5 Reasons Why Purchase to Pay is Better in the Cloud
Monday, 19 Mar 2018
Director of Product Marketing
Cost, complexity, security – considering a cloud transformation project can seem daunting and scary. But equally as scary is not moving forward and staying with a soon-to-be (if not already) antiquated on-premise purchase-to-pay solution that will ultimately stifle growth. Read on for 5 reasons why purchase to pay is better in the cloud.
1. Dealing with an eroding IT landscape will leave you stuck in the mud.
Companies that want to grow, expand and establish staying power need to be thinking about how to future-proof their business. This means looking at how to get rid of unnecessary complexities, work-arounds, excessive costs and inefficiencies with the current infrastructure. The IT landscape is a good place to start.
On-premise purchase-to-pay systems begin to incur maintenance costs as newer versions of the cloud-based software are released. This is because it costs solution providers more in resources to support older versions. Typically, upgrading to a new version also costs money; new features do not come free of charge. Additionally, you must take on more expenses with your internal IT resources to maintain potential disruptions, outages or server issues with an on-premise system. With a cloud solution, those resources are included. Comparing subscription-based Software-as-a-Service (SaaS) cloud solution costs to the existing maintenance costs may not be easy. However, continuing to pay maintenance fees for the same old technology begins to nickel and dime your budget without adding any new value. And, the lack of new features and functionality keep you stagnant and unable to make the agile business moves you need to realise success.
2. OpEx looks better in your financials than CapEx.
Net present value (NPV) of investment is what matters in business today, and from that perspective, you would rather have scalable operating expenses (OpEx) than capital expenses (CapEx) that burden your balance sheet. With your services in the cloud, software and IT-related expenses are regarded as OpEx instead of CapEx. Instead of investing precious capital at one time for these expenses, companies can spread out IT operating expenses over time. This makes approvals much smoother (since the dollar amounts are significantly less), and it’s easier for procurement and finance teams to demonstrate the value they receive from the invoices they pay each month (as opposed to a lump invoice that gets paid once for benefits that won’t be realised until the future). The other good thing about the SaaS model is that costs scale based on consumption – the more you use, the more you pay. So, when companies experience an influx of business or go through mergers or acquisitions, they can easily add on more without going through a rigorous approval and implementation process or taking more huge hits to the balance sheet. This brings us nicely to our next point – scale.
3. You can increase corporate agility – for scaling up or scaling back.
With an on-premise system, expanding or decreasing your system to accommodate acquisitions and divestitures means a painful, time-intensive and expensive project. The cloud is flexible – you upgrade once, and you have the foundation you need to scale up or scale back depending on your business strategy. In a cloud environment, scalability requirements from major business moves can be met in just a few clicks.
Here’s an example: One of our customers was growing and become so successful in their business that they were acquired by a bigger company. The Basware cloud solution better fit with the finance processes and long-term strategy than the existing solution the acquiring company had in place. So, that company was able to easily deploy the Basware cloud solution from that smaller company to the entire enterprise.
4. You can reduce risk with cloud purchase to pay.
For many companies, properly managing payment times and supplier risk is critical to production times and profit margins. Suppliers need timely (or even early) payments to increase cash flow for investing in their own stability and innovation, which in-turn benefits their customers. Achieving the level of efficiency and flexibility needed to support suppliers in this way with speedy payments or financing options is simply not possible with an on-premise solution.
Companies also need transparency and 100% spend visibility to reduce the potential for supplier fraud and be more strategic with how they’re spending, which is not possible with the lacking capabilities of an on-premise solution. The cloud not only streamlines procurement and AP processes for speedy orders and payments, it aggregates the real-time financial data behind those transactions to enable the visibility and control you need to reduce risk and produce savings.
So, you might be thinking, what about data protection and information security risks? Well, the cloud is more secure than your on-premise solution. Remember those additional internal IT resources from reason number 1? Those are the guys you’ll have to find, hire and pay to prevent hackers and data breaches. With a cloud solution, you’re backed by the leading technology and around-the-clock protection from providers like Amazon Web Services. And, cloud purchase-to-pay solution providers like Basware stay up on the latest compliance requirements and build features into solution to ensure you meet the regulations and standards required for your business and do not run the risk of non-compliance. If you’re on-premise, you’re not getting the regular updates that have these compliance features built-in.
5. Cloud purchase to pay is the foundation for emerging technologies.
Part of building the infrastructure for the future is building the data set that emerging technologies like AI and machine learning feed on to generate valuable insights and fuel predictive analytics. This is key as these technologies are already becoming a reality and being integrated into the automated purchase-to-pay process. With cloud purchase to pay, you’re constantly collecting, aggregating and harvesting real-time spend data to build this data set. One thing we’ve been keen to deliver to Basware customers on the cloud is 100% of their spend data through our unique capability to capture 100% of invoices regardless of type, 100% supplier onboarding without making them change how they operate and 100% user adoption of e-procurement. After all this is your data we’re talking about here – why shouldn’t you have unfettered access to it, so you can make more informed decisions, forecast accurately and leverage predictive analytics to drive change.
Convinced that purchase to pay is better in the cloud? Contact us – we’re ready to help you transform.