The Total Economic Impact™ Of Basware AP Automation
Cost Savings And Business Benefits Enabled By Basware AP Automation
A Forrester Total Economic Impact™ Study Commissioned By Basware, January 2024
Accounts payable (AP) executives of organizations that operate in multiple countries need to contribute to their firms’ priorities of optimizing working capital, enhancing efficiency and ESG footprint, and managing talent. To do so effectively while complying with increasingly complex regulatory environments, AP executives need to inject automation and intelligence into invoice processing to enhance productivity, optimize working capital, standardize compliance, and allow savings on legacy systems.
Basware AP Automation is a solution designed to enable global enterprises to receive invoice data electronically and automate invoice processing while complying with regulations. It processes all customer invoices regardless of the originating system or format (e.g., paper, EDI, XML, PDF), handles various types of invoices (e.g., PO-based, non-PO-based, direct-purchase, and recurring invoices), and provides enterprises with actionable insights into invoice status, process efficiency, and AP workload.
By enhancing the productivity of AP clerks and approvers, Basware AP Automation enables finance teams to shorten payment cycles, capitalize on early payment discounts to optimize working capital, and reduce compliance costs. It also enables streamlining of end-to-end invoice processes in global shared service centers, which enhances operational efficiency.
Basware commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying its AP Automation solution. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Basware AP Automation on their organizations.
Return on investment (ROI)
158%
Net present value (NPV)
$1.12M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four respondents with experience using Basware and surveyed 108 CFOs and senior finance executives. For the purposes of this study, Forrester aggregated the experiences of the interviewed and surveyed customers and combined the results into a single composite organization that is a global B2B organization that provides goods and services to the construction and industrial sectors.
Interviewees noted that prior to using Basware, their organizations had fragmented invoice processes with AP clerks scattered across various countries and operating multiple systems to comply with local mandates. They had little to no insights into the length of payment cycles, the efficiency of teams, and overall payable status by supplier.
Prior attempts to remedy this yielded limited success and left the organizations with large amounts of manual processing, difficulties integrating with local ERP systems, multiple disjointed accounts payable standards, and lack of central governance. This resulted in inefficient AP resources allocation, unstandardized payment cycles, and unreliable data, which made it challenging to optimize working capital, reduce costs, and create attractive work environments where talent could focus on adding the most value and growing professionally.
After the investment in Basware, the interviewees’ organizations could consolidate multicountry processes and systems into a single model, streamline invoice processing, and implement shared services centers. Key results from the investment include productivity gains for both accounts payable teams and business users who approve invoices, working capital optimization, legacy cost savings, and gains from compliance audit efficiency.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Increased AP clerks productivity by 50%. By automating the processing of invoices based in purchase orders (POs) through intelligent data capturing and advanced matching and automating the coding of non-purchase order (non-PO) invoices, the organization’s single AP clerks were enabled to process about 50% more invoices. This allowed AP teams to reallocate resources to higher-value activities. With 450,000 invoices processed each year, the AP productivity gain was worth $839,100 to the composite organization over three years.
- Increased productivity for business users. The solution allowed the composite organization to better handle invoice exceptions by guiding reviewers towards a task list that contains all invoice details and suggesting next best actions (e.g., approve, reject, dispute). This reduced reviewing efforts on the part of business users before approval. Automation also allowed the composite organization to reduce the overall percentage of invoices needing extra effort with automatic rules that streamline the approval of recurring invoices. Assuming the composite organization saved 3 minutes per invoice exception handling, its business user productivity gains are worth $202,100 over three years.
- Working capital optimization for early payment discounts. Automation enabled the composite organization to standardize and govern invoice payment cycles and capitalize on opportunities for early payment discounts on a continuous basis. With a total of $30 million in annual indirect spend in which early payment discounts were actually earned, the working capital optimization gains were worth $618,000 to the composite organization over three years.
- Legacy cost savings from sunsetting existing electronic invoice solutions. Implementing e-invoice capabilities enabled the composite organization to capture all invoice data electronically regardless of format and comply with local e-invoicing mandates. This allowed the composite to sunset its existing optical character recognition-based (OCR) solutions and other technologies. Operating in 12 countries that mandate e-invoicing, the composite organization’s legacy cost savings were worth $86,700 to the composite organization over three years.
