E-invoicing is likely the least understood and most confusing market within the broader source-to-pay landscape. But we’re attempting to cut through all the electronic nooks and paper crannies of the market in our just released Spend Matters PRO analysis: E-Invoicing Forecast: 2014 Market Growth, Analysis, and Predictions. This brief, along with its companion (see below), includes an electronic invoicing technology market forecast, market segmentation, market sizing, set of vendor shortlists and general procurement / accounts payable recommendations for selecting e-invoicing providers.
One of the challenges of e-invoicing is definitional. For some, e-invoicing centers on the adoption of traditionally manual and offline AP processes either as part of a move to global business services (GBS) type organizational models, outsourcing approaches, or “business as usual” payables environments. For others, e-invoicing is the bridge between buyers and suppliers for eProcurement environments (indirect procurement), an area of spend where suppliers have traditionally kept line-level invoice detail cards close to the chest (limiting the ability of procurement organizations to gain accurate insights into spending, pricing, and trending activities and relative performance).
Unlike eProcurement and other source-to-pay functional areas in our market coverage, from a competitive perspective, we see three very distinctive vendor approaches to targeting the e-invoicing market. These include those with a legacy in scan/capture/automation/workflow type of approaches (the battle scarred e-invoicing “barbarians” in our vernacular such as OpenText). It also includes a new group of SaaS/cloud-based solution providers that are rapidly innovating and exploring. Our “e-invoicing Vikings” include Basware (formerly a barbarian, but no more), Coupa, and Ariba.
And finally, it also counts a smaller group of providers that come from a different, more advanced planet entirely. What we deem the “aliens” include Nipendo, Tradeshift, Elemica, Taulia, OB10/Tungsten, and Crossflow. These have the potential to shake up the market considerably with newer thinking and approaches, including platform as a service (PaaS) and financial centric models – and outcomes from e-invoicing programs based on receivables and payables financing that more closely link together treasury, procurement, and supplier management.
One finding from our research is that the legacy market for scan/capture/automation solutions remains alive today but will ultimately decline considerably. Providers such as ReadSoft, OpenText, Esker and Kofax will see declines in traditional software revenue in this market by 2017 unless they alter their solution approaches (OpenText has a goldmine of underlying assets to potentially leverage with recently acquired GXS but it remains to be seen what they do with it).
Basware, which perhaps has the most advanced accounts payable automation capability inclusive of e-invoicing, has already seen the writing on the software wall in this regard. It has invested in a new SaaS/cloud platform, Alusta, and centered new attention on its network to drive connectivity rather than accounts payable automation and scan/capture approaches as a primary focus. And SAP and Ariba continue to invest in the Ariba SaaS P2P and network tools as well.
“Not so niche” players in this sector including Transcepta (invoicing connectivity, supplier network, capture and enablement) and Verian (a sort of “Mini-Me” Basware in accounts payable automation, although with a broader footprint that includes transactional procurement, inventory and asset management) are also integral to watch as the market grows in 2014. Moreover, the F&A and procurement outsourcing BPO providers have no doubt not gotten in their last word yet either (it remains to be seen whether or not these provider leverage supplier network partners such as OB10 for new areas in the world of trade financing given the new Tungsten financing capabilities).
This last point of course brings up the elephant in the e-invoicing closet: receivables and payables financing. There currently exists a huge opportunity to offer financing of invoices either using a buyer’s balance sheet, bank, or non-bank third party capital at rates that are attractive to suppliers and offer a significant return for those investing in them – theoretically at very low risk in the case of approved invoices. The wildly successful Tungsten/OB10 IPO last year and subsequent climb in market valuation was the “shot heard round the world” in this area – or perhaps “rocket” is the better word. Others are watching the interest in this space closely, no doubt, and 2014 will be a critical year to gauge the early uptake of these financing programs with committed capital behind them, not to mention the adoption of dynamic discounting programs (which typically use a buyers own balance sheet to finance early payment) as organizations ramp up their Taulia implementations.
So who will win this market? The muscle-clad Barbarians with old spiked software and scanning clubs to crush unnecessary paper? The more advanced and capable Vikings that deploy SaaS and networks to cross land, ocean and air? Or the new breed of aliens that have quietly landed their otherworldly spacecraft and are starting to blend in as they attempt a complete transformation of the market from within? For greater detail and analysis, see the related PRO post and decide for yourself! And look for additional Spend Matters PRO analysis, E-Invoicing 2014 Forecast: Customer Recommendations and Vendor Shortlists, publishing later this week, for those looking for prescriptive guidance on what types of solutions (and specific vendors), are a best fit and when.