The Case for Automation in Procure to Pay

By Rizal Ahmed, Chief Content Officer, SAPinsider

Automation has been a major buzzword in tech and business circles for years. Is now finally the time for SAP customers to apply this technology for significant and tangible gain?

The Enterprise Moves Forward with Automation

Automation is climbing the list of priorities for tech and business professionals, and many enterprise organizations have already dipped their toes in the water, finds recent SAPinsider research.

SAPinsider’s “Integrating Process Automation and SAP S/4HANA,” published In June, found that 65% of respondents have already started applying some sort of automation technology within their business. Over 50% of those respondents are focusing automation efforts in finance while more than 40% are leveraging automation to support supply chain processes.

SAPinsider was able to delve deeper into the drivers and use cases for automation in finance and procurement when we sat down with Danny Schaarmann, CEO and President of xSuite North America, a leading automation partner.

Why Automation Now

Schaarmann says the topic of automation is not new and the basic technology has been around for years. What is different today is the ease in which you can apply automation technology without heavy custom coding or integration. This makes automation technology much more available to organizations.

“SAP is already an automated and digital system in many ways. But now you can put technology and solutions on top of this foundation to eliminate much of the manual work and integration that you have today,” Schaarmann says.

One of xSuite’s specialties is automating the end-to-end procure-to-pay (P2P) process which most organizations support. There are a number of inefficiencies and tedious manual work that most companies have to deal with when it comes to P2P. The complexity arises in the fact that each vendor typically has its own document formats and standards that must be reconciled by procurement and accounts payable teams.

This is where xSuite comes in. Their data capture and optical recognition technology enables companies to take different data and document formats and automatically map that data into a company’s system to avoid the need to rekey data. xSuite also provides portals and intelligence to help digitize partner interaction as well as to monitor and manage exceptions that arise within the process.

The Automation Payoff

It’s not just the availability of technology that’s driving the investment, says Schaarmann. There’s a real opportunity to improve the efficiency and cost savings of the organization. Schaarmann estimates that the average company spends $20 to process every invoice and that $5-$6 per invoice is best in class. That gives you an idea of the potential impact that both automation and best practices can return to an organization when you carry these costs over hundreds of thousands, and in some cases millions, of invoices. “The biggest source of cost is in data entry. “That’s why most of these automation projects originate at the controller or business process management layer,” reports Schaarmann.

Radiant Global is one of xSuite’s key customer references. Radiant has leveraged xSuite to automate more than two million invoices on an annual basis. Schaarmann describes another organization who struggled with processing invoices during the COVID crisis due to the nature of remote working. They worked with xSuite to implement OCR in under one month to help automate the distribution of invoices. “This client processes over 200,000 invoices a year with 15-16 AP clerks sitting at home. If they can’t work remotely, you can imagine the backlog and impact that has,” Schaarmann says.

The other benefit of automation is that it enables organizations to elevate the focus and duties of the typical AR or AP clerk. “Most companies have teams of data entry clerks either within their organization or as a part of a shared service function that they outsource. Automation is not just about cutting staff but also redeploying employees that focus on the strategic aspects of the process and managing exceptions and optimization,” says Schaarmann.

What Does This Mean for SAPinsiders?

So now that automation technology is readily available. How do you take your first steps if you are relatively new or advance your strategy if you have already launched some initial projects.?

• Open up your mindset when it comes to change. Automation on its own is just one step, and it only works if you are open to challenging what you believe to be your best practices and standard way of doing things. Many organizations tend to get caught up in the “That’s the way we’ve always done it” mentality, which can stop automation projects from fully realizing their benefits. xSuite spends a tremendous amount of time in workshops with the business processes to better understand how companies are executing their processes, and then that makes it easier for them to understand the current state and suggest “best practice” solutions.
• Measure the cost of doing nothing: One of the first things organizations need to do is to have a solid understanding of what it’s costing them currently to execute their current processes and procure-to-pay. Based on that you can use conversations with experts like xSuite and other organizations to understand what is “best in class” when it comes to the cost to support those processes with room for improvement.
• Put your most experienced process people at the heart of your automation project: While consultants and partners like xSuite can bring a tremendous amount of experience to the table, it’s important to have members of your business process team to help guide the application of automation to the right pain points. Those AP clerks with decades of experience can really help you understand where things need to change.
• Take the time to select the right partner. Partners like xSuite have spent years building up their expertise and working with customers across the process and industry spectrum. You have to find the best experts that can and want to understand your current business and suggest both process-based and technology-based improvements.that can enhance your current state. “It’s not about the technology. You need to find the right tailor who understands how to create the suit you need, not the one that’s going to focus on the materials for that suit,” summarizes Schaarmann.

ABOUT xSuite

For the last 26 years, xSuite has provided global organizations with solutions and services to help automate core end-to-end business processes such as procure-to-pay.  xSuite has implemented over 1,200 automation projects in its history, with well over half of them focused on companies that run SAP. xSuite is a global company with more than 200 employees and 13 offices worldwide.