From Mind-Numbing to Value-Add: AP Automation Evolved and Explored with Deloitte
The “great leap of evolution” towards a digitized infrastructure sparked by COVID-19 is picking up speed. Ryan Hamilton, of the SAP Concur Value Experience Group, had the opportunity to interview Oren Geshuri of Deloitte on the current state and future evolution of AP automation on our podcast, SAP Concur Conversations. Read through the dialogue below, check out our blog post or enjoy listening to this episode on Apple | Amazon | Spotify | Listen Notes | Acast or your favorite podcast player.
Transcript:
Ryan Hamilton:
Let's go ahead and kick things off. My name is Ryan Hamilton. I'm a Value Consultant with SAP Concur. I would love to have my co-host introduce himself as well. Oren?
Oren Geshuri:
Hi, my name is Oren Geshuri. I am with Deloitte.
Ryan Hamilton:
Excellent. Can you tell us a little bit about what you do with Deloitte?
Oren Geshuri:
Yeah, I am what's known as a Specialist Master, but essentially I am a consultant in the spend management P2P, T&E spaces, helping clients transform their environments to modernize their processes around traveling expense management and around procure-to-pay processes.
Ryan Hamilton:
Excellent. Like I mentioned, I'm a Value Consultant here at SAP Concur. Our team works with both prospective clients and existing clients to really quantify opportunities for creating value, whether that's through improving spend governance, improving compliance, or optimizing spend programs around vendor controls and other discretionary spend controls. So, looking forward to pooling our expertise here today as we talk about AP automation, particularly through the lens of the employee experience and through the lens of organizational spend governance.
Oren Geshuri:
A lot of juicy stuff to talk about there.
Ryan Hamilton:
Yeah, absolutely. I guess as a jumping off point here, we use those two lenses a lot here at SAP Concur, but Oren, having just heard me say those, what does that mean to you, particularly as it relates to AP automation? So, let's start with employee experience. When you hear that, what comes to mind?
Oren Geshuri:
So, the first thing that people forget about in an AP process is that there are people that are core to it. AP is generally speaking one of the least, and I say this with a little bit of tongue in cheek, but one of the least strategic areas traditionally in an organization. It's people who are taking what is generally, or has generally been a paper process, and they're paying checks, they're cutting the checks or if we're lucky, the wire transfers or the ACHs, and that is a process that has been basically the same for decades and decades, if not centuries.
And in the past 20 years, this whole new world of AP automation has revived that area and has given a lot of ability to automate those processes to get that sort of paper out of the desk and allow that what was originally an AP manager or an AP clerk, maybe give them a little bit more opportunity to spread their wings and become a little more strategic in their roles. So, we're taking these people who were traditionally a very focused, routine-based person and empowering them to become more intelligent about the way they're doing business.
Ryan Hamilton:
So, is it fair to summarize your view of employee experience as really maximizing or at least optimizing the ability for someone in an AP role to contribute beyond just the tactical day-to-day process execution?
Oren Geshuri:
Right, the tactical aspect of paying a bill is what sort of drags the process down. So, we have these people who they come into work and they start with a big pile of paper and maybe that pile of paper reduces during the day, but then more paper is added to that pile. Now, that might be digital paper where it's PDFs and some types of imaging that's going through an inbox rather than through a physical inbox, but that has been the approach. And, those people are not given generally the ability to discriminate, to add value to those transactions. Do we pay for certain things strategically so we can get the best benefit of dynamic discounting? Or, maybe we can get a discount by paying it in a certain window. A lot of times it's basically a reactionary type of endeavor where they're just processing things in the order that they're given because people are screaming the loudest.
Remember, these people are also the people who end up picking up a phone and speaking to a vendor who have the 1-800 number for AP wherever it is, shared service or some group of people in an office. And, they ended up getting yelled at by vendors just because they are not getting paid yet. So, they have become... The two things that they're doing all the time is processing paper and doing therapy over the phone for the people who are calling them. Do you know what I mean? So, these things are not incredibly value add tasks, and it shows on how those employees go about their day-to-day.
