Selecting the Right Procure-to-Pay Solution for Your SAP Implementation Published: March 2015 Analyst(s): Scott Pezza, Principal Analyst What You Need To Know Report Number: A1053 Share This Report Identifying, evaluating, and selecting the right third-party procure-to-pay (P2P) solution for your SAP implementation isn t easy. One of the biggest factors to consider is the solutions ability to reliably and efficiently interact with the underlying ERP system. When evaluating third-party P2P solutions for implementation in an SAP environment, Blue Hill recommends a careful examination of four key areas: Data and Workflow, User Experience, Certification, and Future Plans. This report will discuss each of these areas in detail, building further with insights from current SAP users and recommendations to help improve your project s chances for success. Data and Workflow When we think about data and workflow in this context, our focus is on how closely the third-party application is integrated with your SAP implementation. Does it access and update SAP s database tables, or maintain its own that need to be reconciled periodically? For P2P specifically, does it have access to purchase orders and goods receipts stored in SAP for matching against incoming invoices received and processed separately? When attempting to match invoices to related documents, does it execute against the main SAP database tables or utilize local copies to improve performance? Does it offer a choice? AT A GLANCE Business Challenges Finding a procure-to-pay solution that provides necessary functionality without compromising data integrity and accessibility within the core SAP ERP system. Solutions Third-party applications that are SAP certified for integration; Providers who have deep knowledge of SAP systems and stay current to keep pace with small-scale changes and large-scale innovations we well. Benefits Efficient P2P operations, with accurate data housed within SAP; positive user experience, via familiar presentation and/or improved UI design; future-proof technology. Those questions all get to the heart of how different third-party providers integrate and interact with your core SAP system(s) and that can be incredibly important. SAP ERP has some, but not all, of the tools necessary to efficiently process incoming invoices. With a properly-integrated solution, invoices that are processed by a third-party application appear exactly the same as those that may have been manually entered by hand in the past. They exist in the system after being created by standard MIRO (PO-based invoices) or FB60 (Non-PO invoices) functions, and those documents are available to and accessible by all SAP standard transactions. In getting to that point, however, document scanning and data extraction via OCR require outside solutions. Afterward, searching for exact matches during vali-[ dation is possible within SAP, but more Copyright 2015 Blue Hill Research Page 1
flexible, contextual searches to find data with slight differences requires outside help. The same dynamic plays out during the approval process as well: SAP provides a powerful workflow engine, but the standard rules are fairly straightforward. Third-party applications, either tied directly into SAP s data on organizational structure or managed externally, provide more flexibility and creativity for designing workflows to meet individual organizations requirements. If you have found yourself frustrated by the limitations of SAP s standard workflows or the difficulty of adapting them in-house then this can be one big area to dig into when evaluating third-party solutions. Now I have in front of me a dashboard where I can see every day every moment what is being input, how many documents have arrived, how many have been regularly accounted. How many are stopped, and at what step of the process. I have a complete view of the flow. User Experience When it comes to your staff s day-to-day experience in working with an integrated P2P solution, there are two main elements to keep in mind: familiarity and flexibility. For staff who have been using an SAP system for a long time, they have accumulated a store of knowledge about how to navigate the system effectively. Like those shown on the left-hand side of Figure 1 (below), the interface elements are familiar and keying in transaction codes to execute tasks and access specific screens is second nature. For these users, an approach to SAP integration that mimics the source system can help to flatten the learning curve for new solutions. As discussed above, solutions which are designed to execute the same transactions and create the same documents as SAP itself help to maintain consistency both in the underlying system and with the expectations of users interacting with it. Silvia Gironi General Manager Pirelli Administration & Treasury, SpA Of course, not every user brings such experience or comfort with SAP ERP. This is where flexibility plays its part. Some providers, while offering the ability to work directly in the native SAP environment, also provide a secondary interface, which offers the potential for a more user-friendly look-and-feel. With this approach, the third-party solution provider has much wider discretion in how the interface is designed and how information is presented. With proper integration, though, actions taken in this separate interface are accurately recorded within SAP as if the operations had taken place in the traditional applications themselves. In the end, this provides some balance: an experience that better fits the user s needs without compromising the accuracy and accessibility of data within SAP. Copyright 2015 Blue Hill Research Page 2