- Compliance audit efficiency gains. Compliant streamlined invoice processes enabled by automation allowed the composite organization to reduce the time internal auditors need to prepare for external audits and the time external auditors need to carry out their auditing through field trips. Assuming there is one external auditor field trip at each finance location each year, this was worth $85,000 to the composite organization over three years.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Workforce upskilling. Because Basware AP Automation offers data and insight into the whole invoice cycle, AP clerks gain a comprehensive and analytical view of the entire process that enables them to identify bottlenecks faster. This enhances employees’ analytic skills and strategic thinking, and it prepares them for higher-value tasks and roles.
- Easy scalability. Standardized invoice processing and easy integration with existing ERP systems act as enablers for business expansion and ensure that organizations maintain compliance with diverse invoice processing requirements when expanding operations into new regions. This standardization also plays a key role in enabling organizations to transition from decentralized to centralized operations and to assimilate new business acquisitions, all while ensuring efficient onboarding and scalability of operations. One interviewee said: “In the shared service center there were 30 people servicing 20 countries. Overtime, we added 10 countries adding maybe only one more person. Basware allows shared service centers to do more without adding headcounts.”
- Enhanced resiliency. Invoice processing standardization and ease of integration breaks operational and knowledge silos, and it enables organizations to make invoice management a shared knowledge and practice that stays in the firm even when individual AP clerks leave.
- Decreased carbon footprint. Electronic invoices eliminate the need to print and mail physical invoices. And process digitalization makes remote working possible, which reduces the need for fuel-powered commutes to work. All this helps organizations reduce their carbon footprints.
- Enhanced negotiation. By allowing organizations to govern their invoice cycles and better control payment times, Basware AP Automation helps them improve their relationships with suppliers and gives procurement leverage to negotiate better deals.
- Better AP user experience. AP teams and AP managers have more visibility across all invoices (PO and non-PO) and across each supplier, which enables them to manage the end-to-end invoicing process much more quickly and efficiently. AP managers can reallocate workloads across teams and focus on enabling suppliers to send e-invoices.
- Increased supplier satisfaction. Suppliers can send invoices in any format they prefer and get consistent messages, complete and detailed electronic POs, and prompt payments.
- Increased tax compliance. By automating and increasing compliance, organizations may reduce the risk of tax noncompliance and avoid paying fines.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Implementation costs. These costs include technology and professional services fees the composite organization needs to pay to integrate Basware AP Automation with its existing ERPs, to cover the cost of internal IT and AP labor to support integrations, and to train AP clerks to use the new solution. The initial cost for the composite organization is $47,000, and by rolling out the solution in 33 countries over three years, the total costs are $137,400.
- Subscription costs. The composite organization pays subscription costs for e-invoice capture, automated matching, intelligent routing, and smart coding capabilities. The total costs amount to $572,100 PV over three years.
The financial analysis which is based on the interviews and survey found that a composite organization experiences benefits of $1.83M over three years versus costs of $710,000, adding up to a net present value (NPV) of $1.12M and an ROI of 158%.
"How much of a priority are the following initiatives for your organization overall in the next 24 months?"
Base: 108 finance decision-makers who work at global companies with at least $500 million annual revenue
Source: A commissioned study conducted by Forrester Consulting on behalf of Basware, November 2023.
Key Statistics
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Return on investment (ROI)
158%
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Benefits PV
$1.83M
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Net present value (NPV)
$1.12M
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Payback
<6 months
Benefits (Three-Year)
AP productivity gains Business User Productivity Gains Working capital optimization Legacy cost savings Audit compliance efficiencyTEI Framework And Methodology
From the information provided in the interviews and survey, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Basware AP Automation.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Basware AP Automation can have on an organization.
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Due Diligence
Interviewed Basware stakeholders and Forrester analysts to gather data relative to Basware AP Automation.
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Interviews and survey
Interviewed four representatives at organizations using Basware AP Automation and surveyed 108 respondents to obtain data with respect to costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees and survey respondents.
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Financial Model Framework
Constructed a financial model representative of the interviews and survey using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees and survey respondents.
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Case Study
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Disclosures
Readers should be aware of the following:
This study is commissioned by Basware and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in the AP Automation.