Ryan Hamilton:
So, I want to come back to that in a second, but I also think you've made a great point that transitions into the second lens that we want to look at this through, which is spend governance. The second that that vendor calls our AP person and is apparently yelling at them, that's where we sort of transition from the ability for an individual to contribute value to the entire organization's ability to generate value because obviously, the supply chain and the continuity of that supply chain is key to value generation. So, when we talk about spend governance, it seems like it's fair to say that very quickly, we transition into overall how an organization manages its money and ensures that that value chain stays cycling. So, can you talk a little bit about how you see spend governance around AP automation or AP in general?
Oren Geshuri:
The more insight that an organization has to the inner workings or the tactical workings of any P2P process, an AP automation process, they have better information, so they can better assess their cash positions, how they're managing their credit relationships with their creditors, how they're managing their relationships with their suppliers. The bottom line is when you take this behemoth of manual process and you strip it down to its core parts, and then you automate it now, and let's just make the point that the last thing you want to do is to automate poor processes.
You want to re-engineer or optimize the process before you automate it, that's key. But once you've optimized that process and then automated it, then you now have metrical data that can help you target the areas that you as an organization need to focus on. Are we cash rich? Are we having a problem with our credit ratings? How do our suppliers treat us or how do we treat our suppliers more likely? So, the ability to kind of zoom in on specific steps is super important, and you can't do that until you're able to measure them. You can't measure one person moving an invoice from the to pay pile over to the paid pile. It's not as easy.
Ryan Hamilton:
That's absolutely fair. So, you had mentioned earlier when we were talking about the employee experience that it was really one individual's ability to add value to that transactional step of processing an invoice. Is it fair to say then, in your experience, you've seen as organizations become more automated that it's the individuals who are taking over the creation of the metrics you were just talking about, and the process changes to then optimize those metrics?
Oren Geshuri:
So, the individuals have to obviously be contributors for any success in this area. It comes down to let's strip the process down, like I said earlier, to the component parts and how the individual helps enable the optimization of that process. Then as processes merge, you can do centers of excellence or shared service centers where people instead of having one person focus on every end to end task, you can have people specialize, or you can even go the other way. If people are already too specializing, let them to generalize. You can create people who know soup to nuts, the entire end-to-end process, and can be experts on every aspect of that.
So, you've taken what was the mind-numbing solo sort of performance of payments, and you've made it now a team collaborative effort on how do we best create sort of means or ways to give the best possible value for that type of process. And, that value chain goes all the way up to the finance folks who are looking down and seeing, okay, well here are all my areas for improvement, and now I can put some measurements to that. So, it's one of those things where it takes a village. You have multiple people who are helping consolidate the process, multiple people who are becoming that center of excellence, but those individuals are still the ones driving the train.
Ryan Hamilton:
Absolutely, so we have started the conversation by talking a lot about what is theoretically possible and what we've seen across a wide array of organizations that we both worked with. I'd love to talk a little bit more about sort of specifically what happens to the employee experience into spend governance as someone moves through automation and why that's valuable. And to address the elephant in the room, I think COVID, and the related impact to business operations has provided a great foil for understanding what that impact is. We really transitioned from what value could I potentially derive by investing in what might be considered a cutting edge, changed my process by automating. We've really transitioned from that mindset during the COVID crisis to, what am I going to lose out on, or what can't I do if I don't have a best in class, or at least a cutting edge automated product? So, I guess a good starting point would be, do you think that's a fair statement? What do you see as the day-to-day impact of COVID on a non-automated process versus an automated process?
