In the first two posts in this series, I provided a bit of context behind Basware's growth over the past twenty years as well as an examination into some of the strengths and approaches behind their invoice automation product. In this post, I'd like to continue the discussion, drilling down on my observations from looking at the product as well as providing some additional details on Basware's overall direction and differentiation. To begin, for those who are new to P2P solutions (including invoice automation), many will be surprised after logging on to Basware, at the level of depth behind the application. Even the basic cockpit view provides a portal that shows specifically tailored and role-based information including pending tasks such as approval, reviewing, ordering, receiving receipts, related news, etc.
Basware offers both installed and SaaS-based deployment models. While the majority of current customers have followed an installed approach, some of Basware's larger users, including the city of Helsinki, rely on SaaS deployments -- and many at Basware expect this trend to grow. Regardless of deployment model, one area where BasWare distances itself from the competition is in user configuration. The ability to change permissions, rights, processes and workflows on the fly and at a great level of depth with no IT involvement is truly unique. On the invoice automation side specifically, I reckon that Basware might have a significant total cost advantage over other applications because of reduced deployment costs in complicated environments (i.e., no customization required -- just configuration). It is very easy, for example, to train the system to recognize specific suppliers in an invoice process by highlighting the physical location of a supplier name on an invoice and to then route that invoice to the right set of individuals based not only on the name of the supplier, but also the size, date, terms, etc. of the invoice. The system can also automatically extract highly detailed item-level information from invoices such as part/service types, quantities, volume discounts, etc. and then match this information to existing contracts and POs.
Another area where Basware shines is its KPI tool. Based on Hackett's research into world class P2P deployments, the tool can help organizations understand how they fit relative to peers based on a range of metrics including average cost per FTE, cost as a % of spend, cost per invoice, cost per invoice line item, average payment terms, number of FTEs based on spend amounts and the level and cost of headcount relative to other organizations. Basware also allows users to develop a role-based scorecard to measure performance. For example, such a scorecard might only provide a handful of metrics to the CEO, but a shared services manager might see another level of depth followed by significantly lower-level details for procurement or A/P users. But companies can configure these rolled-up views to provide detailed and drillable capabilities, regardless of role, as to display status and trends through a number of visual cues (e.g., color -- green, yellow, red and graphics/charting).
To date, a great majority of Basware's invoice automation customers -- and hence, their overall customer base -- has come from the finance side of the house. While A/P managers are sometimes the lead decision makers, it's very often that controllers and even CFOs now push such initiatives. And the higher the level of engagement inside the organization, the faster the sale. This is not surprising given the current economic climate. After all, invoice automation really is a core function in helping companies enable new working capital management strategies that, at this point of the downturn when cash is king, are all the more valuable. Long-term, it will be curious to see if Basware can transition from selling primarily to finance into other parts of the business in equivalent numbers including procurement.
I suspect that going forward, as invoice automation and eProcurement come closer together in companies, that we'll see Basware compete more frequently against best of breed vendors that are better known in upstream procurement areas. At this stage of the game, I still give an edge to Ariba over Basware when it comes to enterprise eProcurement capabilities (when it comes to comparing Basware to Oracle, SAP, Ketera, Coupa and others today, Basware might begin to compare more favorably as a functional alternative). But by the same token, Basware beats out Ariba on the downstream invoice automation side of the house. From my own observations, these two Spend Management providers do not see each other in competitive deals that often. This, however, will most likely change as companies begin to look at both elements of P2P more closely, and as finance and procurement work more closely together to reduce costs and target working capital management strategies.