Figure 1: Embedded vs. Separate Applications Certification Screenshots courtesy of Top Image Systems SAP s Integration and Certification Center (ICC) provides evaluation and consulting services to software vendors to assess their products ability to successfully integrate with SAP s platforms and applications. Its goal is to ensure that third-party applications, like invoice management, use reliable integrations to the core systems with which they interoperate. There are different variations of certification, such as SAP Certified Integration with SAP Applications which is focused on integration with a specific SAP product and SAP Certified Integration with SAP NetWeaver, which concerns integration with the technology platform upon which many SAP applications are built. Ultimately, the certification program aims to ensure reliability and reduce implementation costs by minimizing or eliminating the need for custom coding. When tying in a third-party application to even a single instance of SAP, this can save a lot of time and headaches. For global organizations whose implementations span ten, twenty, or fifty instances in different geographies, this reliability can be the difference between hitting and falling behind defined roll-out timelines. Finding a certified solution also Copyright 2015 Blue Hill Research Page 3
provides some post-implementation benefit as well, avoiding the aggravation and cost that enterprises can run into when custom-coded solutions conflict with future updates to the core system. Preparing for the Future With SAP s recent announcement of SAP S/4HANA, (SAP Business Suite for HANA), they have set the stage for the next generation of their business applications. This continues their progression towards cloud-based technology, with a new database foundation (SAP s in-memory S/4HANA), a new and vastly simplified database table structure, and a new user interface (with SAP Fiori becoming the standard). Changes in systems and architecture mean that third-party solution providers offering complementary software will need to have their eye on the future as well to ensure their continued ability to provide seamless integration with this latest generations of SAP applications. We are still in the early days, however. Many companies are not even on the latest ECC release, let alone moving to this entirely new platform immediately. As such, it matters more that your chosen or preferred vendor can speak to their awareness of and plans for SAP HANA integration, as opposed to having already achieved a SAP Certified Integration with Applications on SAP HANA or similar designation. Staff efficiency has a lot to do with their familiarity and comfort with how applications flow, and in selecting a long-term partner, their ability to meet your goals for both today and tomorrow should be top of mind. Spotlight on Pirelli From a user point of view, it seems fully and completely integrated. We don t see any difference when we work. We have one screen in front of us, and don t see whether we are in a TIS product or SAP. The user simply works in the system and cannot recognize the border between the two programs. Fabio Magni IT Program Manager Pirelli Information Systems Based in Milan, Italy, Pirelli & C, SpA is a global leader in the automotive field, producing high-quality tires for cars, trucks, motorcycles, and agricultural machinery. No stranger to AP automation, Pirelli had originally implemented an integrated solution for scanning, OCR, workflow, and image storage in 2004. Over time, however, the system s shortcomings became obvious. We chose a new solution to substitute what was already in place, says Silvia Gironi, General Manager of Pirelli Administration and Treasury, SpA their financial shared services organization. Over time, it became obsolete, so we decided to invest our money and change the previous solution. Looking for Change Pirelli began exploring potential replacements in 2013. Their previous provider was given consideration, but the quality of their support in Italy was not good enough. It s a big problem for us if the supplier isn t present or is missing in a country, says Fabio Magni, IT Program Manager with Pirelli Information Copyright 2015 Blue Hill Research Page 4
Systems. When we have a problem, we need to be able to involve the technical staff of the provider. In addition to this need for quality, localized support, Pirelli was focused on finding a multi-channel solution that could incorporate all invoices, whether they were sent on paper, via fax, over an electronic invoicing network, or through a portal. They were also looking for a solution that would improve their level of visibility into processes and performance, to help identify and address bottlenecks when they occurred. As an SAP user running a single global instance, Pirelli looked to their peers for assistance in finding a solution that would fit well within that environment. During our check, we contacted the most important energy utility here in Italy, says Gironi. They are an SAP customer, and have similar treasury problems. We had the ability to interview them and see the solution that they had implemented. We were very impressed by the difference between their solution and our old system. After seeing this system and comparing it to a handful of others they explored, Pirelli chose Top Image Systems eflow Invoice for SAP to replace their decade-old solution. Seeing the Results One important area where the new system outshines the old is in terms of transparency and visibility, especially important in their new multi-channel invoicing environment. One of the problems of our old solution was that, from my perspective, I didn t have any view of the process and its performance, says Gironi. Now I have in front of me a dashboard where I can see every day every moment what is being input, how many documents have arrived, how many have been regularly accounted. How many are stopped, and at what step of the process. I have a complete view of the flow. One thing that has not changed is the user experience, which is good news for shared services staff. In terms of presentation, the TIS solution sits inside of SAP and is indistinguishable from other functionality. From a user point of view, it seems fully and completely integrated, says Magni. We don t see any difference when we work. We have one screen in front of us, and don t see whether we are in a TIS product or SAP. The user simply works in the system and cannot recognize the border between the two programs. Pirelli is taking a phased approach to their migration. They began by using the TIS solution for one business unit managed by the shared service center. After observing how the system functioned and making some optimizations, they expanded out to five business units who process an average total of 20,000 invoices per month. Moving forward, Pirelli plans to onboard additional business units, with a final target volume of approximately 400,000 invoices per year. The planned roll-outs will also expand outside of the Italy-based starting point, touching businesses in France, the United Kingdom, and Germany over the course of the next year. Copyright 2015 Blue Hill Research Page 5
