Spring 2017 TRANSFORMING PURCHASE-TO-PAY AND ORDER-TO-CASH FOR THE DIGITAL AGE
PROCUREMENT STEPS UP IN THE PURCHASE-TO-PAY VALUE CHAIN 6
MACHINE LEARNING AT HEART 14
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TRANSFORMING PURCHASE-TO-PAY AND ORDER-TO-CASH FOR THE DIGITAL AGE
REAL-TIME VISIBILITY THROUGH EXTENDED PURCHASE-TO-PAY OpusCapita helps organizations sell, buy and pay more effectively by providing them with extended purchase-to-pay and order-to-cash solutions. With 600 million transactions processed annually by over 8,000 customers across more than 100 countries, we have created a global ecosystem where buyers, suppliers, banks and other parties connect, transact and grow. Together with our customers, OpusCapita is transforming sales, procurement and financial processes for the digital age. JOURNAL / OPUSCAPITA CUSTOMER MAGAZINE / PUBLISHER OpusCapita / EDITOR IN CHIEF Ulla Kenttä / EDITORIAL TEAM Karoliina Haikonen, Kimmo Kauranen, Rowan Lemley, R iikka Tietäväinen-Arola / TRANSLATIONS Bellcrest Translations / LAYOUT Milko Tarvainen, Tiina Lautamäki / COVER PHOTO Thinkstockphotos / PRINTED BY Hämeen Kirjapaino Oy, Finland, 2017 / ISSN 14580012 / ADDRESS SOURCE OpusCapita customer register / opuscapita.com
CONTENTS 05 Hot topics 06 Procurement takes the lead in building the P2P value chain 10
Toward 100% digital business networks
12 Zalando is rethinking retail in a fashion ecosystem 14 Machine learning at heart 15
PSD2 speeds up digitalization for Treasury
16 Sapa’s three steps to centralized cash management 18 “Blockchain technology is now developing beyond the hype” 19
Blockchain for business
20 News and events 22 Inside stories
Dear Reader, Digitalization is by no means a new theme to be discussing in an editorial. But it continues to be important, because the digital change is far from complete, as you are probably even painfully aware from your involvement with corporate selling, buying, and paying. The digital experience, already a reality in the consumer market, is still incomplete in business-to-business trade. We at OpusCapita have the firm belief that future B2B trade will be powered by high levels of digitalization and automation. We can achieve real-time access to information, enabling real-time transactions and real-time optimization of processes. The pace of the change is picking up. That is why, in this issue of the Journal, we will be covering a variety of topics with the underlying theme of digitalization. In purchase-to-pay, the transformation has to do with enabling closer collaboration between buyers and suppliers, benefiting both parties. This time, we focus on the core process of procurement and share our perspectives on how a modern electronic procurement solution can help you to make an impact on the whole value chain. The interactions between businesses will, in the near future, be heavily influenced by PEPPOL, the network for electronic procurement and e-invoicing in Europe. PEPPOL is growing into an essential part of the digital business ecosystem in Europe and beyond, enabling seamless corporate trade. OpusCapitaâ€™s experts have been and continue to be actively involved in developing PEPPOL further. On the topic of evolving networks, you will also hear about Zalando. This well-known company utilizes digital technologies to the full, for the benefit not only of the business itself but also of the broader ecosystem it is a part of. Their mindset also offers unique inspiration for B2B companies. We will also touch on a couple of the disruptions set to further change the market. Blockchain and machine learning are emerging technologies that will fundamentally change how businesses operate and interact with each other. On the latter topic, our own expert in the field will share his insight and let you in on how we are leveraging machine learning for innovative, intelligent automation in purchase-to-pay and orderto-cash processes. We at OpusCapita are keeping tabs on all of these market changes to ensure that you, our customer, can reach the next level in digitalization and stay connected in the future. We have more than 8Â 000 customers, and we take pride in the fact that many of you see us as your partner in building future-proof processes for selling, buying, and paying. In the fast-moving, interconnected environment, the right partners are essential for keeping abreast of the latest developments. PATRIK SALLNER CEO, OPUSCAPITA
HOT TOPICS LACK OF COLLABORATION BETWEEN BUYERS AND SUPPLIERS CHALLENGES PROCUREMENT EFFECTIVENESS
HOW IS SUPPLIER INFORMATION KEPT UP TO DATE?
Manually, and it is usually up to date
Supplier catalog management is at the top of the list of procurement process areas that organizations plan to prioritize and improve in 2017. In a recent survey conducted by OpusCapita and SSON, European corporations were also looking to manage supplier information in a better way, enhance category and spend analysis, and improve overall sourcing capabilities. The survey results indicate that collaboration between buyers and suppliers has room for improvement. A majority of the respondents stated that only a smaller portion of their suppliers send catalogs electronically, and nearly 80 percent said they update supplier information manually. Over half of the respondents also admitted that their current process for onboarding suppliers is poor or at most adequate.
FRAUD RISK AND LOSSES TO FRAUD CONTINUE TO RISE
24% 23% 18%
COST OF FRAUD: WHAT PERCENTAGE OF ANNUAL REVENUE IS LOST TO FRAUD
1.23% 0.51% 2013
Protecting corporate cash flows against payment fraud and cybercrime is becoming an increasingly challenging duty for treasuries. Several international studies show a significant increase both in fraud attempts and in the financial damage caused by fraud. According to PwC’s Global Economic Crime Survey, for instance, more than one third of organizations have experienced economic crime in the past 24 months. What is alarming is that one in five organizations have never carried out a fraud risk assessment for their processes.
of companies have been targets of payment fraud of companies have been exposed to business email compromise scams
Source: 2016 AFP Payments Fraud and Control Survey.
Source: 2016 Global Economic Crime Survey. PwC.
Source: The 2016 LexisNexis True Cost of Fraud Study.
Less than 10% 10–30% 30–50% 50–75% More than 75% 100%
Source: Indirect Procurement: 2017 Market Report. OpusCapita/SSON.
