform us through organisational change, digital operations and better human capital management. Following these steps is a good start to building the foundation for a mind-machine partnership of the future, and hopefully making data feel inspiring as we celebrate the benefits of being human in an automated world.

This article, written by Louis Fernandes, VP & UK Country Manager, UK & Ireland – Basware was originally published here. 

How to Reign In Even The Wildest Maverick Spenders

A candy fix. Underwear from Victoria’s Secret. An obsession with purple. Real maverick expenses from the front-line of procurement, and how to reign them in.

Image: Jackson Stock Photography/Shutterstock

Anyone who works in an office environment has experienced a scenario that goes something like this:

There’s something you need to do your job, so you just go out and get it – the quickest and easiest way you know how – and then expense it back to the company. Maybe that means buying a notebook from the store around the corner or ordering computer accessories from Amazon.com. Maybe you’ve booked your own travel for a business trip or called up a good friend to get her events management company to help with a corporate event.

Using these shortcuts may feel like you’re doing yourself and your company a favor, but most employees have no idea just how counterproductive this “maverick” spend behavior can be for the organisation’s ability to accurately analyze spend, supplier management, and procurement’s overall strategy.

When employees go rogue, purchasing goods or services out of contract or from unapproved suppliers, the company will miss out on certain discounts they worked hard to negotiate. Worst case, it can damage relationships and impact future contract terms with preferred vendors and even open the door to unethical business practices that taint the organisation’s reputation.

What’s scary is that these scenarios mentioned are all too common and appear to be relatively innocuous, believe it or not. In my 20 years of experience in procurement leadership roles, I’ve seen it all. Some of the craziest purchases I’ve seen employees make on behalf of their companies have been things like:

  • Buying candy for the “office” candy dish… you know, just in case a guest might want to help themselves to some. In reality, the employee that purchased it, ate it all.
  • Purple pens to match purple highlighters, purple pads of paper, purple post-it notes, you name it… simply because purple was this employee’s favorite color.
  • Items from Victoria’s Secret which were expensed as “marketing apparel.” Enough said.

So what needs to happen to reign in this type of behavior, both the common and unwitting cases, as well as the rare and extreme? Simply put, you need to make it fast and easy to place and receive the orders.

Start by putting a system in place for better control and compliance– one that simplifies and automates the purchasing process, regardless of the product/service, approval process or supplier. This makes the entire process a lot more efficient by governing requisition, approvals, buying, receipt, reconciliation and reporting. It streamlines even the most complicated workflows, making it much easier for employees to comply.

These systems should also have intuitive and easy-to-use interfaces (think of the way consumer e-commerce sites are designed) so that employees actually want to use them to make purchases, and not just because they have to.

Lastly, and most importantly, take maverick spend seriously. Maverick spend can still sometimes happen even with the most sophisticated and intuitive systems. Keep a close eye on spend analytics to track exactly where rogue spend is coming from, so you know when and how to enforce spending policies that prevent future rogue behavior – and those surprise expense requests.


To learn more about maverick spend and how to set your key initiatives in the coming year, join Basware and The Hackett Group on November 7th for Ramp Up: Planning Your Key Improvement Initiatives in the Coming Year with Amy Fong of The Hackett Group and Nancy Jorgensen of Basware.

Teeing Up For AI in Procurement: It’s All About One Thing…

The benefit of AI for procurement is clear – the question, then, is what will it take to effectively put it to use?

Over the last year, machine learning and artificial intelligence (AI) technologies have graduated from the class of “emerging tech” – they’re here now, they’re increasingly sophisticated, and their adoption will only continue to accelerate.

We’ve seen machine learning and AI go mainstream in consumer tech environments, and they are rapidly shifting from hype to reality in enterprise environments as well; however, enterprise executives are still working to understand how AI applications can move beyond specific product features to influence broader business functions and strategies.

Let’s take a look at the procurement department, for instance. Procurement and purchasing professionals have a lot to gain from leveraging AI. In fact, AI has the potential to completely transform how organisations manage their spend, from automating invoice coding based on learned criteria, to predicting potentially fraudulent transactions, and preventing rogue spending before it happens.

The benefit of AI for procurement is clear – the question, then, is what will it take to effectively put it to use?

Gartner’s report, “Start Preparing Now for the Impact of AI on Procurement,” states that “technologies’ need for data will force application leaders in procurement to ensure access to the necessary internal and external data sources.”

Essentially, the first step to getting predictions out of AI is to capture all data – internal data, external data and third-party, public data. Furthermore, procurement professionals should be asking themselves if they have the volume, the quality and the completeness of data needed to leverage AI within their department.

Ticking each of these boxes can feel like an arduous process, but a good starting point is to hone in on three particular sources of data that provide the greatest visibility into spend:

1. Supplier Data: This means capturing data from 100 per cent of suppliers in the procurement system. Not just the largest multi-national suppliers who use sophisticated EDI or XML formats, but the whole tail. This should include mid-tier suppliers that may be using online portals or emailing PDF invoices, all the way down to the smallest “mom and pop” businesses, who continue sending paper invoices. Using an open commerce network that accepts and supports all invoice formats and requires no changes on the supplier’s end enables 100 per cent supplier onboarding and captures all transactional data. To gain true visibility and power future platforms, procurement and finance leaders must aggregate as much financial data as possible beginning with supplier data.

