EPISODE #67: Should You Build or Buy Automation & AI?

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Build or Buy? It’s a question both IT & business operations have grappled with ever since John W. Tukey first coined the term “software” in 1957. As automation & artificial intelligence quickly permeate nearly every aspect of enterprise ops over 6 decades later, the question still remains. Should an organization build its own automation & AI application, or let someone else do the heavy lifting? Building custom solutions allows companies to retain control, but at what expense? Then there’s ongoing maintenance costs and other considerations. On the other hand, buying software can accelerate time to value, but that often entails making compromises on functionality.

To delve further into this question, we turn to Shan Haq, Vice President of Corporate Strategy and Development at Transcepta, an intelligent Procure-To-Pay vendor. Transcepta’s platform leverages automation augmented by AI to deliver 100% straight-through invoice processing across supply chains. Shan shares his insights with us on why buying the services of an automation platform can make more sense, & the beneficial ripple effects enterprises can experience by automating just one area of their organization’s operations.

Guy Nadivi: Welcome everyone. My name is Guy Nadivi and I’m the host of Intelligent Automation Radio. Our guest on today’s episode is Shan Haq, Vice President of Corporate Strategy and Development at Transcepta. Transcepta is in the intelligent Procure-To-Pay space, connecting organizations with their suppliers by using artificial intelligence and automation to eliminate things like invoice exceptions and labor-intensive tasks. You can think of their entire platform as a giant use case for automation and AI, that provides out of the box digital transformation for inter-organization accounting procedures. We’ve never really covered anything like that before on the podcast, so we’ve asked Shan to join us and help us better understand the impact this flavor of digital transformation can have on businesses. Shan, welcome to Intelligent Automation Radio.

Shan Haq: Thank you very much for having me. I’m excited to kind of talk about these various hot topics of the industry, and I appreciate you having me on.

Guy Nadivi: Let’s dive in. Shan, please tell us a bit about the path you took that led you to a career in the field of AI and automation-driven, Procure-To-Pay or P2P systems.

Shan Haq: Yeah, sure. You know, I started my career actually really in just kind of a number of different strategy and kind of planning roles. Early on, I was with Deloitte consulting and spent some time with Microsoft and really just kind of working in business process integration-type technologies, typically in the product management group. And ultimately joined Transcepta just a couple of months after the company was started. And our goal was really to kind of change the way customers are doing business with their suppliers, make things much more automated, and really the kind of the focus was around that connection that the supplier has with the customer. So making that digital connection as opposed to, you know, really how everybody was kind of doing business, which was, you know, essentially passing paper back and forth.

And so, that was 15 plus years ago, how we kind of got to the point where AI and machine learning and some of these other technologies became a focus is just really just the maturity of those technologies. And then kind of the presentation of the use cases where you can take advantage of that sort of functionality. And so that’s really where we are today. I don’t want to say it was an accident, but it wasn’t intentional that I said, “Hey, I’m going to get into AI or machine learning”. It just, it just kind of where the market went and today the leading platform, certainly in our space are all capitalizing on the kind of the sophistication in those areas.

Guy Nadivi: P2P has traditionally been viewed as relatively low tech, but recent advances in artificial intelligence and machine learning have pushed the field into some interesting territory. Why should C-suite IT executives take notice?

Shan Haq: Yeah, I think folks, whether they’re in IT or really any department, but certainly at that C-level they feel the pressure to be competitive. They want to be leaders in their space both probably personally and with regard to their company and, they want to be able to compete and help their companies compete. And, to that end, they need every edge that they can get. And today, if you want to do things like automate backend processes, get visibility in the data, just, make better smarter decisions with the data that you have. All of that is enhanced with AI and machine learning. And P2P, there are some, you know, really specific use cases that we can talk about enabling a remote workforce is topical today, for sure.

How do you deal with seasonality, minimize supply chain disruptions? All of these are our use cases, including just, your traditional efficiency-type use cases. And really the best platforms today are including, or I should say, incorporating AI and machine learning in their platforms. And, if you’re a C-level IT executive, and you’re looking at helping your, kind of your business users do any of those things that I just mentioned, I think they need to pay close attention to what kind of technologies are being used by whatever provider they kind of take a look at.

Guy Nadivi: So, speaking of other technologies with so many competing budget priorities these days in the drive towards digital transformation, why should P2P be given consideration relative to other technology initiatives?

Shan Haq: I think the thing that P2P does for a company is, it touches on, I think a lot of the really important values that customers are looking for. So I think, the first thing is, is just, scalability, breadth of influence across multi-department. So, I mean, when you think about where you’re going to automate, if you can put technology in place that can help more than just one department, you’re going to get more out of that investment. I think that, generally speaking, when you can bring not just, for us anyway, within Procure-To-Pay, when you can bring finance, procurement, IT, as well as, kind of more operational or supply chain departments, all into the mix and provide them all value with a single project investment, I think that’s pretty powerful. And I think our customers see that. And that’s why they’re looking at P2P as a priority right now, compared with, other options where they might want to invest.

