Tangentia | digital

First post in our new Shadow IT Strategy Series sharing ideas, methods, and strategies to help CEOs, CIOs and most importantly users, to find greater success with Shadow IT!

Shadow IT has gotten a bad rap. Over the last several years mainstream IT leaders and minions alike, have decried Shadow IT as a blight upon the IT world to be purged from the body of the corporation like some fatal viral infection. For those unfamiliar with the evil and dark voodoo of Shadow IT, here's how Wikipedia defines it:

ShadowIT is a term often used to describe information-technology systems and solutions built and used inside organizations without explicit organizational approval. It is also used, along with the term “Stealth IT”, to describe solutions specified and deployed by departments other than the IT department.

.In my early corporate days at HBC we called these projects skunkworks and we truly got some amazing things accomplished with no budget assigned to support and I even have the letter to prove it! But somehow over the years through the growth of an IT culture of control, Shadow IT has now become something to root out and extinguish like a small brush fire under the shadow of the IT castle walls. Well, I say it's time to bring Shadow IT back into the light and here's why!

Improve Relationships – When behavior in organizations turns to rebellion, and users resort to buying new systems and services using their corporate cards, there's usually a reason. Current budgeting, decision, and procurement processes are slow to the point of being broken and cannot keep up with the need for new types of systems in a variety of areas. Reactions simply to fight this phenomenon will only further fray fractured relationships. Better to see this as your chance to more closely bond with your business users harnessing their initiative to drive innovation.

Innovation Driver – Having worked inside billion dollar corporations and witnessed first hand the inertia of bureaucracy crushing the life out of rapid innovation, perhaps Shadow IT can become an innovation facilitator. An initiative is needed to kick start innovation and if users feel strongly enough about needed IT system to go out and buy it there's true motivation and initiative. So by developing your own Shadow IT strategy, you can then more effectively work with users to tap into this wellspring of innovation.

Cloud Migration – As the future of IT is in the cloud, the sooner you can overcome doubts, fears and negative perceptions of migrating to the cloud the better. As by their very nature, most if not all Shadow IT implementations are cloud-based, by developing a program strategy for how best to roll out Shadow IT projects you can effectively frame positive perceptions and also successfully facilitate the process of cloud migration.

Safe Shadow IT – Just like there are recommendations for industrial safety to prevent accidents when it comes to Shadow IT there's definitely a set of prerequisites and steps which can be put in place to help users avoid pitfalls and maintain systems integrity. Safeguarding Your Success with Shadow IT can be done through taking some initial review steps on key factors as well as bringing in verified partners to assist users in configuration, training, and rollout of their Shadow IT projects. Look out for upcoming Shadow IT strategy posts for the CEO, CIO, and of course users, as we try and do what we can to further fuel innovation by bringing Shadow IT out of the shadows and back into the light!

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Overview

Terms like “Paperless office”, “Paperless factory”, “Digitized Office” have been around for a long time, as an aspiration for the future. And yet, even today, the ground reality is that there are a lot of paper documents that are still in existence. Purchase Orders, Invoices, Shipping Notes, Goods received notes, Proof of delivery notes, and several other documents are still generated, received, and processed in large numbers in companies all over the world. Processes to handle paper documents are largely manual, time and effort consuming, prone to errors, require data re-entry at multiple stages, and result in operational inefficiencies. The need of the hour is to leverage technology to digitize such documents and automate the processes to handle them.

Example use case: Accounts Payable (AP)

Consider a typical use case for Accounts Payable (AP) and the Procure to Pay process at a factory that receives shipments from its suppliers. Trucks arrive at the factory gate with an invoice for the goods they are delivering, along with associated documents such as a shipment note and sometimes the purchase order (PO) corresponding to that shipment. Let us look at how the documents are typically handled.
The invoice and associated documents are in the form of a hard copies (physical paper copies). At the factory gate, this physical invoice is manually inspected, and tallied with the ERP system data. Once done, the gate clearance is recorded (manually again) on the physical invoice, or printed out as another physical document to attach to the received invoice. The invoice is then passed on for further processing.

