A recent study by the IAPP (International Accounts Payable Professionals) shows that despite all the talk about automating Accounts Payable (AP) functions, more than 75 percent of all companies continue to be bogged down with paper-based processes.
Too many organizations still process AP functions without the benefit of technologies such as automated workflow and automated data capture because they do not have the IT staff or the funds needed to implement automation, according to the study. Is cloud computing an option for such companies?
Cloud-based services and Software as a Service (SaaS) options would certainly appear to be the proverbial silver lining for companies struggling to automate their AP functions. Cloud and SaaS technologies offer companies a way to offload the administration and management of IT applications and services. They eliminate the need for companies to purchase, install and maintain expensive IT infrastructures.
Hosted services have given IT organizations opportunity to reduce capital costs and improve operational efficiencies. Many small and medium businesses as well as large companies and government agencies have benefited enormously from such services.
Importantly, hosted services have given business units such as HR, sales, and marketing, a way to quickly acquire the IT services they need without having to wait for their IT organizations to develop it for them.
Such benefits have led to a surge in the use of cloud-based services over the past few years and there’s little reason why AP departments shouldn’t be tapping them as well. According to the IAPP, many organizations are already looking to outsource bits and pieces of the AP function to third-parties.
Close to two-thirds of the respondents in the IAPP survey said they would outsource their document imaging function if they could, while 45 percent indicated that they are ready to outsource their document archiving functions to a third-party.
Other AP functions that companies are looking to outsource include document receipt and sorting, data capture and invoice entry, purchase order and goods -receipt matching functions. At least some of these functions, such as document archiving as well as PO and goods receipt-matching functions would appear to be ideal candidates for outsourced cloud services.
For the moment at least, not too many companies are using cloud services for AP processing, according to the IAPP survey. However, the small handful of companies that have tapped cloud services, say they were able to automate AP functions with minimal IT involvement and minimal capital outlays. Other benefits cited by such companies included minimal initial setup costs and fast startup.
There’s little reason why more companies cannot derive the same benefits from cloud and SaaS technologies. Data security and privacy are legitimate concerns in cloud environments especially because AP departments typically handle some of the most sensitive data within a corporation.
However, neither of these factors should inhibit adoption of cloud services. Most major cloud providers already recognize the security concerns surrounding their services and offer a variety of access control and data protection mechanisms for alleviating those concerns.
The growing adoption of cloud services by government agencies is also pushing cloud service providers to adopt standard technologies and security processes such as the Federal Information Management Security Act (FISMA) for delivering their services.
Cloud computing and SaaS can be viable options for AP departments that are looking to automate critical AP processing functions but are hampered by resource and manpower constraints. The key is to figure out what functions to outsource and how to ensure adequate control over the outsourced AP applications and data.
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Victor Bensusan is CEO of Yakidoo. He has 20 years experience in Finance and Information Technology primarily in the area of process automation, information management and business performance improvement.