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Change is hard. But what if the pain of the same was greater than the pain of change? When it comes to accounts payable (AP) automation, this is the question businesses should be asking.

Automation is arguably one of the more controversial topics of recent times, evoking visceral reactions and strong opinions alike. Perhaps that¡¯s why although AP automation has the power to increase operational efficiency, visibility, and control, all while reducing complexity, fewer than 20% of businesses have fully automated AP processes, and 70% of all invoice processing globally is still paper based. So, what¡¯s stopping businesses from going all in on AP automation, or at the very least taking the first step towards automating their time-consuming AP processes?

In this episode of the SAP ÂÜÀòÊÓƵ Conversations podcast, Chris Elmore, Chief Evangelist of AvidXchange, explores this question, and provides colorful commentary about how the AP profession has evolved, the optimization opportunities AP automation opens for organizations, and how automation forces organizations to be more strategic and intentional with where and how they spend their time and resources.

You can listen to this episode on | | or your favorite place to find podcasts.

Read the transcript from this episode of the SAP ÂÜÀòÊÓƵ Conversations podcast below:

Jeanne Dion:

Hi, and welcome to the SAP ÂÜÀòÊÓƵ Conversations Podcast. Each episode we sit down with industry experts, visionaries, and leaders as they share what it takes to build forward-thinking spend programs. Our goal is to get you thinking differently about how your organization spends money. I'm Jeanne Dion, and I'm the vice President of the Value Experience Team here at SAP ÂÜÀòÊÓƵ. My team works with our customers to bring about positive business outcomes based on data-driven insights. And today I am joined by Chris Elmore of AvidXchange, and we are going to talk about the evolution of the AP function, and how to leverage the power of AP automation to optimize operational efficiency in your organization. Because that was easy for me to say, I guess. But let's get to know you a little bit, Chris, before we start in on our topic.

Chris Elmore:

All right. Well, first of all, thanks for having me. This is great. And I'm looking forward to our dialogue. Now, I've been with AvidXchange for 23 years, and the company's been around for 23 years. You can do the math on that. It's pretty simple. I'm not necessarily a founder of the organization. I like to say that I was kind of the first employee, or an early employee, but that just means that I've kind of seen firsthand the whole rise of AvidXchange, and had a front row seat to accounting, and finance professionals trying to deal with this new world that we're all dealing in this new digital age. So, it's been kind of interesting.

Couple of other maybe background points. I work in the mergers, and acquisition groups at AvidXchange. And also I teach at UNC Charlotte. I've been teaching, I'm a professor of entrepreneurship, and innovation there, and I've written 12 books, eight on the accounts payable process. And if you want to clear room at a party, you tell them you've written an AP book. But I have a feeling that people who are listening to this podcast are like me, and kind of nerd out a little bit when it comes to accounts payable, so we're all family here.

Jeanne Dion:

Yes. Well, I am one of those nerds, big fan. I love that you're passionate about it, passionate enough that eight of your books are around AP.

Chris Elmore:

That's right.

Jeanne Dion:

And we could write books about AP all day, but I want to get a little bit strategic about how AP works. So, I've heard it said that each generation is going to bring change to the world of business, that it's going to be transformational, because we've built them to grow up on technology. And we've actually seen some of it in the past from agricultural to industrial based when technology was introduced. I've even seen some of it in my own experiences with some of the newer employees looking at some of our processes, and saying, "Oh, my God, why couldn't we do this a little bit better?" But you really have a different viewpoint on that, if I'm not mistaken, you once said to me that at least in the AP world, we're training the next generation to do the work the way we've always done it. So, I was hoping you could elaborate a little bit on that for me.

Chris Elmore:

Yeah, I don't know if it's a blessing, or a curse, but I have a tendency to look at the other way of this, and call it the devil's advocate, or whatever. And I have a colleague here at AvidXchange that's a senior leader, and in his notion is that over time, as the millennials take over, they're not going to stand for these manual tasks, these paper driven tasks. And so just by virtue of them taking over, the whole thing's going to be digitized, because their lives are digital, and they've grown up just like you said. But I don't believe that at all. And I'd love to hear what you think about this, because there's a couple of base principles that I do think applies to accounting, and finance, especially accounts payable. And one is that the population that does this work is risk adverse.