2. User-Driven Data: The ability to capture user-driven data–specifically, buying insights that track 100 per cent of all purchasing requests that run through the system, is vital. Visibility into employee spend ultimately depends on how user-centric procurement tools, technologies, and processes are designed. The bottom line is: procurement systems shouldn’t be designed for the procurement department. They should be catered to potentially thousands of employees around the world that are buying things in their organisation.

Searching for orders, dynamic routing and approvals, and guided buying, for instance, should be easy to navigate and fit seamlessly into the way employees already work. The key is to create a system that users adhere to not because they have to, but because it’s the easiest way to get what they want from preferred vendors at the negotiated price, providing another layer of spend visibility.

3. Invoice Data. By nature, the accounts payable function is primed for intelligent automation. There is a huge opportunity to use AI for things like improving processing efficiencies and reducing costs, increasing discounts and eliminating late payment fees, for instance.

But, these enhancements can only be achieved if the invoice data feeding into AI is complete. That means procurement needs to capture 100 per cent of invoices, irrespective of format (paper, PDF, electronic) and irrespective of invoice type (PO-based, non-PO based, invoices for direct spend, for indirect spend, for facilities and utilities, etc) –  truly, any and all. Whatever the invoice, it should be captured.

These three particular sources of data can truly position a company to take advantage of all the benefits AI promises just over the horizon. Elements of machine learning, AI and predictive analytics already exist within procurement today. Forecasting budgets for approvers, alternative cost-effective suggestions during a user’s shopping experience and intelligently aggregating POs based on purchase trends are just a few commonplace applications. But to take advantage of any of these applications, and future opportunities to gain a competitive advantage, data is an absolute prerequisite. Only when armed with data – especially from suppliers, users and invoices – can procurement make the most of their investment in AI technology, enhance spend visibility and optimisation, and ultimately, boost the organisation’s bottom line.

Continue reading Teeing Up For AI in Procurement: It’s All About One Thing…

One Step Closer To Invoice Automation…

How can smart coding functionality take invoice automation one step further…?

Depending on your organisation, the maturity of your invoice processing is likely varied even across your own internal workflows for different invoice types.

And like many others in your shoes, your goal is to get those things as automated as possible – regardless of invoice type – and shoot for 100 per cent invoice automation. The good news is full invoice automation is an attainable goal with innovation available in e-invoicing solutions today like smart coding.

What is smart coding?

Smart coding helps customers further automate their invoice processing of non-PO invoices, going a step further towards touchless invoice handling. With smart coding, invoices that are not automated by purchase order matching, payment plans (schedule, budget or self-billing), or automatic coding templates can now be automatically coded with minimal human interaction.

Why should you care about smart coding?

Smart coding speeds up invoice processing and improves productivity.

Traditionally, non-PO invoices are automated with business rules that are very laborious to manage. Finding a correct cost allocation is typically a challenging task for employees who are not familiar with bookkeeping rules, especially when there is no purchase order to copy information from. It requires the AP clerk to spend a lot of focus on this type of invoices – researching the origination of the invoice, reaching out to others in the business to ask questions and making an educated guess as to the best place to code the invoice. All of this takes time and often delays payment of non-PO invoices.

Smart coding automates those manual steps, so employees can easily code an invoice with a click of a button to automate more of the process. The solution leverages big data to analyse historical transactions, ultimately providing a highly reliable recommendation to the user that can also be complemented with business rules. Not only does this simplify the process for the user and save time in processing the invoice, it also reduces the need for the AP department to rectify erroneous coding lines at month-end.

How does full invoice automation prepare me for the future?

Everyone is talking about machine learning and AI – and invoice automation and e-procurement are certainly areas of application for these emerging technologies. But there a couple of things you must do today to ensure you’re ready when those technologies become the new norm. Use smart coding to help you:

  1. Automate as much as possible: Machine learning and AI are layered over systems, so you want to be as streamlined as possible in preparation for those applications. To do this, set your goals on a high level of automation. And this doesn’t just mean adding technology over clunky processes. As you mature your systems and strategy, make sure you’re re-engineering processes where necessary so workflows are optimized too.
  2. Get financial data: One major benefit of full automation is the central collection of all your financial data in one solution. Data is what feeds technologies of the future. Machine learning and AI are not effective in purchase to pay without a complete, ever increasing source of financial data. If you want to embrace machine learning applications, capture every possible piece of financial data in your purchase-to-pay system today.

Basware has the most advanced invoice automation solution in the world and we’re constantly improving it. Based on 30+ years in the industry, we’re rolling out features and functionality that continue to deliver the ultimate efficiency benefit to customers. With the largest open network, we have the unique ability to capture the most data across customers and combine that with third party data to deliver what customers need now and in the future.

10 Questions to Ask in a Purchase-to-Pay Demo

$1 million is wasted every 20 seconds collectively by organisations around the globe. So, here are some areas to dig into and questions to ask during a purchase-to-pay demo. 

$1 million is wasted every 20 seconds collectively by organisations around the globe.

Yes; you read that correctly – organisations are losing money to the tune of $1 million every 20 seconds due to poor project management practices, according to a recent survey from Project Management Institute (PMI).

This same survey also reported that 52 per cent of projects in the last year experienced scope creep, with one of the main reasons being erroneous requirements gathering.

Seeing these stats and given my profession, I immediately thought of purchase-to-pay projects and how procurement and finance professionals can ensure they have what they need when evaluating purchase-to-pay solutions against their requirements document.

With over 7 years in the business, I’ve seen prospective customers led astray by solution providers making them unsure of exactly what they’re looking for in terms of functionality, and more importantly what they need to solve their business challenges.

