epayables Solution Spotlight

Transcription

1 epayables Solution Spotlight On Vishal Patel Research Director Ardent Partners December, 2012

2 1 The epayables Solution Spotlight builds upon Ardent Partners recent epayables SMARTSet series by combining Ardent s perspective on the accounts payables automation marketplace, recent epayables market research, and a comprehensive solution provider profile of Kofax. This report focuses on the scan, capture, and workflow category of epayables solutions and provides fresh insights on this segment from the epayables 2012: State of the AP Market report. Ardent Partners epayables Framework Ardent Partners defines epayables as the solutions and services that automate all or part of the accounts payable (AP) process. As shown in the epayables Framework below (Figure1), the AP process, at a high level, starts with the receipt of an invoice from a supplier, continues through a processing phase, and ends with the payment of the invoice. This Solution Spotlight report focuses on the first two phases of the AP process - Receive and Process - and features a provider that offers solutions to automate these phases: Kofax. The Ardent Partners epayables Framework helps AP departments evaluate their various processes by dividing invoice processing into smaller, more manageable segments. AP departments can then establish a clear view into the current state of operations - what is happening today - and then take the opportunity to clearly define new AP processes what should happen tomorrow. By developing a clear view into the scope of activities that occurs within each phase, what resources and systems are utilized, and what processes are followed, AP departments will be better able to set standard practices and work to develop best practices. The framework organizes the AP process into three major phases: 1. Receive how the enterprise receives invoices 2. Process how the enterprise validates and approves the invoices 3. Pay how the enterprise schedules and makes payments Figure 1: Ardent Partners epayables Framework Ardent Partners

3 By breaking the process into smaller, more manageable segments, Ardent s epayables Framework will help AP departments implement greater operational efficiency, enact stronger financial controls, and improve transactional visibility and flexibility. 2 Solution Landscape Ardent Partners uses its epayables Framework to explain the different AP automation (or epayables) solution types and the various providers in the market. Depending on their specific capabilities, solution providers are then categorized based upon the processes that they automate which fall within or across the three phases (Figure 2). This report focuses on the receive and process phases of the AP process and the Scan, Capture and Workflow solutions and services used to automate them. Figure 2: Ardent Partners epayables Solution Framework Receive & Process Phases Ardent Partners The first phase refers to the manner in which an AP department receives invoices from suppliers. Manual methods of submitting invoices include mail (paper), fax and PDF; whereas more automated methods include using solutions or services like scan and capture, einvoicing or EDI/XML. Since this is the first step in the process, the format in which the invoice data is received impacts the speed and ease with which it goes through the system for further processing and payment, the aim being to maximize efficiency and minimize cost. The second phase of the framework is where invoices are processed. This typically includes: Validation Confirms that there are no invoice errors or discrepancies and that the correct supplier, amount, price, address, etc are included on the invoice. Matching Ensures that the items were ordered, that the invoice pricing is correct, and that the items were actually received. The invoice is typically matched against a PO, GRN (good received note) and/or a contract. Non PO-based invoices typically skip this step.