Now, if you hear something like that, it could seem like a negative, but it's absolutely a positive. In being risk adverse, what's the opposite of risk-adverse?

Jeanne Dion:

Reckless. I believe the word is reckless.

Chris Elmore:

Thank you. Thank you. Yeah, let's say you are reckless. Let's say you are a controller that had a bent on being reckless. You're not going to be a controller for long. So, the base concept is that it's a risk adverse population. It should be a risk adverse population, and that's a good thing. So, when you take that into account, the younger generation that's getting their sea legs on the processes are getting trained by the older generation on this is how you do it. And so that becomes the way that you do it. And so the idea would be as a younger generation takes over, they're going to continue the old task for one very good reason. And that is they're going to have to have a really strong list of reasons why they should switch from something that actually works pretty well. What do you think? What do you think?

Jeanne Dion:

Yeah, so I think you're right. And I think about it in this sense. I mentioned earlier, we've grown this set of generations to be really technologically dependent that they believe that everything is going to happen from a technology perspective. We grew them that way. We cannot fault them for that. We actually did this to them. How many of us went to a restaurant, and handed a kid a tablet so that the grownups could talk? We did this, so we can't really fault them for it. But I start to think about the AP groups of today are starting to age out of the workforce. We're starting to see them leave, and they're training people into the new way of work that they've always done it versus a new way of work.

And I sometimes wonder if because we're doing this to this next generation of AP teams, are we really limiting the type of people that we're going to be hiring, or the caliber of mind that we're looking to bring into that finance, and AP world? So, I kind of challenge that, in that we're hiring the same sets of people, but should we be? Should we be hiring people who have a little bit more from a strategic perspective, and are taking a bigger picture view, and are willing, and open to have manual processes be taken up by automation?

Chris Elmore:

Yeah. I mean, by the way, I like that. I haven't really thought about the people that are attracted to the job not changing, but there's all kinds of... What's accountants never get older. They only lose their balance. There's the one joke. And then joke number two is why did the accountant cross the road? Because that's exactly what they did the same time last year. So, falsely, there's this view of accounting people of being rigid, and not willing to change, and uncreative, that's the one that really bothers me more than anything. And then the work that I do at the university, the students that are in this have none of those traits. They are creative. They're full of ambition. They're driven.

They're excited about getting into to the work, and getting into the workforce. And making things happen. And when they get there, they get stopped by people who don't feel like the risk is good enough. And I don't want to use this word, but I will. But they're stymied by people saying that we've never done it that way. Don't rock the boat. If it's not broken, don't fix it. And all of those are things that I think are killing the younger generation for them to just say, "Okay, well then I'll just do it that way."

Jeanne Dion:

Yeah. I think it ties to that whole idea that when something becomes the way in capital letters the way. And it's really hard to change the way, and you can see why it kind of happens, because if you were audited, every step of what you did was audited a million times a year. Whether it's a monthly audit, a quarterly audit, an internal audit, an external audit, an IRS audit, if you were audited consistently, you would be incredibly risk averse. It should be kind of a badge of honor.

Chris Elmore:

Yes, absolutely. I remember in the middle of discussions with these teams, if you called them paranoid, they'd say, "Well, thank you."

Jeanne Dion:

Well, thank you, sir.

Chris Elmore:

Yeah, thank you so much. I appreciate that. I'll tell my family you said that. But Jeanne, I wanted to go back to something that you brought up just anecdotally that I think is actually really important when it comes to technology, and the view of technology in the workforce. And that is the generation that's grown up on tech. They haven't known... One of the things that I love so much is my part of my personal elevator pitch is the last time I had a first date, there was no such thing as the internet, and there was no cell phone.

