By using “robot” software to perform the manual, repetitive and time-consuming actions taken by humans, Robotic Process Automation (RPA) stands to radically change the organization of businesses. The CPOs and CFOs who manage many tasks eligible for RPA are on the front line to adopt this technology. Thus, supporting the digital transformation of their businesses.
Do CPOs and CFOs share the same fights?
The Purchasing Directors and the Financial Directors carry out their actions in parallel. They rarely discuss their problems and objectives. Yet, these two functions share very similar ambitions. They are both concerned with the performance objectives and the business model transformation.
For many years, cost reduction has become the holy grail of CPOs and CFOs. From the rationalization of the supplier portfolio to the automated processing of invoices, everyone has found levers to reduce expenses, secure cash and contribute to the financial health of their businesses.
Another common goal is to increase operational efficiency – that is, do more with less. The strengthening of competition, the development of new types of consumption, the acceleration of supply chain processes have forced these two departments to embark on the path of productivity, rationalization, and optimization. The establishment of Finance and Purchasing SSC (Shared Services Center) is one of the responses to this quest for efficiency.
More recently, risk management, especially supplier risk management, paved the way for collaboration between the Purchasing and Finance departments. The multiple cases of fraud, serious breaches of CSR (Corporate Social Responsibility) requirements or unanticipated failures, reinforced by legal requirements, highlighted the need to set up a real risk management system linked to third parties.
The positive impact of close collaboration between CPOs and CFOs on the performance of the company is therefore well established and proofed. This joint effort will be even more crucial in the years to come to initiate and accelerate the digitalization of back-office processes.
Reinventing the business models
The Purchasing and Financial Departments have a major role when reinventing business models. Each in its field must become the promoter of innovation in the company and support the digitalization of processes. To do this, they must play their role as business partners and refocus on creating value:
- Platformization of economies require to accelerate purchasing cycles – ultimately accelerating time-to-market and innovation cycles. The more the purchasing cycles accelerate, the more the business is able to put innovative products on the market and be reactive to purchasing behavior.
- The impact of the company’s social image reinforces the attention paid to the ethical requirements of suppliers who play on consumer appetite and, ultimately, the valuation of the company.
- Data analysis and IoT allow you to link operational needs with supply chain and finance. For example: in an industrial company in the metallurgy sector, connected containers make it possible to identify maintenance and refueling needs when they are empty, but also to make the link with the forecast of purchases and related charges. The Digital Supply Chain is everyone’s business, from buyers to financiers, as well as business operators.
Mastering and governing data
Data is another major challenge that CPOs and CFOs will have to face in the years to come. Indeed, mastering data – specially supplier data – generates both savings, avoids unnecessary expenses (such as late payment fines or fraud), but also adds income from discounts for advance payments, renegotiation of contracts or optimized cash management. For financiers and buyers, data is, therefore, the critical raw material for managing performance.
Awareness is, therefore, necessary to make the quality of data THE priority file in organizations. Moreover, the poor quality of data and the lack of accessibility of these constitute the main obstacles to the digitalization of processes, which we experience for a large majority of our customers.
Anticipate HR impacts
Finally, we should emphasize that none of these external challenges can be successfully achieved if the CPOs and CFOs underestimate the HR impacts linked to digital transformation. They both face double trouble:
- Anticipate and master the profound changes in the professions and organizations; which means to develop the skills of their teams, redefine their missions and above all support these changes to maintain the commitment of their employees.
- Deal with the talent shortage by implementing actions very quickly to attract and above all retain new employees who will be the engine of transformation.
THE BENEFITS OF RPA
Faced with these human challenges, the elimination of manual and repetitive tasks with robotization proves to be a real asset to improve employee satisfaction and attract new talents, especially the Millennials generation who are particularly sensitive to the interest of their missions and well-being at work.
RPA, A DIGITAL FORCE AT THE SERVICE OF CPO-CFOs
By entrusting time-consuming actions to an RPA platform, the CPO and CFO are equipped with digital assistants available 7 days a week and 24 hours a day to save their employees time, relieve them of tedious tasks and guarantee better reliability and process traceability.
Automate P2P processes
The major use cases at the crossroads of the CPO and CFO functions revolve around the P2P (Procure-To-Pay) process. P2P robotics are generally considered to save around 25 to 40% of productivity over a year, depending on the automated processes and the extent of the transformation compared to manual processes.
In this context, RPA intervenes at two complementary levels to, on the one hand, streamline transactional processes:
- Content management and especially the catalog of referenced products and services.
- The drafting of contract projects (using existing pre-established models to supply) as well as the evaluation of suppliers and related services.
- Purchase requests, with their streams of approval circuits, of supplier/product referral reports.
- The generation of purchase orders and receipt thereof, then reconciliation with the invoice.
And on the other hand, facilitate data analysis:
- Spend analysis: consolidation of sources, enrichment of data, reporting.
- Constitution and analysis of purchasing budgets, with a series of new reports and a combination of data sources to consolidate and variances to be drawn.
A technology complementary to S2P solutions
To overcome the heaviness of ERP, many companies have already digitized the processes we have just described by implementing S2P (Source-To-Pay) or P2P (Procure-To-Pay) solutions. However, it is clear there are still many manual tasks that are not managed by these solutions. This explains why an increasing number of companies have used RPA in recent years and this phenomenon is not about to stop. According to Gartner, global RPA software spending that jumped 63% in 2018 will experience double-digit growth in the coming years.
To illustrate our point, here are three very concrete examples of automated processes to simplify the life of Purchasing and Finance:
- Downloading invoices from public companies (EDF, etc.): connection to the supplier portal, downloading and depositing the document in a directory, sending an email to the category buyer and the supplier accountant.
- Creation of a supplier account: data entry in the ERP, connection to a website (e-certificate…) to find the switchboard telephone number… or any other information available. Re-enter data in the re-purchase solution and send an email to confirm the creation of the account.
- Expense analysis: connection to the supplier account in accounting, entry of payment historical data in an Excel file, entry in this same file purchase forecasts for the coming months from the budget forecasting solution, creation of a graph showing one-year data.
In conclusion, RPA is a technology that will quickly impose itself on CPOs and CFOs because it perfectly meets their major challenges, which are operational efficiency, security, cost reduction, and employee satisfaction. Many companies have already taken the step of RPA, not just banks or large groups. Moreover, the senior management is attentively observing the speed of the CPOs and CFOs in adopting this technology in their services. The question is therefore not “Should RPA be integrated” but rather “When and how to start?”. Therefore, the deployment of this solution must be properly orchestrated. Consequently, a successful start-up and good long-term project management are key. We will discuss the tips for implementing the first robots and good practices for scaling up in a follow-up article.
Alexis Sztejnhorn is a Performance Finance Associate at the PMP strategy and transformation firm. He supports finance departments in their strategic transformations, process automation (RPA) and business performance plans.
Contact details: email@example.com and www.pmpconseil.com
Christophe Rivayran is the Associate Director of Fluxym and leader of the RPA offering. He supports the purchasing departments in the digital transformation of their Procure-To-Pay and Source-To-Pay processes.
Contact details: firstname.lastname@example.org and www.fluxym.com