Summary
An interesting set of reports this month. There is a focus on AP with some themes emerging around the need to automate especially around invoice approvals and time to pay. Exception management is still a big issue.
There is a focus on fraud in a number of reports, with some identifying the rising cases of fraud, potentially driven by AI.
Several reports identify budgets for procurement technology are either increasing or staying the same.
Automation and digitisation are common themes across all reports, and as per last month where there comparable benchmarks, ive pulled them all together and compared then with SAP benchmarks from our program.
IDC SAAS Path
This paper provides visibility into the mind and journey of the Software as a Service (SaaS) buyer across multiple functional applications. For my summary ill be focussing on the procurement aspect.
According to the report, Procurement application buyers are willing to spend more for advanced AI capabilities with strong interest in applications that drive cost savings and improve operation efficiency. They seek quick time to value from trusted brands that offer robust data security and ease of implementation. They have shown an increased appetite to explore the functionality of Spend Orchestration applications that can improve the user experience and provide great visibility to all spend.
There are other personas also listed, including CLM, Travel and expense.
Key Barriers for adoption include industry specificity, price, cloud preferences and data security. Following up on the Economist study which identified that 71% stated that procurement was involved in the digital transformation of the organisation, this report identifies the roles (IT and LOB) roles and confirms the involvement of procurement, in evaluation, recommendation and final decision all being over 34%.
The paper also confirms that the majority (51%) planned to increase spend on procurement applications with 43% planning to keep spending where it currently was. Key attributes that buyers looked for in procurement included trusted Brand & robust data security (29%), Value for money (27%) and ease of integration (25%).
Overall an interesting report that taps into buyers preferences across a range of LoB.
Fraud & Payments Studies
There has been a few reports this month about fraud and payments and the next couple of sections will cover them.
The first is from a PYMNTS study that identified that nearly 60% of large firms use at least five systems for AP. It also identified that executing payments was the step in the source to pay cycle that CFO (23.3%) experienced most delays in last year followed by authorising payments (18.3%).
Manual AP handling is still the norm. Just 17% of enterprise firms run their source-to-pay systems largely without human involvement.
Ravelin also launched their fraud and payments survey for 2024 and also had some interesting points, with fraud rising for 75% of companies and payment fraud up by 69%. AI powered fraud affected 64% of respondents but 66% found ML useful in fraud prevention. The majority of sectors identified that impacts on revenue and loss of profit was the top pain point with 30.3% identifying costs of between $5-10 million pa and 27% stat8ing it was over $15m.
These two reports are good intros into the rest of the AP reports this month.
AQPC Late Payments
In APQC research, the number of finance and accounting managers who pointed to late customer payments as a priority issue in managing cashflow increased by 10 percentage points between 2022 and 2023. Potential causes for the heightened level of concern over late customer payments include:
- Economic factors, including recession fears, high interest rates, and decreased liquidity.
- Supply chain disruptions, which can result in the need to increase inventory or delay work, among other implications.
- Changes in payment culture and the broad shift toward longer payment terms.
The report identifies some suggestions for managing this, including providing incentives for early payment/prompt payment.
Interesting 55% of finance leaders identified cash flow management as a top priority for finance to focus in for 2024 with 60% identifying process improvement.
Ardent Partners State of AP/Metrics that Matter
Two reports from Ardent Partners the State of Accounts payable and AP Metrics that Matter.
Both reports are interesting but for the purposes of this summary, I wont distinguish between them as they do cover some of the same information (albeit from differing number of respondents).
Top priorities for AP in 2024, Automation (43%), which is similar to the AQPC report above and also talks to procurement report from the Economist where it also identified digitisation as the top short term priority.
Improving data and reporting is second( 41%) with enabling suppliers more readily. Notably for me, was the 5th priority being improve collaboration and communication with procurement (31%) which I think is very interesting especially as the shared services operating model is not currently the one that organisations are moving toward for procurement and AP meaning that this is absolutely essential to ensure that automation, process improvements and digitisation are done in consultation so as not to negatively impact each other.
Top barriers for AP include the high% of exceptions (53%), and the approvals taking too long (41%) which is a call back to the PYMNTS report earlier. Continuing the fraud theme this is 3rd at 29%.
State of Procurement Function
This e book from Jaggaer follows a survey of 220 leaders to understand the strategic role of procurement. Similar to the IDC report earlier 75% of organisations worldwide have increased or maintained their budgets for procurement technology according to the paper.
Other interesting points include that 42% stated that highly manual processes is the number 1 challenge holding procurement back which is a contributing factor I think when looking at the Economist report earlier this year that 57% identified digitalisation as the top short term priority.
The 2nd challenge holding procurement back is a tie between, cumbersome and slow comms with suppliers, a lack of information and data flow between systems (integration) and inaccurate supplier data. All of these tied at 37%.
This also has call outs, to a previous IDC report on the power of networks to improve communications with suppliers as well as data quality, and the IDC report above on ease of integration being a key need form buyers of procurement solutions.
The report goes onto identify that Spend analysis is the area most ripe for digitisation and automation, which echoes the Economist report for the last couple of years which has also identified this and as a continuation of the theme of automating invoice approvals, 31% identified that this was an area ripe for automation.
TPRM Risk Management Study
This study from Prevalent is a really interesting read and covers trends, challenges, and initiatives impacting third-party risk management (TPRM). Top takeaways include:
- 61% of organizations reported experiencing a third-party data breach or security incident in the past year, marking a 49% increase from the previous year.
- Many organizations struggle with inadequate resources, with only one-third of vendor relationships being managed in a TPRM program.
- Half of the surveyed companies still rely on spreadsheets and multiple disparate tools to assess and manage their third-party relationships.
- Despite tracking risks across the vendor lifecycle, few companies actually do anything about what they find.
- A top concern about use of third party was data breaches or security incidents with 74% identifying this as top issue.
- Cybersecurity is the only risk being tracked more this year than last year (58% tracking more, 35% tracking less).
For any professionals involved in TPRM programs it’s a must read
Ardent Partners State of procurement digitization
This report, commissioned by Ivalua, looks at the state if source to pay digitisation. Savings are the top priority for the respondents with 74% identifying this as a top priority, whilst the top strategy for improving performance is to improve internal comms and collaboration, which was also identified in last year’s economist study (this years research shows that the collaboration has improved, while still room for improvement).
Similar to the Economist study, ESG programs are planned changes for next 2- 3 years (64%) with the next 4 areas all concentrating on supplier management capabilities. From risk, to relationships and intelligence.
Following the IDC and Jaggaer reports earlier, 79% state that budgets are either increasing or remaining the same.
Usability, and user experience are a top criteria for solution selection according to the report, and similar to the IDC report earlier, price (Value for money) and pricing models feature proximately and top benefits of S2P being identified as greater efficiency, (57%), improved productivity (49% leading the way.
Benchmark Summary
I’ve gone through the reports this month and pulled together some quick benchmarks comparison between best in class and what the SAP benchmarking has as best in class through using SAP solutions.
Benchmark | 3rd party benchmark | SAP Benchmark |
Time to process invoice | 3 days | .4 day |
Invoice Exception Rate | 9% | 7.5% |
Invoice processed straight through | 49.2% | 65.1% |
Suppliers that submit invoices electronically | 59% | 81% |
Spend under Management | 68.9% | 84% |
Savings achieved | 8.6% | 9.43% |
Contract compliance | 67% | 95% |
The 3rd party benchmarks were collected from the reports reviewed this month and compared against comparable metrics from the SAP benchmarking service
As always reach out to discuss more, and always happy to hear your thoughts!