TOP FIVE MOST COMMONLY REPORTED TYPES OF ECONOMIC CRIME
Suppliers have self-service options to maintain their data but it is often out of date
WHAT PERCENTAGE OF YOUR SUPPLIERS SEND ELECTRONIC CATALOGS? (excluding punch-out catalogs)
READ THE REPORT:
Bribery and corruption
Suppliers have self-service options to maintain their data and it is typically up to date
Manually, and it is typically out of date
PROCUREMENT TAKES THE LEAD
IN BUILDING THE When building the foundation for the optimal financial and operational performance of the whole organization, the procurement function is uniquely positioned to raise the game for everyone. A modern procurement department leads organization into close collaboration with suppliers in a way that enhances processes, improves compliance, and cuts costs. It is time to put the emphasis on the first P in the purchase-to-pay chain! TEXT: RIIKKA TIETÄVÄINEN-AROLA PHOTOS: SILVIA KRIENS, SAMI TIRKKONEN, SHUTTERSTOCK
P2P VALUE CHAIN It is usually all about cost. Sustainable cost reduction has found a permanent place as one of the most important objectives of the procurement function. This was obvious in a recent survey OpusCapita conducted among European organizations: cutting costs is clearly the most commonly used KPI when measuring the effectiveness of the procurement department. “And why wouldn’t it be? It is a great indicator of how well the department is performing,” says Rowan Lemley, Head of Product Marketing at OpusCapita. He speaks with more than 10 years of experience in the purchase-to-pay area. “But one should not lose sight of the strong strategic role procurement has to play, both in terms of supporting business operations and making it possible for the accounts payable department to excel as
well. Procurement is uniquely placed to do so much more for the whole organization.” The impacts of inefficient procurement flow downstream in the P2P value chain and cause significant challenges in many organizations today. For instance, AP departments are struggling to improve their e-ratio and engage suppliers to send electronic invoices, when procurement could take the lead in solving the issue earlier in the process. The finance function is pushing for extended payment times in order to optimize their working capital, when in fact procurement would have the trump card to play in payment term negotiations by offering suppliers supply chain finance options. “Procurement can push for company- wide policies for on-contract spend and mandatory purchase orders for payments.
They can negotiate to get e-catalogs from suppliers and demand that they accept e -orders. The early stages of the buyer- supplier relationship determine a lot, but it is not a one-off thing. More and more organizations understand that constant supplier engagement is value-adding,” Lemley says. Surprisingly, even large global companies are still making do with procurement processes that can be in large part or even completely paper-based and require manual workflows. According to Dirk Fischbach, Head of Purchase-to-Pay Solutions at OpusCapita, the difference between top-level organizations and median performers is considerable. “The leading performers are focused on the end-to-end value chain, from strategic to operative procurement, and all the way to
“Enabling supplier collaboration is at the center of smooth and smart procurement processes.”
Time for top-notch procurement! Procurement has a strong role to play in the purchase-to-pay chain, and it is time to claim it, say Rowan Lemley, Head of Product Marketing (left) and Dirk Fischbach, Head of Purchase-to-Pay Solutions at OpusCapita.
invoice handling and payments, topped with analytics. Another increasing trend is that companies are abandoning best-of-breed thinking with multiple solution providers and looking for one best-in-class partner for their whole purchase-to-pay,” says Fischbach, who has worked for almost 20 years with different organizations to solve their procurement challenges. In addition to the systems supporting the end-to-end chain, big buyer companies are increasingly looking for ready supplier connections integrated into their procurement solutions in common standard product categories, such as office supplies. “Purchasing organizations want to shorten implementation times and be able to gain benefits from automated processes quickly. We at OpusCapita have our own ongoing initiative of ‘procurement in a box’, providing
pre-negotiated contracts for major commodities and pre-designed workflows.” Enabling supplier collaboration is at the center of smooth and smart procurement processes. Rowan Lemley points out that if, for instance, supplier information is maintained manually, the procurement department is already wasting a lot of time on tasks that do not add value. With a modern solution for supplier information management, the organization can alleviate its own headache of master data management and offer suppliers an easy way to update their bank account information, for example. “The purpose of an e-procurement system and all the solutions linked to it is to bring agility and efficiency to each of the steps in the P2P value chain: finding the right business partner, sourcing and contracting,
buying, paying, and eventually closing the loop by rating and evaluating both the supplier and the products and services. Collaboration is becoming more and more important, and we support Service Entry Sheets, for instance, with which suppliers can report the services provided,” Dirk Fischbach describes. Lack of flexibility and electronic workflows in supplier information management may result in the organization having fewer suppliers registered for different categories in the first place. On the other hand, if the procurement system does not provide support for effortlessly creating sourcing events, the professional buyers have a hard time revisiting pricing with their existing suppliers. “Organizations are stuck with outdated pricing, and simply end up paying too much for their products and services. In addition, many lack the ability to rate the performance
of their suppliers in their systems, which yet again prevents continuous improvement, “ Lemley states. The trends in consumerization are driving the need for transparency, as people are accustomed, in their private lives, to an Amazon-like shopping experience with product ratings from other users. According to Dirk Fischbach, professional buyers are now expecting this type of information from their peers in their product catalogs. Another topic originating from the B2C world is usability. If the employees of an organization are given an e-catalog with poor search capabilities, for instance, it will not be widely accepted and will not result in automated purchase orders, approvals, and electronic order flows as intended. “Usability is one of our main goals. We have implemented catalog and purchasing solutions for organizations with tens of thousands of employees, and no user training has been needed.” “The electronic, automated processes are only as good as the data provided. Most procurement professionals and category managers will agree that data quality is one of the biggest challenges in creating streamlined processes.” According to Fischbach, suppliers still prefer punch-out features in their web-shops over e-catalogs, but the situation is changing. “Providing solid self-service options and portals for suppliers to share their up-to-date product and pricing data is a key element. The legal requirement and compliance regulations force organizations to ensure content integrity, for instance to prevent purchases of hazardous goods. Therefore it is also important to develop automated ways to enrich and improve the content provided by suppliers.” OpusCapita is already investigating the use of machine learning algorithms in improving, enriching, and validating product information, and developing intelligent ways to improve supplier invoice matching. In a complex business environment, one of the biggest challenges for purchasing professionals is to get a grip on the requisition of non-standard products, services procurement, and other forms of indirect spending. A closer look at on-catalog spend often reveals that it covers only a minor share of the