Sometimes cleverly crafted demos can gloss over important nuances or mask inadequacies, which can cause major problems later during implementation – and the dreaded scope creep. So, here are some areas that I recommend digging into and questions to ask during a purchase-to-pay demo.

10 questions to ask in a purchase-to-pay demo:

  1. Does the e-procurement solution do line item requisition approval workflow? 

That’s a mouthful, so let’s break it down. Imagine you have a user that wants to buy three items requiring three separate approvers in the e-procurement solution. This person fills the virtual shopping cart with these items, just like on Amazon.

But unlike Amazon, these items need to be approved and POs issued before ordering happens. And because you want your users to get the items they need quickly, you want to make sure the e-procurement solution automatically issues POs and places orders as each individual request is approved without waiting for the other approvals – this is line item requisition approval workflow. The alternative is a linear approval workflow where each step is dependent on the previous step, meaning all the POs are held up until that approval workflow is complete.

This means all POs are reliant on the final approval in the linear chain and the entire process slows way down. Ultimately what happens in the latter scenario is your users get fed up with the slowness of the system and start purchasing outside the system – often referred to as maverick spending – so they can get what they need faster and more easily.

  1. Will I be able to create complex workflows? 

Related to the first question is the ability to create complex approval workflows. While the goal should always be to streamline approval processes, certain business scenarios and regulations call for more complexity, and you should not forgo that requirement because the system isn’t sophisticated enough to accommodate. Don’t let the solution provider try to oversimplify matters or sway you with a sharp user interface – what you need is flexibility. The tool should give you the flexibility to create comprehensive workflows that address all your needs – not create multiple work-arounds that you must maintain. You also should be able to configure the workflow once and leave it mostly intact – which is better from a compliance standpoint – instead of having to constantly adjust to meet business needs.

  1. Will I get budget visibility during the requisition or approval process? 

This is a biggie. Perhaps the greatest advantage of automating your procurement and accounts payable (AP) processes is the visibility you get across the entire buying process. But here’s the key – you need that visibility proactively, not reactively with month-end reports. A proactive approach gives managers the visibility to see how purchase requests impact budgets as the requests are being made in real-time, so they can make informed decisions as to whether to approve or deny the requests based on their budget amounts. If managers can only see how purchases impacted budgets at month-end after the money has been spent and budgets used up, that’s a reactive approach and it’s not good enough.

  1. Is the sourcing tool easy to use?

Most purchase-to-pay solutions now offer sourcing as part of the full suite. In terms of value, this helps streamline more of Procurement’s job so they can focus on suppliers and other strategic procurement initiatives. If you’re adding on this functionality to make someone’s day-to-day tasks easier, it should be user-friendly and not more cumbersome than manual sourcing activities.

  1. Can the system perform partial returns?

Say you get a shipment of 10 laptops and one is broken. You want to be able to acknowledge receipt of ten laptops in the system and note the return of the one broken computer. And, you want to be able to track that broken item through the return process. Returns and tracking returns should not be an all-or-nothing process.

  1. Can the invoice automation solution truly process ALL invoice formats?

Remember those cleverly crafted demoes and nuances I was talking about earlier – invoice automation is a landmine for hidden inadequacies. I often hear of solution providers try to mask solution shortcomings by harping on getting more PO-backed invoices, when in reality driving a higher PO percentage is not going to solve your problems. So, let’s be clear about a few things here: you will always have a certain percentage of non-PO invoices and paper/email invoices are not going away just yet, but there’s no reason you can’t automate the processing of those invoice types anyway.

Therefore, you should choose a solution that can truly ingest and process any invoice type automatically (paper, electronic, EDI/XML, PDF, etc. – covering direct, indirect, PO, Non-PO spending) and convert these documents into true e-invoices (i.e. – invoices with structured data formatting for machine reading without human intervention). Your suppliers don’t need to change how they operate today – if they send paper invoices, they can continue doing that – but you can still get an electronic invoice. Automation of this process is key. Leveraging automation should eliminate the need for your AP staff to key invoices into the solution. It should also automate approvals, handle exceptions like extra costs, create all book-keeping information automatically and map the spend accurately to correct categories, regardless of invoice quality and with zero change management for suppliers. This means there is no disruption in the supply chain and you can get 100 per cent of your supplier on-board.

This was a lengthy section of highlighting nuances, but it’s key to understand why this is so important. The point of achieving this level of automation and sophistication in your accounts payable department is to capture 100% of your enterprise spending data by automating all invoices – not just some – so ultimately you get 100% spend visibility.

  1. Can the invoice automation solution do split coding on invoices at the line and header level?

Let’s say you have a trade show coming up. The event is an investment for three departments: marketing, sales and pre-sales. When you’re coding invoices for the event, you want to have the capability to take the sum amount and split it between the three departments. If you can only split at the line level, you will have to split-code each line three ways and that gets to be time-consuming and inefficient.

  1. Does the analytics solution offer out-of-the-box reporting and customisable reports?

You don’t want to reach out to a customer service representative every time you want to see your own financial data in a certain way – that’s time-consuming, annoying and can be costly depending on your service agreement. Make sure the analytics tool offers configurable dashboards and reports that have standard views to provide a starting point for your analysis, allowing you to drill into the details when necessary, and also gives you the ability to easily create, configure and export your data in the format you need.

Analytics should make your life easier – not more complex.