Oren Geshuri:
Well, COVID was the litmus test for the survivability of an organization, which isn't to say that organizations that had a lot of troubles aren't going to survive. It's just how well equipped were they? There were basically two broad categories of an organization. You had the organization who already walked down the path of automation. They already had digital workflows and they had more cloud-type services. Those guys could pretty much just the next day start up working from home as long as they dealt with any VPN or working from home issues, or maybe the fact that a lot of those places didn't issue laptops. That's a big problem right there, but nonetheless, those people pretty much just walked right into a sustainable type of process. The people that I kind of felt bad for were the people who either had not even looked at AP automation or maybe had it on their map downstream, and hadn't yet gotten to it.
These are the people who they still come to work or prior to COVID came to work to a big pile of paper on their desk. You can't take all that paper home. Obviously, you're not going to have all the different AP clerks or AP tactical folks getting big batches of paper, invoices, to their houses. You had to come up with a process really quick to figure that out. So, to figure out how to distribute the work without sending Iron Mountain boxes to people's houses every day. Well, those people had to adapt quickly by figuring out a quick way to digitize - digitize at least the image. So, image capture became a huge sort of boon for those people who had to switch to a work from home situation. The thing about COVID is, for those people who always thought, 'ah, we can deal with automation downstream,' well downstream is here.
If you have not used COVID as the sort of the spark to move towards a more digitized infrastructure, then you will probably not be around in another few years. This was the great leap of evolution. Let's go back to our Darwin, there's obviously cycles or slow cycles of evolution, but every once in a while, there's a triggering event that causes a great leap. The fish suddenly starts walking on land, that kind of thing. Well, we're at that crux right now where COVID is that spark. It's the meteor that's extincting the dinosaurs. That's what's going on here.
Ryan Hamilton:
It's interesting. I was reading a study the other day that said... It was a survey of AP professionals during COVID and about 28% rated that COVID had an extreme or high impact on their AP process. And, what I found interesting was that in a follow-up survey, it was about 28% of people who also said their top challenge in their process was too much paper. So, there's a one-to-one correlation between organizations that had at least taken first steps to get rid of paper and organizations who felt a medium impact or a low impact, that remaining 72% that were less effected. So, I thought it was interesting that there was such a direct correlation between the degree of impact and the amount of automation.
Oren Geshuri:
And, let me throw a little shade on the suppliers too right now. A lot of suppliers still want a paper check. What kind of nonsense is that? If you go to Europe, they laugh at our checks. You have to have more of an ACH or digital payment type of infrastructure. There's so many great digital methods of payment nowadays, your Zelle's, your ACHs, even wire transfers if you want to go old school, but the Cash App, Venmo, whatever you're using, there's pretty much no excuse anymore to continue getting a check. And so, some of that is people who run an AP organization who haven't cleaned up their vendor master in some time and still have antiquated, check remittance address details instead of adding an email address into the vendor master, adding an ACH type of a process. So, there's both sides of that coin that make papers still necessary for the organizations who don't want to move forward to the last decade, not even the modern decade, but to the last decade.
Ryan Hamilton:
And, I think that's an important transitionary point. We had one group of organizations that were so preoccupied with ensuring the continuity of their process. They're the ones who if every organization is faced with the same general impact from this crisis, their cash is going to have to be stretched more, they're going to run into supply chain issues. You had one set of organizations where the AP people could come in and all they had on their plate was ensuring continuity, figuring out how to get those Iron Mountain boxes distributed to approvers who were no longer in the office, making sure that that process still ran on the one hand.
On the other hand, you had the group of people who had already looked at automation. So, when I hear you talk about checks, a technology that was invented in the 1720s for all I know, is still being employed in a lot of organizations versus more secure methods, faster methods, methods that offer better cash flow control like ACH, direct transfer, virtual cards, that just reminds me of this second group of organizations were faced with the same set of crises, but having already addressed the continuity of their process, that same group of people then had the time on their hands to go start attacking other opportunities like that.
If cashflow is our problem, how do we make better payment strategies under the same terms? A virtual card probably offers two to three more days of having your own cash in your own account, float. ACH also offers a little float. So without even going to your vendors and changing your terms, optimizing payments can improve your cash position, right?
