The Booming AP Automation Market
Worldwide, accounts payable automation is a $3 billion market, and it’s growing rapidly at a rate of 12.3% or even as high as 16%, according to recent estimates. Organisations across the globe are realising the immense benefits that accounts payable automation can provide in terms of cost savings, efficiency gains, and better financial control.
Poised for Takeoff in India
While the adoption rate of accounts payable automation in India is still less than 10%, this modest percentage holds significant potential. The fact that it is growing rapidly is an important trend to watch. Unlike the U.S. market, where adoption percolated from the top down, with large enterprises implementing these solutions first, India is witnessing a different pattern.
The Choice of New Age Agile Companies
In India, a lot of the adoption is being driven by small to medium-sized organizations and startups led by a new generation of entrepreneurs. These businesses want to keep their backend teams lean and powerful, and accounts payable automation allows them to achieve this goal. As a result, instead of the classic pyramid shape, India is seeing a more even distribution of adoption across enterprises and smaller organisations.
BFSI and Startups are the Early Adopters
While adoption is happening across industries and organisation sizes, certain segments are leading the charge. The banking, financial services, and insurance (BFSI) industry, as well as startups, are among the biggest adopters of accounts payable automation solutions. However, encouraging trends are also emerging in sectors like services, logistics, and manufacturing, as companies realise that having a robust ERP system alone is not enough; they need to digitalise processes to meet their specific requirements.
Complementing both Mature and Basic ERPs
Interestingly, almost 80% of accounts payable automation users have already implemented a reasonably mature ERP system, such as variants of SAP, Oracle, Microsoft Dynamics, Infor, or other popular ERPs. At the other end of the spectrum, some organisations are using smaller ERPs like Tally and are exploring accounts payable automation as a complementary solution.
The Two Implementation Approaches
Indian organisations are taking two main approaches to implementing accounts payable automation:
- Focused Start
Midsize and smaller organisations often begin by automating the core processes related to vendor and employee spends, such as accounts payable, and travel and expense management. They then gradually add more modules over time. - Comprehensive Implementation
Larger organisations, with more complex and cumbersome approval processes, frequently opt for a comprehensive implementation, adopting multiple modules of the spend management suite simultaneously. This approach allows them to realise the full benefits of automation from the outset, without the need for multiple rounds of approvals and implementation phases.
As the accounts payable automation market in India continues to grow, it will be interesting to observe how these adoption trends evolve and how organisations across industries leverage this technology to streamline their financial operations, improve efficiency, and drive better business outcomes.
