SIM compared to cloud-based alternatives
Paul van Rouwendaal - Senior SAP Invoice Management & SAP Master Data Governance Consultant
At a time that everything seems to move to the cloud, you might be wondering if you should move your vendor invoice processing also to the cloud. There are many cloud solutions to choose from when it comes to vendor invoice processing. In addition to all these options, there is also SAP's standard offering called SAP Invoice Management (SAP IM for short), also known as Vendor Invoice Management (VIM) from OpenText. While it might seem obvious to choose for a cloud solution in this day and age, there are many things to consider. An integrated add-on in S/4 HANA, like SAP IM is well worth considering for many reasons, even if this is not a cloud-based solution.
This blog post explains the main differences between SAP IM and a cloud-based invoice management solution. This comparison is based on our experiences with both types of solutions, both from an implementation and operational point of view. As with many things, there is no right or wrong choice, as everything depends on your organization and what aspects are important to your organization.
In all fairness, we have to mention that SAP is currently also working on a cloud-based solution, called ‘SAP Central Invoice Management’, which runs on SAP BTP (in the cloud). In this comparison, we did not include the aspects of this solution. It is still very new and therefore, at the moment, does not offer the same extensive invoice processing features that SAP IM and other cloud-based solutions offer.
The comparison matrix below lists important aspects of each vendor invoice processing solution. It must be said that the comparison generalizes when it comes to evaluating cloud-based solutions. Of course, not all cloud-based solutions are created equal. While this means that this assessment may not fully represent all solutions, based on our experience we believe that most of these aspects provide an accurate and fair assessment.
Comparison Matrix
| Aspect | SAP Invoice Management | Cloud-based invoice management solutions |
|---|---|---|
| Software architecture | Add-on to SAP S/4 HANA or SAP ECC. | Could solution, usually SaaS, interfacing with local ERP solutions (including SAP S/4 HANA and SAP ECC). |
| E-Invoicing Platform | SAP IM is a very capable e-invoicing platform, which is pre-configured for many country specific XML templates. But usually it requires another third party invoice broker to connect with the vendors. | There are cloud-based solutions that are very extensive and powerful, which support many different e-invoicing standards. Sometimes the SaaS solution also includes the invoice broker system, which helps your organization to connect to the vendors with an onboarding procedure. |
| Vendor Portal (where vendors can look up the processing status of their invoices) | This is available with basic information and functionality. | Many solutions have a vendor portal with payment status and payment date information. |
| Optical Character Recognition (OCR). | Highly advanced machine learning with very good recognition and extensive set of configuration options to improve recognition. The OCR server can be installed on-premises, but SAP/OpenText also offers Core Capture for SAP (CC4SAP), the cloud version of the OCR server. | Usually the OCR is outsourced to a third party, where your organization will make agreements regarding a certain service level agreement, with regards to the recognition rate. |
| Inbound monitoring | Extensive monitoring capabilities in SAP, which shows you a complete overview of all incoming invoices from all possible input channels (e-mail, e-invoices, scanned document, etc.) If you have SAP IM connected to the machine learning OCR, you have detailed information about the processing status, as well as very detailed reports on the OCR performance and recognition rates. In SAP, it is very easy to provide anyone access to these powerful monitoring and reporting transactions. | Most of the times, there is a monitoring portal available. The amount of information you see can vary from solution to solution. Sometimes your organization is limited in the amount of information that you can see, while the more detailed information and processing logs are only available to the technical experts of the cloud-based solution vendor. |
| Configuration of the solution | Full configuration can be changed by the customer, your organization. There is already a fully configured baseline out of the box, which can be easily adapted to the needs of your organization. | Most of the configuration on a SaaS solution has to be done by the vendor of the cloud-based solution. You organization as a customer has very limited configuration abilities, which are usually limited to user maintenance, chart of authority, tax code + tax rates, among a few other things. |
| Moving configuration within the system landscape | Through the stable and robust standard SAP transport mechanism. | Usually, all configuration must be copied (redone) on each system tier by the implementation consultant. This is not very robust and stability depends on how well the consultant documented the configuration change. |
| Exceptions and business rules | There are many standard business rules and invoice exceptions available in SAP IM, many more than most cloud-based solutions. All of them are easily configured and activated, depending on the organizational need. | Standard invoice checks are available, but the list of checks can be a bit limited. Most common checks available include: missing mandatory information, duplicate check, tax code + tax rate check, price and quantity check, approval on NPO invoices. Any other checks can usually be build into the workflows with custom scripting. |