Jeanne Dion:

That's right.

Chris Elmore:

And it wasn't so long ago, it was 30 years ago when I met my wife. And by the way, I think it needs to go on record that if my wife ever leaves me, I'm going with her. Okay, here we go. These are the jokes, folks. I put that one right in the middle of the podcast to make sure that people were listening.

Jeanne Dion:

I love a good dad joke.

Chris Elmore:

I don't know what you're talking about, dad joke, it's a threat, and a promise. It is a threat, and a promise all at the same time. I love that woman. But here's the thing that you mentioned anecdotally, is that you kind of hand the kid the tablet, so the grownups can talk. The association that the technology generation that's supposed to automatically transform us into a business digital age is largely, largely based on entertainment. And so the association to technology, they've had technology their entire life, but it's almost exclusively been wrapped around entertainment. So, what happens is when they go into the workforce, and I'm not going to be shocking anything, or breaking down any barriers on this next statement, because I'm going to say that the workplace is not the most entertaining place in the world. It's a job. It's work. It's not supposed to be arduous, but it is work. It's not necessarily all the time fun. Although what we're doing right now, Jeanne, is.

Jeanne Dion:

It's a lot of fun. That's probably the most fun I have at my job all the time.

Chris Elmore:

I'm running my mouth, I'm talking. But the thing is, in order for the technology generation to make that leap, they're going to have to cut the entertainment value out of the tech, and then focus more on, and this is something I know we're going to get into. Focus more on the mission, the purpose, and the outcome of the technology, and how that's associated to the business, and how that affects the business outcomes.

Jeanne Dion:

So, that's a great segue to this next thing that I was going to ask, because if I'm thinking, if I make the assumption, if I agree with your assumption that the next generation really is not going to save us by highly automating those manual processes, who's the right group that we're going to be looking to for changes to process within an organization? I mean, wouldn't the people who do the work daily be the right people to make those changes? Because they're the experts at what they do. Are we looking at the right group to bring in change?

Chris Elmore:

Yeah, and I'm not going to make any friends on this one, but I got to say it. And that is that people, in my experience now, I've had close to 9,000 conversations with these groups about this topic. And by, and large, the clear assumption in their mind is because they know accounts payable, they do know accounts payable automation, and that's actually false. And here's the thing, folks, at the sound of my voice, if, first of all, if that irritates you, I do apologize for that, but it is my job here to make everyone mad. That way we'll go viral. No, it's not my job to do that. But here's the thing is that, let me give you a key indicator that you're actually in the middle of this, and that is, if you're talking about things like how does it get coded, how does it get approved?

What's the dependencies of the codes, and who approves it? If you're having conversations like that with your service provider, you're not talking about the right things. Now, it's important to get your arms around that from a feature set, but those are not the things that'll make the decision. Those are not the reasons why you should decide it. If it's easy to code, if it's easy to prove, if it has flexibility in the approval process, you need all of those things. But those aren't the reasons why you need to do this. It always frustrates me when I get an RFP, because on the RFP, they list all of these features out. And I'll tell you this, Jeanne, there's only so many ways that you can digitize an invoice, put it into an approval process, and present it to an accounting system. They're all going to look really similar. So, the question is, why are they different? Maybe this is a good time for you to... I mean, what makes them different?

Jeanne Dion:

Yeah. So, it's funny you say that because I've watched hundreds of customers take their expense process that was sitting on an Excel spreadsheet, and just translate it into a quote automated system, because that's how they always did it. And they're not looking to actually look at it from a strategic perspective of what could we do better? How could we make this work more efficiently, or effectively, how do we make the technology work for us rather than us work for the technology? So, to your point, if you're sitting there talking about, "How do I code this invoice", and "Well, 20% of my invoices don't follow this workflow, so what am I going to do with those?" Or "How do I ensure that what I've always done manually is going to get done electronically, and so I'm going to watch every single line item as it comes through just to make sure that the technology is doing its job." You've totally missed the point of the exercise.

