This article courtesy of Ariba Inc.
In a networked economy, collaboration brings transformation. By establishing real-time connectivity with your suppliers and other business partners across the procure-to-pay spectrum, you dramatically lower transaction costs, enforce compliance of invoices to orders and contracts, increase the efficiency of business commerce, and manage cash better.
But how will you enable this collaboration?
The cell phone network is sometimes cited as a model for enabling business commerce in a networked economy, but it’s not a good one. Why? Because a cell phone network can’t validate the data flowing through the network. It’s merely a channel for data translation and transmission.
Then there’s electronic data interchange (EDI), which is still in use today for e-commerce. Here, too, the focus is data transmission, not data validation. EDI did not achieve widespread deployment due to the cost and complexity required to participate. It forced users to conform to a rigid file structure, and could not effectively validate data.
More recently, e-invoice-only networks have appeared. While some of these point solutions add basic validation capabilities beyond what EDI offers, they don’t deliver the level of validation required for compliance and touch-less processing to meet best-in-class standards.
If your goal is to broadly enforce compliance across all transactions and drive touch-less invoice processing rates close to 100 percent, you must align with a business commerce network that offers more than what an EDI, cell phone, or e-invoice-only network can deliver. To thrive in the networked economy, your business network must help you manage the end-to-end, procure-to-pay process, and effectively:
- Support key transaction documents such as purchase orders, change orders, order confirmations, advance ship notices and, of course, the invoice
- Link orders to contracts and catalogs, and match invoices to purchase orders and contracts
- Validate line-level data on orders, invoices, and related documents
- Support or provide native integration to many different file formats and business processes, and data translation for new formats
- Support all types of spend including direct, indirect, services, and maintenance and repair operations (MRO)
- Convert paper invoices to an electronic format and consolidate processing with electronic invoices
- Enable buyers and suppliers to collaborate over the timing of payment through “dynamic discounting.”
Despite the substantial business value from these broad e-commerce capabilities, some place greater urgency on a single, standardized file format to simplify business commerce. Global organizations, however, have large trading communities featuring diverse suppliers with varied technical requirements. Forcing one file standard on all these suppliers would limit the reach, and results, of an e-commerce strategy.
Even here, though, standards exist. For technically savvy trading partners, cXML is the gold standard for e-commerce, supported by organizations comprising more than two-thirds of the world’s gross domestic product (GDP). For other suppliers, the ability to “flip” a purchase order into an invoice is a proven alternative for driving touch-less processing and “the perfect payable.”
The networked economy makes all this possible, but to reap all the benefits, your transactions must flow through an intelligent network.
Richard Downs is director of solutions marketing for Ariba Inc., an SAP company and the world’s business commerce network. Richard is responsible for all aspects of product marketing for Ariba’s on-demand invoice and payment services, discount management, and working capital optimization within EMEA. He has over 12 years of sales and finance automation experience.
For more stories like this, visit Ariba’s The Networked Economy site.