Basware reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Basware provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Edoardo Zavarella
Salma Hamdani
Drivers leading to the Basware AP Automation investment
Interviews
| Role | Industry | Region | Invoices Processed Per Year |
|---|---|---|---|
| Global product manager | Logistics | China, Germany, Hong Kong, Malaysia, Singapore, US | 800,000 |
| Global business services transition lead | Construction and industrial support | US | 500,000 |
| Mission lead, digitalization | Industrial goods and services | Finland | 300,000 |
| Manager of business solutions | B2B manufacturing | US | 650,000 |
Key Challenges
Forrester interviewed four representatives with experience using Basware at their organizations and surveyed 108 respondents. For more details on these individuals and the organizations they represent, see Appendix B.
Prior to adopting AP Automation, the interviewees’ organizations had a limited number of shared service centers, and many of their AP teams were scattered across each country in which they operated. The organizations had multiple ERP systems and some e-invoice data capturing technologies, but the invoice processing was largely manual.
Interviewees noted how their organizations struggled with common challenges, including:
- Suboptimal invoice processing that impacted working capital optimization. Interviewees said their organizations tried to implement shared service centers to adopt common invoice payment frameworks that could enhance accounts payable governance and help them better manage cashflows, but they soon realized this wasn’t working. One interviewee said: “The large number of ERP systems across the organization made it difficult to establish standard practices for invoice processing. Even within each shared service center, we had a lot of different silos. Teams couldn’t really help out each other because each was specialized in an ERP, and in order to help others, they would have had to know a different ERP.”
- Legacy technology that impacted AP efficiency. Existing legacy solutions didn’t deliver on their promises. One interviewee said: “We had solutions for circulating the invoices, but since they did not match automatically, we still needed manual labor. Someone needed to understand whether it was PO or non-PO [and] then send to the contact person to review. This [person would make] corrections if needed, then send to the approver, etc. All that added processing costs.”
- Lack of reliable standard processes, which impacted financial health. Understanding amounts that remained to be paid required guesswork, and this made it very difficult to conduct data-based budgeting, forecast, and optimize working capital. One interviewee said: “I remember when we had to report about the backlog. It was just looking at piles of papers and guessing, ‘Well, that’s 800 [invoices and] the other is maybe 1,000 invoices.’ It was really just the best guess.”
Investment Objectives
The interviewees’ organizations searched for a solution that could:
- Easily integrate with all their organization’s ERP systems to standardize processes as an overarching layer without having to touch the ERPs themselves.
- Deliver high levels of invoice processing automation to increase efficiency and build or enhance the shared service center model.
- Help streamline invoice processing governance to improve data and forecast reliability.
- Upskill employees to provide them with more time to dedicate to value-added activities and to nurture talent.
- Reduce the organization’s carbon footprint by enabling work from home and contributing to ESG objectives.
Composite Organization
Based on the interviews and survey, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the four interviewees and the 108 survey respondents, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The global B2B organization provides goods and services to the construction and industrial sectors and generates $4 billion in annual revenue. It operates in 30 countries and has 20,000 employees globally, including 30 AP clerks who process 450,000 invoices each year. The organization has $2 billion in total indirect expenses annually, and 20% is eligible for early payment discounts. It has grown through multiple acquisitions and uses multiple ERP systems that are often locally customized. The organization needs to comply with multiple invoice mandates.
Deployment characteristics. The composite deploys Basware AP Automation to cover 33% of its total invoices each year.
"How much of a priority are the following initiatives for your finance organization in the next 24 months?"
Base: 108 Finance decision-makers working in global companies with >$500mln annual revenue
Source: "Basware AP Automation Survey", a commissioned study conducted by Forrester Consulting on behalf of Basware, November 2023
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | AP productivity gains | $186,360 | $372,721 | $481,321 | $1,040,403 | $839,076 |
| Btr | Business user productivity gains | $41,974 | $83,948 | $125,923 | $251,845 | $202,145 |
| Ctr | Working capital optimization | $89,910 | $239,760 | $450,000 | $779,670 | $617,977 |
| Dtr | Legacy cost savings | $18,000 | $36,000 | $54,000 | $108,000 | $86,687 |
| Etr | Compliance audit efficiency | $17,701 | $35,402 | $53,104 | $106,207 | $85,248 |
| Total benefits (risk-adjusted) | $365,054 | $748,392 | $1,164,348 | $2,277,794 | $1,825,166 | |
Evidence and data. Interviewees mentioned that it was difficult to set up and run efficient shared service centers without shared ERP-agnostic invoice processing practices. They said that with the introduction of Basware AP Automation, their organizations created automation layers on top of existing ERP systems. This allowed the organizations to have a common, highly automated framework for invoice processing.