Guy Nadivi: A lot of people listening into this podcast, Shan have led their organization’s investment in automation tools, such as RPA, or perhaps they’re even RPA practitioners themselves. What would you say to someone like that? Who’s not afraid to get their hands dirty and build their own P2P automation rather than use a service that’s been built out like yours.

Shan Haq: Yeah. I think it’s difficult to build out a platform like ours for one particular customer. I mean, I think there are certain tasks that you can automate by using something like RPA. And I think that’s appropriate in some cases, right? Some repetitive tasks that can be automated through a technology like that. If you can kind of do it yourself, build it your own. I think that can make sense. But I think when you’re looking at automating an entire business process, as complex as accounts payable for that matter, where you’ve got not just automating the matching process, so to speak between an invoice, a PO and a receipt or automating the coding of a non PO invoice and getting all of the GL coding in there, you really need, I think a platform that, one can capitalize on leverage.

So, the investments that we’ve made have been from data across, many, many, many customers, as opposed to just one. I think there’s also something to be said for kind of maturity of development. I mean, we’ve been doing this for 15 plus years. And so I think we’re probably going to be able to do some things that maybe somebody who’s doing it for one particular organization, and maybe hasn’t been doing it all their career across, tons and tons of data over many, many customers. I think they’re going to have a different result, but I think also, ultimately if you look at a platform like ours, we’re trying to eliminate the need for those repetitive steps that RPA is designed to automate. So I think sometimes people maybe look at it and they say, okay, the goal is how do we roll out an RPA initiative?

Well, what we want to do is get to the point where those repetitive stuffs aren’t even required because we’ve used technology to essentially kind of create data from, previous data through, algorithms and things like that. And, what we want to be able to do is deliver a transaction, for example, where, maybe a supplier sent an invoice and it doesn’t have certain information on the invoice that you need to process it efficiently. We want to be able to kind of create that data before we send it to you. And, that’s going to remove the need for somebody to go through kind of a manual process to resolve a discrepancy. And so I think there’s a role for RPA and potentially a role for a customer to do it themselves. But I think to get the most out of an investment in P2P, you really do want a platform that has kind of an aggregate view of both customers and their data, to be able to leverage that insight into the technology and really give you the most value that’s possible.

Guy Nadivi: COVID-19 had a profound impact on every type of business over the last year. How did the pandemic affect adoption of P2P?

Shan Haq: In the beginning, I wasn’t so sure what was going to happen. You know, I thought it’s probably going to be some interest because certainly customers are going to want to be able to do more with less, get more efficient. I think candidly, a lot of, kind of the people that drive these initiatives were suddenly working from home and there was some disruption and maybe there had some time to do research on different projects they might want to kick off, but it wasn’t sure that companies were actually going to spend money just because I thought it’s an uncertain world and maybe they’re going to be more conservative and hold on. And, for our business anyway it was a positive that what really happened was I think customers just felt pressure to do projects.

There were, I think the edicts from the senior levels saying, “Hey, we need to get more efficient. We need to be able to move our workforce dynamically, back and forth to a remote workforce”. You know, we certainly have customers that, said things like, if we were doing things with, paper and manual processes, there wasn’t even anybody in the office to process an invoice. We needed to be, we were thankful that we were in a place where these processes were automated. And so, that’s a long way of saying we actually saw the kind of the busiest year ever in terms of, of customers actually doing projects. And so COVID impacted different industries differently, certainly from a P2P cloud software perspective, it was a positive in terms of growth. Guy Nadivi: I’m curious, Shan, what kind of ripple effects does P2P automation have on the rest of the business?

Shan Haq: Yeah, it’s a good question. So, these projects start from different areas. You know, a lot of times you’ll see them starting IT as a, you know, kind of a way to kind of just update and automate across the Procure-To-Pay spectrum. But I think, most of the time they start in finance, some type of a have accounts payable initiative where customers, kind of the first step is they want a digital connection with their supplier, receive digital invoices and have a platform that has, sophisticated enough technology to eliminate exceptions and accounts payable. And so the thing is, is that they start there, but when we talk to customers, I think sometimes they’re ahead of the game and they’ve already kind of thought some of these other things through, and sometimes they’re surprised and delighted to hear that there’s a lot more impact that just doing something like automating AP can have on other departments. So you talk about a ripple effect. Here’s just a couple of quick examples. One is, so when you automate the invoice process, now the time it takes to get an invoice from a supplier and ready to pay goes from days or weeks to minutes. And the thing is, is that, it’s not like every customer out there wants to pay their invoice the second they get it, right? In some cases you might want to pay an invoice more quickly because there’s an early pay discount associated with it. In other cases, you might want to hold that payment until the last possible, kind of day within terms in order to kind of optimize that cash flow. And, when you automate AP, you essentially just get really, kind of fine tuned control over the timing of the payment. And obviously that’s a finance value proposition, but that’s one of the kind of side benefits of doing an efficiency or operational efficiency project within AP. Another example would be even kind of less connected than finance, would be supply chain departments. So, many times when you’re in a particularly in industries within the supply chain space, they do, what’s called a three-way match. I alluded to it earlier, but what that means is that they match the invoice to the purchase order to the goods receipt, and that is how they know that the invoice is okay to pay. And, if you can think of a scenario, just a simple one where you’ve got invoices on hold, and the reason is because you haven’t received the goods yet. And so you can’t pay that invoice, but by not being able to pay that invoice and being alerted of that fact through the P2P platform, you’re actually getting alerted of a potential supply chain disruption down the road, right? Because you haven’t received those goods and you might not have known that if that invoice wasn’t on hold and an alert wasn’t triggered. And so, that’s totally outside of AP or finance, but it’s a benefit to the supply chain organization. So there’s many examples like that, but it’s interesting how widely felt the benefits are of doing something as focused as automating an invoice process.

