Gartner has traditionally published Magic Quadrant reports for the office of the CFO function like Financial Planning and Analysis (FP&A) and Procure to Pay (P2P). For the first time in 2022, Gartner released a Magic Quadrant report for Integrated Invoice-to-Cash Applications. This report signifies why the Order to Cash (O2C) function should be a critical focus area for shared services and GBS leaders looking to improve working capital across business operations globally.
In the Magic Quadrant report, Gartner elaborates on the five technologies that are changing the landscape of O2C transformation and are significant for leaders to build the right tech stack, devise proactive A/R strategies, and improve cash flow. This blog draws insights from the report and shares a 5A Technology Framework which deep dives into each of those advanced technology capabilities and highlights the things to consider when adopting them to suit the evolving business requirements.
Gartner considers automation a primary enabler for an Order to Cash process transformation. Most Order to Cash processes require a high degree of human intervention. Enterprises remain manual in extracting credit data from multiple credit bureaus, tracking invoice payment details on customer portals, and closing the open invoices by matching them with the corresponding payments. Automating these low-impact manual processes is the first step to transforming the order to cash function.
Typically when shared services and GBS leaders plan to automate, they think of investing in Robotic Process Automation (RPA) technology. While RPA might be a good starting point for automating processes, an essential thing to understand is its limited capabilities to drive scalable results. Deploying RPA for business operations is not a one-time exercise and requires significant IT support to upgrade the RPA bots based on changing business requirements.
As a result, the Gartner report primarily focuses on application software with RPA capabilities available as out-of-the-box offerings – that means the internal IT teams don’t have to invest their bandwidth in managing the RPA bots.
The Gartner Magic Quadrant report claims that embedded Artificial Intelligence (AI) in integrated O2C applications will automate over 50% of business decision-making within the O2C process by 2023. AI leverages financial transaction data and analyzes the trends to share recommendations and predictions with leaders, helping them improve their decision-making quality.
Shared services and GBS leaders need to remember that deploying AI across their operations requires three broad steps –
The availability of financial transaction data from leading big data companies like – HP Enterprise, IBM, and Teradata makes it easy for business analysts to build and enhance Machine Learning algorithms.
For ML capabilities to help improve decision-making quality, data analysts need to develop algorithms trained on these large financial transaction datasets. This enables the machine to understand data trends and develop AI-powered intuitive insights critical to making informed decisions.
Implementing AI generally starts with data scientists looking at variables across datasets critical to making significant business decisions. Most organizations believe that onboarding the right AI skillset will help them successfully execute AI capabilities.
For AI technology to drive real-world use cases across global Order to Cash operations, it is essential to leverage insights from internal subject matter experts and guide the data analysts and data scientists to understand the complex business requirements.
The Gartner report lists down technology vendors that help enterprises with the above prerequisites like – access to extensive data libraries, training the machine on trillions of dollars of financial transaction data, and collaborating data engineering and domain expertise to make accurate business decisions and improve cash flow.
Gartner says predictive analytics capabilities form a robust backbone to execute daily A/R operations. From extracting key insights across high volumes of customer data to presenting the data in a more consumable manner via prebuilt dashboards – advanced analytics tools significantly improve executive visibility over global A/R health.
Advanced analytics should allow O2C teams to measure the impact of digital transformation initiatives periodically. The analytics dashboards must provide global business leaders with a 360-degree view of the critical leading and lagging indicators across the core A/R process to strategically optimize process performance.
Gartner expects digital assistants to be a standard feature across all Order to Cash processes over the next two years. Alexa and Siri – Amazon and Apple’s voice-activated digital assistants are convenient tools in the B2C space powered by a large volume of data. Digital assistants based on Natural Language Processing (NLP) capabilities in the B2B enterprise world are slowly evolving to provide similar insightful experiences for O2C teams by analyzing the end user’s intent.
Digital assistants could add value to critical O2C processes such as credit and collections by automating low-impact activities like transcribing live calls, drafting dunning correspondences, and recommending action items for later. They will enable teams to allocate their bandwidth towards more strategic decision-making tasks like credit limit up-gradation.
Gartner believes prebuilt Application Programming Interface (API) is an integral component of modern O2C solutions. APIs act as the building blocks of modern cloud-based infrastructures enabling interaction across multiple business applications that need to work together.
API capabilities enable data to be exchanged between an organization’s ERP and CRM tools, Accounts Payable (A/P) Portals, and Trade Promotion Management (TPM) systems to provide an integrated experience of different processes interacting in tandem with each other.
Enterprise O2C applications with prebuilt APIs enable seamless integration and flow of A/R-related customer data across ERPs like Oracle Netsuite and TPM systems like SAP TPM.
Several B2B enterprises run essential finance functions like accounts receivable, accounts payable, and inventory management in silos. Most of these occur due to disparate ERP systems and a lack of cross-team collaboration. The Gartner recommended 5A technology framework will allow Order to Cash teams to eliminate low-impact repetitive work like document retrieval from customer portals, improve the quality of decision making with AI performing tasks like prioritizing which customers to follow up with for dunning, and providing real-time visibility to GBS leaders over global O2C KPIs for proactive course-correction.
HighRadius equips global A/R teams with an integrated solution that addresses the limitations of traditional O2C software by leveraging data and advanced technologies, which has led to its recognition as a ‘Leader’ in Gartner’s first-ever Magic Quadrant for Integrated Invoice to Cash Applications. The report placed HighRadius in the top-most quadrant, with the highest score across ‘Ability to Execute’ and ‘Completeness of Vision.’
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HighRadius Integrated Receivables Software Platform is the world’s only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway – covering the entire gamut of credit-to-cash.