4 Approval If there are no errors or disputes that need to be resolved with the supplier, the invoice is made available to the appropriate person (based on its amount, cost center, the location and type of goods or services delivered, and other factors) to be approved,. 3 Scan, Capture & Workflow Solutions Scan, capture, and workflow solutions (sometimes referred to as document imaging, data capture and automated workflow solutions) automate the Receive and Process phases of the AP process. The primary role of these solutions/services is to take paper-based documents and transform the data that lies within them into a usable electronic format which can then be processed in a more automated and efficient manner. This is made possible by first scanning invoices and using the scanned image to identify, extract, and capture the relevant invoice data. Methods of capturing data can include OCR, ICR OMR or dual pass data entry (see Appendix A for definitions). Data can be captured from paper invoices or PDF and faxed invoices. Once data is extracted from the invoice it is put through a series of automated validation and matching exercises to ensure its accuracy. Invoices are typically validated against vendor master data and can be matched to purchase orders or other documents (e.g., goods received note). In some cases, where a solution or service has been successfully deployed, invoices that match all the preconfigured rules are processed straight-through without any human intervention. Those that are not automatically matched and those that contain errors or discrepancies are considered exceptions and are routed to the appropriate personnel for resolution. Most of the solutions or services that perform these activities also store the scanned invoices images in a central repository and for easy access in the future. epayables Research In March of 2012, Ardent Partners conducted a survey of approximately 220 accounts payable and other finance professionals regarding their use of epayables solutions and found that (Figure 3) that there is fairly wide-spread adoption of Figure 3: Scan, Capture & Workflow document imaging solutions (which scan paper or PDF invoices and transforms them into images) in the market (65%) but more limited adoption of data capture solutions (30%). Data capture solutions, identify, extract and capture data from the scanned image of an invoice. This, leads us to believe that a significant portion of AP groups are simply scanning invoice images for storage or for use in document management systems and not for further data capture. Although scanning invoices may be sufficient for some AP organizations, Ardent Partners research has found that extracting and capturing

5 4 the data from an invoice can deliver significant value while introducing a higher level of visibility and efficiency. Perhaps because of these benefits, more respondents have shown an interest in using data capture solutions or services versus document imaging over the next 12 months (32%). Regarding the adoption of automated routing and approval workflow solutions (which automate and provide visibility into the workflow process around invoice approvals) there is sizable current usage (42%) and relatively strong interest in future usage (48%). Solutions that offer a scan and capture capabilities (and particularly those that offer services around front-end imaging and data capture) present AP organizations with a rapid first step to automating their processes and removing paper. Because there are multiple variations of solutions/services in the market, Ardent asked participating AP groups what they look for in these solutions and what features are most important to them? Figure 4: Most Important Features When Considering a Scan & Capture Solution Ability to capture data from s/pdf & paper 60% Includes automated routing & approval workflow 51% Allows for in-house scanning and data capture 49% Ability to capture header level and line item detail 31% Ardent Partners As seen in Figure 4 above, 60% of AP departments believe that the ability to capture data from s and other paper documents is the single most important feature of a scan & capture solution. Today, suppliers are likely to send invoices via an attachment (often a PDF) and may or may not mail a copy of the invoice. Receiving a PDF is no different than receiving paper, unless the data from the PDF can be accurately captured and utilized for further processing, which is why the second most important feature for scan and capture solutions to possess is automated routing and approval workflow (51%). Automated workflow is a key capability that significantly reduces the time spent reviewing and approving invoices and provides an enhanced level of visibility into the process. More importantly, this is where AP groups can gain the ability to process invoices straight-through (or touchless processing). Touchless processing is enabled by establishing a set of business rules that could include invoice total validation, PO number match, supplier information match and other supplier specific rules, and then allowing the system to automatically route the invoice through the process, checking them against the established rules. When the required invoice checks are approved and certain configurable thresholds are met, invoices can be processed straight-through and scheduled for payment.

6 Solution Spotlight Kofax 5 Company Overview Kofax is a publicly-traded company (London Stock Exchange: KFX) that is headquartered in Irvine, CA with offices globally. Kofax is a provider of capture enabled business process management (BPM) solutions. Kofax automates information-intensive processes to help enterprises streamline operations, increase productivity. In September 2009, Kofax acquired 170 Systems (a provider of automated AP workflow solutions) to broaden its footprint, customer base, and expertise. In December 2011, Kofax acquired Singularity a provider of BPM software. Today, AP remains a large focus and the Kofax solutions enable the automation of the receive and process phases of the process. The company s long history in the capture market and its strategic acquisition has put it in a great position to offer innovative and effective solutions to help organizations better manage and control the AP process. Products & Services Founded 1985 HQ Irvine CA Employees Geographic Presence Revenues Solution Delivery Total Customers Total AP Customers Transactions Processed/Yr Industry Segments Key Clients (up to 10) Operations in 32 countries, presence through partners in over 70 countries Fiscal year ended June 30 th, 2012 $262.5 million Direct through Kofax Professional Services and indirect through 700+ certified partners Over 25,0000 Over 1000 for advanced recognition, over 200 for MarkView Over 50 million invoices per year are processed using MarkView. Estimate additional 50 million for advanced recognition Financial services, insurance, government, healthcare, manufacturing, transportation and logistics, construction, retail, etc General Electric, BP, HSBC, ConAgra Foods, British Telecom France Telecom, TD Bank, Nordstrom, Qualcomm, Google Kofax offers a number of sophisticated technologies that allow its clients to transform from their paper-based organizations into more efficient and automated organizations that have greater visibility into the AP process. The following Kofax products apply to accounts payable: Imaging Transforms paper documents into electronic images using various products including Kofax Capture, Kofax Front Office Server and VRS for image enhancement Data capture Extraction of invoice data from images using OCR ( Kofax Transformation Modules)