Guy Nadivi: Shan, what do you think will be some of the biggest innovations we’ll see in the next one to three years, with respect to automation and AI in the Procure-To-Pay space?

Shan Haq: Well, we’re already seeing, I think the first steps of this, but I think we’re going to see some exceedingly kind of drastic improvements in this area, which is eliminating the need for manual coding of invoices. So, I talked earlier about a three-way match. There’s also just the two way match where you match the invoice to the purchase order. But for those invoices that customers receive where there wasn’t, they weren’t initiated by a purchase order called non PO invoices. The way that customers approve those invoices is they route them for approval and then they manually code them, they GL code them. And that is a really manually intensive process. And it’s one of the things that takes them the most amount of time and therefore costs the most amount of money within AP. And so what we’ve seen is that the kind of the leading platforms out there today are doing things like defaulting coding, or looking at historical data to try and predict coding. But I think what we’re already today, and I think it’s just going to get more and more effective or successful is using technologies like AI and machine learning to actually predict what those GL codes should be. So that when a customer receives an invoice from a supplier and it’s a non PO invoice, all that coding is just set for them.

Guy Nadivi: For the CIOs, CTOs and other IT executives listening in, what is the one big must have piece of advice you’d like them to take away from our discussion with regards to implementing an AI and automation-driven P2P service.

Shan Haq: Yeah, I think, the most important thing is to really focus on solutions that leverage digital connections with their suppliers. Because, the sort of the old way to do it, and surprisingly, there’s still a lot of companies out there that are doing this, is to use something like OCR, optical character recognition, scanning type solutions, imaging type solutions. Certainly those are better than processing transactions manually, but they’re imperfect. And they’re really not as efficient as a digital connection. And I think most importantly though, they, having a digital connection with your supplier opens the door to so many other types of benefits. And we’ve talked about some of them today, whether it’s leveraging technology to predict data, whether it’s, I use the supply chain disruption. I mean, those types of things are just not possible without a digital connection. And, so I would start there, as you’re kind of looking at ways to kind of solve these problems with automating backend processes, the ability to really get the most efficiency and collaborate across your supply chain is predicated on having a digital connection. And I would really focus on solutions that start there and that’s sort of the, I call it the qualifier, right? I mean, once you have that, then you can start to look at comparing options, platform options with, by the technologies that they’re using and you can see, okay, well, how sophisticated can the provider be? Or is the solution once the transaction is digital, right, what are they doing? Are they just passing electronic files back and forth? Or are they actually doing something to clean and enhance the data before it’s sent off? And that’s to me the more exciting, the more fun part, but it’s not even, you can’t even get there if you don’t establish that digital connection with your suppliers. So that’d be kind my two cents on it.

Guy Nadivi: All right. Looks like that’s all the time we have for on this episode of Intelligent Automation Radio. Shan, Procure-To-Pay is a topic I confessed, knowing very little about, and you’ve really educated me as well as the audience about it from an automation and an AI perspective. I think a lot of our listeners will benefit from having a greater understanding of P2P and maybe even gain a broader perspective on how much value AI and automation can deliver through this operational specialty. Thank you for coming onto the podcast today and sharing your insights with us.

Shan Haq: I appreciate you having me. It’s an interesting conversation. This stuff is fun to talk about, and there really are some, some kind of new and exciting use cases out there within P2P. And so appreciate an opportunity just to share my thoughts with you.

Guy Nadivi: Shan Haq, VP Corporate Strategy and Development at Transcepta. Thank you for listening everyone. And remember, don’t hesitate, automate.

Vice President of Corporate Strategy and Development at Transcepta

Shan is a Partner and Vice President of Corporate Strategy at Transcepta, a leading procure-to-pay platform. He is responsible for shaping Transcepta’s strategy for new markets, products, and alliances. Through leadership roles in corporate strategy, marketing, and product management, Shan has successfully grown businesses within Microsoft, Deloitte Consulting, and Boeing Space and Technology.

Shan can be reached at:

LinkedIn: https://www.linkedin.com/in/shan-haq-697101/

Email: info@transcepta.com

Website: www.transcepta.com

Host of "Intelligent Automation Radio"