In the first post highlighting the recently announced partnership between Basware and Lavante, I provided a bit of context behind the deal, given both vendors' histories and target markets. In today's post, I'll provide a bit more color on the announcement, especially from the standpoint of Lavante's roots in automating as much of the audit recovery process as possible, leveraging their core solution in this area (vs. an expanded focus on vendor file management or supplier information management, as they are calling it). I had the chance to catch up with Lavante last year and came away very impressed with what I considered -- and still consider -- a novel approach to looking at invoices, payment and other related information to build a unique view of supplier relationships to drive audit recovery in an automated manner.
According to Lavante, the roots of the credit or audit recovery market go back some 30-40 years, when professional services providers starting reviewing historical A/P records and invoice data manually to search for gaps and anomalies. The model could not have been simpler: firms would take a cut of the recovery amounts they identified and their clients would receive immediate credit or reimbursement from their suppliers for finding mistakes. Early success in the market led to a greater number of entrants. Now, providers such as PRGX (which recently purchased UK spend analysis provider Etesius) and Connolly have helped consolidate business within a somewhat fragmented, cottage industry market. Yet Lavante and PRGX (with Etesius) are attempting to automate a larger percentage of what they do -- and the types of returns that are possible -- in the audit recovery field with software.
The process of collecting and presenting invoice, payment and related information for an audit recovery application very much works out to deliver a solution that is somewhat of a strange -- but very useful! -- hybrid between spend analysis and supplier management (or supplier information management) solutions. Lavante's toolset not only helps users to identify audit recovery opportunities and credits, it also allows them to see relationships between themselves and their suppliers in a manner that goes far beyond the balance of trade visibility that companies have today with traditional spend visibility tools.
This can help companies to see parent / child relationships in the context of dollar recovery opportunities and credits (e.g., don't go asking for a $20K credit from someone who contributes $10 million to your top-line). It can also allow companies to negotiate better rates and terms based on rationalizing spend with preferred suppliers (in a way that mimics the capability in more traditional spend analysis tools). But perhaps most important, in terms of supplier management, it can provide the basis of hybrid visibility into spending and supplier information from basic contact details such as names, phone numbers, etc. all the way to the type of basic supplier management information (e.g., banking details) that you might gather with an AECSoft, Aravo, CVM Solutions, Hiperos, Xcitec or a similar application from a suite provider such as Ariba, Emptoris or IValua, Oracle or SAP.
How does this all relate to invoice management and Basware? Stay tuned for the final post in this series.