Modeling and assumptions. For the composite organization, Forrester assumes:
- The composite’s total number of annual invoices is 450,000. Sixty-six percent are based on POs and 33% are non-PO invoices
- Before using Basware AP Automation, 30 AP clerks processed an average of 15,000 invoices annually.
- The composite deploys Basware AP Automation to cover an additional 33% of total invoices each year.
- The composite’s productivity recapture rate is 80% because not all the time saved through touchless invoice processing is reused.
Risks. The impact of this benefit may vary among organizations due to differences in:
- Solution deployment capacity.
- Initial number of AP staff members.
- Total number of invoices to be processed.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $839,100.
AP Productivity Gains
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| A1 | Total invoices | Composite | 450,000 | 450,000 | 450,000 |
| A2 | PO and non-PO invoices automatically matched or prematched | Composite | 150,000 | 300,000 | 450,000 |
| A3 | Invoices per AP staff member | Interviews | 17,500 | 20,000 | 22,500 |
| A4 | AP staff members required to process total invoices | Interviews | 26 | 23 | 20 |
| A5 | AP staff members reassigned | Composite | 4 | 8 | 10 |
| A6 | Average fully loaded annual salary of an AP staff member | TEI standard | $54,000 | $54,000 | $54,000 |
| A7 | Productivity recapture rate | Composite | 80% | 80% | 80% |
| A8 | Total automated matching savings | A5*A6*A7 | $172,800 | $345,600 | $432,000 |
| A9 | Non-PO invoices smart coded | Composite | 50,000 | 100,000 | 150,000 |
| A10 | Average coding time saved per invoice through smart coding (hours) | Composite | 0.03 | 0.03 | 0.03 |
| A11 | Average hourly salary of an invoice coding staff member | TEI standard | $26 | $26 | $26 |
| A12 | Productivity recapture rate | Assumption | 80% | 80% | 80% |
| A13 | Total invoice coding savings | A9*A10*A11*A12 | $34,267 | $68,534 | $102,802 |
| At | AP productivity gains | A8+A13 | $207,067 | $414,134 | $534,802 |
| Risk adjustment | ↓10% | ||||
| Atr | AP productivity gains (risk-adjusted) | $186,360 | $372,721 | $481,321 | |
| Three-year total: $1,040,403 | Three-year present value: $839,076 | ||||
Business User Productivity Gains
Evidence and data. Interviewees mentioned that manually coding non-PO invoices caused inefficiencies not only for AP teams but also in other parts of their organizations since business users had to review invoices and often correct mistakes. In addition to this, nonstreamlined processes caused the organizations to handle a large number of invoices as exceptions, which they shouldn’t do.
One interviewee said: “When someone needs to look at the invoice and send it to someone else for reviewing and approving, [this in itself] has a cost. [It should not require] two people taking 1 or 2 minutes each.”
Modeling and assumptions. For the composite organization, Forrester assumes:
- Business users require an average of 3 minutes to conduct a review.
- Before automation, the composite organization handles 20% of total invoices as exceptions.
- With automation, the percentage of invoices the composite handles as an exception decreases to 5% in Year 3.
Risks. The impact of this benefit may vary among organizations due to differences in:
- The percentage of invoices the organization handles as exceptions.
- The time business users need to review an invoice, which may vary depending on invoice complexity
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $202,100.
Business User Productivity Gains
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Invoices that need extra approval effort | Composite | 90,000 | 90,000 | 90,000 | |
| B2 | Invoices for which automation saves extra approval effort | Composite | 22,500 | 45,000 | 67,500 | |
| B3 | Average review time saved (minutes) | Composite | 0.05 | 0.05 | 0.05 | |
| B4 | Average hourly salary of an approver | TEI standard | $51.82 | $51.82 | $51.82 | |
| B5 | Productivity recapture rate | TEI standard | 80% | 80% | 80% | |
| Bt | Business user productivity gains | B2*B3*B4*B5 | $46,638 | $93,276 | $139,914 | |
| Risk adjustment | ↓10% | |||||
| Btr | Business user productivity gains (risk-adjusted) | $41,974 | $83,948 | $125,923 | ||
| Three-year total: $251,845 | Three-year present value: $202,145 | |||||
Working Capital Optimization
Evidence and data. Interviewees mentioned that the lack of standard invoice processing models and practices caused erratic invoice payment cycles that led to issues with cashflow management and an inability to benefit from early payment discounts at any significant rate. They said that by introducing Basware AP Automation, their organizations gained the ability to govern payment cycles and consistently benefit from early payment discounts where available.
