Welcome!

Apache Authors: Liz McMillan, Gil Allouche, William Schmarzo, Christopher Harrold, Elizabeth White

Related Topics: Microservices Expo, Java IoT, Microsoft Cloud, Containers Expo Blog, @CloudExpo, Apache

Microservices Expo: Article

Collaboration Advances Bring New Productivity

Collaboration-enhanced procurement & AP automation maximize productivity & profit gains in networked economy says Ariba's Hofler

When the bottom line needs to grow (even when the top line does not), then businesses must exploit open collaboration advances in procurement and finance to produce new types of productivity benefits, say an industry analyst and Ariba executive.

And the benefits of improved data integration and the process efficiencies of cloud computing are additionally helping companies refine their finances through tighter collaboration with all elements of their procurement and supply chain networks.

To uncover how these trends are fostering improved processes in accounts payable (AP) automation and spend management, BriefingsDirect recently sat down with Drew Hofler, Senior Solutions Marketing Manager of Financial Solutions at Ariba, an SAP company, and Vishal Patel, Research Director and Vice President of Client Services at Ardent Partners. The discussion was moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: Ariba is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: Today’s landscape for AP and collaborating across business is driving some new processes, new approaches, and you have some new research. Tell us why you did the research now, and what found out.

Patel: We completed this E-Payables 2012 research study in June of this year. It was comprised of approximately 220 AP, finance, and procurement professionals. Our intent was to get a sense of the current state of AP operations, the usage of AP solutions, and to capture some of the key strategies, processes, and performances that these organizations are able to achieve. Also, to determine how best-in-class companies are leveraging AP automation.

Gardner: And what's changed? What's new now or different from say two or three years ago?

Patel: Traditionally, we saw AP as having a very tactical focus. We asked the survey participants, "What do you think AP can do for you?" The responses ranged from payroll and reviewing invoices to responding to supplier inquiries. But in 2012, we're beginning to see a little bit of a shift more toward strategic activities and the introduction of automation in the process.

Vishal Patel

If we compare procurement and AP, AP traditionally is lagging behind procurement in terms of transformation and improvement of performance in their groups. AP is currently at the point where it's trying to improve efficiency and trying to focus staff members on more strategic activities, instead of responding to supplier inquiries.

That's the general trend we've been seeing, and also just being able to connect the various processes within the procure-to-pay cycle.

New efficiencies

Gardner: Drew Hofler, we've seen an emphasis over the past several years, particularly in a tough economy, on seeking out new efficiencies. We've seen that in procurement and supply chain. Is this now AP's day in the sun, so speak, to grow more efficient?

Hofler: I would say that it is. It's probably the last bastion of paper processing in most organizations right now, typically seen, as Vishal mentioned, in the past as a back office tactical organization. They're seeing now that there are benefits that can be had by automating -- and not just automating the process and getting rid of paper -- but automating that on a network platform.

Drew Hofler

That allows visibility into key strategic data that drive decision-making throughout the organization and across their firewall to their suppliers as well. These are things like visibility into shipments, when they're coming in, visibility into line-item invoice data on the procurement side, so that they can do better analysis of their spend.

It's driving more strategic procurement on the supplier’s visibility into invoice status and payment timing, so they can manage their working capital and even access opportunities for getting paid early in exchange for discounts.

All of this stuff flows out of automation, and I think companies are really seeing how AP can now drive some of these strategic activities. So, I think it is their time in the sun.

Gardner: When we actually have an automation across the spectrum of these different activities, it seems to me that we're not going to be just collecting data and be able to proactively seek out new efficiencies or processes. It allows us to have more of an ad hoc, real-time benefit of being adept and even proactive. How is that important now, when you look at this entire spectrum of economic activity?

Hofler: That’s extremely important. Everybody needs to be nimble right now. The big deal is being able to adjust to the circumstances that are just crazy right now. It's having visibility into where you're spending specifically and when you're getting paid. Also, visibility into automating the invoice cycle and the AP process so that now you can do something with that with an early paid invoice that is approved maybe 45 days before it's due.

This opens up working-capital opportunities, where companies are offering early pay discounts to their suppliers. Suppliers who don't have the same access to cash flow that they had pre-2008 are accessing that, saying thank you, and are willingly giving up a discount so that they are lowering their days sales outstanding (DSO).

Buying organizations are getting something for their cash that they're certainly not getting with that cash sitting in bank accounts earning zero percent right now. Both sides are winning, and all of that's really made possible by automation.