Oren Geshuri:
Right.
Ryan Hamilton:
You could also then go out to your vendors, start to address payments. If all of your customers are paying you late, it seems reasonable that you should be able to go to your vendors and pay them late as their customer. So, you have one group of AP people who are so absorbed in continuity that they had no opportunity to take these other initiatives. Then, you have this other group of AP people who had already addressed continuity and were able to focus on some of the things that you had had just mentioned. So, outside of payment optimization, where do you see AP automation supporting more strategic crisis management?
Oren Geshuri:
Well, so there's always somebody from AP, an AP manager or a director or whatever who is part of that sort of crisis response committee that's at any corporation and because mostly so they can say, "I have a list of emergency payments that I can issue at a moment's notice." Procurement's in there having that same conversation, but all they're there, again, it's to be reactionary to say an emergency has happened, we need to get payments out the door so we can get PPE or whatever the need is. Well, let's unleash the P2P and the AP folks to say we have an emergency. Cash is going to be tight. We need some of things. So, let's see which of our vendors... Let's run some metrics, let's figure out which of our vendors are going to give us dynamic discounting terms, so we can shave a few cents off of the payments, so we can use that cash for other purposes.
So, you can have a strategic conversation about where you're spending money without withholding money. Do you know what I'm saying? Dynamic discounting is kind of one of the untapped areas that a lot of people are getting into where everybody is familiar with 2% net 10. If I pay it in 10 days, then I get 2% back, but then what about 3% net nine and 4% net eight and blah, blah, blah. You need a means to be able to capture as much as you can and have a vendor or a supplier that will support that kind of thing. And, that's hard to do when you're still bogged down by the pushing of paper.
You need to be able to free yourself from those sort of tactical things, to be able to focus on that strategic piece. I just want to add one thing. I don't know if you guys read the news. I read it in the news last week. So, Japan, which has for centuries... In corporate Japan, you have the managers who have to physically stamp their seal on a payment before it can go out the door. And in COVID times, there was some new legislation being introduced that is rocking the world of corporate management because they want to digitize that. They want to take that complete sort of ceremonial right out of sort of corporate Japan, so they can actually make things more speedy and more digitized. I think if that isn't an indication that COVID is a game changer, I don't know what it is.
Ryan Hamilton:
It was interesting, I was talking to someone who was a frontline AP clerk and one of the things they mentioned that you just made me think of was they're sitting there at the beginning of the COVID situation reading about how COVID can exist on mail for up to, I don't know what it was, four days. I'm not a scientist. I don't know if that has changed. I don't know if the science has come somewhere, but I remember that clerk describing to me automation, business continuity, improvement of our processes aside, I'm actually worried about my health having to handle each of these individual invoices and that's employee experience from the other side. What do they see as the value of your organization?
Oren Geshuri:
I was going to say I'm fairly certain there have been zero cases of COVID communication through an email or a PDF.
Ryan Hamilton:
I certainly hope so, but the point I wanted to make was that that's one example of what's crossing the minds of an individual contributor, but I think it relates back to a greater point when you think about employee experience, which is as we have a contracting workforce, what are you doing to attract the best talent? If you're an organization thinking about things like how do we take advantage of modern best in class payment solutions? How do we do, or at least track, dynamic discounting? How do we do some of these cutting edge investments or ideological investments at least? You need people who are able to execute on that for you. So, in your experience, how have you seen automation or at least improvement to an AP process relate to the ability to attract and retain talent?
Oren Geshuri:
So, it actually begins at the top of that tower because you need to have somebody who even wants the change before anything could happen. So, I believe that if you have a dynamic leader who is willing to embrace new technologies and move along the path to automation, the talent will come. So, I think the first goal is to get somebody in position who will drive that ship to success. Then, in terms of attracting the talent, there are a lot of ways to, to communicate the sort of desire to use the technology for good instead of evil.
