Software, finance and COVID: why life will never go back to normal
Until recently, the process of digitising manual business processes has been a gradual one for all but the most technologically-focused companies. Now COVID-19 has changed everything, including the importance of being able to operate remotely, consistently and in a paper-free way. All of a sudden many ‘nice-to-have’ processes became essential and, almost overnight, organisations realised the need to cull traditionally manual, paper-based processes or those reliant on human-to-human contact.
Of all the areas of the enterprise, few functions have been more manual, repetitive and paper-dependent than the finance department. Most business professionals would never consider sending a handwritten letter to a supplier or partner. However, putting a purchase order (PO) or invoice for services rendered in the post was, surprisingly, still an everyday occurrence for many companies until COVID exposed the vulnerabilities of organisations with any paper-based activities.
When country after country went into lockdown, the immediate need for digital solutions required organisations to shift their digital approaches and finance was no exception. That’s why we at Tech Wire Asia are delighted to interview Basware about why this crisis became a catalyst for business teams, including finance, to consider more in-depth, business-impactful solutions immediately and for the longer term.
Paper, cattle and the Coronavirus
The shift to remote working took many of our readers by surprise. In an exclusive interview with Tech Wire Asia, Sush Koka, the Director of Global Product Marketing at Basware, described the challenges of a paper-based lifestyle.
“In the midst of lockdown did you continue to risk employees’ health and send them into the office regularly to pick up documents and scan them?” she asks. This seemingly simple question underpins a fundamental business risk. “If you consider that suppliers, especially smaller ones, struggle to keep their doors open unless buying organisations pay them on time, or even early”, says Sush, the risk to the entire supply chain could be significant. When weeks elapse between invoice pickup, processing and payment, smaller suppliers might, quite frankly, not be able to survive.
That was the situation faced by Pāmu, the state-owned New Zealand company that managed to pay 7,500 invoices in ten working days as the COVID pandemic hit, an action that kept the country’s food supply moving and ensured the continued livelihood of owners and workers on 125 farms.
How did Pāmu achieve this rapid transition to electronic invoicing? It came down to two factors: Basware’s know-how and procure-to-pay SaaS software and Pāmu’s finance and procurement teams’ determination and forward-thinking drive to turn farmers into digitally-enabled procure-to-pay experts.
Being able to quickly turn around payments and support the New Zealand economy when they needed it most was actually an unanticipated bonus for Pāmu. Originally, their intention was to digitise key processes across the business, starting with procurement and finance. However, they soon realised that the benefits of automating 100% of their procure-to-pay processes also gave them 100% visibility of those processes: and that, in turn, unlocked a host of other benefits.
Michael Pyliotis, Basware’s Vice President of APAC, explains that while 100% spend visibility is the company’s mantra, having visibility of what is spent actually translates into complete visibility across all of the company’s commerce flows when it’s done right. For Pāmu this meant the finance and, in turn, leadership team were able to see what their farmers had actually bought, not just what they had spent.
The key to true visibility lies in that small, but significant, three-letter word, ‘all’.
The Basware solution adds the type of profound insight into all the financial activities that take place everywhere in the organisation. “From day one”, Michael says, “we can see everything that our suppliers are doing out there. And from there, we can make real business decisions based on real information. We can answer questions like, ‘What type of spend is coming in? Is it linked to contracts and POs? Is there a lot of non-purchase order-related spend that requires additional processing to get it right, and into the payment process?’ Having access to this information can provide significant value to decision-makers across the organisation, if they choose to use it. For example, managers tasked with driving an R&D project can track every cent spent, analyse the best- and worst-performing cost centres and use this information to reach their project goals faster and more leanly.
How is this possible? Basware uses advanced invoice and PO matching, which matches more scenarios than any of its competitors through the logic built into the application. Basware’s SmartCoding also uses AI and machine learning to leverage historical transactions to suggest coding, even for non-PO invoices, and its SmartPDF solution takes care of the mapping of the fields between the format in which a supplier sent the invoice and the format in which the buyer can receive it. All of these activities make it easier for data to be extracted and, consequentially, acted on by people who need information anywhere in the organisation’s financial process – from the person who requests the PO to the CEO.
Change is hard
Despite the obvious benefits that true visibility brings organisations, many companies have not yet sought to connect their data and their systems in a way that can provide meaningful data that allows actionable insights. Why? The answer often lies in human fear of change.
Despite the fact that COVID illustrated our human potential to adapt rapidly, many people and organisations still believe that change is hard: which has typically been a barrier to adopting new technology. This is partly why, typically, software implementers have chosen to take the stick rather than a carrot approach to change management. However, Basware has seen positive results from approaching things differently. Basware prefers to involve those who understand and are involved in the real day-to-day invoice and purchasing process in its evolution. “When people are involved in designing, learning about, testing and working through a project, they become part of the solution, in a way”, says Michael. Then, once the process evolution has taken place, the whole team can drive reporting and compliance rather than processing transactions. Subsequently, tools like Basware’s reporting and analytics suite help members further evolve their service offering.
For example, “Using tools like analytics helps identify where there are cost blocks in the process, where processes have stopped, where there are disputes” and enable business users and process owners to resolve the underlying issues, creating a virtual cycle of business improvement. “We tend to encourage them to come in and own the process”, says Michael. “This is how we realise true process automation actually occurs. It’s not about changing how the business works. It’s about looking at how we can work across the business and use tools to drive change effectively”. As Sush explains, “Our solutions are built with the end-user in mind, not just the procurement or AP professional. Users adopt our solution not because they are forced to but because it’s the easiest way for them to get their jobs done”.
Fitting in nicely
Many organisations struggle to get full visibility because they simply can’t access all the financial data they need. It’s locked up in systems that don’t talk nicely to each other.
However, Basware’s platform works alongside enterprise’s existing solutions.
“Basware supports an open ecosystem approach”, says Sush. “Our integration capabilities mean that we can connect to whatever systems our customers already have in place (multiple ERPs and even legacy systems) as well as a broader partner ecosystem. For example, we can connect and get the data from specific procurement or marketplace systems as well”. All of which goes back to the 100% data capture approach. “The transaction does not have to originate or terminate in our system for us to capture the data,” Sush explains.
By integrating and connecting the many different business support systems across the entire purchase to pay process, true data visibility becomes possible. Basware uses a combination of its own internal tools and open APIs, which, as Michael describes, “make it pretty simple for IT departments to connect systems in a very secure, safe, structured way”.
As many organisations begin their transition from a COVID-dominated business environment, it may be tempting to think that things can or will return to the way things were. Neither Michael nor Sush believe that companies will want to go back to the dark ages of paper processing. “Financial process automation is clearly critical and strategic – COVID has made that very, very obvious,” says Sush. “Paying suppliers on time, keeping the supply chain moving, enabling a remote workforce… None of that is possible without a digital platform. You just don’t have a good handle of your cashflow in a situation like this, without automation.”
Since finance drives or underpins every single aspect of business life it seems logical that digital change should start with financial technology. Beyond cost savings and processing efficiencies, cost containment and spend management are becoming more important in our current world. Efficiency and improvements in that business function bring enterprise-wide benefits and financial automation has far reaching benefits across the entire organisation.
Indeed, an argument could be made for requiring all departments to co-fund a financial platform like Basware’s, too. But that’s another topic for another day…
To re-examine your digitisation strategies in the light of the COVID epidemic and learn about driving change from the finance department out into the greater enterprise at large, read more in “The Roadmap to Business Continuity,” and speak to Basware about its uniquely powerful offerings.