Gardner: Vishal, this notion of being nimble, is that something that came up in your recent research and how important is that for companies to once again push the needle on efficiency?

Impact of AP

Patel: It's very important, especially when you start thinking about the impact that AP can have on other parts of the organization like procurement and finance. When you look at the P2P process, it's one transaction that all of these different stakeholders are connected to. But all the stakeholders are not connected to each other necessarily, and that's where automation comes in. That's when you get the added value of collaboration between the P2P cycle.

If you think about the manual environment where you're receiving paper invoices, paper purchase orders (POs). It's a difficult, really tedious work to get the right level of information at the right time, and then make decisions about how to most appropriately utilize cash.

One of the interesting things we found the research was that when we asked the survey participants what some of the biggest drivers are for the AP groups, the top one was improving processing efficiency, which is as expected, and it's been the same way for the last several years.

But the following two were the ones that were surprising. Number two and number three on the list were improving cash and working capital and improving days payable outstanding (DPO). Previously, we wouldn’t even have seen those on the list, but these are much higher on the list in 2012.

Any organization that can have visibility into their opportunities, into their process, and control over that process benefits from this.

Gardner: Drew, we recognize that large companies that are moving lots of goods that have a lot of capital involved are deeply incentivised to do this, but what about smaller organizations? Is this now something that is attainable by them, and are they starting to see benefits there, too?

Hofler: Absolutely. Any organization that can have visibility into their opportunities, into their process, and control over that process benefits from this. Smaller organizations on the buyer side are most definitely seeing the value of this. Lots of smaller organizations on the invoice sending and payment receiving side, what we would traditionally call the supplier side, the seller side, are seeing huge benefits from this.

For example, one of the suppliers on the Ariba network company called Mediafly, invoices with a very large entertainment company. They're a small company, they're a startup, and they're in growth mode. They have a full visibility into when they're paid and their CFO has told us that it's just like gold being able to see that.

So Mediafly has visibility into not only when their invoice is going to get paid, so that they can forecast on that, but also the ability to accelerate that payment on demand. They can literally click a button and get paid when they want.

They have told us that that has allowed them to hire, to accelerate their production of their products by hiring new developers, so that they can actually get a product out the door. They told us an example where they were able to get a new product out the door before they had planned, and they were scheduled to get paid on that original invoice.

Accelerated growth

And so it accelerated their growth. They've been able to avoid using credit lines because they have access to this through this kind of networked economy effect. They're able to see what's going on, and have the capability to make a strategic decision to accelerate cash, and it has really helped them as a small company.

Patel: In general within organizations, collaboration is a theme nowadays, with the workforce being quite diversified in terms of location. People are relying on collaborative efforts to help improve performance overall across the enterprise. And I think that's no different between procurement, AP, and treasury. Their collaborative efforts are going to improve each of their processes and the visibility they all have into the procure-to-pay process.

For example, procurement because of e-invoicing and supplier networks and just the visibility that AP is providing procurement, can improve their monitoring and measurement of supplier performance with invoice accuracy, how the're doing on payments, this helps them understand the total cost of working with a supplier.

That's one example of how procurement and AP can work together. But with treasury being able to understand what invoices are coming due, when they're coming due, when is the best time to make a payment, AP is able to deliver this kind of information in an accurate and real-time way, and that enhances their collaboration as well.

Their collaborative efforts are going to improve each of their processes and the visibility they all have into the procure-to-pay process.

Gardner: Drew, of course we're seeing lots of advancements in the field around cloud computing, mobile devices, and social networks, where people are becoming more accustomed to having an input and saying what's going on along the way. Technically, how is collaboration being driven into what Ariba is doing specifically around this AP automation?

Hofler: It all revolves around visibility into information, and as you said, access to make decisions based on that from across silos inside of organizations. For example, one of our customers, Maxim Healthcare, had very little visibility into procurement, across AP, and into their suppliers. All three of these stakeholders had very little visibility into what was happening, once a PO went out the door and once an invoice came in. There were spot processes that happened, but they were in a black box.

They had no way to enforce compliance to contracts. So an invoice comes in but it's not connected to the original document which is essentially a contract that enforces, say, volume discounts on widgets or whatever it might be. By automating the P2P process, by bringing all of these things into a kind of a network solution, the various stakeholders are able to see what's going on.

From the procurement side, they can see the line items on the invoice, so they can do better spend management and better analysis on their spend.

From a contract compliance perspective, the AP department can automatically connect the data in the invoice to that contract, to ensure that they're actually paying what they should be paying, and not too much.