entire spend. And what is more, the average cart value of a purchase made from a catalog can be a couple of hundred euros, whereas the price tag of the non-catalog purchase can be measured in thousands. The long tail story is well known, but when put in concrete numbers, it still takes many by surprise. Lemley and Fischbach emphasize that organizations do not have to settle for the easy wins, as a modern procurement solution can also automate complex categories and bundled products. In practice the complexity can be harnessed with smart forms, for instance. Smart forms help to minimize free-text orders that are typically used in these situations and that cause a lot of manual effort for the professional buyers,
who have to sort them out to create the actual order. “For example, a company using a lot of temp labor was able to increase compliance with the frame agreements with agencies by establishing smart forms, and this brought the spend category under control at the same time. Managing workwear orders, handling mobile phone plans, or ordering a laptop with suitable equipment are other good examples of complex orders that can be made simple.” “The more complex the commodity category is, the more benefits you gain through saved time, lower process costs, and increased compliance.” n
SIMPLIFYING COMPLEXITY Forty million different products are bought and sold in OpusCapita’s solutions. What does smarter procurement mean in practice for Opus Capita customers? It means a flexible process to order workwear for 40 000 employees. Or effortless management of a spare parts catalog for a machinery fleet of a thousand different makes and models. Or a global solution to handle 4 million items from 5 000 catalogs. READ ABOUT THESE REAL-WORLD challenges of our customers, and find out about OpusCapita ‘s solutions to them in our e-procurement e-book: opuscapita.com/eprocurement-ebook.
Up to 80 percent of all the information that organizations need to run their supply chains efficiently is outside their own walls, in their business partners’ systems. “This is why we need ecosystem thinking! To maximize the value of the trading relationships for all parties, we need to enable effortless access to all of this data and make it available for fast, streamlined processes,” says Heikki Pulli, Head of B2B Integration at OpusCapita. So far, the electronic exchange of business data and trade documents has mostly been developed in bilateral connections, and the network effect of easy connectivity has been missed. Now the traditional linear business models are increasingly challenged by standardized digital business networks, where seamless collaboration between all parties is possible. “New networks arise, and organizations need to find the ones that truly benefit their business. In order to stay connected, they need to keep a close eye on market changes,” Pulli says.
PEPPOL OPENS UP EUROPE FOR EVERYBODY
In Europe, one of the most rapidly evolving open ecosystems is the PEPPOL network (Pan-European Public Procurement Online). In 2016, over 35 million electronic transactions were delivered in the network, and the growth anticipated for the present year is over 30 percent. “What is important is that it is not just an e-invoicing network, but a many-to-many infrastructure for exchanging all business documents related to e-procurement, for example RFPs, catalogs, and orders,” describes Ahti Allikas, Solution Owner at OpusCapita. Allikas is also an active member of the OpenPEPPOL Association responsible for developing the PEPPOL infrastructure further. PEPPOL originated to facilitate electronic cross-border trade between European suppliers and public-sector buyers, and continues to be spurred on by the public sector. To date, over 75 000 buyers across Europe have joined the network, which is accessible through nearly 150 Access Points provided by service providers such as OpusCapita. “In a nutshell, PEPPOL means a wider network and more business opportunities for those who are compliant with
A 100 percent digital business-to-business network: utopia? Not at all! OpusCapita experts in their fields explain how current developments in the market are driving the change, and how organizations can already embark on the journey toward entirely digital selling, buying, and paying.
the requirements. The aim is to spread the network in B2B communication, too,” adds Allikas.
HEALTHCARE LEADS THE WAY
PEPPOL is currently gaining traction in the healthcare sector. In 2016, the National Health Service in the United Kingdom joined the PEPPOL network, and this year, the healthcare sector in Norway has decided to start using PEPPOL in its purchasing processes. “Healthcare organizations are among the biggest buyers in the public sector. Thus, the demand for PEPPOL-compliant catalogs, orders and invoices covers a vast supplier base, from international industry-specific manufacturers and retailers to local food or facility management service providers. It is a major push toward a new environment,” says Sami Seikkula, Head of Sales at OpusCapita Norway. Seikkula points out that previous efforts to streamline the process along supply chains, for instance with EDI connections, have mostly involved suppliers with the largest volumes. Now the effects extend further. “Enabling efficiency with e-procurement brings even bigger process benefits and
DIGITAL BUSIN 10 |
cost savings than supplier invoice automation. Leveraging the potential of the PEPPOL network will be interesting for many public buyer authorities in the near future,” Seikkula notes.
BUYING AND SELLING MADE EASY
One of the biggest challenges for the developing e-procurement landscape today lies in e-catalogs, or namely the
lack of them. “Selling organizations today handle a vast amount of product data, which, if done manually, is a huge effort. There is an increasing need for agile and automated ways of defining customer-specific assortments of the data and exchanging it efficiently. At this point, PEPPOL provides an additional, stan dardized sales channel to collaborate with public buying authorities,” describes Björn Frotscher, Product Manager at OpusCapita. With a modern product information management (PIM) solution, suppliers can collect, enrich, and manage product and pricing data for different customers, and share it easily as e-catalogs as well as in their own web shop or other marketplaces. OpusCapita’s PIM and e-catalog solutions are PEPPOL-ready.
“If we look at the healthcare sector, the legal requirements are strict and add to the challenges of maintaining correct product information. Automating the information management and exchange helps to deliver the right data in the right format to the right buying customer’s system,” says Frotscher.