  1. How are upgrades handled?

The advantages of using Software-as-a-Service (SaaS) technology are plenty, but to reap those benefits you have to be receiving upgrades regularly. Ideally, you want to be on a multi-tenant SaaS environment (if you want the real techy stuff, ask the head of your IT department – this person will know exactly what that means). But in short, this enables every customer in the environment to upgrade at the same time to the newest version.

Other environments stagger upgrades for customers, meaning that not everyone has access to the latest functionality and bug fixes (including features that ensure compliance) and worse, they fall behind on their upgrades. This begins to pose real problems due to fragmented support across various versions, some customers opting to skip upgrades and falling further behind and challenges maintaining the solution.

  1. What happens to custom fields during upgrades?

The custom fields you create and the data associated with those fields should remain intact when upgrades occur. You spend a lot of time and energy defining custom fields during implementation; there is no reason your solution administrator should have to go back in and do re-work every time an upgrade happens. This is a waste of time and you risk loss of data capture if those fields are not re-activated in a timely manner.

6 Ways Procurement Pros Can Be More Effective

87 per cent of organisations have faced a disruptive incident with suppliers in the last 2-3 years. How can we work in more effective ways?

Transforming into a strategic procurement organisation is not an easy journey. But there are a few obstacles that procurement teams should address sooner rather than later when thinking about how to be more effective in procurement. Here are 6 challenges to tackle today for success in the future:

1. Unproductive business relationships

The majority of CPOs rate their current business partnering effectiveness at less than 70 per cent with hopes of greater than 90 per cent in the future.  How can procurement become a better business partner? By creating a purchasing process that is the easiest, fastest and most affordable way for business partners to do their jobs. Users need what they need to do their jobs and they need those items quickly – and that’s all they care about. If you roll-out an e-procurement solution that is truly the easiest way for employees to request those goods and services within the natural course of their daily work, they’ll use the system and they will see the value that procurement is delivering. And when managers see how this process streamlines approvals and helps them better manage their budgets with real-time tracking, they’ll become champions of procurement as well.

2. Slow, inflexible approval workflows

Speaking over approvals, we’ve seen hundreds of approval workflows, each unique based on business maturity, locations, department structures and technologies. But a consistent challenge among many companies is that approval workflows often make purchasing more difficult for the requester. If requesters could make their purchases without needing to understand approvals or the inner workings of the procurement department, imagine how much easier it will be to get them spending in the preferred manner. Procurement professionals should look at ways to minimize the impact of approvals on the end-user. One way to do this is what we call “line item requisitioning.” This is when the approval workflow is configured so a single requisition/shopping cart can be split and sent through separate approval paths at the line item level. This means that items on the requisition that require fewer approvals get approved and POs are submitted, without being held up by other items that may take longer to get approved or require more reviews. And, the approvers only see the items on the request that pertain to them, making it quick and easy for them to sign-off on the items.

3. Supplier risk & fraud potential

87 per cent of organisations faced a disruptive incident with suppliers in the last 2-3 years. Risk inside of the supply chain remains a focus for procurement leaders. So, what’s the key to reducing risk? Transparency. The more transparency you have with suppliers, the more you can build up those relationships and better understand your suppliers’ needs. Perhaps you find out you have a key supplier that is struggling with cash flow needs – work with this business partner to understand their position and look at strategic payment programs that benefit both parties to mitigate that risk upfront. You can also leverage the wealth of data at your fingertips to pinpoint issues like this early on and better manage supplier data to prevent fraud.

4. Lack of spend visibility

If you want to know how to be more effective in procurement, I have two words for you:  spend visibility.

Every strategic procurement initiative starts with knowing how 100 per cent of the company money is being spent – not “some” of the money, all of it. 40 per cent of CPOs are focused on consolidating spend, but if they’re not seeing the full picture, those efforts will prove futile. Spend visibility – from both direct and indirect spending – allows CPOs to do what they do best, including: consolidating spend, rationalising the supply base, leveraging volume buying, negotiating better contracts, sourcing strategic suppliers and more. The data needed to support all of these activities is in the company spend data.

5. Manual reporting and analytics

65 per cent of organisations are accelerating investment in procurement-related analytics. But you really need to accomplish 2 things before making this investment: 1) Capture 100 per cent of financial data 2) Focus on data science within the procurement department. If you aren’t capturing 100 per cent of your data by on-boarding all your suppliers, achieving 100 per cent user adoption and processing 100 per cent of your invoices through the purchase-to-pay solution, your analytics tool won’t have the data needed to give you the right insight. And, once you have that data, you need someone who understands how to turn actionable insight into results – so make sure your procurement team is thinking about the skills they need for the future.

6. The talent gap related to technology

Related to the skills needed for the future is the talent gap procurement is experiencing, especially when it comes to technology. 87 per cent of CPOs believe talent is the single greatest driver of procurement performance, and yet organisations spend less than 1 per cent of their budget on equipping and training their procurement teams. Think about the tools, technology and training your procurement team needs to keep up with organisational transformation and deliver value, then start developing skills in those areas now – procurement is only going to get more digital. Check out my recent post on bridging the talent gap in procurement for other tips on attracting, hiring and developing new talent for this function.

If you’re questioning how to be more effective in procurement, overcoming these challenges will put you on the course for success. At Basware, we have a heritage in helping companies transform, so you don’t have to go it alone. Reach out– we’re here to help.

