As we mentioned in an article last week, Ardent Partners is initiating its technology coverage with the launch of the its first SMARTSet™. A SMARTSet is a low-cost, comprehensive set of research tools and templates designed to guide organizations though the process of automating their processes and selecting the best-fit solutions for their specific requirements and budgets. Our first SMARTSet focuses on ePayables solutions (accounts payable automation).

Today and over the next few weeks, Vishal Patel, Research Director, ePayables at Ardent Partners will walk us through the entire series. Today he begins with an overview of “A Business Case Template for AP Automation”

An ePayables Business Case Made Easy

We believe that accounts payable (“AP”) departments utilizing manual processes have extraordinary opportunities to drive value within the function and across the enterprise. We have also seen, first-hand, well-executed ePayables deployments that have yielded a positive year one return. Now, while the value proposition of ePayables solutions is fairly straightforward, articulating and presenting a business case for a solution can be complex, time-consuming, and difficult. To help AP departments accelerate this process, Ardent’s analyst team has been hard at work developing a comprehensive Business Case template that is user-friendly and highly-customizable and includes accounts payable specific content, independent research, and easy-to-follow guidance and directions. The goal of the template is to help accounts payable (“AP”) organizations make a clear and compelling case for the investment in an ePayables solution AND make it an easier and more efficient process (we expect companies will be able to dramatically reduce the level of time and resources needed to complete the case).

Writing a solid business case and presenting a logical argument for investment in an ePayables solution involves a great deal of thought and effort – research on processes and costs, communication with relevant stakeholders, executive buy-in, financial analysis, and much more. We believe that a Business Case for AP Automation should include and discuss the following:

Relevant stakeholders – Projects with broad-based support are more likely to be approved than those that lack it. No matter where the AP function sits organizationally (i.e. part of shared services or part of the finance department), the ultimate success of an ePayables project will depend on support from relevant stakeholders. This may include procurement, finance/treasury, IT, line of business and last but certainly not least suppliers.

Current processes – The business case must provide a clear understanding of the current AP process. Figure out what the current method is to receive, process and pay an invoice. Is it fully paper-based? How long does it take to process and pay an invoice? How is validation and matching done? How many invoices and payments are processed annually?

Costs – In order to present an ROI calculation (see below), it is important to establish the cost to run the entire AP department, which will help to determine the cost per invoice. This is a key metric to monitor as an AP organization moves towards more automated processes.

Challenges / Opportunities – Only after the baseline processes and costs are fully understood is there enough context to highlight the current challenges. These problems, which are also opportunities for improvement, are typically driven by a lack of visibility and efficiency in the AP processes, some of them include:

• High processing costs and times
• High exception rates and general invoice processing issues
• Late payments and late payment penalties
• Poor supplier relations
• Inability to manage/control cash, understand current liabilities, and the failure to optimize working capital

Solution requirements – Involving relevant stakeholders early in the development of the case will allow them to provide input into the key functional and technical requirements and pay huge dividends on the back end after the solution has launched.. For example, IT will have an understanding of the enterprise’s current IT infrastructure and can help to define any integration requirements and/or constraints. With the full understanding of requirements, the business case can provide a clear idea of what the proposed solution is, what it will do, and how it will alleviate the current challenges and benefit the organization.

Organizational Impact – A project such as this will have an impact on business, IT, processes and people. It is important to keep in mind that this project will involve a significant amount of change management and the impact to the organization in these areas should not be underestimated because the acceptance of these changes will determine the success of the project.

Project Risks – Every project, technology or otherwise, involves some level of risk which cannot be eliminated completely. Risks involved could be related to technology, resources, user adoption, and/or supplier enablement [Sidebar: Supplier enablement is one of the biggest risks to a successful ePayables project]. The key in the business case is to identify all major risks and then identify the best ways to minimize the impact of those risks.

Financial Analysis – One of the most important aspects of any business case is the financial analysis that supports it. While competing projects can have very different requirements and benefits, the financial analysis is one area that allows enterprises to compare projects in an apples-to apples type of comparison. The analysis typically includes a cost-benefit analysis and an Return on Investment (ROI) calculation.

The above stands as a good Summary of the Template – although, we obviously cover much more ground in the 30-page report. In Summary, this template will guide AP departments present a comprehensive, well structured and persuasive business case for investment in an ePayables solution. We welcome your comments and questions. _______________________________________________________________________________________

Thanks Vishal!

So, there you have it, Ardent Partners’ “A Business Case Template for AP Automation” is now available on Ardent Partners’ site. If you’re in the market for ePayables, we hope you’ll investigate this document and the others in the ePayables SMARTSet.

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Tagged in: Ardent Partners Research, ePayables, Technology