The further processing might involve invoice being sent to a verifications team, where the received shipment is checked for quality. Once done, the ERP system is updated (manually) indicating that the shipment received has cleared the quality check. The quality clearance might then get recorded manually on the physical invoice document, or a QC certificate might get printed out and attached with the invoice.

The invoice (and the received goods) are then sent to the stores section where there is a quantity verification (counting) process. This involves matching of the ordered quantity of goods from the original PO in the ERP system, with the quantity in the invoice, with the actual quantity received. The matching requires a visual inspection and a manual comparison of the PO and Invoice for quantity as well as other details.
Once the matching is completed, the goods are accepted at the store, the ERP system is updated (manually), a Goods Received Note (GRN) is printed out and handed over to the supplier's delivery associate, and the physical invoice is sent to the accounts team for the payment approval.

Business Challenges

The limitations of this process are obvious. It is inefficient to have the paper invoice (and other documents) being sent across from one department to another. There is quite a bit of work on data entry and re-entry including updates to the ERP system, which could also result in data errors. Also, with a paper-based process, search and retrieval of documents later (e.g. during audits) is a very painful process since the actual physical documents are not easy to find. These inefficiencies impact both the cycle time as well as productivity of the factory personnel involved in receiving and processing shipments.

The solution: Invoice Processing Digitalization

These inefficiencies can be addressed by a technology solution that involves converting the paper-based manual process into a digital, automated process. Such a solution involves two main steps:

Digitization of the physical invoice
This involves the following
- Scanning of the invoice and converting into digital (e.g. PDF) form
- Optical Character Recognition (OCR) to extract specific data fields and values from the document
- Generating and adding “tags” or “meta-data” to the digital document, to help describe the document and to help for later search and retrieval
- Storing the digital documents in a document repository or document management system (DMS), to be accessed when needed
Intelligent automation
Just converting the documents to digital form and storing them is not good enough. The next step is to have a process automation/workflow engine that can orchestrate the document workflow via a process application. The process application will handle approvals, automatic forwarding of the document to the right stakeholder, automated alerts and notifications, and integration with any back-end systems that might be needed. Process applications can be made “smarter” or “intelligent” through technologies such as artificial intelligence (AI) and machine learning (ML). The use of AI to complement automation is in fact what has given rise to the term “Intelligent Automation”.

Benefits

Invoice processing digitalization offers some obvious benefits. The scanning and conversion of the document to PDF form can be done at the gate itself, after which the physical documents can be sent for filing immediately, eliminating the risk of the physical document getting lost or damaged. Search and retrieval can now be done on the digital documents, reducing the time required from a few hours to a few seconds. With intelligent automation, manual data entry or re-entry can be automated fully or partially, reducing the chances of data entry errors. Overall, digitalization offers direct improvements in operational efficiencies with invoice processing cycle time reduction, reduced costs, and improved staff productivity.

Summary

While this article covers the AP area and a portion of the Procure to Pay process, digitalization equally applies to other areas such as Accounts Receivable (AR) and Order to cash processes. These processes are a part of any organization and digitalization of such processes goes a long way towards achieving the vision of the “digitized office” or “paperless factory”. This is of course, provided that companies are willing to invest in digital technologies such as intelligent automation. A lot of companies have already implemented such solutions, or are in the middle of doing so. Where does your company stand?

Footnote: Tangentia’s Invoice Digitalization Solution is designed to help you address the challenges related to handling physical invoices and related documents. Leveraging the power of Robotics Process Automation (RPA), Artificial Intelligence (AI) and Workflow / BPM technologies, the solution delivers all the benefits of digitalization including reduced invoice processing cycle times, reduced invoice processing costs, elimination of data entry errors, improved staff productivity, significantly reduced time and efforts for document search and retrieval and zero risk of documents getting damaged or misplaced during processing. The solution is a part of our Digitalized Office / Paperless Office offering, which includes automation solutions for Procure-to-Pay as well as Order-to-Cash processes.

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