These stats are taken from Deloitte’s Global CPO Survey

Bridging the Talent Gap in Procurement: Attracting New Hires in a Digital World

Want procurement teams to attract the best talent? Show us your stuff!

oatawa/Shutterstock.com

According to The Deloitte Global Chief Procurement Officer Survey 2017, 87 per cent of the respondents agree that talent is the single greatest factor in driving procurement performance. But the rates of new hires and recent graduates pursuing a career in procurement is decreasing.

That translates into a problem for the future of this function – a talent gap in procurement. But why?

Procurement is More than Cost Savings and Compliance

There are several reasons we can speculate as to why the workforce is pursuing careers outside of procurement, but in my opinion the overarching problem is that procurement is not seen as a ‘sexy’ career path. In the world of tech startups, innovative products, self-made social media sensations, and more, the idea of focusing on corporate cost-savings and spend compliance just doesn’t appeal – especially to the up-and-coming millennial workforce.

But the truth is, procurement is more than policing the organisation and saving company money. It’s about building relationships with internal stakeholders and external suppliers, drawing strategic insights from data to help others and using unique talent to solve problems.

Confession time: I’m also a millennial, and I think we have an opportunity here to fill the talent gap with eager new hires by showing what the new world of procurement is all about.

Show Us Your Stuff, Procurement

As employers and providers in the world of procurement, it’s up to us to make procurement a strategic and desirable field to enter. Hiding in the back office has made many of us modest, but it’s time for us to show off a bit to demonstrate the true strategic value procurement brings to the party. In reading The Deloitte Global Chief Procurement Officer Survey 2017, there were clear trends on how CPOs feel about the state of procurement, which led me to think about how we can apply those insights to address the talent gap.

Here are 5 ways to bring procurement careers into the modern world…

1.Create a digital culture

I’ll admit, I stole this one right from Deloitte’s recommendations because it’s spot on. 75 per cent of the survey respondents agreed – “procurement’s role in delivering digital strategy will increase in the future and are also clear that technology will impact all procurement processes to some degree.” And you know who grew up with technology from day 1 and is perfect for navigating a digital procurement world? You guessed it – millennials. Demonstrate to this up-and-coming workforce that your procurement department is committed to leveraging technology to automate and outsource the repetitive tasks, expedite the pace of business and enable them to focus on strategic initiatives. Invest in digital procurement today and think about how emerging technologies like AI, machine learning and robotics influence the procurement world. And best yet – involve your entry level procurement team members in these discussions. Give them the opportunity to shape and influence the path of technology at your organisation and make recommendations on your digital future.

2. Invest in employee development

According to the survey, 60 per cent of CPOs do not believe their teams have the skills to deliver their procurement strategy, yet investment in on-going training and employee development remains low. Demonstrate to your current staff and those entering the workforce that you recognise that people are key to procurement success and invest in their future with procurement and non-procurement training programs.

3. Dial-in on data

Data is the alpha and omega of the future and 60 per cent of the Deloitte survey respondents regard analytics as the most impactful technology for the function over the coming two years. So, this is a two-part recommendation: 1) Make sure to capture 100 per cent  of your financial data, and 2) Properly train current and future procurement professionals on data analysis. Analytics and technologies like AI and machine learning are only as good as the data that feeds them, so it’s imperative to build a complete data set for your employees to leverage. Gartner also says that data science and analytical skills are required in procurement to leverage a future with AI. Many professionals enter procurement to be hands-on in solving problems across the business – this could be saving money; negotiating better contracts; optimising the supplier base; helping other departments create and track budgets; reducing risk; finding funds to support new product innovation or growth, etc. Give these professionals reliable data and training to properly analyse it to extract actionable insights so they can act quickly and effectively on strategic initiatives.

4. Provide opportunities to influence innovation

Long gone are the days when procurement meant squeezing every penny out of suppliers and business partners. Now it’s about building strategic partnerships that can take your business to the next level and procurement is at the forefront of that effort. Young procurement professionals are going to be excited and eager to make their mark on something – let them help lead the charge in sourcing and nurturing relationships with key suppliers. Product innovation comes not only from finding the money to explore and test but also from finding the right partners that bring you the elements you need to build that innovation. Create collaboration between your procurement and product departments, as well as other departments for that matter, so that procurement becomes a true business partner and is actively involved in core business functions.

5. Build rapport with internal stakeholders

Another reason that procurement might not be seen as ‘sexy’ is the simple fact that people in other functions just don’t know what exactly it is that they do. If you’re a procurement leader, be a champion for your team. Help others understand what procurement truly is and communicate and celebrate your wins. Also look for opportunities for collaboration between your team and other business functions. Become an advisor during critical times like budget planning and showcase the talent you have in your team. When budgets remain flat, offer up procurement expertise to help other departments produce cost savings and new money from their existing spending habits. As the Deloitte survey eloquently says, “Procurement professionals should challenge themselves to understand functional stakeholders in the same way they do their suppliers.”

At the end of the day, many people are motivated by the idea of being a hero at work. What profession enables employees to swoop in and save the day better than procurement? There are not many. With the required people skills, analytical approach and desire to focus energy internally and externally, the procurement profession is a truly unique career path that doesn’t receive the credit it deserves. Look on to the future of procurement at your organisation and build the culture that attracts your next generation of hires.

To learn more about Basware’s approach to collaborative procurement, download the eBook: WeProcurementTM: Putting the “We” in e-Procurement and contact us to learn more about rolling out a digital procurement solution.