Blue Hill Analysis Pirelli s story helps to bring attention to some very important considerations when exploring AP automation solutions within SAP ERP environments. Their approach to selection and implementation processes show how valuable it can be to: Evaluate support, not just software. A rundown of features and functionality shows us what can be done when everything goes well. That said, it s the availability and accessibility of localized support that can make the difference when problems occur. For global organizations, finding a partner that has a local presence in areas of current and future operations can provide that level of dependability to address problems as they arise. Think holistically about invoice channels. Some solutions handle paper well, scanning and extracting data. Others focus on providing portals for suppliers to log into and upload or key in their invoices. Still more facilitate true electronic invoice exchange. There s great benefit to getting all of those channels flowing through a single solution, enabling a unified and standardized workflow regardless of how the invoice originated. Value Visibility. If you already have an existing document processing solution in place, the key benefit of an alternative solution may not be focused on increasing the average efficiency of invoice processing. Visibility is the big driver of efficiency when dealing with exceptions knowing when and where they occur and giving staff the opportunity to address them quickly. If you can t see where a payment is stalled, your first true alert may come in the form of a supplier phone call. Find a user experience that works for your team. There is no right or wrong choice when it comes to your choice of embedded versus standalone interfaces. If your staff is comfortable and proficient with the standard SAP interface, a solution that sits inside of your ERP and merely extends its functionality can ease adoption and reduce the need for additional training during implementation. With Fiori, SAP is moving toward a new paradigm of their ERP presentation but if your organization isn t on the bleeding edge of adoption, that look-and-feel is not what your AP or shared services staff is accustomed to. Copyright 2015 Blue Hill Research Page 6
Conclusion When looking to improve your procure-to-pay operations, there are a lot of solutions to navigate. When taking the time to consider your options, it is important to evaluate not just the functionality the solutions provide, but also their ability to work with your existing SAP implementations. This means looking at whether the vendors products are certified by SAP, how flexible they are in using the native SAP interface and screens, how they balance performance and data consistency, and how well the provider is prepared for future SAP innovations. The goal is to help make the best decision possible. That means not just finding a solution that works today, but a solution that is reliable through upgrades, and a provider that is positioned to address structural changes to the underlying technology stack as well. Copyright 2015 Blue Hill Research Page 7
ABOUT THE AUTHOR Scott Pezza Principal Analyst Scott Pezza is a Principal Analyst with Blue Hill Research, a Boston-based technology research and advisory firm. Scott s research is dedicated to topics that are top-of-mind for the Office of the CFO, from working capital management and enterprise performance management to the day-to-day operations of accounts payable and receivable. His career spans the breadth of the physical and financial supply chain, from logistics to software-as-a-service technology to business research. He has spent the past seven years exploring how businesses tackle challenges, from warehousing and transportation to procurement, payments, and receivables management. He received his B.A. from Clark University, his J.D. from Boston University School of Law, and his M.B.A. from Boston University Graduate School of Management. CONNECT ON SOCIAL MEDIA @scottpezza www.linkedin.com/in/scottpezza bluehillresearch.com/author/scott-pezza/ For further information or questions, please contact us: Phone: +1 (617)624-3600 Fax : +1 (617)367-4210 Twitter: @BlueHillBoston LinkedIn: www.linkedin.com/company/blue-hill-research Contact Research: Research@bluehillresearch.com Blue Hill Research is the only industry analyst firm with a success-based methodology. Based on the Path to Success, Blue Hill Research provides unique and differentiated guidance to translate corporate technology investments into success for the three key stakeholders: the technologist, the financial buyer, and the line of business executive. Unless otherwise noted, the contents of this publication are copyrighted by Blue Hill Research and may not be hosted, archived, transmitted or reproduced, in any form or by any means without prior permission from Blue Hill Research. Copyright 2015 Blue Hill Research www.bluehillresearch.com
This research is being made available courtesy of Top Image Systems, a SAP-certified partner. Top Image Systems (TIS) is a global innovator of intelligent content processing solutions. Our multi-lingual, comprehensive platform is designed to help finance and treasury teams operate at peak performance. Our financial transformation solutions automate receivables and payables functions, integrate with 40+ ERP systems, enable superior service levels, and only require human intervention for discrepancies. Deployed in over 40 countries, our solutions have helped over 1,000 companies around the world reduce processing costs by up to 80%. By leveraging TIS innovative mobile and cloud offerings and best-in-class recognition technologies, you can also enjoy 80-100% straight-through-processing. TIS was founded in 1991 and is publicly traded on NASDAQ (TISA). We operate internationally with branch offices in the United States, Germany, UK, Latin America, Singapore and Japan and with local representatives across Europe and the Pacific Rim. We are committed to providing the highest value in digital business transformation and continually improving customer experiences. www.topimagesystems.com