This morning I listen to a podcast about GDP, gross domestic product. It was interesting, but the angle on the podcast was that GDP was a “thing” it’s not technology real. As the risk of starting a debate on what GDP is or isn’t, we may all agree that it’s not tangible, you can’t touch it.
Tangible or Intangible?
Accounts Payable Automation is a tangible – intangible. The idea (hang with me) is that because of the software that makes automation run, you have something to see and touch, which makes it tangible. The problem is, the real impact of AP Automation is a better process and a better business, which is an intangible. With Account Payable Automation it goes another step further, because automation is a tangible – intangible that people don’t understand.
Example 1 – Tangible
Look at it this way, buying a car is an example of something that is tangible. At no point, the last time you bought a car, did the salesman try to convince you that driving a car was better than walking… I am sure there was no time calculation or ROI study.
Example 2 – Intangible
An example of an intangible is life insurance. A lot of people own life insurance, you can’t touch it and when the salesperson sold it to you it was based on some version of providing for loves ones. Even though life insurance is something we can’t touch or see, we all know or have known someone who has benefited or wish they would have benefited from the offering. That is why AP Automation is both tangible, intangible and unknown.
I write a lot about automation and time savings. I do that because times savings is a unique benchmark to automation that tells you the benefit of automation and/or help you reached your goals. I also write about return on investment (ROI). ROI is a great tool because it helps you understand the financial impact of automation, but its something that will help you “sell” the idea within your company. Even though these are fantastic numbers that will help you with automation, they are not technically real.
Example 3 – ROI and New Time
Here is an example, the average return on investment for the companies that I work with is $92,000. In order to get the $92,000 you have to either layoff the people who are being freed up from automation or reassign them to other tasks. Because most companies that I work with reassign it’s not like they are getting a $92,000 check. It is still real values but to the point of this article not real.
What Is Real?
I had an eye-opening discussion about real saving with a company that has been automated for several years. He said that the “real” savings within his organization was number of times the invoice gets touched. This closely relates to new time (that’s the time that is freed up by automation) but he was able to calculate that he saved 20 touches. Now he is a smaller company and most of his accounting is done in one location, but from an analytical and justification stand point adding up the number of times a company touches an invoice is a real savings.
How many times does your company touch an invoice?
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Categories: Return on Investment