Chris Elmore:

That's right.

Jeanne Dion:

Which is really to reimagine or envision change that affects the entire corporation, not just the tactical day to day, but what is happening. You are looking at this from a, "I have to look at every line item. I have to do everything because my job is on the line if I don't", rather than thinking about what if I spent 90% of my time on 5% of the problems, the problems that really matter, instead of spending 90% of my time on a hundred percent of every single line item of which only a small fraction will be a problem? What could I reimagine in the system? What could I do in addition to what I'm doing now that would add value to the company overall that would add value to the bottom line. That would add efficiency to the process that makes it easier for everybody to work. And I think that's where we get caught up. That's where people get tripped up in looking at automation of AP. It's not just taking what you do by paper, and making it electronic. It is actually re-imagining your entire system. So...

Chris Elmore:

That's the hardest part because you, you've now got to go to a professional who has maybe 10, 15, 20 years on this same process, and the process is their baby. I have a thing that says you should never tell them their baby's ugly. You can't roll in there and say, "Oh, you're messed up three ways to Sunday on this thing." You can't do that, because these are their processes, and by, and large, they work. And so the thought is, it's so difficult for a human being to take an objective look at something that they've known for 15 years, and they developed themselves. And now I'll give you a little, if someone wants to do additional research, we study this in my class. It's called the curse of knowledge. We talked about this in our prep. And the reason why the curse of knowledge is interesting is because one, it's both a psychological condition and an economic condition. It can kind of be studied either way, and it has applications both way. I say that because it's trying to make myself sound really smart to SAP ÂÜÀòÊÓƵ.

The curse of knowledge is a really simple fundamental principle which says the people who are doing the work, and are closest to the work are the ones that are least likely to innovate. And we have personal experience at this at AvidXchange, because hopefully this is okay, is that we ultimately created an accounts payable application, and nobody knew anything about accounts payable, because our customers over the years pulled us in that direction. We found ourselves in that, we're right there. So, what we had to do is it forced us to get feedback from over 200 companies on how to do this thing, and it created a really flexible application in its wake. But my students are always shocked when I tell them things like that, because they think in order to create something, you have to know everything about it. And that's actually faults. It's that the curses of knowledge, it has you stay in these invisible lanes that are so paralyzing that it's really hard to look outside of them.

Jeanne Dion:

Well, yeah, because you're looking at the tactical. You're looking at the day-to-day. You're not looking at what could be. So, we are actually looking at, continuing to look at green ledger pads that we've just moved onto a screen of some sort, and we're looking at the DOS entry screens that are going in, and we're still looking at cabinets full of paper, because we don't trust the scanning machines, and we're not really looking or moving to that age of the futurists where we've got flying cars, and robot maids, and true exception handling in AP. None of that is happening.

Chris Elmore:

You just described the Jetsons.

Jeanne Dion:

Yes, I did, because I'm that old. But that's what it is. I mean, we understand what the problem is. We understand how to move ourselves, but yet we cannot make ourselves move forward. In the scheme of things, automation really is the same for everybody, isn't it? I mean, there's nothing new about the automation we're talking about. I think you had mentioned to me once about when you're looking at automation, it's the same for everyone. It has to be driven by your mission, or your purpose, or your outcome. So when you're concentrating on that tactical, you're never going to be successful because your mission is never tactical. It's always lofty. It's always strategic, in a way.

Chris Elmore:

Well, and so I'm glad you brought that up, because I'm desperate to get to, let's talk about what to do about it. So, now we kind of...

Jeanne Dion:

Yes, yes!

Chris Elmore:

Yeah, I've taken over the podcast. Jeanne, let's talk about what to do about it.

Jeanne Dion:

That's exactly where we were going.

Chris Elmore:

And hopefully there's been some thought-provoking things that we've said in the inspiration side of this, and some motivated things, and hopefully when you hear Jeanne, and I talk about the issues, or the problems, it's more to kind of tell you you're not alone. Because I go from company to company to company, and all these companies have tons of paper, and they're like, "Don't tell anybody that we're this far behind." And I'm like, "You know what? You're all like that. Everyone's like that." The percentage of people that are fully automated are just low.

