No matter where you look, the world is going digital. Does the same hold true for those in AP?
CFOs and finance professionals have to face many changes in today’s business environment, from new regulations resulting from the Affordable Care Act to the latest changes in tax law to the growing impact of globalization. These changes are coming at a faster pace than ever before and those responsible for the company’s finances need to be able to react just as swiftly. And businesses know that managing change is never a simple task.
A recent article in Accounting Today cites Jon Baron, technology leader and managing director, professional segment, at Thomson Reuters Tax & Accounting, who noted that the most important driver of change is, not taxes, not healthcare, not even the impending retirement of the Baby Boomers: the biggest change is technology. Although Baron is speaking of accounting firms, rather than individual AP departments within an enterprise, the reality is the same. And it’s not just finance. This is a theme that we see constantly, not only in the area of finance, but in, literally, every aspect of business and, to some extent, in our private lives.
Here are some interesting statistics to show how the pace of technology is increasing, according to Baron:
- By 2020, 80% of adults on earth will have a smartphone
- Internet penetration is now 88% (vs. 77% in 2010) and access speeds have almost tripled
- Americans spend an average of 5.6 hours a day online
- More than 1,000 new apps are created every day.
Within the B2B community, digital changes also have impressive numbers. Forbes released its update of its roundup of cloud computing forecasts. They found, among other things that:
- The global Software-as-a-Service (SaaS) market is projected to grow from $49B in 2015 to $67B in 2018, attaining a CAGR of 8.14%.
- Mobilecloud traffic will grow 11-fold from 2014 to 2019, attaining a compound annual growth rate (CAGR) of 60%.
- Globally, cloud apps will account for 90% of total mobile data traffic by 2019
Yet with all of this in technology, Baron notes that “accountants may not be doing as much as they should to stay relevant.” According to PayStream Advisors, in its “2015 Invoice Workflow Automation Report”, although the adoption of automation, including e-invoicing, in AP is growing, there are still a large number of companies surveyed (40%) who are not using and have no intention of implementing invoice workflow automation. When one considers that companies that have adopted e-invoicing and workflow automation solutions have realized significant increases in efficiency, substantial drops in errors and costs, and unlimited visibility into their transaction and transaction history, it is quite surprising that the 40% number is as high as it is. Reasons for this range from inertia (“It’s working just fine as it is”, or “this is the way we’ve always done it”) to a discomfort with technology to a concern about costs of implementation and training. Yet, studies show, time and time again, that there are a wide range of solutions that will pay for themselves in a short period of time and, after that, can produce a considerable ROI.
The transition to automation and digitization may not be occurring as quickly as many would like, but with the expansion of digital use globally, it’s undoubtedly just a matter of time before most companies take the necessary next steps. That will be especially true for those in the finance function.