DIGITAL MILESTONES INTO THE NEW ERA
In reality, paper is still common in B2B commerce, even if the annual growth in e-invoicing, for instance, is measured in double digits. “In the end, organizations need to be able to be part of and operate in multiple local, industry-vertical and international networks with different standards. What becomes pivotal for their success is their ability to find a partner who can handle the complexity and ensure wide access through one optimized process,” Heikki Pulli explains. A multichannel invoice exchange service is a good example of a necessary stepping stone on the way to the new digital world. In addition, digitization services with highclass data extraction continue to play an important role. That way, the efficiency of an automated procurement and AP process, for example, can be maintained regardless of
the format of the received invoice. As buying decisions move to digital channels, electronic messaging provides many benefits for invoice senders as well. Digitalized orders and order responses, dispatch advices, and e-invoicing make it possible to automate payment reconciliation in AR and streamline the whole order-to-cash process, cutting days out of the cash flow cycle. At the same time, improved transparency of the orders, deliveries, and invoices is reflected in customer service. In digital networks, Pulli emphasizes the role of small and medium-sized suppliers. OpusCapita has created services for its customer companies in which their smaller suppliers can key in their invoices, for instance. “None of the developing networks will flourish in the long run, if the integration of the long tail of SME suppliers only takes place in half measure. If there are no services available that enable small suppliers to join the digital networks, in the end it will be a burden on the efficiency of all,” Pulli concludes. n
INTERESTED IN PEPPOL? Read more from OpusCapita’s experts: opuscapita.com/growing-peppol
RETHINKING RETAIL IN A FASHION ECOSYSTEM The success story of Zalando is worth listening to, even if you are not one to surf on the crest of the wave of the latest fashion trends. Under a decade ago, Zalando was just two guys selling flip flops from a basement in Berlin. Today the noted German online fashion retailer characterizes itself first and foremost as a tech company and has 20 million active customers. Now the model pupil of digitalization is weaving a fashionable ecosystem around itself, creating new opportunities for collaboration, growth, and co-evolution. TEXT: RIIKKA TIETÄVÄINEN-AROLA PHOTOS: ZALANDO, HENNA SEPPÄLÄ
“Alone, growth is more difficult and takes time. In an ecosystem, we can grow faster and at the same time create new opportunities for growth for other players in the industry.”
Zalando’s Kenneth Melchior shared his take on an evolving ecosystem with finance and procurement professionals at the OpusCapita event Finance 4.0, in Helsinki, Finland.
Looking at the present situation in the fashion industry, Kenneth Melchior, Head of Nordics at Zalando, mentions two contrasting facts. Most European fashion stock, approximately 90 percent of it, is still offline, sitting on the shelves of local stores and hanging on the clothes racks in street-level shops. But people, the fashion consumers, are always online with smartphones, used to accessing information and products anywhere, anytime. This is the gap Zalando aims to close by connecting people and fashion through technology. “We want to be the enabler who makes access to fashion effortless and convenient, just as Spotify changed the way people listen to music. The music industry underwent similar digitalization development, and as a result, music is now more personal, it is ‘snackable’, and connected.”
BRIDGING THE GAP BETWEEN THE ONLINE AND THE OFFLINE Zalando has set out to create a service platform that will bring together all parties in the modern fashion industry: the consumers, brands and retailers, stylists giving fashion advice, and brick and mortar stores, as well as logistics service providers. In other words, it aims to create a fashion
ecosystem that will bridge the gap between the online and the offline. According to Kenneth Melchior, Zalando is rethinking retail. Through its partner program, Zalando is integrating fashion and life style brands’ stock from their logistics centers or local stores into Zalando’s platform. “Integrated commerce opens up new possibilities. If Zalando’s own warehouse is out of stock, an item a customer is looking for can be shipped directly from a partner brand’s inventory. Or the local store can receive orders through the Zalando online fashion store and deliver them locally – or even have the customer pick up the parcel directly from the store,” Melchior describes. He believes that many retailers have stayed offline because going online would demand time, resources, and know-how they do not have. “The ecosystem benefits all parties. Customers will have even more fashion to choose from and will find the items they are looking for. Fashion brands and stores will gain easy online visibility and access for their products while also generating new traffic in their physical stores.”
markets from one percent to five. In 2016, Zalando reached EUR 3.6 billion in revenue. “We currently operate in 15 countries in Europe, and we have a lot of potential to grow. Alone, growth is more difficult and takes time. In an ecosystem, we can grow faster and at the same time create new opportunities for growth for other players in the industry,” Melchior states. He describes the future Zalando as the single entry point for customers to access fashion items and related services. For instance, in the DACH region, the Netherlands, and Belgium, Zalando’s curated online shopping service already connects 200 stylists with consumers. “Imagine you spill coffee on your shirt on your way to a business meeting. The vision is that, with an app on your smartphone, you would be able to check who has your shirt brand and size within a ten kilometer radius, for instance. You could pick it up on your way to the meeting or have it delivered to the conference site. It all boils down to convenience and an even better experience for the customer.” n
A VISION FOR THE FUTURE At stake for Zalando is the ambitious aim to multiply its share of the European fashion | 13
Data Scientist Ali Faisal gets enthusiastic when talking about the transformative capabilities of machine learning, advanced analytics, and other technologies utilizing artificial intelligence. He has been researching the areas for years, and now he focuses on finding ways these disruptive technologies can propel finance and procurement solutions and services to the next level.
MACHINE LEARNING AT HEART Machine learning is extremely powerful for exploring large amounts of data and, for instance, making predictions, suggestions, and classifications based on it. For many of us, an everyday demonstration of this power is the helpful voice of Siri on our iPhones, the customer service agent at PayPal, the spot-on movie picked for us on Netflix, or the interesting items recommended to us on Amazon. “These big players have turned machine learning into the hype it is today, as they revealed to the world the potential of the technology that had been maturing in academia for a couple of decades,” says Ali Faisal, who himself carried out postdoctoral research on the subject at Aalto University before joining OpusCapita. The widespread adoption of machine learning in different industries has been further spurred by the increase of cost-efficient high-performance computing and also by the increasing amount of available data. Faisal points out that the terms ‘machine learning’ and ‘artificial intelligence’ often get used interchangeably. “To achieve smart behavior, an artificial intelligent system can utilize programmable rule-based logic, robotic process automation, or intelligent machine learning algorithms,” he clarifies. “For me, machine learning is the most challenging and also the most rewarding part of artificial intelligence – after all, it is the
part which truly makes a machine intelligent and adaptable.”
