Closing Digital Gaps With The Cloud

People complain about Germany’s digital backwardness: lack of broadband expansion, poor network coverage, no widespread use of cloud computing, etc.

However, in companies the situation is not as bad as some might think: According to the Bitkom Digital Office Index 2018, a representative survey of 1,108 companies with 20 employees or more, as many as 67 percent of companies are up to date when it comes to the digital office.

However, this also means that one in three still has some catching up to do. They mostly suffer from processes having points of interruption.

Viewed in isolation, operational financial procedures in purchasing and accounting have already been digitized in many companies. The larger the company, the more has been digitized. Paper invoices with entry stamps moving through the release process by in-house mail and eventually arriving at the accounting department to be manually entered into the ERP system by whoever happens to be at hand – this type of scenario is almost nonexistent today.

The analogue process in purchasing is also a thing of the past: Printing out the order form, filling it out, giving it to the manager to sign, and then forwarding it to the purchasing department, where it is manually typed again. Whether in regard to the use of document extraction and OCR or to the digitalization and standardization of internal requisition notes and purchase requisitions, many business processes are now at least partially digitized and automated.

Hardly anyone’s at zero percent anymore in this regard. But then again, few have reached 100 percent, either.

Partial digitalization is not enough

The average mid-sized company may well have achieved 40 to 60 percent digitalization of its OCR and/or workflow steps. For such a company, the question will be, “What steps should we take next?”

Indeed, how can a company really go beyond marginal improvement of automation and take its purchasing and accounting processes to the next level? You have to start at points where the process is disrupted – no matter how well individual steps may already be digitalized, if there is a break anywhere in the chain, automation will come to an abrupt halt.

A chain is only as strong as its weakest link. Say you want to fly from Hamburg to Los Angeles in a supersonic aircraft. You won’t get much out of it if you have to change planes three times and saddle a mule for the last leg of the journey.

Applying this metaphor to companies, a typical thwarting influence could be something like the following: The process of ordering is digitized from the step in which the purchase requisition is created down to the step in which the order is generated. Then, however, the order is printed out and sent by post.

It could also be the other way around: Orders are created and sent digitally, but the corresponding invoices arrive in paper form and must be digitized before they can be processed. Or, orders and invoices might all be processed digitally, but incompatibilities prevent the process from flowing end to end. If the systems in, say, purchasing and accounting do not communicate with each other, then issues will have to be reconciled manually.

Portal solutions from the cloud as a link in the chain

Obviously, these points of disruption in the workflow are the ones where automation has the greatest potential to contribute to streamlined end-to-end digitization and efficiency.

Processes must be seen across the board – from department to department or, better yet, from company to company. Suppliers and their systems must be integrated into their own IT landscape so that there is no sudden changeover necessitating the paper route “by mule,” so to speak.

Portal solutions from the cloud are ideal for closing gaps in inter-company communication. With a supplier portal, for instance, a company can map its procure-to-pay processes digitally. It serves as a central platform – standardized and digital – for the business partners to exchange orders, order confirmations, shipping notifications and invoices.

In such a portal, suppliers can update contact data or query the status of processes on their own. Such self-service options save company employees time and effort and they increase general satisfaction among business partners as concerns can be clarified and settled immediately.

Design priorities in cloud applications generally include straightforward usage, clear arrangement of interfaces, and user-friendliness. And accessibility from anywhere, regardless of location or device, is a natural given with cloud applications. This is a selling point that appeal not only to customers but also to their suppliers.

All communication connected with orders can take place on the platform. Truly all the information and documents involved are bundled and can be made available directly in your own ERP system via the cloud, removing yet another point of disruption.

Artificial intelligence is the next step

An important advantage offered by the cloud is the way it accommodates machine learning technologies. This artificial intelligence can be applied by companies to advance intelligent automation in business processes and to relieve purchasing and accounting staff of routine tasks.

An invoice solution, for instance, would not only read the contents of an invoice, but “understand” it and make suggestions as to who the vendor is, which account assignment might fit, and so on.

In order to make good suggestions, AI applications need to learn. The more data sets available, the better machine learning works. This brings us back to the cloud: Public cloud solutions are usually designed for a large number of clients.

Even if the datasets of the individual customers are logically and physically separated, the system can nevertheless use all data records as a learning set. As a result, a much larger data pool is available for learning purposes in the public cloud than it is in on-premises or private cloud solutions. This makes the public cloud an ideal basis for intelligent automation of operational financial processes when based on machine learning.

All that remains is to overcome the other impediments standing in the way of achieving a streamlined workflow. The leading German association for the IT industry, Bitkom, has identified a whole series of them.

For half the companies surveyed in the Digital Office Index, the budget required for investment in digitalization is too high. Just about the same number fear access to sensitive company data or have too few qualified personnel to handle the process of digitalization.

For every third company (and thus only slightly less than in the last survey from 2016), the economic benefit of using cloud technology is still unclear. 25 percent of companies also report employee resistance towards taking steps in digitization – resistance which, however, must necessarily be overcome if the gaps in digital streamlining are really to be closed.