Buying Social, Expressing Yourself Online and Other Procurement Challenges…

Does it pay to buy social? Can I build greater trust online? And how do I prepare my team for AI developments? We answer some of the questions and challenges on the minds of procurement leaders…

Olga Savina/Shutterstock.com

The Procurious London CPO Roundtable was sponsored by Basware

How do you evolve your organisation from the mindset of  “we’re not doing anything bad” to actually “doing something good” ?

What happens when people who don’t know what they’re talking about start talking online, what does that mean for society’s leaders?

With the development of RPA and AI, are we all out of a job, and when?!

How should organisations go about developing existing talent to prepare them for leadership roles?

These are just some the questions we answered at last week’s  Procurious CPO London Roundtable, sponsored by BaswareWant to know the answers? Look no further…

The Buy Social Corporate Challenge

Charlie Wigglesworth, Deputy CEO – Social Enterprise UK (SEUK) gave a fascinating insight to the great work social enterprises are doing across the UK.

SEUK was established in 2002 as the national body for social enterprise. Now, with over 1200 members they strive to support social enterprises and develop the evidence base to showcase their benefits, as well as influencing policy and political agendas within UK government.

Social enterprises sit comfortably in between a charity and a private sector company. They have a clear social mission and  look to make profits to further that social mission – they are “businesses which trade for a social purpose.” 

“Businesses and governments can support social enterprise in lots of ways but the best way to do good is to buy from them,” explains Charlie.

They are much more likely to be better represented or minority led or based in the most deprived areas. They are more likely to employ people that wouldn’t have work otherwise had work or give money where people wouldn’t otherwise have had it.

Supporting these companies is good for your business because they are likely to be cheaper, more innovative and doing so gives corporations the opportunity to overlap and integrate CSR with normal business, rather than have it exist as a separate entity.

Buying social doesn’t cost more money or change the procurement process  but it has significant strategic and ongoing value for communities and your business.

Of course, as Charlie admits, it can seem hard to make changes and switch your mentality from “not doing anything bad” to “doing something good”. Charlie’s advice is to “find opportunities locally- they may seem tiny but there can be significant opportunities. Look at where you can do things directly.”

SEUK is working with a number of businesses for The Buy Social Corporate Challenge with the challenge to achieve $1 billion of procurement spend with social enterprises by 2020. Follow their progress here.   

The Conversation Century

Elizabeth Linder, Founder and CEO of The Conversational Century joined Youtube in 2007 and often thinks back to that year, a significant time for Youtube, in order to understand the social media space.

It was an exciting and life-changing time for skilled amateurs. A time that had millions of people singing in their bedrooms or racking  up millions of video views for a commentary on something they would never otherwise have been considered an expert in. Youtube ultimately offered them the opportunity to be heard.

Elizabeth is a strong believer that the internet is the best place to build trust. “The people” ( i.e. you and me) have already got this all figured out. But the reason so many people still believe the internet is destroying trust is that our leaders are still so far from getting it right! We simply don’t have leaders at a political level that have invested in a voice on social media.

Some key things to remember when trying to start conversations online:

  • Most leaders fear that they have to move at an increased pace because of today’s internet culture. You don’t. Go at your own pace but keep people informed as you do it. It’s ok to communicate to people that “the discussions are still in progress” or “we don’t have information on this yet” so long as you’re communicating something!
  • Believe in the power of primary sources because the public certainly do. Hearing directly from the source rather than a paper adds a lot of value to your communication. If you’ve ever been quoted in an article, blog or feature you’ll know the producer of that piece never quite gets to the meat of what you were trying to say because you don’t own the conversation or drive the discussion – they do!
  • Embracing in the hacker culture, i.e. making it up as you go along, is key. EU politicians, for example, only see social media as a tool for outbound communications and not for their inbound policy making. Hacker culture dictates that they need to consider the latter.

Elizabeth’s take away advice on owning the social media space? “Be yourself online and talk to people in a way that lets them in but not in a way so casual that you’re treating them like family.”

RPA and AI – Are We All Out of A Job?

Where are we at in terms of Robotic Process Automation (RPA) and Artificial Intelligence (AI) ?  Paul Clayton, Head of New Service Development, Basware outlined the current threats and challenges.

RPA essentially replicates things that aren’t easily automated; the things a human would do. Its skills lie in coding systems and inserting data. The downside to RPA is that there is no intelligence or decision making process, which means it can go very wrong!

There are four levels to AI:

  • Level 1:  This is the simplest form of AI and is quite prevalent today.  It’s reactive and rule-based with no memory or recollection and decides what to do based on a set of rules.
  • Level 2:  Limited, but not long-term, memory with decisions based on recent experience. It will react to data from the things it sees.
  • Level 3:  These are computers that learn and have memory. They  can re-formulate their view on the world so they can make decisions and remember actions. Whilst there are Level 3 computers out there, other than C3P0 (!),  it hasn’t been applied in procurement except in the areas of fraud and risk management.
  • Level 4:  This, fortunately, does not exist…yet! These are machines that are self aware and can form their own view on anything, redevelop their own software and change their behaviour entirely.

Levels 1 and 2 cover most of the repetitive tasks in procurement and finance. Not before long, 90 per cent of the people in this sphere wont be required.

So yes, as Paul admits, the jobs we have today won’t be here tomorrow and people won’t have careers in the way that we currently define “a career”. But the workforce coming in today is used to their environment changing every 30 seconds,  they already expect instantaneous change and they’re able to adapt quickly to something different.

Barclays’ leadership development process

Jonathan Harvey – Global Head of Talent & Culture, Barclays PLC, gave us a high level overview of Barclays leadership development framework and how it compares or contrasts with other leading companies.

