A Recipe for Irresistible ROI
Blog: Kofax - Smart Process automation
Give Your Stakeholders a Taste of Procure-to-Pay Automation Success
Before we talk about ROI, let’s talk about chocolate – one of my favorite topics. People like to drizzle it on ice cream, drink it steaming from mugs, and snap off squares of it to pair with piping hot marshmallows and graham crackers. But imagine if you’d never tasted chocolate. If you picked a cacao pod off a tree and ate the beans out of it, would you understand how incredible it would taste when it was made into chocolate?
If you’re at the beginning stages of selling your P2P automation project, your stakeholders likely haven’t experienced the benefits of implementing an automation solution yet. You need to convince them that the end-product of investing in a solution is going to be as irresistibly delicious as a chocolate truffle filled with even more creamy chocolate. Because, according to a recent report from PayStream Advisors entitled “Pitching ROI for Accounts Payable,” one of the top barriers to getting an automation project off the ground is “a belief that there will be no return on investment (ROI) from a solution.”
3 ROI Ingredients for a Palatable Pitch
Here’s the good news: the ingredients for proving the ROI of your P2P automation project are readily available if you’re willing to do your homework. Add these ingredients to your ROI pitch, and you’re guaranteed a tantalizing presentation that will have your stakeholders asking for more.
- A Dash of Reality – Current Performance Metrics
According to PayStream Advisors, “when preparing to make the case for automation to company stakeholders and decision makers, the most important element to include is the metrics of the current state.” This should include your company’s current procure-to-pay performance data. But it should also take a wider view of the performance of other procure-to-pay organizations, as well.
PayStream’s report includes data from 300 back office employees on benchmarking data like common pain points, the ability to capture early payment discounts, and the biggest benefits companies have realized by automating accounts payable. You could also expand your analysis to include organizations that have reached best-in-class performance. (Check out the best-in-class metrics section in this report from Ardent Partners.) Why? Showing your stakeholders exactly how much room for improvement your procure-to-pay processes have will prime them for the numbers you’re about to present.
Sprinkle in Some Real World Scenarios
When prepping to make your ROI pitch you need to help your stakeholders imagine the potential results of automating processes. The best way to do this is to serve them a platter of case studies and scenarios with solid numbers based on real data gathered over a long period of time.
If this sounds a little daunting, you’re in luck. PayStream has already used their repository of data to put together estimates of “general costs of implementation and the criteria to use when evaluating the potential ROI of a tool.” And with thousands of customers worldwide, we have a cache of case studies that highlight the results of customers in a wide range of industries.
News sources focused on the finance department could also be a great resource for data. Take this March, 2016 article from Supply and Demand Chain Professional Magazine, for example. It discusses Starwood Hotels & Resorts Worldwide, a Kofax customer that used one of our ReadSoft solutions to automate their global P2P processes. “The hotelier expects to break even on its investment by 2019 and predicts a 30+ percent ROI, and this does not include the return expected from greater spend visibility that will be leveraged in negotiations with suppliers,” says the article.
Add a Heaping Cup of Calculations
Your stakeholders are on the verge of jumping on board with your P2P automation project. What could push them over the edge? More numbers.
ROI calculators, like the ones in the PayStream report, give you formulas for measuring the outcomes of various ROI scenarios, including total cost per invoice, the perfect payment index calculation, first-year ROI, payback period and five-year ROI. Kofax also offers an interactive ROI calculator that allows you to see how AP automation can increase efficiency and reduce personnel costs. Using the data you’ve gathered, you can calculate some persuasive figures to present to decision-makers.
Serve it up
Let’s go back to chocolate for a minute. Did you know that cacao beans have to be taken out of the pods, fermented between banana leaves, dried in the sun and then shipped to processors that separate the cocoa butter from the powder before ever being touched by chocolate-makers? That’s a lot of preparation.
Getting your P2P automation plan off the ground will not require any banana leaves and probably no fermentation. But it is going to take some serious prep work. Remember the Starwood example from above? The hotel chain took 18 months to evaluate AP automation vendors and test solutions. Mixing the ROI ingredients discussed here into a rich presentation for your stakeholders is absolutely crucial to moving on to evaluating potential vendors.
According to PayStream, “when presenting their case for automation, practitioners should leverage all current-state and ROI metrics with a detailed plan for product implementation, highlighting the long-term benefits of the solution in both hard and soft costs.” And putting some chocolates on the conference room table couldn’t hurt either.
Ready to get cooking? Download the PayStream report now.