REVEALING THE SECRETS OF DATA What else should those of us, who are unfamiliar with the finer points of these technologies understand? To start with, Ali Faisal explains that, as a technology, machine learning is at the intersection of computer science and statistics. Computer science focuses on designing programs that solve problems, whereas statistics deals with data and what can be understood from it. “Simply put, a machine learning algorithm is a program that itself defines the logic needed to solve a certain problem, and learns more through experience. It is not hard-coded like computer programs nor does it have pre-set rules, like robotic process automation.” There are hundreds of different machine learning algorithms, but Ali Faisal broadly differentiates three major paradigms – namely supervised machine learning, unsupervised machine learning, and reinforcement learning. The mainstream applications today utilize supervised machine learning, which means the algorithm is given labelled training data. “In practice, training data can be historical data for a process, with ready labels. These labels identify which data belongs to which category. A supervised machine learning algorithm learns the logic based on the
training data in order to correctly carry out categorization in the future,” Faisal explains. In unsupervised machine learning, the algorithm is not told in advance what is what; rather, it just goes on to explore the data available to find a solution for the given task. “Machine learning is very efficient in revealing hidden patterns in the data and discovering new associations that may have previously been unknown to us humans. Fraud detection and different recommender systems are possible applications of unsupervised machine learning.” The third approach, reinforcement learning, includes a human in the loop. “When a machine makes a decision, for instance when categorizing the data, it can be either rewarded or penalized based on how it performed. The algorithm then adjusts the rules accordingly, and learns through trial-and-error.”
INTELLIGENT AUTOMATION FOR FINANCE AND PROCUREMENT OpusCapita has been exploring the possibilities of artificial intelligence and data science thoroughly over recent years and has identified several areas where machine learning algorithms are being developed to enable intelligent automation and deliver superior customer experience. “In the finance and procurement departments, there are still many manual, repetitive
SPEEDS UP DIGITALIZATION FOR TREASURY In less than 300 days, EU member states need to have implemented the Revised Payment Services Directive (PSD2) into their legislation. The aim o f PSD2 is to open up the financial market for competition, to provide modern, cost-effective, and innovative payment solutions without compromising security. The official date is January 13th, 2018. Meanwhile, the European Banking Authority (EBA) is developing the Regulatory Technical Standards (RTS) to support achievement of the objectives of the directive.
Photo Sami Tirkkonen
tasks that are done every day. Increasing automation with machine learning is not just about cost cutting and the efficiency of these processes, but also about elevating the quality of these functions and supporting the business even more,” Ali Faisal describes. One area where machine learning is already applied is purchase invoice posting. The algorithm predicts the posting dimensions – GL account, cost center, VAT code, and the inspector of the invoice, for instance – with high accuracy. The development of automated anomaly and fraud detection is also well on the way. “The algorithm recognizes payments that are unusual in some way and can flag them for inspection. Similarly, machine learning can be used to classify payments into different spend categories or for supplier product data validation in the procurement solution.” “What is, in my opinion, one of the most beneficial aspects of this kind of intelligent automation is that it is not static but based on constant progress and evolution of the logic. The predictive models adjust themselves over time and do not become outdated if the business logic changes.” n
Change in the financial industry is evident, and I believe it is taking place in front of our eyes as we speak. Just take a glance at consultancy white papers and you notice they echo the same message. According to Pitchbook, global investments in Fintech since 2010 have exceeded USD 130 billion. The whole “open banking movement” is permanently changing how we as consumers experience our banks, and PSD2 is one important piece in that puzzle. We like the new services and finance apps such as MobilePay, Tink, and Pivo that change the way we buy and pay in our personal lives. And whatever we as consumers demand and receive, we want to experience in our corporate lives, too. Imagine real-time visibility to your corporate bank accounts. But don’t stop there. What if you could have your own personal assistant to optimize your cash flow or tirelessly hunt fraud patterns? That assistant will be machine learning. Those of us who work with Treasury also know how cumbersome it can be to open and close bank accounts or to work with bank agreements, formats, channels, and all that. Too often, basics take all the time away from analysis and supporting business. PSD2 and open banking is an opportunity for both banks and suppliers to address all these challenges in a new and innovative way. Going forward, purchasing and cash management will become a more closed loop, and this change is being accelerated by open banking. It will be just like what happens when we, as consumers, buy something. Purchases can be verified and automated through easy-to-use catalog solutions, and then paid for and financed according to predefined rules. The whole workflow is executed as an automated, touchless process, to great extent. ‘Cash is king’ is an old phrase, yet still so true. Time saved in the purchaseto-pay process or operational cash management not only delivers operational savings. Digitalization and automation also help to shift Treasury’s role toward being more strategic. Cash flows carry knowledge and are therefore an asset for boosting a company’s strategy execution. Cash management can be harnessed to advise and help reach the company’s goals. We call this proactive cash management, and it is possible to take that approach today. If you are interested in how, then turn the page and read how our multi-local customer took the reins and gained visibility and access to group-wide liquidity flows.
JUKKA SALLINEN Head of Cash Management, OpusCapita Jukka Sallinen shares more of his insights on PSD2 and the effects it might have in a webinar available on demand at: opuscapita.com/PSD2-webinar
LIQUIDITY FORECASTING, PAYMENT FACTORY, AND IN-HOUSE BANK AT THE CORE Cash Management Director Hans-Erik Trulsen
SAPA’S THREE STEPS
TO CENTRALIZED CASH MANAGEMENT ”Instead of following behind, we are able to adapt up-front. We are a lot calmer in our cash management now.” Cash Management Director Hans-Erik Trulsen sums up one of the major advantages resulting from the extensive cash management centralization project carried out in Sapa Group, the leading global supplier of aluminum solutions. To improve their control of cash management, the Corporate Treasury established an entirely new financial infrastructure and created harmonized, group-level processes together with OpusCapita.