Increased visibility

And from a supplier perspective, they benefit both from being able to see their invoice approval status, and when they're planning on getting paid. They're also able to access early payment, as I mentioned. One of the interesting benefits of this to Maxim was actually an increase in their DPO, a working-capital metric.

Procurement and AP typically may not have an impact on working-capital metrics that's usually a treasury and finance function. But when they had full visibility into their invoices and their payment terms, Maxim found that they were actually able to pay suppliers on time, rather than the practice of paying them early, because they just didn't have visibility into when they were supposed to pay them.

For a lot of my customers, we find that when we look at their vendor master, they often will have a lot of immediate terms with suppliers that they didn't realize they had, and their DPO was low as a result. So just getting visibility into all that gives them the ability to enforce the terms that they already have, and the net of that is to increase their DPO as Maxim saw.

Gardner: Now of course, we're in the networked economy. We've been talking about this in the context of an individual enterprise or a small business, but when more visibility data and accessed information along with collaboration is perhaps exploited at an industry or vertical level, there are some other benefits.

So does collaboration go beyond just what we're doing as an internal process? What about getting more data about what's going on in the whole industry and applying that to some of these business activities and decisions?

That's definitely huge and I would agree that it's right over the horizon.

Patel: When you have trading partners on a network and a whole cluster of them in a specific industry, there’s tons and tons of data that can be collected on invoicing, payments, purchase orders, spending habits, spending behaviors, and certain commodities.

There is a whole host of data that's collected, that's maybe the next phase of where the supplier networks go and how they make use of information. To date, I think it's still a matter of getting the scale and getting the network to a size where that information is available and makes sense. That's probably the next phase of it.

Hofler: I definitely agree with that. It's really the promise of the network, as Vishal pointed too. As you get the network effect and you get the massive amounts of data, there is just a tremendous amount of data flowing through on a daily basis on the Ariba network.

That's one of the things that's very exciting about our recent acquisition by SAP. There’s a big data program called HANA that they're developing and pushing. That's going to blow out the market. The amount of data that we can bring into that, and then slice and dice to the various different uses that's required to get intelligence into some of the things that Vishal was talking about. That's definitely huge and I would agree that it's right over the horizon.

Metrics of success

Most of the companies that come onto the Ariba network to do invoice automation, we call it Smart Invoicing, are able to set up certain parameters so that by the time an invoice gets to them, it's very clean. The suppliers give an immediate feedback on things that need to be fixed, as the invoice is being submitted, and then they get it very clean.

The result of that is that we have many customers who have 95 percent, 98 percent straight-through processing. Invoice comes through, it goes straight into their back end system and it's scheduled for payment and they're ready to go.

One of our customers, Ecolab Inc., has employed this. They had a couple of big problems, for example, where they had no visibility into their shipment information from the supplier on the front end of the process and their suppliers again had no visibility into payment on the back end of the process.

There are benefits to thinking more long term about the entire process.

A very interesting thing happened. When they weren't able to get visibility into shipment, they couldn't invoice their customer until they knew they had received the shipment that was going to be part of what they are invoicing their customer for from their supplier.

That led to an extended DSO, which is not a positive. By getting visibility into this, they were able to invoice on shipment and lower their DSO. Traditionally procurement and AP would not play in terms of DSO, but now they're able to contribute to the more strategic level of the company by impacting DSO in a positive way.

Additionally, they had risk in their supply chain from their suppliers not knowing when they were going to get paid, and sometimes threatening to and carrying through withholding shipment until they received payment on a particular thing. Now, their suppliers can see exactly when they're going to get paid and that has increased satisfaction and lowered the risk for them as well.

Just by automating the process and approving invoices in time, Ecolab increased their capture of contracted early-pay discounts from somewhere around 25 percent or 30 percent that they were able to capture before, to upwards of 95 percent. So that's a huge benefit to them as well.

Gardner: Vishal, in closing out, how do organizations get started on this? What are some typical steps that they should take in order to avail themselves of some of these benefits that we've been discussing?

Patel: One of the key things is, when looking at an automation initiative in the procure-to-pay process, to think about the process holistically, instead of focusing on automating one part, one process in AP or in procurement. There are benefits to thinking more long term about the entire process, how it's going to integrate, what technologies are going to be used for each part of the process, and whether that's all done at once or over phases.

Best practices

Gardner: Drew any thoughts from your perspective on getting started, best practices, or even where to get more information?