There's ways to ask the group of people, the candidates, the potential heroes, ask them to engage, ask them to participate in the strategic mindset rather than come in with the, I shall say, old school AP approach of how do I tactically move this paper from point A to point B. It is a mindset that is required that is going to make this a success. You've got to change. You've got to shake the cobwebs off of the old process, off of the old dusty AP way of thinking and embrace the new.
Ryan Hamilton:
Do you think it's fair to say it's an AP way of thinking versus what AP has had time to do? If you go back 50 years before automation was on the table, it didn't matter what ideas you had in your head if you had to spend 60 hours a week making sure your business was simply able to continue its value cycle, right?
Oren Geshuri:
Exactly, the conventional wisdom is that particular wisdom because that was the convention. The people in AP were going into it with this is the job of an AP person. It is a tactical career path and traditionally left little time for strategic thinking, but that is changing, that has changed. And, it is our goal here to completely eschew the old way of thinking and embrace the technological approach that frees everyone up to pursue the strategic path.
Ryan Hamilton:
You used the analogy earlier of the great leap forward, right?
Oren Geshuri:
Right.
Ryan Hamilton:
I always like the saying necessity is the mother of invention. So, the crisis that we've all gone through, everyone is I'm sure tired of talking about COVID this and COVID that, but the reality from an AP perspective that nothing you or we have talked about is limited in its value to just being a crisis response. Improving your payment methods, improving your payment terms, improving your AP team's ability to inform strategic decisions and metrics across a wide array of business, none of that is only useful during COVID. All of that is useful in perpetuity. So, as we talked about those two groups of organizations, the one group where they spent the brunt of COVID simply trying to figure out continuity, and the other that responded to that same set of crises, but already had continuity in place, which was able to spend their time on improving all of these metrics.
When you emerge from this crisis, that delineation still exists. You have one organization or one set of organizations that's now better off from a continuity perspective. You have this other group that's gone in and permanently changed the way they operate for all of these other metrics. So, that improvement isn't just limited to the scope of COVID. Now you have these organizations that are permanently in a better place. So, I guess the question would be, do you see that in practice now? Do you see that those advantages are going to be permanent? And then as a follow-up to that, in your experience, what can you personally, in the work that you do, how do you help organizations sort of get into group B and stay into group B?
Oren Geshuri:
I just happen to think that even once we all get herd immunity and the vaccines are distributed in whatever format that happens, COVID is kind of here to stay. Our lives, our entire sort of existences have kind of been irrevocably changed, but I think ultimately for the better. This is one of those, again, periods where it's a paradigm shift in societals, in corporate norms that are only going to make the people come out better for it, that they've had to adapt, but that push kind of has set people up for hopefully future success. Now, there are going to be a few organizations who once COVID is kind of gone, or at least at sunset for the time being, they're going to say, "Okay, phew, we can get back to normal." Well, to those people I say, really rethink that line of thinking because things will never be the same normal you had before.
This is the perfect opportunity for you to change, and I'm seeing that with a lot of my clients. The people that I work with, the biggest shock of COVID wasn't can I check my email or look at a PDF at home? It was, I am now stuck at home and I have to take care of my kids. Luckily, I don't have any, but my pets are yapping in the background and the gardener is outside and I no longer have the community around the water cooler with the people I work with, et cetera, et cetera. It was that personality or the social contact change that was the most egregious for them.
The work changes, the technology changes, everyone realizes this is the better way to work. The work from home world, aside from all of the distractions, shows us that we have the technology and we can succeed. How many companies before COVID never wanted to let people work from home? There were organizations that simply did not allow it. Well, sorry. The train left the station. It's over. You can't do that anymore and people are adapting to that. It is the perfect opportunity in this past year. 2021, we'll see, but 2020 was the perfect time for companies to gut whatever process they had, build some new, exciting, streamlined processes and get the technology in there to support them. That's what 2020 was about.