Modeling and assumptions. For the composite organization, Forrester assumes:
- The composite’s average indirect yearly spend is $1 billion.
- Indirect spend eligible for early payment discount is 20% of the total.
- Eligible indirect spend where early discount benefit can be earned (as the composite may not necessarily want to pursue early payments) is 15% of the eligible spend
- The composite’s spend where early discounts are earned through automation is 75% since it was already earning 2% of the possible benefit.
- The composite’s average early payment discount savings are 1.5%.
Risks. The impact of this benefit may vary among organizations due to differences in:
- The amount of total spend that is eligible for early-pay discounts, which depends on various factors
- The available discount rate, which may differ depending on the organization’s supplier relationships and markets.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV of $618,000.
Working Capital Optimization
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| C1 | Average indirect spend processed through automation | Composite | $333,000,000 | $666,000,000 | $1,000,000,000 | |
| C2 | Indirect spend eligible for early payment discount | C1*20% | $66,600,000 | $133,200,000 | $200,000,000 | |
| C3 | Eligible indirect spend for which discount can be earned | C2*15% | $9,990,000 | $26,640,000 | $50,000,000 | |
| C4 | Eligible indirect spend for which discount is earned | C3*75% | $7,492,500 | 19,980,000 | $37,500,000 | |
| C5 | Average early payment discount savings | Composite | 1.5% | 1.5% | 1.5% | |
| Ct | Working capital optimization | C4*C5*C6 | $112,388 | $299,700 | $562,500 | |
| Risk adjustment | ↓20% | |||||
| Ctr | Working capital optimization (risk-adjusted) | $89,910 | $239,760 | $450,000 | ||
| Three-year total: $779,670 | Three-year present value: $617,977 | |||||
Legacy cost savings
Evidence and data. Interviewees’ organizations had legacy solutions in place to capture invoice data and to comply with electronic invoice mandates through certified e-invoicing providers. Interviewees said that by implementing Basware AP Automation, their organizations could descope these costs.
Modeling and assumptions. For the composite organization, Forrester assumes:
- The composite organization needs to comply with electronic invoice mandates in 12 countries.
- The average yearly cost of a legacy solution including labor, assistance, and subscriptions is $10,000.
Risks. The impact of this benefit may vary among organizations due to differences in:
- Whether or not the organization operates in countries with invoice mandates.
- The costs of the organization’s legacy solutions
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $86,700.
Legacy Cost Savings
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| D1 | Local centers with invoice capture technology | Composite | 2 | 4 | 6 | |
| D2 | Invoice-capture technology costs per center | Composite | $10,000 | $10,000 | $10,000 | |
| Dt | Legacy cost savings | D1*D2 | $20,000 | $40,000 | $60,000 | |
| Risk adjustment | ↓10% | |||||
| Dtr | Legacy cost savings (risk-adjusted) | $18,000 | $36,000 | $54,000 | ||
| Three-year total: $108,000 | Three-year present value: $86,687 | |||||
Compliance audit efficiency
Evidence and data. One interviewee said: “There were also audit savings as well from an internal [and] external audit perspective. By bringing in Basware [AP Automation], we enabled our internal audit [team] to audit our accounts payable processes remotely from a lower-cost country rather than having to visit the business. External auditors also do 90% of their accounts payable work before they get to visit our local centers. So, all of a sudden, instead of them being in a business for a week, they roughly save a day. We estimated $100,000 of savings from our external audit partner by them not having to go to these businesses and audit accounts payable.”
Modeling and assumptions. For the composite organization, Forrester assumes:
- External auditors visit 33 countries once per year.
- External auditors save one day for each visit.
- Internal auditors save one day for each visit.
Risks. The impact of this benefit may vary among organizations due to differences in the number of external auditor visits per year.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $85,200.