7 6 Mobile capture - Allows the use of a mobile device to capture a document, cleanse and enhance it and extract critical data (Kofax Mobile Capture) Document management Enables greater control over the lifecycle of documents Automated AP workflow Automated routing and workflow based on configurable business rules (Kofax MarkView) Supplier portal Self-service portal where suppliers can submit invoices, resolve disputes and review invoice status (Supplier Express) Process Optimization Provides full visibility into the AP process and enables managers to monitor and improve upon key metrics (MarkView Advisor) Solution/Service Offering Receive During this initial phase of the AP process, suppliers can submit invoices in any format (paper, , fax, PDF, XML, etc). Once an invoice is received, the customer either conducts the scanning in-house or uses one of Kofax s many partners that provide outsourced imaging and data capture of invoices. At this point there is a scanning image of an invoice which goes through a data extraction and capture process using Kofax s capture software. Kofax Capture (batch imaging software) and Kofax VRS (image enhancement software) provide a single, consistent process that purifies the data for downstream processing. These two products represent powerful and versatile capabilities that capture all types of data. Once all the right data is captured it must be transformed into structure electronic information in order to enter the workflow, this is where Kofax Transformation Module comes in. This module processes the content using its unique knowledge bases, fuzzy logic, and self-learning capabilities. The solution uses learn-by-example techniques based on training samples that work on all invoices regardless of layout it does not need templates to be defined to indicate where the data is located. Solutions are pre-trained to extract a high percentage of information from each invoice and can continue to learn while running in production to increase performance. This replaces manual, error-prone and expensive document sorting and data entry processes with automatic document classification, separation and data extraction. Process MarkView delivers configurable best practice workflows for PO invoices, non-po invoices, vendor master maintenance, and manages all associated documentation. With real-time ERP integration for Oracle and SAP, Kofax ensures that the ERP is the single source of the truth, additional ERP data or logic is never duplicated. PO invoices are processed with 2, 3, or 4 way matching. Discrepancies are routed to the responsible party for resolution. For non-po invoices, users are prompted to point and click approvals, and also to enter accounting details for general ledger categorization. All exceptions are managed through workflow routing, and MarkView leverages the ERP approval

8 hierarchy to escalate the approval of higher value invoices. MarkView is fully configurable and a customer implementation rarely contains customizations. Deployment 7 Implementation is delivered by Kofax s professional services team which has over 150 years of AP experience. There are three categories of implementation services that are offered to clients. All are available at a fixed cost. 1. Ignite - For organizations with straightforward operations, strong IT and change management skills, the Kofax best practice solution is installed, tested, and validated. Implementation within approximately 4 weeks. 2. Accelerate For organizations with more complex operations, strong implementation teams, the Kofax best practice solution is configured to client requirements, installed, tested and validated. Implementation within approximately12 weeks. 3. Custom For organizations with complex operations that require customization, a complete set of services is adapted to the specific requirements. Implementation adapted to specific needs. Notable Options Supplier Express a self-service AP portal for suppliers for submission, status inquiries and payment details. This is a simple, point and click, SaaS solution Reporting MarkView Advisor is a real-time process monitor and dashboard for AP process owners. It provides real-time views into process status, and with the ability to allocate work and expedite individual invoices. It includes a set of standard reports. Kofax Mobile Capture Smart phones and tablets can be used as image sources, extending capture to the originators of content. Kofax VRS image enhancement insures that the images are perfected, making them readable. Supplier network Kofax integrates with all supplier networks.

