From Problem Analysis to ROI in Record Time: Optimizing the Invoice Management with Noreja and Blumatix
Digital transformation poses major challenges for medium-sized companies in particular because, in contrast to large companies, there are often no dedicated digitization teams or subject matter experts available to address issues holistically and over the long term. This often leads to silo-like digitization measures that are initiated in the short term and whose benefits and effects on the stakeholders involved are difficult to understand in retrospect.
Long process chains (end-to-end) such as Order-to-Cash or Purchase-to-Pay, in particular, conceal challenges at countless points because they are characterized by interfaces, media discontinuities, and manual activities. All these elements are potential sources of below-average customer and supplier service, high personnel costs, or inefficient cash management in the context of invoicing and recording.
In creating transparency, data-driven approaches such as process mining help during three key steps (Fig. 1):
- Analysis-To-Cause: reducing the time from the start of process analysis to identifying the cause of the problem.
- Cause-To-Change: Faster and more effective insight into where, how, and why it would be optimal to perform process optimization.
- Change-To-Impact: Gaining transparency and speed in evaluating changes already implemented through subsequent continuous monitoring.
In cooperation with Blumatix, we are now using an anonymized example case to demonstrate how quickly a return on investment can be achieved. In doing so, we show how useful it can be to take a holistic view of the problem by combining process analysis (with Noreja Process Mining) and the implementation of an optimized invoice receipt (with BLU DELTA AI):
1. Analysis-to-Cause: A look at the dashboard (Fig. 2) for the purchase-to-pay process provides initial transparency:
- The analysis considers 15,000 process instances.
- There is an average transition time of 13h 18m between the activities “create delivery note” and “post invoice” (with a total lead time of the purchase-to-pay process of 5 days and 9h).
- A high rework rate of 2.1 can be identified for invoice posting.
- There are 384 deviations from the specified process standard.
For a more detailed analysis, it is worth taking a look at the timeline (Fig. 3). Here you can see the transition time between “create delivery note” and “post invoice”, which was previously only shown in key figure form, and its change over time. Between the years 2016 and the end of 2018, the runtime between these two process steps deteriorated continuously from 12h 30m to 14h 35m. In addition, seasonal patterns can be seen: In January, strong transit time peaks seem to occur; In May, short-term decreases in transit time can be observed. Targeted measures should be taken to counteract the negative developments.
2. Cause-To-Change: The previously created transparency regarding the cause of the problem must now be translated into concrete optimization measures. High reprocessing rates and constantly increasing runtimes indicate resource bottlenecks in accounting (invoice receipt, archiving, invoice verification, invoice release). Particularly in the case of invoice receipt, media discontinuities between the invoice and the ERP system result in a high level of manual effort, which also harbors the potential for errors.
This can be remedied, for example, with an AI-supported document capture solution from Blumatix (Fig. 4). Their solution recognizes any features via OCR fully automatically and without customer-specific configuration with an accuracy of >95%. The models are intelligent and learn with each newly captured invoice.
3. Change-to-Impact: continuous monitoring utilizing process mining makes the implemented measures of the OCR/KI-supported solution from Blumatix measurable. The result shows that the runtimes and post-processing efforts in the business process could be reduced significantly by optimizing the invoice receipt. In our concrete example, the total runtime of the process step was reduced from 14h 35m to 13h 11m (Fig. 5), which corresponds to a reduction of 84 minutes (since these are transition times, waiting times are included here). Optimizing the lead time has further positive effects on the company:
- Reduction of throughput time lowers personnel costs and frees up tied-up capital.
- Employee relief leads to higher motivation and productivity.
- Reduction of regulatory risks due to less intentional or unintentional human interaction.
We are very pleased to announce that we could win Markus Neumayr (CEO of Ramsauer & Stürmer) as an key investor for Noreja! In addition to the purely financial investment, Markus will take an active role as an ‘Ecosystem Ambassador‘ at Noreja, in which he will further deepen our existing cooperation with Ramsauer & Stürmer.
Our vision is to take the digital transformation of all Ramsauer & Stürmer customers to the next level through process mining, enabling them to optimize critical resources such as human resources, finance, customers and suppliers, thus saving significant costs.
Ramsauer & Stürmers’ official announcement is available here.
Interested Ramsauer & Stürmer customers can register below for the free webinar (in German) with the title “Digitalisierung beschleunigen mit Noreja Process Intelligence für rs2“ on 03.03.2022 between 14:00h and 15:00h with Prof. Dr. Jan Mendling and Lukas Pfahlsberger:
We are super excited to announce that we were accepted into the Microsoft for Startups program which enables us to expand our Azure capabilities for our SaaS process mining solution. We are sure that this program will help us accelerate the realization of our vision to help SMEs gain process intelligence and master the digital transformation!
