Cash & Liquidity ManagementPaymentsHow digital networks can cut through ‘corporate cholesterol’

How digital networks can cut through 'corporate cholesterol'

Reluctance to move away from legacy systems and embrace digital networks can result in 'corporate cholesterol' clogging up the smooth flow of business operations, writes Julie Gerdeman, general manager of payments and financing at SAP Ariba.

Are you a morning person? Neither am I. But if you’re like me, caffeine always helps! When gearing up to face the day, it also helps to have choices. For example, do you purchase your coffee with cash, credit, or the swipe of a smartphone? You drag yourself into work and, after a few meetings and conference calls, that growl you hear is your stomach. Do you order lunch over the phone, via an app, or through third-party delivery? Survive another few teleconferences in the afternoon, and you’re feeling wiped out. It’s been a long day! Maybe you unwind with a good movie. Do you download to your tablet, order cable on demand, or head to the local cineplex?

These scenarios summon to mind some of the world’s most ubiquitous brands. That’s because the most successful consumer businesses cater to the flexibility their customers increasingly expect. All too often, though, business-to-business commerce lags behind in embracing innovations that enhance the user experience. But happily that’s changing, particularly with regard to payments.

All too often, business-to-business commerce lags behind in embracing innovations that enhance the user experience

Payments are the ‘last mile’ in the user experience, and we’re seeing a great deal of disruption in the space. From banks and fintech to cryptocurrencies and authentication, payments today represent fertile ground for innovation. As emerging technologies compete to set standards and shape the future of commerce, one thing is clear: trust is the decisive factor in any commercial relationship. Those businesses that reinforce it through transparency and a secure cloud architecture are, ultimately, likelier to disrupt than be disrupted.

Of course, cloud-based networks not only instill trust but spur collaboration. When buyers and suppliers gain visibility into each other’s interconnected operations, they can work together in real time to design products, foster new ideas and fuel mutual growth. They can also align their payments strategy with that up- or downstream in the supply chain.

Yet despite all the transformation underway in the payments space, many businesses hold fast to the same systems they’ve had in place for the past 10 or 20 years. Why the inertia?

Chalk it up to what I call corporate cholesterol. This unhealthy plaque, which can clog up the smooth flow of operations, accumulates from legacy systems that don’t ‘talk’ to each other across disparate silos. In the most worrisome cases, the buildup of gunk poses a threat so severe to an organization’s health that a figurative angioplasty is required.

Procurement and payments professionals are perfectly positioned to perform the procedure.

You can restore vitality to operations by centralizing procurement processes, from sourcing to purchasing to contracting to payments, onto a digital network. Through a unified, cloud-based platform, internal teams and trading partners alike can harness the dual power of consistency and collaboration, aided by the insights that artificial intelligence and machine learning glean from vast troves of previously uncorrelated sets of data. The results are both tactical, as savings accrue, and strategic, as procurement and payments teams broaden their traditional roles to include driving growth for their organizations.

You can restore vitality to operations by centralizing procurement processes onto a digital network

Meanwhile, as businesses explore digital payment solutions, they may encounter challenges beyond corporate cholesterol. Another is the pace of regulatory change, typically slower than that of technological progress. By its nature, a digital network is built on openness and transparency. But without strong security and authentication protocols in place, a network risks falling prey to data breaches or fraud. This creates an opportunity — not only for software engineers but for regulators as well — to establish a framework that deters wrongdoing and engenders confidence.

A well-designed digital network instills confidence not only in its own integrity as a platform, but in that of its participants too. Consider a network comprising millions of buyers and suppliers, where each can evaluate the others based on hundreds of compliance criteria. Does a potential trading partner have the necessary governance structures in place to root out forced labor from its sourcing relationships? To verify the provenance of precious minerals? To document responsible stewardship of the environment? To steer clear of regions associated with documented patterns of inhumane working conditions? To manage risk both operational and reputational? In sorting through these factors, procurement and payments professionals ensure that buyers and suppliers reflect the values shared by their organizations, shareholders and customers. In a word, they infuse their supply chains with purpose.

In the payments space, purpose is very much a part of the bottom line.


Julie Gerdeman is general manager of payments and financing at SAP Ariba.

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