Hofler: For more information, come to ariba.com and look at all of our solution pieces. For getting started, I would agree with Vishal. In the networked economy, it's all about sharing information across silos, across stakeholders, and doing so in an automated fashion.

There are a lot of pieces to that and a lot of steps and processes along the way, where that information can be captured and shared across these parties.

A lot of people take it all at once in P2P process. Other people will automate POs and then invoice automation and then early payment discounting. I say look at where your communication breaks down internally over these processes, and let's target that first with some automation that can bring visibility into that.

You may also be interested in:

More Stories By Dana Gardner

At Interarbor Solutions, we create the analysis and in-depth podcasts on enterprise software and cloud trends that help fuel the social media revolution. As a veteran IT analyst, Dana Gardner moderates discussions and interviews get to the meat of the hottest technology topics. We define and forecast the business productivity effects of enterprise infrastructure, SOA and cloud advances. Our social media vehicles become conversational platforms, powerfully distributed via the BriefingsDirect Network of online media partners like ZDNet and IT-Director.com. As founder and principal analyst at Interarbor Solutions, Dana Gardner created BriefingsDirect to give online readers and listeners in-depth and direct access to the brightest thought leaders on IT. Our twice-monthly BriefingsDirect Analyst Insights Edition podcasts examine the latest IT news with a panel of analysts and guests. Our sponsored discussions provide a unique, deep-dive focus on specific industry problems and the latest solutions. This podcast equivalent of an analyst briefing session -- made available as a podcast/transcript/blog to any interested viewer and search engine seeker -- breaks the mold on closed knowledge. These informational podcasts jump-start conversational evangelism, drive traffic to lead generation campaigns, and produce strong SEO returns. Interarbor Solutions provides fresh and creative thinking on IT, SOA, cloud and social media strategies based on the power of thoughtful content, made freely and easily available to proactive seekers of insights and information. As a result, marketers and branding professionals can communicate inexpensively with self-qualifiying readers/listeners in discreet market segments. BriefingsDirect podcasts hosted by Dana Gardner: Full turnkey planning, moderatiing, producing, hosting, and distribution via blogs and IT media partners of essential IT knowledge and understanding.

@ThingsExpo Stories
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
"We've discovered that after shows 80% if leads that people get, 80% of the conversations end up on the show floor, meaning people forget about it, people forget who they talk to, people forget that there are actual business opportunities to be had here so we try to help out and keep the conversations going," explained Jeff Mesnik, Founder and President of ContentMX, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
I wanted to gather all of my Internet of Things (IOT) blogs into a single blog (that I could later use with my University of San Francisco (USF) Big Data “MBA” course). However as I started to pull these blogs together, I realized that my IOT discussion lacked a vision; it lacked an end point towards which an organization could drive their IOT envisioning, proof of value, app dev, data engineering and data science efforts. And I think that the IOT end point is really quite simple…
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus...
Verizon Communications Inc. (NYSE, Nasdaq: VZ) and Yahoo! Inc. (Nasdaq: YHOO) have entered into a definitive agreement under which Verizon will acquire Yahoo's operating business for approximately $4.83 billion in cash, subject to customary closing adjustments. Yahoo informs, connects and entertains a global audience of more than 1 billion monthly active users** -- including 600 million monthly active mobile users*** through its search, communications and digital content products. Yahoo also co...
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
The best-practices for building IoT applications with Go Code that attendees can use to build their own IoT applications. In his session at @ThingsExpo, Indraneel Mitra, Senior Solutions Architect & Technology Evangelist at Cognizant, provided valuable information and resources for both novice and experienced developers on how to get started with IoT and Golang in a day. He also provided information on how to use Intel Arduino Kit, Go Robotics API and AWS IoT stack to build an application tha...
IoT generates lots of temporal data. But how do you unlock its value? You need to discover patterns that are repeatable in vast quantities of data, understand their meaning, and implement scalable monitoring across multiple data streams in order to monetize the discoveries and insights. Motif discovery and deep learning platforms are emerging to visualize sensor data, to search for patterns and to build application that can monitor real time streams efficiently. In his session at @ThingsExpo, ...
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it ...
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
It’s 2016: buildings are smart, connected and the IoT is fundamentally altering how control and operating systems work and speak to each other. Platforms across the enterprise are networked via inexpensive sensors to collect massive amounts of data for analytics, information management, and insights that can be used to continuously improve operations. In his session at @ThingsExpo, Brian Chemel, Co-Founder and CTO of Digital Lumens, will explore: The benefits sensor-networked systems bring to ...
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, discussed how leveraging the Industrial Internet a...