Jeanne Dion:

Small.

Chris Elmore:

It really is. And so I'm glad you brought up the... And so what do you do about it? And so here's my answer to that. My answer is you do have to focus on the mission outcome, and purpose of the technological initiative, whether it's accounts payable automation, Salesforce automation, marketing automation. And I get a lot of inspiration from manufacturing who... They've already figured this out, and they have six sigma, and lean process, and all of these things that kind of back up their need to automate. And so if you think about mission, purpose, and outcome, what is it supposed to do? And then here's the loop, the loop is real simple. The best outcome in any automation, accounts payable, or anything else is that it frees up time, and that's its best outcome. That's its product. It could have a financial ROI to it, but it's real reality is that the organization is going to get a certain amount of time out of that. Let's call that 5,000 hours. And this is something that's just standard in my world.

So, if I'm talking to an accounting department, I'm talking to them, in terms of how are you going to invest that 5,000 hours? Now, the word investment is really important. How are you going to invest that 5,000 hours? And then when you make that investment, and maybe I could say it even simpler, if I give you 5,000 hours, which projects are not getting done, that should be getting done? And when those new projects get done, how is that going to affect the company? And then who in the company is going to be excited about that effect at the highest level? And then lastly, this is the most important. How is that going to affect your career? So, where are you going to invest it? How's that going to affect the company? Who at the highest level's going to get excited about that? And then how's that going to make you look? That is whole mission, purpose, and outcome.

Jeanne Dion:

Yeah, that's a real futurist view, right? Because I think a lot of AP departments, I can say this, having worked in many of them, automation typically brings the fear of losing a job.

Chris Elmore:

That's right.

Jeanne Dion:

It really doesn't work that way. Automation typically brings you a better job.

Chris Elmore:

That's right.

Jeanne Dion:

It doesn't take anything away. It actually expands your horizons, and gives you a chance for future growth. And so I think that whole idea of focusing on mission, purpose, outcome is really the only way to make these kind of AP automation plays successful for everyone in the organization, not just the vendors who might be getting paid better, or faster, or quicker, or somebody who doesn't have to put in as many journal entries because the coding's done. There's a broad purpose that comes with this. So, I'd love that viewpoint.

Chris Elmore:

By the way, it's a pencil, and paper exercise. It's not a let's hire a bunch of consultants, and now I'm off all the consultants now. It's not hire a bunch of consultants. It's not like, let's get into a room, and brainstorm. It's not a whiteboard exercise. It's not a whiteboard with sticky notes exercise. What's some other things that corporate America does that drives me crazy?

Jeanne Dion:

Murals.

Chris Elmore:

It's a pencil to paper. It's a imaginary exercise, and it's not an event either. It's a process. It's an ongoing thing. Is that how am I going to spend my 5,000 hours? By the way, yours might be 10,000 hours. How am I going to spend my 10,000 hours? And it is a real pencil, and paper exercise, and it doesn't need to be more than that. And that's what the best results come from. And I'll tell you, just to back up what you said is that, and I deal a lot in my class with history, because history has a tendency to give you the whole view. In 1900, the loom industry was automated 90%. And the thing was, did jobs go up for looms, or did jobs go down? Now, traditionally, you would think if 90% of the work was automated, there'd be all these loom workers that were out of jobs.

But the reality is, it went way up because what happened was the automation reduced the cost to produce the fabric, and people started using fabric in different ways, and it opened up brand new markets. And therefore, even though you had to do 10% of the job, they just needed more people to do 10% of the job, that the jobs were easier, and they paid more too, and they required more intellect. Automation has a tendency to do that over, and over, and over, and over again. It forces you to go on to things that are more important. That's why I use the word, if I give you 5,000 hours, how are you going to invest it?