9 REPORT SPONSORSHIP 8 The views and opinions in this report represent those of Ardent Partners at the time of publication. Sponsoring companies have had no measurable influence on the content and research in this report. The contents of this research report are the exclusive property of Ardent Partners. Please direct any comments or questions regarding our research sponsorship policy to Ardent s Chief Research Officer, Andrew Bartolini at abartolini@ardentpartners.com and/or Sponsor: Kofax plc (LSE: KFX) is a leading provider of Capture Enabled BPMTM solutions. These award winning solutions capture and streamline the flow of business critical information throughout an organization in a more accurate, timely and cost effective manner, enabling our customers to be more responsive to their constituents and better grow their businesses. Kofax solutions provide a rapid return on investment to more than 20,000 customers in banking, insurance, government, healthcare, business process outsourcing and other markets. Kofax delivers these solutions through its own sales and service organization, and a global network of more than 800 authorized partners in more than 70 countries throughout the Americas, EMEA and Asia Pacific. Contact: Mireya Arellano Marketing Programs Manager Tel: +1 (949) Mobile: +1 (949) Mireya.Arellano@kofax.com

10 ABOUT ARDENT PARTNERS 9 Ardent Partners is a Boston-based research and advisory firm focused on defining, advancing, and promoting the accounts payable, procurement, and supply management strategies, processes, and technologies that drive business value and accelerate organizational transformation within the enterprise. Founded by Andrew Bartolini, Ardent also publishes the CPO Rising website and hosts an annual event supply management leaders. Register for access and discounts to Ardent Partners research at ardentpartners.com/newsletter-registration/. ABOUT THE AUTHOR Vishal Patel, Research Director and VP of Client Services at Ardent Partners Vishal Patel is a recognized expert in the world of supply management. He has worked closely with procurement and accounts payable groups for most of his career, researching their best practices and advising them on how to utilize technology to improve organizational performance. Vishal is the lead analyst for Ardent s epayables (Accounts Payable automation) coverage and is also responsible for the oversight of certain AP solution selection and benchmarking projects. Vishal joined Ardent from HH Associates, where, as Director of Business Development, he helped establish and grow the company s US business by helping corporations de-couple their marketing supply chains and drive significant savings. Earlier in his career, Vishal was a Research Director in the Global Supply Management research practice at Aberdeen Group where he led and supported the coverage of many key areas including contract management, commercial cards, epayables, and complex category management. Vishal has conducted primary research, benchmarking and interviewing hundreds of procurement and accounts payable organizations and authored dozens of reports that highlight the strategies and technologies that enable Best-in-Class performance. All of the above has allowed him to gain a deep understanding of the Source-to-Settle processes, and accounts payable, in particular, and their impact on the enterprise. Vishal has been named a Pro to Know by Supply and Demand Chain Executive and holds a B.S. in Finance and International Business from The Pennsylvania State University and an M.B.A from Babson College. He welcomes your comments at vpatel@ardentpartners.com or Industry Standard Fine Print: The information contained herein has been obtained from sources believed to be reliable. Ardent Partners, Ltd. disclaims all warranties as to the accuracy, completeness or adequacy of such information. Ardent Partners, Ltd. shall have no liability for errors, omissions, or inadequacies in the information contained herein or for interpretations thereof. The contents expressed herein represent Ardent Partners best analysis at the time and are subject to change without notice Ardent Partners, Ltd. All rights reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. Solution providers and consultancies should take special note that Ardent Partners reserves the right to seek legal remedies including injunctions, impoundment, destruction, damages, and fees for any copyright infringement (which includes but is not limited to usage of any Ardent Partners content in company collateral, presentations, and websites) in accordance with the laws of the Commonwealth of Massachusetts and the United States.