How a major Kenyan bank went from approving hard copies to fully digitalized procurement

Company: I&M Bank
Locations: Kenya
Industry: Banking
Website: https://www.imbankgroup.com/ke/
Company size: 1001+ employees
Using Precoro since: August 2021
Users: 220
Client’s rating of Precoro: 8.5/10
Featuring: Rajen Satish Shah — Finance Manager

About the Company

I&M Bank is the flagship entity of I&M Group PLC (I&M Group), a public company listed at the Nairobi Securities Exchange. I&M Group continues to take advantage of opportunities presented in different markets with its international networks, including subsidiaries in Rwanda, Uganda and Tanzania and a joint venture in Mauritius (Bank One Ltd). I&M Bank’s portfolio of international correspondent banks includes major multinational banks such as Standard Chartered Bank, Citibank NA, Commerzbank AG, Deutsche Bank AG, amongst others.

I&M Bank has over 1, 700 employees in Kenya alone and offers a wide range of corporate and retail banking services. The bank’s Finance Manager, Rajen Satish Shah, talked about the company’s journey with software implementation and shared how Precoro revolutionized I&M Bank’s procurement process.

Manual and Paper-Based Procurement Process at I&M Bank

Let’s discover how one of the largest Kenyan banks introduced a fully automated procure-to-pay process to replace paper-based purchasing operations.

Initially, every transaction required printed hard copies of all relevant documents. Even if documents were sent as a pdf via email, it would eventually have to be processed as a printed copy — either the I&M Bank procurement department would print the documents, or the partner would mail the hard copies later. Without printed and approved hard copies, no purchasing transaction was considered complete.

I&M Bank did have software for creating purchase orders, but no automation beyond that. Once a PO was raised by the procurement department, a signed hard copy was dispatched to the supplier. The supplier, in return, would send hard copies of the invoices and all supporting documents. These documents would then be approved by various units within the Bank.

This manual approval process was complicated, as it heavily depended on the availability of approvers in the office. If someone was unavailable immediately, an approval could take up to a week.

Another problematic aspect of the manual approval process was instances of having to send documents back and forth for further information. For example, if the finance department needed further clarification, the printed document was sent back to the approver and, in certain cases, to the supplier. “It was just a lot of unnecessary tedious work and follow-ups,” Mr. Shah explained.

After the documents were submitted to the finance department, the accounts payable team would confirm that all supporting documents were in place and properly approved. Once satisfied, accounts payable would register invoices in the accounting system and make payments.

Upon paying the invoices, hard copies of processed documents were temporarily stored prior to being archived weekly. Such a process required a lot of physical storage space and different filing schemes, and it created additional manual tasks.

Processing a purchase order for a typical supply, from issuance to payment, would take at least a week. This was the case for typical items, including stationery, electricity, water, rent, software licenses, and security services. For high-value items, where more than one approver was involved, it could take longer than a week.

The company was operating with this manual paper-based system until 2021, when they discovered Precoro.

Recognizing a Need for Software

In 2019, when I&M Bank was implementing a new core banking system and digitizing its records, it became clear that the whole procure-to-pay process needed to be revised and upgraded as well.

The two pain points that stood out were:

• Inefficiency of the manual procure-to-pay process.
• Complications with retrieving information. If an issue with the transaction was discovered several months after the payment was made, it was tedious and time-consuming to find and retrieve the necessary documents from the archives.

The COVID-19 pandemic was also a push for implementing software, as the bank had to ensure business continuity by separating employees of the same function into different offices to comply with health protocols. As the organization moved its staff, it became especially difficult to process and approve hard copies of documents. Scanning helped at first, but some files were quite large and took a lot of time.

Moreover, even though suppliers permitted some payment extensions in light of the difficult situation, verifying the documents and processing payments in a timely manner became even more imperative.

“All of that ended up being a perfect storm for us to push forward.”
Rajen Satish Shah, I&M Finance Manager

The finance and procurement teams understood they needed an efficient tool to help automate key processes and reduce P2P cycle time. To address this, they decided to implement a dedicated procurement software.