Cloud + Data = Future!
We were nominated by WU Vienna to pitch at Stage Two, the first pan-European startup competition for early stage startups. Behind Stage Two is a network of more than 25 of Europe’s top universities, who follow the vision to connect top universities, the startups of tomorrow, industry leaders and VC across national borders. 💯💯💯
We are excited to share our Noreja release roadmap: Our releases will be named after the 12 highest mountain peaks (ascending) of Styria aka Steiermark (Austrian federal state)… 🏳️🌈 🎯
Why? Because our the company name Noreja is derived from a Celtic mother goddess Noreia, known from consecration inscriptions of the Roman Empire. She was worshipped as the protector of the MINING industry and has her origin in the Noricum, which nowadays corresponds to today’s Styria. See the parallels? 😀
Our first release Noreja Kogel will be presented within the next months. With each further release we are trying to “peak process excellence” a little bit further! 💯💯💯
What do you think of our release naming planns? ❗️❓❌
What is the value noreja provides to a customer’s BPM department? We try to break it down to three central KPIs which can be optimized when using noreja process mining:
1. Analysis-To-Cause: Reduce the time from starting with the process analysis until the identification of the root cause of the problem. Usually, companies can massively reduce FTEs for manual tasks like conducting interviews, searching through documentation, and process modeling.
2. Cause-To-Change: Get better and faster implications for where, how, and why it would be optimal to implement a process optimization. This enriches traditional process analysis techniques and leads to more accurate results.
3. Change-To-Impact: Gain transparency and speed regarding the evaluation of implemented changes by continuously monitoring the process. This leads to a sharper learning curve and a more profound business impact.
We are now part of the Entrepreneurship Center Network (ECN) and featured in their Success Stories. You can read more about why we decided to start a company, how our team was formed as well as some Do’s and Don’ts from the founding phase.
Read more here: ECN Success Stories: Noreja Intelligence GmbH
What is the ECN:
The Entrepreneurship Center Network (ECN) is the interdisciplinary entrepreneurship network of Austrian universities and universities of applied sciences. The ECN promotes and supports entrepreneurial thinking and action and is committed to cross-university networking. Currently, we count 24 universities in our network.
Over the last years, the process mining domain developed a tendency for path-dependent behavior that circled around the utilization of event logs and directly-follows graphs, which limited the possibilities to analyze process data more holistically from multiple perspectives. Causal references and object-relations of the underlying source data have only recently come into focus of process mining research. Therefore, we argue that it is necessary to provide alternatives to the classic event-log-based approaches to make process mining ready for the next evolutionary stage in the era of Big Data and the application in an organizational context.
The S-Curve Pattern of innovation illustrates that we are currently at the beginning of a new wave of innovation that departs from classical approaches in process mining. We at Noreja want to be part of this movement with our Causal Process Mining approach based on Causal Event Graphs stored in graph databases.
What is your opinion on this development?
We officially are a “GmbH”! 💯 🙌🏼 👌
Thanks to BRANDL & TALOS and their start-up program „Nährboden“ of which Noreja is a part. They supported us in the preparation of the articles of association, the notary certification, and the company registration.
BRANDL & TALOS is one of the leading legal advisers in Austria with a wide range of capabilities. For start-ups, they act as a sparring partner for all kinds of challenges along the way, be it financing initiatives, market access, M&A, venture capital, searching for business partners, or a successful exit.
Every business process execution is tightly connected to the financial perspective of an organization. In order to understand both perspectives in its entirely, you should analyze them with mutual consideration.
For instance, optimizing the ‘Cash Conversion Cycle’ by reducing the ‘Days of Inventory on Hand’ leads to higher liquidity and lower costs of financing. On the other hand, it could impact the execution of the ‘Purchase-to-Pay’ process negatively because less inventory could result in less flexibility in servicing unexpected large customer orders (peak demand).
To make a second example, increasing the time period for your customers to pay their bills could lead to higher customer satisfaction and therefore also to a higher willingness to order more (revenue increase). On the other hand, it negatively impacts the ‘Cash Conversion Cycle’ because the amount of available capital decreases for alternative investments.
Noreja Causal Process Mining can help to combine both perspectives and supports organizations in finding the right balance between process execution and financial optimization. Together with our partner Ramsauer & Stürmer Software OG, we can offer this analysis by combining data from their rs2 modules ‘Einkauf” and ‘Verkauf’.
Feel free to contact us to learn more!
#causalprocessmining #cashconversioncycle #businessprocessmanagement