But that’s not the reality in the B2B ecosystem that’s been built on age-old traditions that make transforming to new platforms appear burdensome and expensive to companies. In reality, the upgraded solutions are designed to make money and paperwork faster than ever before — freeing up time to focus on other sectors of the business supply chain, thereby making business and business transactions more efficient.
Still, the changes aren’t easy to keep up with. That’s why PYMNTS spoke with Paul Noel, SVP of Procurement Solutions at Ivalua, a global provider of spend management solutions, to get the inside scoop on how e-invoicing and e-procurement platforms reduce costs, create efficiencies, and add value to the B2B supply chain.
PYMNTS: When deploying e-invoicing tools, what are the expectations? Especially around cost reduction?
PN: The biggest problem [with e-invoicing] has been getting invoices from millions of different suppliers out there in the world, and tens of thousands for any one buyer into a common format in electronic.
If you can get it electronically, then you don’t have to have someone else keying in all that information so that you can reconcile and pay it. And that’s at the heart of any e-invoicing payment is the “e” part of it. If you can get your suppliers to do it, then you might be able to reduce some staff on the AP side, or the buyer side from having to key that stuff in. It’s also a much smoother process. The very first thing around the e-invoicing is capturing it into an electronic format. And the first ROI that most people are focused on is the fact that they can reduce re-entry of data and therefore re-route their staff to more higher value-added sort of things.
PYMNTS: What are some of the concrete advantages that e-procurement tools bring to the client?
PN: E-procurement is automating the intact procurement process, and invoicing is the tail-end of that process. If you’ve automated the acquisitioning such that people are ordering things only that they are approved to order, and the accounting is already being taken care of and the budget is already figured out and it’s OK to go — and the order is sent electronically to the supplier, then that gives you this great opportunity for the supplier…[By] using the buyer’s own system, they’ve created an electronic version of the invoice and made it easier for the buyer to reconcile and pay — which is the whole idea for suppliers. Making it easy to get paid, and in a compliant invoice. So e-procurement really helps invoicing in the sense that it cues up the invoice in a way that it can be easily captured and then easily reconciled.
PYMNTS: Bringing it back to e-invoicing in general — is there a way to measure the effectiveness of those tools?
PN: To measure the effectiveness and any kind of software solution, you baseline on what you were doing before and then after. The baseline for the before is really — at a very, very high level — is seeing the cost per invoice. …After invoice automation and e-procurement systems, they can really get it down to less than a dollar per invoice, which is pretty good.
The ongoing value of being able to reconcile your invoices faster is that you can pay them faster, or that you can do some supply chain financing and get some extra discounts in paying faster.
PYMNTS: Speaking of value, as companies are deploying e-invoicing management tools, what kind of success factors should they keep in mind?
PN: Going back toward that goal, and the reduction of staff who is doing things that computers can do. And it’s a matter of supplier enablement and supplier adoption — so that suppliers are part of the system and they are helping things out. Another success factor here is the success of the e-procurement system. So are suppliers actually looking at online orders coming from the buyer, and therefore are more prone to do flips of those orders into invoices? Or are they are more prone to use that portal or that network to send electronic invoices? They are if they are using it for the full process.
The buyer has an advantage here in that supplier adoption is not hard when you consider that an order coming to a supplier is happy times for the supplier. And the ease of invoicing is also happy times, because that goes toward payments for suppliers. You don’t have the normal problems you might have in other enterprise adoption areas — like getting the requisitioners to use the requisitioning system. When it comes to suppliers and you say to the supplier “if you want to see your order, just login here,” then they’re going to do it. That’s a huge success factor that’s sometimes overlooked when people looking at e-invoicing solutions. [Sometimes] they ought to really be looking at more of an e-procurement, or procure-to-pay solution that brings both elements together so that the orders and the receipts and invoices can all be in one system for the supplier to leverage.
PYMNTS: What is your perspective on the trends that are influencing e-procurement right now and how they are likely to evolve?
PN: E-procurement and overall things like spend management, which are solutions that are both strategic and transactional and work with suppliers. And that’s what we effectively supply — solutions that allow you to interact with suppliers on 40 or 50 different types of interaction processes…The software solutions that have been built over the last 15-20 years have gone into a new generation lately where the solutions that did any one of those are really kind of merging into platform-based solutions. The whole body is being addressed, and not simply parts of the system are being addressed now.
That’s one of the overarching trends that are going on here. And also the fact that the solutions that have existed for a long time went through three stages, and in the third stage right now was that they were just customized per client with the behind-the-firewall solution. Then they went into the software and the service, cloud-based “you get what you get, out of the box [solution].” Now it’s kind of the pendulum swinging back to highly configurable cloud-based solutions. So you get the best of both worlds. You get the out-of-the-box, but then you can configure the heck out of it to what is necessary. What we’ve found is that procurement is one of the oldest things out there. Everybody does it slightly differently and needs a little bit of a tweak to it. And from an enterprise software point of view, high configurability, compliance to regulations are different industry needs, requirements and things like that — those are all the things that are making it very hard to do the “out of the box, you get what you get” type of things.