| Types of invoices supported | Many standard PO scenario's, including Goods Receipt (GR), Service Entry Sheet (SES), Limit purchase orders, Bill of Lading, Condition Types (for additional costs), Transportation Management (TM) invoices, and full support for subsequent debit/credit invoices. | Standard purchase orders and NPO invoices. Restricting purchase orders and matching on terms is sometimes possible with custom scripts, up to a certain limit. There is limited support for debiting/crediting invoices retrospectively. |
| Unsupported invoice types | In case you have special invoice types with a custom matching logic or special business rules, processing of these types of invoices can always be added into SAP IM by custom configuration. | Invoices with Service Entry Sheets (SES) and transportation invoices. Basically any invoice that requires a complex matching logic will not be supported, partially supported, or only supported with a lot of extra custom scripting. |
| User interface | In S/4 HANA, the SAP Fiori Launchpad offers end users a single, consistent, web-based entry point and user interface. SAP IM is delivered with multiple Fiori apps, which covers all aspects of invoice processing. Since everything is integrated into one user interface, the user does not have to access and switch between multiple systems to look up vendor information, PO/GR information, etc. All information is easily available and presented in screens that allow for easy navigation between different data. | While the user interfaces of cloud-based solutions are generally very well designed and look very beautiful, the look and feel can be very different from SAP. And the user will need to access multiple different systems, with their own user interface. This results in additional complexity for the user, since he does not only have to learn to work with multiple different user interfaces, he also needs to understand and remember to look up different type of data (vendor information, PO/GR information, etc.) in multiple different systems. |
| Reports | SAP IM has many detailed reports available out of the box, for checking and controlling the entire invoice process from start till finish. There are also detailed process analytics (KPI) reports available, which run with any configuration required. And since all processing data is available in the SAP tables, it is very easy to make any custom reports, which combines purchasing information with invoice processing information, or any other possible powerful combination that you can think of. All these reports can also easily be exported to Excel, where you can create macro’s or more detailed analysis on any of the data. | All cloud-based solutions have some form of reporting available, but there are differences. It can be that the data can be exported via an API, in which case you can transfer it to another reporting solution for further analysis. KPI reports are usually available, but are limited in the information that they will show you. |
| Line item matching | In SAP IM, the automatic line item matching between the invoice lines and purchase order lines is good and has some smart features to improve automatic matching. Also many more complex matching scenarios are available out of the box with a minimum of configuration. When the automatic line matching fails, a user needs to manually match the lines. The user interface for the manual line item matching in SAP IM can be a bit challenging for an inexperienced user, and is also not very convenient to use for invoices with many invoice lines. | Automatic line item matching in most cloud-based solutions is working well for simple invoices with simple line item matching scenario’s. But as soon as the invoices are more complex, or there are many possible PO line matches, or the PO types are not fully supported, the automatic line item matching can struggle to produce good and stable results. On the other hand, many cloud-based invoice solutions have an advanced web-based user interface, that provides detailed information about the line item matching and the reasons why the automatic matching failed. This makes it easier to do manual line matching in more complex matching scenarios with more complex invoices. |
| Interfacing to and from SAP | Since SAP IM is an add-on within SAP, there is no middleware or other systems used for the invoice processing. All main invoice processing components are within SAP. In case of e-invoicing, you can connect SAP IM to an e-invoice broker, which would then be the only interface to an external system. | Vendor data, purchase order data and goods receipt. Depending on architecture rules, there is usually a middleware system between SAP and the cloud-based invoice processing solution. This makes the solution much more complex and can introduce mapping issues. Also, in case of issues, you have to check multiple possible points of failures, like SAP, middleware and SaaS solution. All these points are maintained and supported by different teams, who could start pointing to the other teams, while it is difficult to coordinate effective issue resolution. You will need to organize joined issue resolution with multiple internal and external teams. |
| Integration with standard SAP for invoice posting | The invoice posting via SAP IM is a seamless and fully pre-configured process. Most invoice types, even the more complex ones, are posted without any issues. The SAP IM logic takes care of all the field mappings and other technical complexities that are involved in posting the invoice correctly, with very robust retry and error handling. | After the invoice is checked and approved in the cloud-based solution, the invoice is posted in SAP via an API call to SAP that executes a web service or BAPI to post the invoice. While the cloud solution vendors have templates for this API interface, we experienced that a lot of tweaking needs to happen to these templates during the implementation project. Your organization will need to have very good SA P knowledge to be able to tell the cloud solution vendor how to pass the data correctly to the API call, since the cloud vendors often do not know the details of the invoice posting in SAP, especially for more complex invoice types. |