When Jonathan joined Barclays two years ago he was tasked with assessing whether Barclays were doing enough to embed a common set of values and to measure their progress in embedding them.

He evaluated how they were developing existing talent in preparation for leadership roles and eventually established a set of criteria for potential leaders at Barclays. This criteria demands they live by Barclays’ values and inspire others to live by them and that they have leadership critical experience such as experience managing more than 1000 people, across different geographies and through different business cycles.

The most successful leaders of organisations will be those who can think the most adaptively and creatively, and that comes down to experience!

Procurious are hosting CPO roundtables on 30th May, 19th September and 14th November. If you’re a CPO and would like to attend one of our roundtables in person please contact Olga Luscombe via [email protected] to request an invitation.

Don’t be Fooled and Underestimate Blockchain

Do you find it comforting to dismiss blockchain as “flash in the pan”? Simona Pop believes you’d be a fool to do so and explains why it will live up to the hype.

There is a pattern emerging where new technologies are treated with a certain degree of skepticism. After the initial wave of excitement and expectation, many of the game changing advances are suddenly approached with a “flash in the pan” dismissal.

Is it meant to reassure comfortable people and businesses that carrying on as they are is the better option? Why risk innovation when you can draw out a tradition type stance?

But this isn’t the technology’s fault. Many of these advances are – when divorced from the Gartner hype cycle and the hashtags and actively placed in their proper context – exactly as exciting and game changing as they seem, if not more so.

Blockchain is a high-profile victim of this phenomenon: as a distributed ledger technology that promises faster, more secure payments, many industries have been exploring its possibilities and many more have been writing and talking about it.

Purchasing is no exception. And while blockchain technology may have limited application in other professions, in this one, it will live up to the hype. As a means of reducing costs, improving efficiency, controlling fraud, and boosting transparency, it has tangible, real-world benefits for procurement functions – whatever the market or business they work within.

In a recent article, Paul Clayton, Head of New Service Development for Basware, states:

”In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet it’s just an interesting concept with some obvious benefits and flaws.”

Let’s go through some of the reasons why Basware feel blockchain is not all it promises to be for finance and purchasing:

  1. “Whilst a blockchain itself is safe, an application using it remains hackable” – This is also true of your bank software, or Apple Pay or pretty much any software we are currently using for payments. It should not stop us using it or leveraging its deep transformational effects in how businesses operate.
  2. “It can be too transparent” – Technically true, but in reality the references to user wallets are encrypted key strings which, whilst easy to relate to the originating source and other related transactions, is not as easy to relate to an actual physical person. In much the same way as a credit card number isn’t easy to relate to a person without extra information.
  3. “It’s not the most elegant solution” –  Here’s where we strongly disagree. The elegance is in the simplicity. Banks have been trying to come up with distributed ledger technology since the 70s but they were hindered because they refused to be outside the transaction. By using TLS style encryption and cutting out the transaction verification at financial institution level, the whole transaction becomes significantly simpler.
  4. “You can still lose things!“ – Of course you can. You can lose your wallet too.

The argument that there isn’t really that much value in blockchain when the benefits of smart contracts and removing the invoice are tangible possibilities is nonsensical. Removing  the need for invoice processing is huge and any platform truly helping businesses handle their invoices and payments should know this. Invoice processing, and invoice fraud by proxy, are the biggest threats to company money out there today. Just look at Facebook and Google who were victims of $100M payment scam this year.

Blockchain automates trust

Trust is the cornerstone of every business relationship. On a fundamental level, you need to believe that the other person is who they say they are – and they need to believe the same of you.

In this age of phishing, malware, and general cyber security attacks, this seemingly simple principle becomes complicated. Login details are stolen and turned to criminal ends; high-level executives are being impersonated by hackers, who then persuade other parties to release vital funds; the sheer scale and variety of cybercrime is growing.

Blockchain provides a means of automating trust. By using permanently retained historical data to authenticate everyone involved in a deal, each side can be assured of the other parties’ trustworthiness: the seller and buyer alike are always who they say they are, and the product is the right product. What’s more, because prices cannot be modified, invoices will effectively be rendered obsolete.

This greatly simplifies the complicated, multi-faceted transactions that make up modern supply chains – maximising security and reducing the risk of fraud.

Blockchain is fast

Procurement functions will also benefit from the speed and efficiency of blockchain technology. For one thing, it’s fully digital: by taking the more time-consuming elements of a conventional transaction out of the equation, you immediately save time and resources that would have been spent on these tasks.

Shared access databases mean that it’s no longer necessary to manually scan invoices – dramatically accelerating the reconciliation process as all parties are allowed to view the same transaction.

Blockchain effectively cuts out the middlemen. By removing all intermediaries, it makes the processing of payments and transactions much faster: purchase order data can be exchanged on the blockchain at a far speedier pace than current levels will allow. This technology can also identify the nearest and most cost-effective vendors: decreasing lead and work time, and improving your operational efficiency.

Blockchain creates strong audit trails

Blockchain technology stores every detail of every transaction at every level of the supply chain. This will – as mentioned above – facilitate greater fraud control, and it will also offer transparency into issues of legality such as money laundering and the use of child labour.

And though it’s a digital technology, blockchain will also assist with the tracking and recording of physical items. As they are transported across local and international borders, they can be identified at each location – creating a strong and fully documented audit trail.

