The Power of Process Mining in Purchase-to-Pay

For years, organizations have turned to business intelligence (BI) and insight tools to help surface operational inefficiencies. By granting a snapshot of process issues, BI tools have helped teams see the impact of these inefficiencies on their KPIs. But knowing you’ve got a problem and being able to tackle that problem effectively are two very different things.

To optimize your processes and unlock hidden value opportunities, you need to know exactly where those opportunities exist, the potential value capturing them could produce, the parties involved, and how your processes interconnect across the enterprise. That’s where Process Mining and Process Intelligence come in.

What are Process Mining and Process Intelligence?

Process Mining is a way of visualizing and monitoring business processes as they really run today, rather than how teams believe they run. It analyzes current data, events logs and knowledge from ERP platforms and other live information systems to help organizations build up a complete view of process performance in real time.

Where BI capabilities show that a problem may exist at a given point in time, Process Mining grants objective, real-time insights that can easily be translated into actions — and ultimately, business process improvements. There’s no need to hypothesize over the outputs of the analysis, or the data it’s coming from – Process Mining simply shows you the problems you’re facing, where they originate from, and what you need to do to solve them.

Process Intelligence acts as the connective tissue of your enterprise. It connects you to your processes, your teams to each other, and emerging technologies, such as artificial intelligence (AI), to your business. It helps you understand how objects and events interact, how processes are interconnected, how your business runs, and how it can run even better.

As Celonis' Edward Bagely wrote, "Teams use Process Intelligence to build on the visibility that process mining provides by enabling you to take easy, effective action. It’s here where the exciting stuff happens for process optimization and value realization. With informed decisions, you can effectively target and capture the value hiding in processes."

If you work across Purchase-to-Pay, it’s likely that you can already imagine the kinds of opportunities process mining and process intelligence might bring to light based purely on those descriptions. But let’s dive into some greater detail.

Read: Process Intelligence vs Process Mining: What’s the difference?

What are the benefits of Process Mining and Process Intelligence for Purchase-to-Pay?

Process Mining and Process Intelligence can deliver a lot of value for P2P processes specifically. The technologies are already transforming thousands of Procurement and Accounts Payable (AP) departments today — helping them optimize spend and free up working capital while reducing errors and improving productivity, primarily through automation. In other words, they're helping Purchase-to-Pay teams accelerate their journey towards full-capacity finance.

By granting teams granular visibility of both tasks and processes across Procurement and Accounts Payable, Process Mining and Process Intelligence are helping them tackle some of their biggest challenges, and achieve many of their top strategic priorities, including (but not limited to):

• Maximizing productivity – by automating in all the right places and cutting down cycles times, for instance by automatically converting free-text purchase requisitions into POs
• Improving supplier performance and relationships – by ensuring master data is always correct, whether it’s lead times, pricing or quantity, and of course by paying on time
• Cutting down on maverick-buying – by identifying where and why it’s happening, so you can have the right conversations with the business
• Optimizing working capital – by reducing early payments and making sure invoice processes is automatically prioritized by impact rather than first in, first out
• Cutting costs: by getting both POs and invoices right the first time – every time

Use cases for Process Mining and Process Intelligence in Purchase-to-Pay

Process Mining (especially when combined with Task Mining) delivers total transparency over the tasks and activities happening right across the Purchase-to-Pay process. So, whatever challenges an organization is facing, and wherever inefficiencies manifest between Procurement and Accounts Payable, Process Mining and Process Intelligence can help find – and fix – the process gaps getting in their way.

Here are three of the most common Process Mining and Process Intelligence use cases in P2P:

Use case #1: Maximizing cash discounts

Cash discounts are a huge source of value for the organization. But, with numerous contracts to navigate and agreed payment terms to keep track of, teams often don’t take full advantage of them.

Process Mining and Process Intelligence can help P2P teams see where discounts are being missed, and prioritize invoices to maximize cash discount realization. They can also help you evaluate when taking advantage of a cash discount is worthwhile, or when it might be more profitable to pay later from a working capital perspective. That view enables teams to make the most of Procurement’s hard-won negotiations, and ultimately reduce overall spend.