| Extensibility | This is very easy and very powerful in SAP IM. There are many standard enhancement point, where you can extend the standard solution using ABAP code, while there is no or extremely low risk for future upgrades. Since enhancements are made within SAP, any custom invoice checks, advanced invoice line matching logic, or automatic data derivations can be built easily, since you can directly access any data in the database tables within SAP. | Some SaaS solutions allow extensibility, but this usually more limited. And since the cloud solution only has limited data available from SAP (about the vendor, purchase orders, etc), the solution is dependent on retrieving data from SAP via an API for example. This makes the extensions usually much more complex, and some things might not even be possible. |
| Reuse of existing platforms, systems, technology, authorization concepts and expertise | When implementing SAP IM, you are leveraging on existing systems, technologies and expertise, which you already are using for other business functions. SAP IM uses the same techniques as any other SAP module, like tables and ABAP programs, background jobs and customizing transactions. On top of that SAP IM works with the same robust and extensive authorization setup, already familiar to your authorization team, that makes sure the invoice processing is fully compliant with internal and external audits. | Cloud solutions will use different programming models and techniques, which your company might not be familiar with yet. This means you will need to train your technical teams to familiarize themselves with all these new techniques. For sure, any cloud solution will also offer an authorization concept that is fully compliant to internal and external controls. But you will have to integrate user management and role assignment of the cloud solution with the user provisioning for other systems, since a user will then exist in multiple different systems. This could require a custom interface to connect the entire user provisioning across multiple systems into one identity management solution. |
| Maintenance and support | You can create tickets through the SAP support portal, just as you do for other SAP solutions. This means you have only one support portal for SAP-related issues. | Raise tickets via SAP support portal, as you do for other SAP solutions. This means you have only one support portal for any SAP related issues. |
Limitations purchasing cloud solutions
Next to all the dedicated cloud-based invoice processing solutions, there are many cloud solutions for purchasing that also offer some form of invoice processing. This seems attractive, because you combine your purchasing and invoice processing in one integrated cloud solution. The invoice processing can work reasonably well for purchase orders created in the cloud-based solution. However, the invoice processing capabilities of these solutions are quite basic and have limitations. One such limitation is that the invoice can only be processed if it is received for a purchase orders that was created in the cloud-based solution.
But how and where do you process invoices that are received without a purchase order? Not all companies have a 100% no PO no pay policy. And even then, there is usually always an inflow of invoices without PO, which can not be fully eliminated. And many companies use the cloud-based purchasing solution only for a part of their purchases. For example, non-product related purchasing is done in the cloud solution, while product related purchasing is done in SAP (with MRP runs for example). This means that you will have purchase orders not only created in the cloud solution, but also in SAP. For the SAP purchase orders, you still need to have a vendor invoice management solution, while not all cloud-based purchasing solutions offer these kinds of invoicing scenarios.
SAP IM on the other hand is a single solution that will be able to handle the vendor invoice processing for all invoicing scenarios: for purchase orders that are created in SAP, for purchase orders that are replicated to SAP from any kind of cloud-based purchasing solution, as well as for invoices without a purchase order. This also makes the life of your accounts payable department much less complex and more effective, because they only have to process incoming invoices in only one solution.
Upgrades
There is one last point to consider. Sometimes companies are concerned about the upgrade impact of having an add-on like SAP IM in their S/4 HANA or SAP ECC system. While you should limit extensions and custom code in any SAP solution as a best practice, we know from experience that custom coding in SAP IM (if done properly within the standard extension points provided by SAP) have no or extremely low risk of incompatibility with a future upgrade of SAP or SAP IM. And at the same time, if you have vendor invoice processing in a cloud solution, any upgrade of SAP or this cloud solution will have to be tested. Therefore, it is an illusion to think that the upgrade effort is lower while using a cloud solution, as opposed to using an add-on in SAP like SAP IM.
Key takeaways
In summary, the invoice processing capabilities of cloud-based solutions are good for the majority of the common types of invoices. And while there is a lot to say in favour of having a SaaS solution as opposed to an add-on in SAP ECC or S/4 HANA, there are also many strong points in favour of SAP IM. SAP IM integrates into the SAP ECC or S/4 HANA system, which has many advantages: no complex interfaces via middleware, on single and consistent web-based user interface (Fiori Launchpad and Fiori apps) for users, extensive monitoring and standard detailed reports, support for more processing more complex invoice types, and superior extensibility options.
We hope this information will get you thinking and supports your journey in making a choice.
More information
For further questions or information on this topic or for other questions on SAP Workflow, Fiori or SAP Master Data Governance (MDG), please contact Martijn Wever.
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