Invoice automation and connectivity in SAP and Oracle procurement deployments

Oracle and SAP procurement shops can improve their accounts payable functionality through invoice automation.

Invoice automation and connectivity systems do more than reduce paper-based processes. They can also serve as a foundation for transforming the accounts payable (A/P) function by bringing new levels of operating efficiency to Oracle and SAP procurement and finance organizations (e.g., reducing costs per full-time equivalent, the total cost of operations, etc.) and the overall effectiveness of the function (e.g., by improving working capital, enabling an ability to “profit” from receivables through either treasury or third-party funded early payment, among other things).

Despite the often significant hard-dollar savings and working capital improvements that invoice automation and supplier network connectivity solutions can bring, SAP and Oracle remain behind providers in delivering capabilities that can help address supplier enablement as a preceding component of the invoicing process. Processes in this area require complex invoice workflow, matching, approvals and overall process management that optimizes the linkage between procurement, payables and treasury requirements, and priorities.

They also require the capability to enabling electronic invoicing for all suppliers and the enablement of scanning, capture and conversion to electronic invoices for middle-tier suppliers sending 500-1,000 invoices per year, as well as smaller suppliers that typically send 100–500 (or fewer) invoices per year. Invoice management and connectivity tools should also allow direct integration into supplier systems for high-volume suppliers, as well as interoperability and document exchange between internal and external supplier systems.

In addition, companies should look for systems that also enable:

  • Connectivity to existing network operators
  • VAT, tax and related jurisdictional payment matters
  • Working capital management visibility and strategies
  • Both dynamic and fixed discounting programs

To address these shortcomings in their own solutions, SAP and Oracle have partnered with OpenText and Transcepta in addition to providing partial solutions of their own within their procurement suites.

Yet ERP customers should not limit themselves to these recommended options. Many SAP customers also use SAP partner Hubwoo, for example, which has broader capability than OpenText. In addition, Basware, which many analysts and observers say have the strongest invoice automation solution, has extensive experience with enabling the electronic invoice presentment and payment and connectivity process within complicated SAP environments for both high-volume and low-volume suppliers.

Ariba has a proven network system as well, although recent price increases for suppliers do not make it as economical as in the past, especially for vendors that submit high-dollar value invoices. For further reading regarding Ariba’s price increase and both buyer and supplier views of the costs and benefits, read “Ariba Network Price Hike: Plan for Increased Supplier Fees in September 2010.” In addition to Ariba, Amalto, Elemica, Ketera, Kofax, OB10, Pagero, Perfect Software, and Quadrem, among others, are all worthy of consideration. New specialists such as Oxygen Finance and Pollenware offer their own unique capabilities in the discounting and benefits capture area.

As a final point of recommendation, we suggest to clients operating globally, especially in the European Union, that they make sure that the providers they work with in the European markets have the ability to integrate with local network operators and providers in specific countries and regions.

For a complete, comprehensive look at this subject beyond this article, download our Compass Research Paper.

If you’re interested in learning more about procurement systems that can enable the ERP ecosystem in general, we would encourage you to download our latest Compass research on the subject.

Jason Busch is Principal Analyst at Spend Matters. His contributions are based on Spend Matters Compass research, which examines a range of procurement and supply-chain technology solutions and trends.

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