This kind of end-to-end visibility ensures that delays are rare and that missing items are found and allocated to supply routes more easily. This allows you to manage and optimize these supply routes with maximum efficiency – ensuring that no space is wasted and no customer disappointed.

It’s clear blockchain will have a significant influence on procurement and finance. The advantages of being able to streamline business processes, secure payments, and automate workloads shouldn’t be understated. Do the research, ensure you’re positioning your business correctly and you’ll be in the camp that benefits – today, and in the future.

See InstaSupply’s co-founders chat about blockchain and its vital role on our roadmap.

Blockchain: Are You Bothered?

There are so many misconceptions around blockchain and its potential impact. Will the fundamental concept of blockchain really have a significant impact on procurement, finance and supply chain?

Last month’s Procurious London Roundtable was sponsored by Basware

Blockchain is the coolest technology of the moment and the hype surrounding it only appears to be growing year upon year. Whilst the concept was first used for Bitcoin, the digital currency, its potential is far wider, and many industries are actively investigating the possibilities of using blockchain-based solutions.

But despite organisations around the world jumping on the Blockchain bandwagon and advocating for its enormous potential, do the majority of professionals understand precisely what it is, what it can do and the extent to which it will impact our businesses?

At last month’s Procurious roundtable, Paul Clayton, Head of New Service Development, Basware put us through our paces with an overview of blockchain technology and his insights as to why procurement pros need to be cautious not to overestimate it’s bearing on the function.

What is blockchain?

A blockchain is simply a digitised, decentralised and cryptographically secured ledger of transactions.

“The biggest misconception” Paul begins, “is that there is only one blockchain. There are actually many blockchains in use today throughout many different industries.”

“Blockchain is actually only a concept, whose origins go back to academic work in the early 90s, rather than a thing. The concept was first publicly used to allow the crypto-currency Bitcoin to be traded virtually, anonymously, and without the need for a centralised bank.”

“Blockchain technology says where something has been transferred to and retains a trace of the transfer. Conceptually a blockchain acts like is a single ledger, a source of the truth if you like. In reality, it is physically distributed where there are actually multiple ledgers, known as nodes, that all work together to come to consensus on where something has been transferred to, which is then shared between them.”

An obvious advantage of this technology, is that it’s very difficult for you to break the integrity of the ledger. “There are multiple copies of the same ledger and so if someone hacks one it becomes immediately obvious that it is different.”

The flaws at the heart of blockchains

Whilst a blockchain itself is safe, an application using it remains hackable – Security researchers and hackers have proved it’s possible to hack someone’s Bitcoin wallet and empty it of crypto-cash. Mt. Gox infamously lost 7 per cent of all Bitcoins in circulation in 2014, which were worth, at the time, approximately $473 million. It also appears to be an uphill battle trying to prosecute someone for taking a Bitcoin

It’s can be too transparent – With public blockchains, once a transaction and its associated data have been placed onto a blockchain, anyone and everyone who has access to it can view everything, whether you like it or not

It’s not the most elegant solution – The very nature of the deliberately distributed ledger with multiple copies (nodes), means that you have multiple nodes undertaking exactly the same piece of work ie working out where something has been transferred to. From a pure computing power point of view, for certain applications, this is a highly inefficient way of doing things.

The blockchain for Bitcoin for example, has already had to be re-designed to increase its scalability as the number of Bitcoins in circulation and the growth in the associated transactions meant that the ledger became too unwieldy and it was taking too long for it to update.

You can still lose things!

Even if you know where something went, you can still then lose it. Who could forget the unfortunate James Howells, who mistakenly threw out a hard drive containing 7,500 Bitcoins, now estimated to be worth $7.5 million

 

Blockchain for business

There are some who would argue that these problems have been addressed and eliminated for blockchain for business. Paul is not one of them!

“The distributed nature of ledgers means blockchain is good at maintaining the integrity of who owns something but what it cannot do is determine whether the person who put something into a system owned it in the first place.”

This means, when making a transaction via a blockchain, the recipient needs to be able to trust the supposed owner of the thing that is being exchanged. “You are, essentially, reliant on the veracity of the source of what goes in to the blockchain.”

For example:

Does the “owner” actually own the rights to the house they are trying to sell you?

If you’re exchanging metals, does the “owner” have documents to prove they have the rights to the gold?

It might be good at preventing a fraudulent transfer of an asset but blockchain is “next to useless at establishing if a person owned something in the first place”

“As a ledger system it is extremely inefficient, almost clumsy in the way it works. In certain circumstances, where there are a high volume of transactions it uses so much computing power it’s almost not worth it.”

“And it’s for these reasons that, whilst it will have applications in many areas from supply chain through to electronic voting, blockchain won’t change the world!”

Where is the value for procurement?

“Is there value in blockchain tech? Yes. Does the value match the hype right now? Not even close!”

“From a procurement point of view the biggest area of impact right now is most likely to be in supply chain applications. There are obvious applications for the transfer of title and bill of lading. Of particular interest in this space right now are supply chains that can be subject to fraud such as pharmaceuticals and food

Going beyond that the application of so called “smart contracts” to a blockchain can help automate certain business processes. Smart contracts, are pieces of computer code attached to a blockchain that automatically execute an action once a set of agreed criteria have been met. For, example, a smart contract could be used to automatically pay a supplier once the buyer has received their goods without the need for invoice processing and payment.

” In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet its just an interesting concept with some obvious benefits and flaws.”

Last month’s Procurious London Roundtable was sponsored by Basware