Ryan Hamilton:
So, I want to play devil's advocate here to really elucidate the point, but if I'm one of those organizations that's thinking, phew, once this crisis is over, I get my vaccine. I can go back to normal. What I'm probably also thinking is automation is a costly tool. It's something we had to do to enable our employees to work from home. But, improving that quote, unquote employee experience, or I guess the employee happiness during this crisis was a temporary cost that we don't want to bear anymore. Now, obviously you and I doing the work that we do, neither of us would agree with that perspective. But, I would love to hear from you sort of a direct challenge and where, in a short summary, where you would find the value to say, no, this is something that's permanently putting your business ahead. It was not a temporary thing you had to do to make due.
Oren Geshuri:
It's something that happened even before COVID. When we would come in to do finance transformation with an organization, a lot of times I would sit with the key leadership, whether it's the CFO, the COO, whoever it is, and in that first introductory meeting, I'm sitting around this boardroom table and he looks across at me and says, "So, how are you going to save me money?" And, I always challenged them right at the table and say, "All due respect, that is the wrong question to ask. The better question is, how can we obtain or how can you deliver the best overall value?" And, that is throughout all work streams, throughout all technologies, targeting sort of the fat, streamlining, and allowing people to be more strategic about their jobs. It is about people moving away from tactical things, allowing the technology, RPA, machine learning, artificial intelligence, all the buzzwords you've heard, and I'll throw in Blockchain just for the heck of it, why not?
All of the buzz words that you've heard for the past several years, applying them, using them, letting it free your people to do their best jobs. That's what delivering value is about. It is taking the chaff from the wheat, it is trimming the fat from that Kobe steak, it is giving people an opportunity to shine in the position that you have empowered them with. This is my opinion now, any good leader wants everyone in their organization to also be good leaders. And, you can't do that if you're mired in tactical, day-to-day junk. So, free them from the junk.
Ryan Hamilton:
I could not agree more strongly. Although I have to say, if you're trimming the fat from the Kobe steak, you are definitely doing something wrong.
Oren Geshuri:
Well, that's true. I should have said the T-bone or something like that, but yeah. A nice marbled Kobe, yes, you're right.
Ryan Hamilton:
Fair enough, so that's really every question that I had wanted to ask you. In summary, I think we talked about this through two or three different lenses. There was a crisis, and it would be silly to ignore that elephant in the room, but I think really what we landed on was that as you look at this crisis, it gave an organization... It feels wrong to say the opportunity, it forced organizations to act on a set of value levers that was already there. When we talk about moving beyond tactical into strategic work, the crisis presented to an organization meant they had to go find more room to hold onto their money. It meant they had to go optimize payments, had to go improve terms, improve discounted payments all while trying to navigate continuity. So, the individual resource contribution was sort of offset with the need overall to make money go further and to govern how that money was being spent. But all of these hurdles that were presented were not unique to a crisis, they were simply more forceful during a crisis. Would you say that's a fair summary?
Oren Geshuri:
Absolutely. Do you remember a few years ago, maybe 10, 15 years ago, there was a business book called Who Moved My Cheese? Do you remember that? Well, COVID was like the smelliest Roquefort that was forced on everybody or Limburger and here we are. Now we're all cheese lovers. We can all move forward with better lives for us in our corporate worlds.
Ryan Hamilton:
Well, I can't think of a better way to end the conversation then, by agreeing with you that we're all Roquefort lovers now.
Oren Geshuri:
Yeah, absolutely, especially with the caraway seeds.
Ryan Hamilton:
Excellent, well, hey, thank you for your time, Oren.
Oren Geshuri:
All right, Ryan, I appreciate the conversation.
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Depending on the client or the situation, Oren can be a troubleshooter, a corporate therapist, a number-cruncher, or a negotiator. He is a technophile who tries to be a steady voice encouraging the adoption of new tools and technologies. After spending almost twenty years in the Entertainment industry, he really enjoys working with companies across all industries and getting a taste of other business sectors.
A lifelong bookworm, Oren cannot fathom a world without escapist literature or incisive non-fiction.
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