TEXT: RIIKKA TIETÄVÄINEN-AROLA PHOTO: SAPA The situation now is very different from September 2013, when Sapa AS, the joint venture owned in equal shares by Hydro ASA and Orkla ASA, was formed, and Trulsen, from Hydro, started as the corporate Cash Management Director. “When you merge large operations, you are bound to discover a lot of differences. We Jonas Kjellberg shared used different bank and cash pool solutions, his inspiring insights and and there were major variations in both visions on digitalization and transaction processing and forecasting. Plus, the disruptions ahead with we had a very diversified system structure OpusCapita customers in with dozens of ERP and other systems, which the popular Finance Forum added to the complexity.” in Finland. Present in around 40 countries and in more than 100 locations, Sapa decided to embark on a determined journey toward more simplified, streamlined, and centralized cash management, and focused on developing group-level processes, integrations, and standardization. “These goals were all very good arguments for implementing a payment factory, in-house bank, and liquidity forecasting solution as the platform to build our future financial processes on.” As their partner for the journey, Sapa chose OpusCapita.
GETTING RID OF SURPRISES IN CASH OUTFLOWS The first order of business in the newly formed Corporate Treasury was to achieve visibility for cash by implementing an integrated and automated liquidity forecasting solution. “It is easy to understand why this was a priority for us as we are not a cash-rich company, and the existing forecasting process was highly manual and not that accurate. Gaining an overview of what goes out of our cash pools made it possible to get rid of the frequent nasty surprises in our cash outflows,” Trulsen states. The accounts payable data for the forecasts is collected from Sapa’s six core ERP systems, and on top of that, some manual processes concerning taxes and salaries, for instance, are included for a comprehensive overview. The forecasting span is two weeks, and 110 entities are included in the forecasts.
THE HIGHWAY TO STREAMLINED PAYMENTS The next step in Sapa’s cash management project was to implement a payment fac-
tory. They chose OpusCapita’s cloud-based solution with the integrated SWIFT Alliance Lite2 solution. The outgoing payment files from the core ERP systems and treasury system are transferred in various formats to the payment factory, converted into ISO 20022 XML files, and sent via SWIFT to nine banks covering 15 countries. “I call the setup our highway. It is the streamlined and simplified way that all the financial and commercial transactions in Sapa should be processed, with common security solutions and a single channel for communication with the banks,” Hans-Erik Trulsen describes. In the payment factory, over 19 000 transactions are processed each month. T he straight-through processing rate is up to 96 percent, which is a considerable improvement on the previous situation with manual processes and e-banking tools. “The centralized payment hub has meant increased control and efficiency as well as reduced costs for our payment transaction processing. It also supports system centralization as we now have an ongoing project to drive more and more entities to the core ERPs, thus making them able to join the payment highway.”
120 ENTITIES IN THE IN-HOUSE BANK Sapa made the decision in principle that cash is a corporate asset. With that, the Corporate Treasury needed not only comprehensive visibility for the Group’s cash, but also access to it. Sapa decided to implement zero balance accounts all the way through their companies in order to concentrate the cash physically in corporate top accounts. “We considered both netting and inhouse bank solutions from OpusCapita. In the end, in-house banking was a good fit for the zero-balancing structure and for maintaining the subsidiaries’ cash positions,” Trulsen says. At the moment, Sapa has close to 120 entities with accounts in their in-house bank, expecting it to fully cover the group’s operations in Europe and North America by summer 2017. The main function of the in-house bank is to keep track of the intercompany borrowing and lending positions. The daily physical cash balance sweeps from the operational accounts to the Corporate Treasury top ac-
count are mirrored in the in-house bank, where the interest calculation takes place automatically. In addition, the in-house bank accounts have pre-agreed overdraft limits, which are used to cover the subsidiaries’ short term financing needs and to control spending. “The in-house bank has significantly simplified the administration of our internal funding. In addition, the in-house bank is the channel for all the intercompany financial and commercial settlements. When fully implemented, we estimate savings of up to 200 000 euros per year in banking fees and float alone.”
AN AGILE PARTNER FOR CASH MANAGEMENT Simultaneously with the in-house bank implementation, Sapa performed bank simplification and focused on a smaller number of core banks. “With all the steps we have taken, we have been able to improve cash discipline in the Group. The number of our cash pools has been cut from 15 to six, and we have considerably reduced the need for cash pool transfers. We have reaped both operational benefits and cost savings,” Hans-Erik Trulsen states. The evolution does not stop here: Sapa is already investigating the possibility of implementing payments-on-behalf-of functionality in their in-house bank, and is exploring the benefits of building a country-specific branch structure for their in-house bank. “Going forward, I regard OpusCapita as an important strategic partner for Sapa in the cash management area. We have solid relationships with the team in OpusCapita, good access to their expertise, and we know they are agile and also listen to our wishes and requests,” Trulsen says. “We are quite demanding and have a habit of pushing the solution development even further. It is usually well received by OpusCapita, and we have developed functionalities in cooperation. I appreciate the open and trustworthy partnership we have.” n
“BLOCKCHAIN IS NOW DEVELOPING BEYOND TEXT: RIIKKA TIETÄVÄINEN-AROLA PHOTOS: HENNA SEPPÄLÄ, THINKSTOCKPHOTOS
BLOCKCHAIN is a distributed, cryptographically secured ledger or database maintained by a global network of nodes. The data is stored in a block which is dynamically linked to the previous blocks using a mathematical hash function. Technology ensures that the data cannot be altered. A SMART CONTRACT is a digitally signed agreement between two or more parties that can be executed automatically if the terms are fulfilled.
