This post also available on KMWorld Magazine.
In this two-part blog post, I explain how to successfully integrate enterprise content management (ECM) with enterprise resource planning (ERP), using accounts payable (AP) as an example. This time, an overview of the business benefits of such integration and of what the resultant AP process looks like. (Next time: an ECM-ERP AP reference model and the steps to get you there.)
All commercial and government organizations have administrative or internal back-office processes such as accounting and human resources (HR), and all have to pay their bills for goods and services. We use AP processes as a measuring stick when we look at how enterprise content management will fit an organization.
It’s true that AP processes can be quite complex, embedded in the procurement-to-pay or purchase-to-pay lifecycle, but often they are simpler. Organizations have been trying to digitize and automate their AP processes since imaging first began, so it’s well-trodden ground with relatively low risk, and often the best place to start with ECM before tackling any line-of-business processes.
When we walk into an organization and see that it has successfully digitized and automated AP, with solid ERP system integration, in less than 4 months, then we know that we and the organization can be aggressive with the ECM roadmap. When we see an organization that’s failed on its third attempt over 6 years to deploy a solution that AP staff can use to simply see images of invoices, then we know that it needs a lot of help first laying down the foundation for the ECM program.
The Business Case for Automating the AP Process
The business case for trying to improve AP processes with digitization and workflow is persuasive because the inefficiencies and other problems are significant and measurable. Talk to an AP team and members will usually cite the four following problems:
The appropriate ECM tools used effectively in conjunction with an ERP system can provide the following benefits:
1. Reduction in paper-handling and labor
2. Reduction of misplaced or lost invoices
3. Reduction of storage costs
4. Increase in processing speed
5. Reduction of errors (higher accuracy)
6. Fast, reliable, easy access to invoices, using the familiar ERP user interface
7. On-time payments and greater opportunity to earn early payment discounts
8. Auditable business processes with greater visibility, improving efficiency and facilitating regulatory compliance
Some of those benefits, particularly benefits 1 through 6, can be derived almost immediately through invoice capture and digitization. Others, like 7 and 8, are more complex and require more significant changes in processes and software implementation.
Overview of the Typical Target-state AP Process
The typical target state of an AP process that’s been improved with ECM looks something like the chart below. Note that this is a target future state, and should be approached in phases, each of which can provide significant benefits:
Well, that’s all for now, folks. (I know, I know – it was just getting interesting!) In my next post, I’ll return with something even more compelling: the ECM-ERP AP reference model. And I will outline for you the steps and the steps to get you an ECM-ERP integration. Stay tuned!