Jeanne Dion:

Right. Well, it reminds me of your loom example reminds me of the whole conversation around artificial intelligence, and how people are so afraid that artificial intelligence is going to replace them. And you said something really interesting to me. It was that artificial intelligence wasn't going to replace that person, but a person using artificial intelligence would replace that other person, I think it ties right exactly to that loom example. We've seen this happen before. We become a better, faster, stronger organization for it. And so I think it's just a place to go. And you mentioned something about this is a paper, and pencil exercise. And I would say, you're going to see what you need to do in that first 5,000 hours, right? And you're going to get that done. Then there's going to be that second round. This is iterative.

This type of change becomes iterative. It's a cycle of innovation. It's a cycle of reinvention. It's not just, well, I've found my 5,000 hours, and then I'm just going to keep doing this 5,000 hours, and I'm going to keep doing what I was doing. It frees you to then continue to work on that more important work of strategic oversight, and strategic viewpoints of how you can continually improve. I always like to say that this type of project, an AP automation project is really just continuous finance improvement, because it's going to drip into every part of the finance organization, which in turn, will then drip into every part, as you pointed out, every other part of the organization, because finance is the beating heart, and the rest of the organization will gain that circulation from that beating heart. So, we have to keep moving forward.

Chris Elmore:

Yeah, it's a habit. And really, if you think about it, we're not just talking about accounts payable automation. We're talking about any technology that any company consumes. Mission, purpose, and outcome. If it's cool, that's fine, but I need to know it's mission, purpose, and outcome. If it's really neat, okay, that's good. But I'm always shocked on how many people buy on cool, and neat. It's got to go beyond that. And that that's that thing that will permeate through the entire organization. It's a habit on, and I have a saying, hopefully the saying will hit, but it kind of encompasses this whole... We probably should print up a bunch of t-shirts. But the saying is that technology is only as good as the people that it serves, and it's got to have that human impact element to it, or else it's just pretty much useless.

Jeanne Dion:

Okay. So, if you're going to print those up, should we just post them out here, and let people order online?

Chris Elmore:

Oh, I would. And I'm going to put a Sasquatch on the back that says I believe.

Jeanne Dion:

Okay. Okay. All right. Sign me up. Well, I want to thank you, Chris, for sharing all your insights with us. This was really fantastic, and I'd like to encourage everybody, if they can, to go out, and take a look for Chris's work. I think for those of us who are AP nerds, his books are fantastic, and I think you're going to get a lot out of them. So, thank you again for joining us. I hope we can have you back another time.

Chris Elmore:

You ask, I'm going to come back. And so anytime, anywhere, it was absolutely my pleasure. And then the only caveat that I say is that next time you have me on the podcast, we have to do it live in Charleston at your favorite restaurant, which is?

Jeanne Dion:

All right.

Chris Elmore:

What is...

Jeanne Dion:

Oh, gosh. ³Õ±ð°ù²Ô¡¯²õ.

Chris Elmore:

³Õ±ð°ù²Ô¡¯²õ.

Jeanne Dion:

³Õ±ð°ù²Ô¡¯²õ.

Chris Elmore:

There it is. Ladies and gentlemen, we'll invite everyone to ³Õ±ð°ù²Ô¡¯²õ.

Jeanne Dion:

Okay. We'll be there. You, and me both. We'll get them shut down, and we'll bring an audience in.

Chris Elmore:

I love it.

Jeanne Dion:

Well, and I want to thank everybody for listening to this episode as well. We really appreciate you tuning into the SAP ÂÜÀòÊÓƵ Conversations Podcasts. To hear more exclusive insight, and interviews from the world of business, travel, expense, and invoice processing, be sure to subscribe and listen wherever you find your podcasts. And please join us for our next SAP ÂÜÀòÊÓƵ Conversation.

Want to hear more conversations like this one? Check out the SAP ÂÜÀòÊÓƵ Conversations podcast, and be sure to subscribe on , , or wherever you enjoy your podcasts so you never miss an episode.

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