Blockchain has inevitably crossed your radar screen by now, probably more than once. Blockchains and distributed ledger technology are reaching top of the Gartner’s hype cycle for emerging technologies as we speak, and they rank highly time and time again on lists with titles such as the tech trends to watch, and the top 10 strategic technology trends in 2017. But what is actually behind the buzz about the most disruptive technology since the invention of the internet? “Blockchain is now developing beyond the hype, and many innovative use cases are emerging outside the banking and financing industry and capital markets as well. The creative disruption that the technology will eventually be able to cause remains to be seen,” says Petri Syvänne, Head of Payment Services Nordic at Accenture. Accenture is a member of the Hyperledger Foundation, and is also hands-on in blockchain implementations around the globe. The disruptive potential of blockchain technology is to a great extent based on its ability to establish trust and alleviate interactions in digital ecosystems. With blockchain, the reliability, speed, and visibility of transactions are increased, and organizations and individuals are thus able to trust each other in a peer-to-peer network. “The benefits of blockchain for the payments industry are talked about a lot, but it can transform any type of interactions that requires making contracts and transferring value or information between parties,” Syvänne explains. At the moment, business-to-business corporate trade and stock trade, for instance, and in fact many other transactions, from insurance claim disbursements to registration
of property ownership, require a considerable amount of work and exchange of documents back and forth, electronically or on paper, between the different parties. “The parties update and handle the information in their own systems. This causes many delays in the process, not to mention costs for both sides. In a shared blockchain database, all the event and transaction data could be visible simultaneously to everyone involved. Trading could take place in real time, at a fraction of the cost and with great transparency.” Ripple, a startup company is already using blockchain to transfer cross-border payments between banks in real-time, and NASDAQ is piloting a solution that reduces the time needed for clearing and settling trades. The reliable technology is used around the world to manage invoice disputes, store records of academic certificates, and to trace diamonds, just to mention a few practical examples. Distributed ledgers could even transform manufacturing value chains. “A new car could receive a unique identifier code for a shared ledger upon manufacturing. During the lifecycle of the vehicle, events such as ownership changes and registrations, repairs, and accidents would be updated to the ledger, so that the reliable vehicle history could be checked at any time, for instance when purchasing a used car,” Syvänne elaborates. Smart contracts enabled by blockchain push the real-time transactions and automation possibilities further. In organizations’ purchase-to-pay chains, for instance, a vendor could receive payment automatically when the goods are received according to the order. Smart contracts are already utilized for example in power and utility distribution in
TECHNOLOGY THE HYPE” ”For a long time, blockchain and the virtual currency bitcoin were regarded as synonymous. Blockchain is the technology that bitcoin is based on, and when we look at it separately, we can see all the possibilities it opens up,” says Accenture’s Petri Syvänne.
Africa, and in Germany, a pilot for managing the billing process at electric car charging stations is ongoing. The buying of and paying for electricity takes place automatically. According to Petri Syvänne, the many examples demonstrate how the technology helps with skipping unnecessary phases in processes and makes transactions more convenient for all parties. “The potential is huge. In the future, standardization of the technology will play a role in determining which solutions will be applicable and have a major impact.” n
BLOCKCHAIN FOR BUSINESS OpusCapita is investigating the possibilities of blockchain. For example, the company is involved in creating a blockchain-based e-invoicing registry. Currently OpusCapita is also involved in a project in which blockchain is being considered as an option for building digital supply chains for exchanging trade documents in tendering, ordering and invoicing processes, for example, between business partners in the process industry. Recently, OpusCapita cooperated with IBM on a technology demo and used IBM’s Bluemix cloud platform to create a blockchain implemented on Hyperledger F abric. Hyperledger is one of the
fastest-growing open-source blockchain communities at the moment, and Fabric is a foundation designed especially for developing industrial blockchain applications and solutions. With Hyperledger Fabric, you can build permissioned blockchain, for example, where all new members need to be invited and approved. It also supports private transactions. “It solves the problems caused by the anonymity for business-to-business use and, for instance, lessens the often-cited worry that someone could hack the blockchain by creating thousands of identities. Attention is paid to the privacy of the da-
ta, as well as to the speed and scalability of the system,” explains Solution Architect Ville Toro from OpusCapita. He says that the demo had very promising results. For now, it is wise to consider carefully where to utilize blockchain – if it actually brings added value compared to the use of more traditional technologies. “Blockchain technology should not be used just for the sake of it. When the technology matures and becomes more robust, it could become a commonly applied option for database technologies, or even merge with them,” Toro says. n
NEWS AND EVENTS
OPUSCAPITA OPENS DOOR FOR FINNISH GOVERNMENT AGENCIES TO JOIN PEPPOL … Government agencies and institutes in Finland have joined the European PEPPOL network for electronic invoicing and e-procurement through an Access Point provided by OpusCapita. The company has served as the Finnish government’s partner in invoice sending and receiving since the early 2000s, with more than 10 million purchase and sales invoices transmitted per year. “The PEPPOL network is developing into a key part of European digitalization. It is important for state administration to lead the way and give government agencies the opportunity to use the new channel for receiving and sending invoices,” says Keijo Kettunen, Payment Transactions Manager at the State Treasury.
… AND DISTRIBUTES INVOICES FOR 225 PUBLIC AUTHORITIES IN SWEDEN The Swedish National Financial Management Authority (ESV) has selected OpusCapita as its new sole service provider for managing and distributing invoices to the customers of government agencies. The framework agreement covers both e-invoices and paper invoices, and involves a total of 225 public authorities in Sweden. An important factor for ESV was that the solution offered by OpusCapita gives the authorities a simple connection to PEPPOL. All government agencies in Sweden need to be connected to PEPPOL. The framework agreement makes this possible and OpusCapita will be a key player in helping the public sector during the transition to more efficient invoice processing.
