Our Automation Went Live, but the Savings Stalled. Now What?

Automation promises faster processing and lower costs, but go-live is only the beginning. The savings do not arrive on their own. Efficiencies are real, but so are the challenges. To learn more, IOFM sat down with Erica Herwig, Grand Valley State University’s Assistant Controller for AP and Finance Systems.

Let’s start from the beginning. After go-live, which savings did you realize and which have yet to materialize?

Before the rollout, we were semi-automated, but we still had to touch an invoice seven times in our process; invoices were scanned, but our workflows and validations were still very manual.

When we went live with an automated AP process, we were so excited to move forward into a three-way match process, using OCR and allowing for a mostly hands-free and click-free process.  Unfortunately, this is not our reality, we were forced into re-writing our AP process in the first month after go-live.

The utilization of OCR has replaced much of our validation, but invoices are still moved around manually and touched by departments at too many levels. But we did learn to do more with less: One person retired and we did not need to backfill the role.

Things have stalled. We still don’t have a three-way match process.

What were the root causes of the stall? 

First, our culture and process have slowed progress within our organization. We never required POs on all purchases prior to the move to automation and we did not do a great job of working with internal departments to determine how they purchase and what internal process they may have in order to include them in the design. You can’t automate a broken process. 

Second, OCR has turned out to be not as reliable as we were promised. It’s resulted in needing to still review each field to ensure each scan is correct. 

What metrics do you watch in the months post go-live to discover those limitations?

For the first six months, we watched total turn time for an invoice on a weekly basis.  We knew that if turn time was slow, something was wrong in the process.

From there, we needed to review other metrics to determine invoice date to payment date. Specifically, we wanted to know where there was a miss and why. This included: How much time an invoice sat with AP, how much time it sat with approvers, and then the time from approval to payment.  These factors all provided clues as to where there was a problem with the process.

After three months we monitored invoice to payment turn around time just to ensure invoices weren’t getting stuck. The new automation tools provided outputs automatically and we were able to identify issues and resolve them more quickly.

At six months, we attempted a cost per invoice metric to see if we had any savings. We hadn’t. Nor did we a year after roll-out. What we determined was that we saved time for other projects. This seems like it should translate to a good ROI, and it does. But in the actual cost per invoice, it remains unchanged due to the higher cost of the new tools we are using. 

Where did you eventually see improvements?

Partnering with our procurement team has led to big gains. We have worked with them to add more suppliers to our supplier portal and to implement “punchout” suppliers for direct pay orders.

The portal allows our suppliers to self-register and enter/update addresses, banking information, tax information and allows them to see POs, create invoices from the POs and see invoice status—all on their own. This allows the supplier to be somewhat self-sufficient, reducing the number of invoices we are touching.

Additionally, we integrated a third-party supplier validation software that saves us a significant amount of time and has increased our EFT payments by more than 300%.

What is your checklist for a director with a stalled automation program?

Think about what you’re doing today. Quite literally, white board every single step, every touchpoint, every possibility—the good, the bad and the ugly.  Visualization helps to make it obvious where duplications and unnecessary steps are.

Move that whiteboard into a workflow document that can be modified as you move through the rest of the process.

Ask “why” at every point and “what is the purpose of this step?”
Identify pain points on that whiteboard, using a red x or circle to identify those.

Discuss dream state: “What if…” Nothing is too extreme.

Only then are you ready to discuss every single “We-don’t-know-why we-do-it-that-way” or “we-just-have-always-done-that” process step. This will weed out a lot of activities that aren’t needed.  

Then, review the flow. Does an invoice get routed smoothly? Does it get stalled? If so, where? What would help?

Get input from others impacted by your process to see if they see or experience something you are missing.  Repeat this everywhere in this process!

Then, review alternative systems.  There are many tools out there that already do what you are probably trying to do, sometimes the ROI exists for using a tool, once you identify what is broken and where you want to go. Check out conferences, read those spammy marketing emails, ask for some demos.  

How did you report the stall to leadership without losing support for the program?

Documenting and ensuring I’m sharing facts and not opinions or feelings is how I get my leadership to support me during stalls or changes.

I communicate frequently, state the stall, explain the reason for the stall, and share how I intend to move forward. My leadership team and I then communicate on a plan. So far, that has not resulted in losing support in the program.

Communication is the key. Making sure they know the roadblocks help them support the process longer. In some cases, they can remove those roadblocks for me as well.