For example, by working with Celonis, global healthcare provider Fresenius Kabi increased their cash discount realization rate from 61% to 90%. (They also increased Days Payable Outstanding by improving payment terms, which has already resulted in $550K in capital cost savings.)

Use case #2: Reducing free-text requisitions

Free-text requisitions are a constant cause of Purchase-to-Pay process gaps, impacting and creating work for teams across both Procurement and Accounts Payable. If you want to reduce them, and reduce the cost and compliance risks they create, you need to be able to identify the source quickly and act fast to resolve their underlying causes.

Process Mining and Process Intelligence help P2P teams clearly see how free-text requisitions impact process performance, both in terms of added effort and costs. But more importantly, they enable teams to dive into the sources of free-text requisitions and pinpoint the teams, individuals and vendors involved in their creation.

With that insight, P2P teams can take direct actions with repeat sources of free-text requisitions. Plus, they can also start working towards resolving the issues that have led to the creation of those requisitions by ensuring that catalogs, processes, and currently approved suppliers can deliver everything the business needs.

Use case #3: Identifying opportunities for P2P automation

Process Mining and Process Intelligence help organizations build up a complete view of Purchase-to-Pay processes, showing them where their biggest performance and execution gaps are. Often, those gaps are areas where P2P automation could yield significant benefits.

By surfacing the tasks and areas where things like manual rework are leading to delays and reduced performance against KPIs, Process Mining and Process Intelligence help teams understand where automation could be applied to improve results. Plus, they help teams see the potential impacts of proposed P2P automation cases in dollar terms, so they can prioritize them intelligently. Process Mining and Process Intelligence also enable you to monitor the impact of these automations on KPIs after the fact, so you can make sure you’re on the right track.

Crucially, it’s not just about identifying where P2P automation could best be applied. Process Mining and Process Intelligence also help you understand the tasks and process areas that shouldn’t be automated. By surfacing problem processes that need fixing, they can help prevent cases where teams unknowingly automate inefficiency.

Are Process Mining and Process Intelligence just about surfacing and fixing Purchase-to-Pay problems?

While Process Mining and Process Intelligence's biggest and clearest strengths are their ability to help teams identify value opportunities and take the right action to capture them, they're also a hugely valuable tool for understanding performance and benchmarking.

Process Mining and Process Intelligence enable you to see P2P process performance clearly at a global, regional, supplier and even individual level. So, they help you spot trends like high performing regions, and drill down into that region’s processes to discover what they’re doing well. Then, those practices can be applied across the wider business, to help you take that high regional performance global.

They are also extremely helpful for teams that want to understand how far they are from their ‘ideal’ process state. If you have a target process model that you want to move towards, Process Mining and Process Intelligence help you clearly see how close your live processes are to that model, and spot any major deviations from it, as well as why they’re happening.

Process Mining vs Consulting

Process Mining delivers many of the same outcomes as a direct engagement with a consultant. It explores your processes in-depth, works to analyze and contextualize relevant data relating to them, and ultimately helps you see where your bottlenecks and performance blockers are, and what needs to be done to remedy them.

However, Process Mining delivers these outputs a lot faster than a traditional consulting engagement. Instead of waves of workshops and exploratory exercises, it simply pulls live data for analysis, and uses information from your live systems to build up an objective and complete view of Purchase-to-Pay process performance. That’s why a lot of consultants are – you guessed it – using Process Mining.

Process Mining enables consultants to continuously track process performance, and identify new issues as they arise, rather than generating a one-off fixed view that quickly loses value and relevance over time.

What are the challenges associated with applying Process Mining and Process Intelligence across the Purchase-to-Pay process?

Process Mining and Process Intelligence technology are designed to be easy for stakeholders to engage with right across the Purchase-to-Pay process. However, like any other technology, its adoption can carry cultural challenges that can impact its overall effectiveness and value.

To get the most from Process Mining and Process Intelligence, Purchase-to-Pay teams need to be ready to change how they work with process data and insights. If they’ve relied solely on BI capabilities for process insights for a while, chances are they’ll be very used to questioning and scrutinizing the insights handed to them. With P2P Process Mining, that simply isn’t necessary, because the data is automatically extracted directly from your systems.