Recently, I had the pleasure of spending some time with Bruce Bourdon, a payments and financial services executive with over 30 years of experience with the likes of U.S. Bank, Cigna, Open Systems, and ADP. I originally met Bruce at IFO Fusion back in 2012, where he shared some insights on payments opportunities in the healthcare market. His knowledge and experience are extensive, and I’m happy to have the chance to welcome his views here at Beck Anderson. So let’s get started!
SP: First off, thanks for taking some time to join me to discuss a topic I know we’re both passionate about: enterprise procure-to-pay.
BB: My pleasure, Scott. Thank you for the opportunity to discuss a common industry passion we share.
SP: Let’s start at the high level. We’ve seen a lot of innovation in the procure-to-pay space over the past few years. From your perspective, what has been the most exciting development thus far?
BB: From where I sit, the most exciting opportunity is in the payables automation aspect of the P2P arena. There are organizations taking advantage of e-invoicing and approval workflow adoption, however, there are recent industry studies indicating there is still a significant untapped market for these solutions. Both solutions enable buying organizations to benefit from working capital optimization tools such as discount management and dynamic discounting solutions. The challenge for solution providers is to illustrate their competitive differentiation over other like P2P solutions. Providers also need to demonstrate their competency and capacity to deliver compelling ROIs that justify investments in their solutions.
SP: So when you think about the value of procure-to-pay-related investments, and those “compelling ROI cases,” where does it come from? Process efficiency and labor savings, transactional savings, working capital opportunities?
BB: All of the above feed into a business case for a P2P investment. Expedited payments are necessary for buying organizations to take advantage of early payment discounts offered by suppliers, which can be facilitated by automating AP invoice data entry (e.g. e-invoicing), approval workflow, and electronic payment on the back-end. A real reduction of AP headcount can result from broad adoption of e-invoicing across the supplier base, which can lead to a significant hard dollar savings. Although a reduction in cash float will result for a buying organization when making an early payment to qualify for a discount, this can be more than offset by the cumulative discounts received.
Virtual payment card programs can extend a buyer organization’s cash float and reduce costs by lessening the reliance on check payments (postage and bank fee savings), however, these types of programs are typically only put in place for suppliers representing 5 -10% of a buyer organization’s annual AP spend. Virtual payment card programs can be implemented with no external costs, with internal resource time invested to create the accounting system integration, and providers willing to conduct supplier enrollment at no cost to the buyer organization.
SP: I think we’re on the same page as far as the different potential sources of savings. That said, do you think that message has been effectively communicated to the entire market? Is there anything that providers, analysts, and business press could be doing better here?
BB: I believe white papers have helped lay out the business case and the value of P2P solutions, however, these findings often have limited distribution through provider sales collateral/websites, webinars, and occasional industry trade shows and user conferences. The stage for communication does not seem to get the same broad industry press voice as mobile technology, payment networks, and ERP technology. If the press can get the word out via AFP, ISM, and IOFM publications, that can help broaden the awareness.
SP: Good point. Thus far, it seems wider press focuses mostly on consumer-oriented payments stories. There are good folks like those at CFO.com, The Paypers, and others helping spread the word. I agree, though, that we have more to do. But that’s enough of the soapbox for me. Let’s focus on how practitioners can actually realize those potential benefits.
Across the enterprises you’ve worked with over the years, are there any common traits that successful P2P implementations share?
BB: Yes. Senior management sponsorship is key. Also, a working project plan with a realistic timeline. A common question asked by prospective buying organizations is “how fast can you implement this solution?” Unfortunately, they may place too much emphasis on making their provider selection decision based on the provider’s response with the shortest timeline. Most providers can deliver in a relatively similar timeline, however, the heavier variable dependency is on the availability of the client’s mission critical staff for the project at hand. This means AP, Procurement, Treasury, and IT, in most cases. Clients that have the best success rolling out P2P solutions are good at managing the process with the provider, while leveraging senior management’s commitment to assign key competent resources, and keeping the team on task.
SP: That makes sense, and lines up with the research I’ve conducted—and read—over the years. I think there’s also benefit to thinking about this another way. Looking at things from the opposite perspective, are there any pitfalls that you would caution companies to avoid when taking on an implementation project?
BB: I highly recommend that the entire team that is being charged with implementing the solution be given the same presentation that was presented to the CFO, before the decision was made to implement said P2P solution. This helps all parties on the client implementation team to understand what the CFO bought into and why. It also helps provide a sense of purpose, critical milestones, and project objectives. This affords the project team a chance to address any questions they have before beginning the implementation process. This can lead to a more successful implementation. Also, request and contact three provider references before selecting a solution. Don’t just ask for references in the RFP process without talking to them. Yes, they will likely all be “good references”, but you can still avoid common pitfalls by asking referenced clients about what they might do differently on their P2P implementation, based on what they now know. You can also use this as a way to survey other clients on a realistic implementation timeline and any ERP integration nuances. It is best to receive references for clients that are on the same accounts payable system as the buying organization.
SP: As a follow-up to that, I think it can be pitfall not to include the broader team during the evaluation process. At very least, representatives from the different functions that will need to work with the chosen system. The buyers, AP clerks, and managers who will be using the system day-in and day-out. Especially with the importance of user experience in the increasingly-SaaS world, it’s their feedback that should be weighed when judging a solution’s ability to work in practice.
BB: Agreed. Though there are times when a solution provider may be successful in getting senior management buy-in without a team representing all affected areas, as you indicated, it is a best to engage representatives of the impacted areas at the time the solution provider is selected.
SP: As we wrap things up, let’s bring out the Magic 8 Ball. If the past twenty years have brought us trading networks, a host of electronic payment options, and more C-level recognition of what P2P has to offer, what do you think the next twenty years have in store?
BB: Driver-less cars, card-less mobile payments using tokenization for consumer and commercial payments, and consolidation of P2P providers to leverage business relationships and their complementary core competencies. This consolidation will occur as it has in the past, through strategic alliances and acquisitions/mergers (e.g. SAP’s acquisition of Concur and Ariba, Lexmark’s acquisitions of Perceptive Software, Kofax, etc.). Also, we will continue to see non-traditional P2P providers pushing the envelop on the adoption of new technologies and emerging value-propositions that will accelerate the ROIs and make it even more compelling for C-suite leaders to move forward on P2P initiatives. Dynamic, fluid, and realtime solutions will evolve from best practices systems to common practice platforms. I am very bullish on the advancements in the P2P space over the next two decades!
SP: Sounds like we have quite a bit to look forward to, Bruce. To close things out, though, I want to focus on the present – and thank you for taking some time to share your thoughts on where P2P has been, where it’s headed, and what’s needed to make whatever choices we make successful.
BB: I have enjoyed our conversation, Scott. This is an exciting time. There is a broad field of opportunity for organizations to benefit from P2P solutions. I look forward to working with organizations to help them conduct their due diligence and to implement the solutions that most effectively address their business objectives.
This is the first in a series of expert and practitioner interviews we’ll be featuring in the coming months. If you’ve enjoyed this perspective, or if there’s anything specific you’d like to see, just let us know.
Until next time,