How to Mitigate Financial and Operational Risk While Automating your Accounts Payable

Risk mitigation is always important but is particularly important in tough economic conditions. While there are many ways to reduce risk in automating your accounts payable function, they generally fall into three major categories:

• Responsibility — the idea is to make others responsible for 1. what they are good at, and thereby reduce the anxiety of taking on new projects.

  One of the best ways is to utilize on-demand technology such as Software as a Service (SaaS) and thus eliminate all the infrastructure requirements such as buying hardware, managing software installations, maintaining hardware and software implementations, etc.

  In short, you should do what you are good at – financial management – and leave the technology management to others.

• Time — There is typically a large amount of time necessary 2. for you to research, specify, bid, select, implement, train and manage AP automation technology.

  Traditional scenarios that utilize on-premises software can require three to six months (often more) from the start of the technology acquisition process until the technology is working on-site.

  This is a long time-to-value. By contrast, SaaS is designed to give you a very quick time-to-value, because you can often be receiving strong return on investment in less time than it takes you to write a complex request for proposal (RFP).

• Finance — The issues of time and finances are intertwined, 3. and not just because of the truth of the oft-repeated expression "Time is money."

  One of the major reasons that so much time is spent (some would say wasted) in selecting automation technology is the severe financial consequences that ensue if you choose the wrong solution. To alleviate this risk, Software as a Service offers several advantages:

• There is no long-term commitment. SaaS is pay-a. as-you-go and you will not be stuck with what you do not use.

  You can easily adjust the number of SaaS licenses as you go and avoid purchasing costly enterprise content management licenses that may become 'shelfware'.

  This is a very real issue since industry analysts say that up to 40 percent of enterprise software licenses go unused.

• The expenditure category of SaaS is usually a b. monthly business expense instead of long-term capital expenditures. Thus you can adjust payment to the current value received while preserving your precious financial resources for other purposes.

• You can avoid the "bait and switch" syndrome. Do c. you ever go to a large ticket retailer or auto dealer to find that the terrific deal that was advertised is in reality much more expensive when you add in all the upgrades and service fees that are necessary to make the item work for you?

  Likewise, the cost of an on-premises software license is only the starting point and by the time you add all of the infrastructure, services and maintenance costs, the solution costs 2-4 times what you were anticipating.

  SaaS pricing is much clearer and there will be fewer surprises.

Another major risk area is the possibility of unsuccessful project deployment. It is no mere coincidence that CFO’s and CIO's are both particularly vulnerable during times of implementing a new ERP system.

And on-premises software usually requires more participation from your employees both in finance and IT and there are associated direct and opportunity costs.Given the much larger implementation times of on-premises over SaaS, there is also a more significant risk of project delays,again delaying your time-to-value.

Software as a Service can also be implemented on a "trial" or "prototype" basis. Because it is much easier to implement, SaaS Invoice Processing can be tried before you make any financial commitment.

You either quickly see the value and ROI or you decide not to implement the AP Automation solution. As mentioned earlier, you can usually accomplish this in less time than it takes you to write the RFP for on-premises software.