While I have personally have spent a good deal of my time over the past six years focusing on the accounts payable market, at Ardent Partners, we have another analyst – Vishal Patel – who has been and will be solely-focused on accounts payable. Ahead of Vishal’s upcoming ePayables research series, we recently got together and then pulled together a list of the six major trends we expect to see continue and grow in accounts payable in 2012.
1. Payments – We believe that 2012 has a very good chance to become “The Year of Electronic Payments.” Since May, we’ve seen a pretty big spike in interest for payment solutions. Companies that began their AP automation journey in recent years are coming to the realization that payments are a big part of the AP process. These companies are looking to extend the process automation footprint of their ePayables solutions and include the invoice payment process. We are also starting to see more companies contemplating and including electronic payments in new RFPs. In some ways the electronic payments market in 2012 feels like it could resemble the 2002/03 eSourcing market which started to see broader understanding and greater acceptance. This bodes well for payment specialists like SunGard and those that can provide an end-to-end solution like Direct Insite and the network providers.
2. Networks – If 2012 is the “Year of Electronic Payments,” then we have already entered what we believe is “The Decade of the (P2P/Supplier/Payment) Network.” Enabling more suppliers onto your system faster is the best way to drive full value from your investment in the solutions that you and your suppliers use to communicate, collaborate, and transact. Whatever you call them, trading networks leverage a common infrastructure to help enable more potential trading partners onto a standard platform more quickly. Those that build a critical mass of trading partners have an extraordinary opportunity to really change the way business is done. Will really dramatic changes or shifts occur in 2012? Probably not. But, what started at the end of the millennium and continued slowly through the last decade has picked up some good momentum over the past two years. We expect to see the network trend accelerate in 2012. And, as more enterprises join these networks, more opportunities for value will arise. It is still unclear what the “next generation” networks will look like, but the leading network providers like Basware, Hubwoo, and Ariba stand to be at the center of the action. And, we haven’t even begun a discussion around the inevitable impact that social networking capabilities will have on the Source-to-Settle value chain [Stay tuned – there’ll be much more on that last item very soon].
3. Increased focus on true P2P – We’ve previously raised the debate about whether or not Procurement should own AP and our views on that topic have evolved over the past decade. However your enterprise answers this question, it has become increasingly valuable (and therefore increasingly important) for enterprises to link procurement and accounts payable – linking their processes, linking their systems, and opening up communication between the two. This new (or in some cases renewed) focus will ultimately benefit both groups and solution providers like Verian and Puridiom that have solutions that cover the P2P terrain.
4. Supplier Information Management – One by-product of the P2P trend above is that the management of supplier information has now become a procurement AND an accounts payable problem. While some of the supplier information management (“SIM”) pure-plays in the space have done ok in the market, many of the larger Strategic Sourcing and P2P companies in the space have done a good job closing the ground on any advantages by improving their own SIM solutions or partnering with a pure-plat. In our view, this means that (1) we expect this market will see very good growth in 2012 and (2) somewhat paradoxically, we will start to see an industry shake-out that will include some consolidation and some liquidation. Kroll Risk & Compliance’s acquisition of CVM solutions is one example of this trend.
5. Contract Compliance – We like to say that the best way to save money is not to spend it. Along those lines, the cheapest way to fix mistakes is to not make them. It is much more expensive to find mistaken payments after they are made than ensure that they aren’t made in the first place. OK, that’s three obvious statements in a row – four if you include this one. For years, companies have been waiting for solutions that identify non-compliant POs and invoices in an automated way and cut the mistaken PO or payment off at the pass. Now they are starting to demand them. This bodes very well for solution providers like ADP, that include this automated capability within their ePayables offering.
6. Paper Remains Public Enemy #1 – In 2012, more AP departments will be doing what they can to get paper out of the AP process. Paper is unwieldy and costly and companies need to end its use in invoicing – and yes, this includes emailing pdfs. We expect to see more outsourcing of the front-end processes and greater investment in solutions, like Brainware and Esker and that help eliminate paper.