SOFTWARE ROBOTS ENABLING SAVINGS OF 3 MILLION EUROS OpusCapita has made an agreement to provide a software robotics solution to the Finnish Government Shared Services Centre for Finance and HR. Worth more than EUR 2 million, the agreement is estimated to enable overall savings of approximately EUR 3 million. “We are using software robotics with the primary goal of realizing better productivity,” says Helena Lappalainen from the Finnish Government Shared Services Centre for Finance and HR. “In addition, we want to use automation to enable our personnel to concentrate on their own expert work, by delegating process-related routine tasks to robots.”
NEW FACE AT OPUSCAPITA
ARE YOUR CASH OUTFLOWS SAFE FROM FRAUD? The latest e-book by OpusCapita’s experts takes a comprehensive look at corporate payment security. Fraud related to organizations’ purchase-to-pay and payment processes is very common. More than one third of companies report being victims of economic crime. The e-book provides you with all the different perspectives you should examine your process from to be safe. As a result, you will have a checklist of concrete advice to mitigate the risks.
Marco Schulten has been appointed Managing Director for OpusCapita in the DACH region. Schulten joined OpusCapita from Basware, where he was most recently in charge of sales in the German-speaking region and Central Eastern Europe. “OpusCapita offers one of the broadest portfolios to help companies optimize their financial supply chain. Our goal is to become the go-to service provider in the German-speaking region,” says Schulten.
DOWNLOAD the e-book: opuscapita.com/fraud-prevention-ebook
THE OPUSCAPITA KNOWLEDGE CENTER
is filled with interesting information and insight for building world-class sales, procurement, and financial processes. View survey reports, explore case studies, learn more from whitepapers, and read blogs from our experts. There you can also find all of our webinars discussing the topical themes in the domain. opuscapita.com/knowledge-center/
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OPUSCAPITA WELCOMES NEW ADVISORY BOARD OpusCapita has announced the creation of a new Advisory Board. The Advisory Board consists of highly regarded industry professionals with strong global expertise and insight, to support OpusCapita’s management in matters related to the company’s strategic development, growth ambitions, and global expansion.
Mark Coopersmith is an entrepreneur, educator, Fortune 500 executive, and author. A Senior Fellow and Faculty Director at UC Berkeley’s Haas School of Business, he teaches innovation, entrepreneurship, and leadership. He has built and run global businesses for Sony as Executive Vice President, and for Newell Rubbermaid as General Manager and Group Vice President. He has launched successful Silicon Valley startups such as e-commerce startup WebOrder, and mentored hundreds of startup teams. Additionally, Coopersmith is the founding Author in Residence of the N ASDAQ Entrepreneurial Center in San Francisco. His most recent book, The Other ‘F’ Word helps leaders put failure to work to drive innovation and growth.
Gregory A. Mark has more than 35 years of experience in creating, transforming, and growing global technology companies. He is currently President of Connect, Inc., a consulting company focused on helping companies refine their go2market strategy, plan its realization, and monitor its success. In addition, he is a board member at Cortex Business Solutions. Mark is former CEO and Chairman of the Board at Hubwoo, a company providing B2B digital procurement solutions. Mark was also a founding member of The Indus Group (IGRP), the leader in enterprise asset management software for highly regulated industries, and has held senior executive leadership positions at Commerce One and Perfect Commerce.
Ossi Pohjola is an experienced management consultant and board professional with 35 years’ experience of international leader positions in IT business. Currently he is a board member at Remedy Entertainment and Salomaa Group, and Chairman of the Board at SecuryCast, Fluido, and Qentinel, among other responsibilities. His experience includes nine years at Oracle Corporation, where he served as Senior VP of Consulting in EMEA, and five years at Andersen Consulting, the predecessor of Accenture, where he was responsible for establishing the Finnish subsidiary and also served as its CEO. Pohjola has previosly been a board member at OpusCapita, and has also served as Acting CEO of the c ompany in 2015. | 21
INSIDE STORIES OpusCapita’s passionate professionals at your service. Meet some of us! CONTACTS email@example.com
My name is Kati Myllyniemi and I am Managing Consultant. I work in presales supporting extended purchase-to-pay cases with process advice and solution demos. I’m located in both Tampere and Helsinki, Finland, and currently work one week every month in Dortmund collaborating with Product Management. In my work I gain great satisfaction from being able to make things better, whether it is developing our customers’ processes, improving our own solutions, or developing the way we work at OpusCapita. I want us to be the best! To relax, I like renovating my house and doing DIY projects, hiking, and dancing whenever there is a chance. I enjoy time with my extended family, doing sport, or just hanging out on the sofa with popcorn and a good movie. n Whenever you have a question relating to purchase-to-pay processes, customer needs, and how we could best serve them – or how we could be better – feel free to contact me.
My name is Sven Norin, and I am Product Manager responsible for developing OpusCapita’s Multichannel Invoice Sending product for order-tocash processes. I am located in Stockholm, Sweden, and joined OpusCapita in 2010. I am inspired by developing our offering in line with the needs of the market, equipping our customers with tools for taking on tomorrow’s challenges. We are currently working on a new release of Invoice Sending for the Finnish and Norwegian markets, which we aim to launch after the summer. In my spare time, I am often found in the kitchen, cooking, or by the wine rack, looking for the best beverage to match whatever is on the stove or in the oven, or on the squash court, chasing that tiny ball that barely bounces. n I am happy to answer questions regarding our invoice sending products and also to discuss and hear your thoughts on the future of the consumer invoicing landscape.
I am Amir Hassan, a business consul tant for the digitizing unit. I have been based in Helsinki, Finland since I joined OpusCapita in February 2016. My main responsibility is to develop the Digitizing Business Consultancy Service to support OpusCapita’s Document Process Automation, DPA. I am driven by a passion to work with our clients to analyse and improve their profitability through business process development. What ultimately empowers me is the knowledge that we at OpusCapita can contribute to the success of our clients’ business by delivering products and services that actually make a difference in their bottom line. After work, I chill out with my family and also unwind by going to fitness and yoga classes. n Do not hesitate to contact me if you need advice on business process development or document process automation.
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