20 Mar 2011 3 reasons why AP automation projects fail and how avoid the mistakes
AP automation has got a bad name for itself in some quarters. You will often hear of projects that meant well but either failed to meet expectations or were abandoned completely. There are many reasons why projects fail such as poor change management or lack of sufficient resource but for AP automation projects, there are three particular issues that crop up again and again in failed or disappointing projects.
Supplier Master Data
Take for an example a project that uses invoice scanning and intelligent data capture to automate the invoice matching process. In order to get a sufficiently high level of correct matches, the intelligent data capture software relies on the supplier master data to validate the OCR data. Where the master data is managed by the purchasing function, the quality of data can be the weak link in the chain.
If an exercise to cleanse the master data has not been brought into the scope of the project early, the intelligent data capture results won’t be what your vendor promised. And it’s no use looking across to purchasing and blaming them for not managing the data. For them the data may be perfectly suffiecient for their purposes.
It’s important to recognize that high quality vendor master data is a prerequisite to the project and that a cleansing exercise is funded as part of the AP automation project.
Successful AP automation does what it says on the tin. It allows a 3-way match – a match between the purchase order, the goods receipt and the invoice – to be performed automatically. It does assume however that there actually is a purchase order and there is an accurate goods receipt. In many organizations this is not a safe assumption. If the AP team spend most of their time dealing with requesters and buyers, chasing reciepts and retrospectively creating POs then AP automation can’t help.
Engage with the purchasing people
The AP process doesn’t start and end in accounts payable. There’s an intimate relationship with suppliers – one that can mean the difference between commercial success and failure. Late payments, caused by whatever and consequential supply chain disruption can have a devastating effect on the relationships that the supply chain team may have nurtured for years. AP automation approaches such as electronic invoicing directly impinge on the supplier relationships. It’s critical to collaborate closely with the purchasing teams to increase adoption rates and to ensure that important relationship are maintained.
It’s all about taking a holistic approach
The quality of vendor master data is a critical success factor. Why would you ever start a project where your CSFs are outside of your influence? Poor P.O. compliance – it is pointless trying to automate a dysfunctional process. Fix the process first, then automate and make sure you engage closely with procurement.
This isn’t 3 reasons why AP automation projects fail – it’s a single reason. For an AP automation project to succeed it must – absolutely must – be run within the context of holistic purchase to pay environment.