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Expert Knowledge on Digitalization & Automation of Business Processes

xSuite Blog

Expert Knowledge on Digitalization & Automation of Business Processes

Invoice Approval with SAP: Integrated or Upstream?

Topic: AP Automation | SAP

 

As companies begin to automate their invoice approval processes, it is important for them to make an essential decision in advance: Is an integrated workflow system required? Or would it be better to opt for something that places fewer limitations on company and users?

More freedom with an upstream invoice-approval  workflow?

At first glance, a solution running independent of ERP system would appear to offer more possibilities. You can create your own user interfaces and forms, define workflows, maintain authorizations—all free of the look and feel of a particular ERP system. A workflow upstream of the other systems may offer distinct advantages—for example, in the case of a particularly heterogeneous ERP landscape, which may have other ERP systems set up alongside an SAP system. Landscapes such as this can often be found in companies with infrastructure that has developed rapidly as a result of acquisitions. An upstream system may also benefit companies whose branches can make decisions independently. An overarching business goal of many companies is to keep the number of ERP systems down to a minimum; therefore, adding a system would invariably be connected with a concrete business advantage.

Heterogeneous ERP landscapes may pose disadvantages due to the fact that you have to connect or develop your own interfaces for each ERP system. Some systems may not even be connectible at all. Replication of business logic in the upstream workflow may also prove inconvenient: authorizations will need to be set in two systems; in the worst-case scenario, users will need to be set up and maintained in multiple systems; and all master data—supplier master data, G/L account plans, mapping of cost-centers, etc.—must be made available externally. Ultimately, when selecting an upstream system, one should consider whether the economic benefit will outweigh the operational costs in the long term. The more systems connected, the more complex the operation of the solution in practice.

And how do SAP-integrated workflows add up?

An SAP add-on is usually advantageous if SAP ERP is clearly the leading system or if no other ERP systems are used alongside it. Many companies using SAP also use SAP-integrated workflow systems because they are based on SAP infrastructure. Acquisition of additional resources such as servers is usually not necessary. Once an invoice has been created in SAP, processing will go through the infrastructure of the SAP system.

When SAP is the preferred system, users will feel well-oriented in SAP-integrated solutions. The look and feel of the application will often resemble a native SAP application or transaction. Configured web interfaces generally accommodate external users in invoice approval quite well. In an SAP-integrated system, performing tasks such as authorization, user maintenance and business logic is generally much less complex than doing so in a heterogeneous system. And if technical feasibility is a concern, certification granted by SAP SE is a helpful indicator.

Of course, SAP integration does have its downsides. With a workflow system that is not exclusively connected to any one ERP system, you have more freedom when it comes to design. The interfaces can be individually designed and thus simplified for the user. In addition, you can create your own business logic (think definition of mandatory fields). The user will rarely need an SAP user account. All in all, one is less subject to the restrictions of the ERP system.

Both systems have their advantages—but which one to choose?

Generally speaking: each kind of system will fulfil its purpose. You will certainly be able to check and approve invoices with both of them, and you will have an invoice overview at your disposal to find items.

It's all in the details: SAP offers a large number of order types, especially for invoices with a reference to purchase orders. In addition to material purchase orders with account assignment, unassigned purchase orders also come up; while the purchase orders with account assignment already contain all the information, the unassigned purchase orders must be assigned an account in the invoice receipt step. In SAP, there are purchase orders that can go through without a goods receipt, while others expect a goods receipt or, in a yet stricter scenario, always require a goods receipt before an invoice receipt. Different account assignment types such as cost center, internal order and work breakdown structure (WBS element) should also be integrated. One must be aware that, among others, these dependencies may also play a role in upstream processes and should therefore be taken into account.

Particularly with generic workflow solutions, it is important to ensure that the provider offers not only all the SAP-specific features but also extensive project experience in connection with SAP, with reputable references to back it up. SAP certification of the entire process is a criterium which is practically indispensable for such critical business processes as invoice approval. Often, the erroneous assumption is made that using an external workflow will help save on SAP licenses. This is frequently discussed and in most cases turns out to be incorrect.

In the decision-making process, though cost factors must be considered, a comprehensive view is essential. As much as a solution must be evaluated in terms of its cost, consideration of its functional advantages should predominate.

If you wish to know what to look out for when selecting a workflow solution for processing invoices in SAP, I recommend our white paper on the topic. To download, click here.

Author

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Jan

Jan Schulze is Head of Product Management at xSuite Group. As a graduate of business informatics, he is an expert in business and IT topics and thus optimally combines the relevant expertise. As a passionate field hockey player, he is a true team player and is always fully committed to what he does.

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