Why are ‘processes’ at the top of the boardroom agenda?

By Martin Hurley, VP and General Manager Outsourcing at Ricoh Europe PLC

As European businesses push the accelerator on business growth and move forward from the recession, 2011 will be noted as the year of the renewed focus on ‘business processes’ at a strategic business level.

“In the future, it will be more important than ever for employees to find the right information, in the right place at the right time.”
-By Martin Hurley

During 2009 and 2010 many businesses needed to act quickly to cope with the economic climate and were forced to focus on short term strategies and cost reduction. At Ricoh, we are now seeing our customers move back to focusing on long term goals and, more interestingly, we're seeing businesses take steps to prepare for the changing workplace of the future.

Statistics show that Europe is expecting a dramatic decline in the number of people in the workforce over the next 40 years.   According to Alison Maitland's research report The Ageing Workforce: Challenges and Opportunities^[1], skill shortages already affect sectors such as Information Technology, Finance and Accountancy. Adding to this are reports that the EU will experience a fourteen percent decrease in its workforce by 2030[2] and that the ratio of retirees to workers in Europe will double to 0.54 by 2050[3], moving from four workers to two workers for every retiree.

For businesses this poses a real challenge.  How do we ensure we maintain our growth plans with less people?  The answer: ensure 'business processes' are at the top of the boardroom agenda.  In the future, it will be more important than ever for employees to find the right information, in the right place at the right time. 

There are many ways to address business process improvement across the organisation; surprisingly one which has been recognised on both the business and political agendas is the process of invoicing. 

When we see the positive impact that introducing a new digital invoicing process makes - with businesses saving up to 90 percent[4] of the cost of processing an invoice while also freeing up their employees' time - it is easy to understand why this area is rapidly gaining momentum as a way for businesses to save time and money.

In reality, businesses are still heavily reliant on paper-based processes and are not yet taking advantage of digitisation as a means to improve productivity. Last year in Europe, companies issued nearly 30 billion invoices, but only five percent were sent electronically. This means the majority of business invoicing processes are paper based, labour intensive and inefficient. Furthermore, additional time is wasted while employees search for paper-based copies or deal with invoices lost in the post - time that could be better spent focusing on the core goals of a business.

The process push from the European Union

The EU views quick and seamless invoicing across member nations as helping drive the growth of the pan-European economy, and in the last three years it has taken steps to promote a shift from paper-based to electronic invoicing (e-invoicing). The EU is so serious about increasing the uptake of e-invoicing that it recently issued a number of directives aimed at speeding up adoption of e-invoicing among member countries.

From January 2013, member states must apply the provisions included in a 2010 amendment to directive 2006/112 on value added tax. The amendment means that electronic invoices will be put on the same footing as paper invoices. As such it will help drive down barriers for cross-border electronic procurement and create a more efficient financial supply chain with estimated potential savings in the billions of euros[5] for businesses.

In addition to improving productivity, such process enhancements will also support sustainability targets, for example, lowering the carbon emissions of member states. A switch from paper to electronic invoicing would help reduce the need for the 12 million trees required each year to make the paper for the millions of invoices posted.

From politics to the boardroom

Increased compliance and preparing for the future are the two major drivers that are making invoicing processes a business priority.   

For many businesses looking at switching from paper to electronic invoicing, the obstacle is lack of readiness for a fully digitised process.  Many smaller businesses do not yet have the technology to manage it.  For global businesses with a broad range of suppliers, many will not accept or provide digital invoicing.  Despite these challenges, there are ways for businesses to act now, while still meeting the varying needs of their own customers and suppliers.

By adopting an 'intelligent' invoicing process, a business can outsource the receipt and production of all invoices.  This flexible service will manage both paper and electronic invoicing on behalf of a business, while digitally archiving all materials in a central hub for the business to access quickly at any time. The end result is an efficient process that not only benefits businesses by saving their employees' time, but can also produce substantial cost savings.

A global Ricoh client employing more than 30,000 people based in the Netherlands was spending approximately €4million mailing 4.5 million paper invoices a year. Today it is using a fully digital process and will save €3m over the next three years.

Such savings make it easy to see why businesses should start to seriously focus on managing their document processes more efficiently.

Ensuring compliance and future proofing

There is no doubt that the topic of business process improvement will move higher up the agenda in the boardroom as the dynamic of the future workplace and EU compliance forces changes to the existing ways of working. 

Introducing a process like digital invoicing will help businesses focus on increasing the productivity of their employees and ensure they remain competitive in the future. It's now up to businesses to take the next step and ensure that process improvement is at the top of their boardroom agenda.

For more information about how to improve your business processes visit www.ricoh-europe.com/i-invoicing.

About

Martin Hurley is Vice President and General Manager Outsourcing at Ricoh Europe PLC. He was appointed Vice President and General Manager, Outsourcing Services for Ricoh Europe PLC in 2004 and is responsible for the development of the Ricoh outsourcing services business across EMEA, which includes i-invoicing, document process optimisation and fully serviced document management.

[1] Alison Maitland, "The Ageing Workforce: Challenges and Opportunities", http://www.opportunitynow.org.uk/research/the_business_case_for_diversity/the_work_environment/ageing_workforce.html (accessed September 22, 2010).

[2] U.S. Census Bureau, "Depopulation and Ageing in Europe and Japan: The Hazardous Transition to a Labor Shortage Economy", http://www.globalaging.org/health/world/depopulationeuropejapan.htm (accessed September 22, 2010).

[3] International Monetary Fund, "Can Europe Afford to Grow Old?", http://www.imf.org/external/pubs/ft/fandd/2006/09/carone.htm (accessed September 22, 2010).

[4] 'Use Supplier E-Invoicing to Help Optimize Operating Costs', Gartner, 2009.

[5] European Commission, "e-invoicing", http://ec.europa.eu/internal_market/payments/einvoicing/index_en.htm#why (accessed September 22, 2010).