Basware Connect – Finance Transformation and Marginal Gains

The Basware Connect event last week was held in a new venue for me, the Crystal in London Docklands. Nothing to do with the Crystal Maze, unfortunately, but a highly environmentally friendly and sustainable building next to the docklands cable car, with an exhibition* about the future of cities.

The event drew around 150 delegates, a good mix of procurement and finance practitioners, partners, industry experts and other interested parties. There were opportunities to see demos of Basware products, but the conference sessions were far from being a hard sell, with a good mix of presenters.

Ad van der Poel who heads up the supply chain finance business at Basware kicked off. Global trade is now $80 trillion, he said, and B2B and B2G (government) represents half of that – some 170 billion transactions, but only 5% are electronic. Late payment is a problem everywhere, including the UK;  57% of organisations have delayed payments to suppliers in last 12 months.

Basware is talking about the idea of  "Corporate social financial responsibility” - take responsibility for ethics within your area, including paying on time. Late payment can directly cause employee lay-offs, and SMEs in the UK at any given time have £30B outstanding in late payments.

He talked about “the transformation of finance" in four key areas. Operational efficiency is still the foundation for finance. Visibility and control means having sight of what is going on within the business, for instance, through managing spend and forecasting cashflow. Then we have the need to manage risk and compliance, for instance by reducing / eliminating fraud. Finally, more cash for growth is key – including working capital management which means “leveraging investment in P2P into invoicing and supply chain finance areas”.

There wasn’t much about Basware’s plans directly, but he talked about the firm’s focus on wider P2P activities, continuing the diversification from their invoicing heartland. There will be opportunities for customers to benchmark with other clients and more on alternative financing and SCF models – including a partnership with Demica.

The second keynote came from Tim Harford, the “Undercover Economist”. He talked about how to encourage innovation and the pros and cons of marginal gains versus the big “step change” or transformational ideas.

He used the example of the British cycling team, who have won more gold medals than the rest of the world put together in the last three Olympics. Much of that was down to incremental gains. Cleaning the tyres with alcohol helps acceleration. Wash your hands carefully so you don’t pick up a bug. Electrically heated pants to keep athletes' muscles in top condition between the warm-up and the race starting. Indeed, there is a “Head of Marginal Gains” at British Cycling.

We can take this idea and apply it to business, Harford says. Try small changes and see what happens – even experiment with different fonts on our website to see if it affects propensity to buy or to read more. Some of this thinking is being used in government, for instance, what wording in letters is most likely to get people to pay their taxes promptly?

Having got us excited about this, Harford then changed tack and asked if we are too attracted to the idea of marginal gains? It is easy and safe, but is not the only way. It works in cycling, because radical innovation is likely to be banned by the authorities. But in most of “real life”, there is no regulator and we can consider radical innovation.

Harford went on to give some good examples of this, but ultimately and not surprisingly, his key message was that we need both types of innovation. And there are lessons for procurement. Yes, we should strive for that great new technology or radical commercial approach; those step change gains can be very powerful. But we should also look every day to make multiple small improvements to what we do.

A very enjoyable and stimulating session anyway, and we will be back soon with some other highlights from the day, as well as our interview with Ilari Nurmi, one of Basware’s top executives.

*As an exhibition, it lacked a bit of pizzazz in our opinion – they need a smart and creative science communicator to take a look at it I think!

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