Compliance Audit Efficiency
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| E1 | Finance locations where invoice automation is implemented and audited yearly with onsite trips | Composite | 11 | 22 | 33 |
| E2 | Onsite audit time savings (days) | Composite | 11 | 22 | 33 |
| E3 | Onsite audit cost per day | Composite | $1,500 | $1,500 | $1,500 |
| E4 | Savings on external auditors | E2*E3 | $16,500 | $33,000 | $49,500 |
| E5 | Internal auditor time saving (days) | Composite | 11 | 22 | 33 |
| E6 | Average daily rate of an internal auditor | TEI standard | $288 | $288 | $288 |
| E7 | Savings on internal auditors | E5*E6 | $3,168 | $6,336 | $9,504 |
| Et | Compliance audit efficiency | E4+E7 | $19,668 | $39,336 | $59,004 |
| Risk adjustment | ↓10% | ||||
| Etr | Compliance audit efficiency (risk-adjusted) | $17,701 | $35,402 | $53,104 | |
| Three-year total: $106,207 | Three-year present value: $85,248 | ||||
Unquantified Benefits
Additional benefits that customers experienced but were not able to quantify include:
- Workforce upskilling. Interviewees said Basware AP Automation allows AP clerks to gain a comprehensive, analytical view of the entire invoice approval process and that this enhances employees’ analytic skills and prepares them for higher-value tasks and roles. One interviewee said: “Thanks to Basware [AP Automation], we were able to include an analyst function, and not just for seniors in the teams. There’s value added from being able to explain why something went the way it went. It also allows for more efficient sharing of best practices.”
- Easy scalability. Interviewees shared that Basware AP Automation enables their organizations to scale operations globally while minimizing friction. One interviewee said: “We knew we were going to expand a lot. It was one major thing that Basware had done implementation projects and multiples of them in each country. As a comparison, competitors told [us] that they have done one or two implementations in one specific country [where] Basware had done more than 100.”
- Enhanced resiliency. Interviewees said Basware AP Automation was instrumental in creating truly functioning shared service centers where knowledge and practices could be shared. One interviewee said: “When employees leave the company, they take with them a lot of knowledge and understanding that needs to be rebuilt and recreated. With a shared service center, you significantly reduce that risk. So, Basware [AP Automation] was instrumental to increase our resiliency.”
- Decreased carbon footprint. Interviewees mentioned that using electronic invoices eliminated the need for their organizations to print and mail invoices and that this allowed them to implement remote working.
- Enhanced negotiation. Interviewees reported that Basware AP Automation helped their organizations improve relationships with suppliers and gave procurement leverage to negotiate better deals. One interviewee said: “The feedback from strategic purchasing is definitely that in the negotiations, since we are able to pay suppliers on time now more than ever, it definitely helps because it’s an incentive.”
- Better AP user experience. AP teams and AP managers have more visibility across all invoices (PO and non-PO) and across each supplier, which enables them to manage the end-to-end invoicing process much more quickly and efficiently. AP managers can reallocate workloads across teams and focus on enabling suppliers to send e-invoices.
- Increased supplier satisfaction. Suppliers can send invoices in any format they prefer and get consistent messages, complete and detailed electronic POs, and prompt payments.
- Increased tax compliance. By automating and increasing compliance, organizations may reduce the risk of tax noncompliance and avoid paying fines.
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement AP Automation and later realize additional uses and business opportunities, including:
- Building the groundwork for AI-powered decision-making and processes. Interviewees said investing in streamlining core business processes such as accounts payable results in better data management and provides more reliable data. This lays the groundwork for other departments (procurement, treasury, etc.) to build upon and more confidently adopt AI- and ML-powered technologies.
- Powering up data intelligence capabilities. Decision-makers can analyze data available through the cloud solution to build insights, unearth new business opportunities, and increase top-line revenue. Moreover, organizations can reduce their costs by understanding spending data and identifying areas in which they could save.
- Managing increasing regulatory complexity. As businesses expand their global footprints, they need to navigate increasing regulatory complexity. Interviewees said that by employing Basware invoice automation solutions, businesses can relieve the burdens of compliance and enable growth by future-proofing processes at global scale.
