Posted by Steve Wilcox on Wed, Jul 01, 2009 @ 09:01 AM
During my college days, I would go to this local bike shop and gawk at all the new racing bikes. The owner was an old Italian former pro racer. As a poor college student, I couldn't afford any of the super expensive racing bikes in his shop. Heck, I couldn't even pay for the seat on these bikes!
Nevertheless, this old Italian gentleman was very patient with me. With his thick Italian accent and big white mustache, he would educate me on all the bike handling and racing subtleties of any bike that interested me.
One day, a gorgeous (and I mean gorgeous) Italian racing bike appeared. The red paint job, the shiny new components, the sleek new design ... it was the most stunning bike I had ever seen. When I asked him about it, he sighed sadly, shook his head and as he put his finger over his lips, he tsk-tsked "not good bike."
In that charming Italian accent, he said something to me I have never forgotten: "That bike, she is like beautiful woman that is very bad soul-mate."
Apparently, the bike was a disaster to ride -- not comfortable, unresponsive and very high maintenance ... but the paint job was spectacular.
That same disappointment happens with technology investments. Check out this chart which I have posted before:
Only 11% of respondents thought they were getting a high return from their investment ... and 43% believed they were obtaining a low, negative or unknown return.
Unfortunately, these results are true for AP Automation investments as well.
AP automation has so many obvious benefits:
So why do some AP technology investments fail?
... for several reasons:
- Automating bad AP processes
- Unwieldy and unfriendly user-interfaces
- Too much customization
- Poor roll-outs
- Inadequate knowledge transfer
When done right, AP automation offers a compelling ROI ...sometimes a jaw-dropping ROI ... BUT this requires a comprehensive understanding of your requirements and a rigorous evaluation of all the available solutions. This can be a daunting task. It can be difficult to sift through the over-promises and bold claims.
Think about the 6 key criteria to consider when evaluating AP solutions:
- Functionality: What are the must-have and what are the nice-to-have features?
- Technical Requirements: What are the critical technical hurdles for your organization?
- Support: How well is a vendor's solution supported? What level of support is right for you?
- Vendor Credentials: What credentials are important and how do you verify them?
- Pricing: What the pros and cons of the various pricing models?
- Return on Investment: This is critical and needs to be fully understood.
-Rakesh Shukla
@rakesh170
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Posted by Rakesh Shukla on Thu, Jun 04, 2009 @ 01:59 PM
It's been about a year since one of my very first blog posts titled, A Cell Phone for an 11 year old?
A year ago, my son tried to make the case that he needed a cell phone but had no idea of the costs.
It turns out that he actually didn't use his phone that much to talk. Instead, TEXTING became all the rage. I became aware of this when our monthly bill doubled! You see, I didn't have him on a texting plan, and he sent and received 750 texts!
"Do you realize that sending text messages cost money?" I asked.
"Uhhh, no"
"Do you realize you texted 750 times last month?"
"Sometimes I get 50 in a day!" he responded proudly.
"What are you texting about?"
"Stuff" he replied like it was none of my business.
At that point, I got concerned and asked him to hand the phone over so I could see what was going on.
Here was a typical text conversation with one of his buddies:
SON - hi
BUDDY - hello
SON - im bored
BUDDY - me too
SON - bye
BUDDY - bye
750 texts like this! I put him on a plan and told him not to go over 500 texts in a month.
Anyways, the same lack of knowledge about costs continues to persist about technology investments.
Check out this chart:
What is striking (at least to me) is that almost 20% or respondents have NO IDEA of the return on their technology investments!
That's excusable for a 12 year old but not a finance manager ... especially an AP manager. Other surveys (such as IOMA's) show that most AP departments have no idea of current costs even after the economic turmoil we have been through.
Here is the point I made last year which I feel is still valid now:
Survey after survey shows that the #1 priority for most finance departments and especially AP is cost reduction. Well, how can you make the case to save money with proposed/desired initiatives if you don't know your current costs???
The other benefits of a formal cost analysis are a better understanding of your current AP processes and inefficiencies, as well as establishing the groundwork for future benchmarking to measure how you are improving as an organization and how you compare to other organizations.
IOMA also states that when it comes to technology investments, "traditionally, AP has not been a priority, which is why so many organizations rely on completely manual processes. ... The problem is that most AP Managers do NOT build a good enough case."
How can you build a case for any type of investment if you don't have a handle on current costs? Understanding costs would be a NECESSARY first step to building a case for technology investments.
-Rakesh Shukla