- Enhancing innovative approaches to recurring challenges. By combining Basware AP Automation with additional Basware services, organizations may solve recurring challenges. For example, an organization could leverage AP data to identify and recover lost profits due to payment errors, identify potentially fraudulent activity, and catch duplicate payments before they happen.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Ftr | Implementation costs | $47,168 | $36,300 | $36,300 | $36,300 | $156,068 | $137,441 |
| Gtr | Subscription costs | $0 | $118,800 | $237,600 | $356,400 | $712,800 | $572,132 |
| Total costs (risk-adjusted) | $47,168 | $155,100 | $273,900 | $392,700 | $868,868 | $709,573 | |
Implementation costs
Evidence and data. Interviewees said their organizations incurred integration costs, internal IT and AP staff support costs, and change management costs.
Modeling and assumptions. For the composite organization, Forrester assumes:
- The composite organization implements the solution in 11 countries each year.
- The organization’s internal labor costs are $33,000 in years 1 to 3.
- The composite’s change management costs include 3 hours of training for the entire AP staff.
Risks. The impact of this cost may vary among organizations due to differences in the level and costs of the organization’s professional services and internal labor.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $137,400.
Implementation Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| F1 | Countries in which solution is implemented | Composite | 0 | 11 | 11 | 11 |
| F2 | Internal labor costs | Composite | $0 | $33,000 | $33,000 | $33,000 |
| F3 | Technology and professional services costs | Interviews | $40,000 | $40,000 | $0 | $0 |
| F4 | Change management costs | Composite | $120 | $0 | $0 | $0 |
| F5 | Average hourly rate of an AP staff member | TEI standard | $24 | $0 | $0 | $0 |
| F6 | AP staff support and training costs | F4*F5 | $2,880 | $0 | $0 | $0 |
| Ft | Implementation costs | F2+F3+F6 | $42,880 | $33,000 | $33,000 | $33,000 |
| Risk adjustment | ↑10% | |||||
| Ftr | Implementation costs (risk-adjusted) | $47,168 | $36,300 | $36,300 | $36,300 | |
| Three-year total: $156,068 | Three-year present value: $137,441 | |||||
Subscription Costs
Evidence and data. Interviewees said Basware uses a pay-per-invoice subscription pricing model and that their organizations agreed upon this cost upfront with Basware and capped their use of the solution at a certain number of invoices per year.
Modeling and assumptions. For the composite organization, Forrester assumes:
- The composite organization deploys Basware AP Automation to process an additional 33% of its overall invoices each year.
- The composite organization and Basware agree upon the cost per invoice and the cap at the beginning of the three-year period.
Risks. The impact of this cost may vary among organizations due to differences in the number of invoices it needs to process per month.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV of $572,100.
Subscription Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| G1 | Invoices processed through automation | Composite | $0 | 150,000 | 300,000 | 450,000 |
| G2 | Cost per invoice | Composite | $0 | $108,000 | $216,000 | $324,000 |
| Gt | Subscription costs | G2 | $0 | $108,000 | $216,000 | $324,000 |
| Risk adjustment | ↑10% | |||||
| Gtr | Subscription costs (risk-adjusted) | $0 | $118,800 | $237,600 | $356,400 | |
| Three-year total: $712,800 | Three-year present value: $572,132 | |||||
Consolidated Three-Year Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits-
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Cash Flow Analysis (Risk-Adjusted)
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($47,168) | ($155,100) | ($273,900) | ($392,700) | ($868,868) | ($709,573) |
| Total benefits | $0 | $353,946 | $767,832 | $1,164,348 | $2,286,125 | $1,831,133 |
| Net benefits | ($47,168) | $198,846 | $493,932 | $771,648 | $1,417,257 | $1,121,560 |
| ROI | 158% | |||||
| Payback | <6 months | |||||
Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Total Economic Impact Approach
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Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
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Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
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Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
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Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Appendix B: Interview And Survey Demographics:
"In which country are you located?"
"Which of the following best describes the industry to which your company belongs?"
"Using your best estimate, what is your organization's annual revenue (USD)?"
"Which of the following best describes your current position/department?"
"Which title best describes your position at your company?"
"Which of the following best describes your position at your company?"
"What is your level of responsibility when it comes to automation?"
Base: 108 finance decision-makers who work at global companies with at least $500 million annual revenue
Note: Percentages may not total 100 because of rounding.
Source: A commissioned study conducted by Forrester Consulting on behalf of Basware, November 2023.
Appendix C: Endnotes
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
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