“The reason it took us till 2021 to start using [procurement] software was a matter of priority. Customer facing projects were prioritized in terms of the overall benefit to the bank and its customer base. And [procurement software] was one of those things that was considered to be important but could wait a little bit,” Mr. Shah told us.

In early 2021, a new Chief Financial Officer joined the team and gave the procurement digitization process a push. He asked the finance and procurement team to look for viable solutions.

There were several requirements for the software:

• Ability to create, store, and process documents digitally
• Ability to track order status at any point in time
• Ability to track approval status
• Ability to track payment status
• A feature for generating reports to better understand spending data (per supplier or per product, estimate the biggest expenses, define areas for improvement, etc.)
• Affordable cost
• Easy implementation
• User-friendly interface

“The overriding principle we had, or what we really wanted to achieve, was the ease of processes. [We wanted] something easy to use.”
Rajen Satish Shah, I&M Finance Manager

I&M Bank’s CFO found Precoro online and wanted to see what the software was capable of. That’s when the bank’s finance team first contacted Serge, Precoro’s Senior Account Executive. While I&M Bank was also considering several other options, Precoro gained points as a cost-efficient “plug and play” solution that was easy to use and did not have a complicated setup process.

As Mr. Shah pointed out, I&M Bank was “very conscious of cost and ease of implementation.” They considered several other software, but some were quite expensive while others like ERPs required purchasing several modules at once. For some solutions, implementation timelines were quite long because they required the involvement of many people. Mr. Shah’s finance team concluded that other software they tested were not adding the value the company was looking for.

First Steps with Precoro

First and foremost, I&M Bank had to connect their ICT and security teams with Precoro engineers to ensure that the software fit in with the security regulations of the banking industry.

To kick off the cooperation, Precoro offered I&M Bank a trial period for transferring their workflows into the software and setting up perfect approval matrices.

For a smooth start, Precoro offered I&M Bank what we call a “concierge setup.” This means that an experienced customer success manager – in this case Olena – was assigned to the bank to provide its teams with custom online training.

To ensure a smooth transition to the automated procurement process, I&M Bank took a gradual approach to implementing Precoro. Initially, only several core specialists from finance and procurement were set up with accounts for the software. Once these users were comfortable with Precoro, the organization started adding more users, especially those who generated many requests and approved a lot of expenditures within the scope of their jobs. These were employees from human resources, ICT (information and communication technology), and premises management.

Mr. Shah appreciates that onboarding new users is very easy with Precoro: “Each time we wanted to get people onboarded, we simply sent an email out.” Compared to other software in the bank’s technology stack, Precoro stood out as an easy to use and user-friendly software, and it was quick to implement.

“As we got more and more comfortable with Precoro, we realized that, really, it was very easy to use. Within a short time of interacting with the system, pretty much every user becomes quite comfortable with it.”
Rajen Satish Shah, I&M Finance Manager 

Key Precoro Benefits Utilized by I&M Bank

Precoro is currently used across all departments that require procurement of goods and services. For over 50 branches of I&M Bank, the procure-to-pay process is centralized, resulting in numerous orders made regularly. On average, I&M Bank’s procurement department processes at least 150 POs per month.

Time

With Precoro, I&M Bank processes its orders considerably faster. For the typical purchases that fall within the standard approval flow, the finance department usually processes and pays approved orders within two to three days.

I&M Bank also significantly shortened the order processing time for partial deliveries. Before Precoro, it could take somewhere between 2 to 6 weeks to confirm partial delivery, retrieve all the documents, communicate with suppliers, and complete the order. Now, I&M Bank can complete verification and re-order in a few days.

Data

Mr. Shah also mentioned that the finance team benefits from Precoro’s custom reports, which let them extract and analyze available information immediately without having to request the support team’s help. This has helped the I&M Bank finance team obtain valuable insights into some crucial metrics, such as the largest vendors for a given period, highest cost centers, and peak purchasing periods for various items.

“It’s become very easy for us to start seeing things – to start packaging information.”
Rajen Satish Shah, I&M Finance Manager

Compliance

Budget compliance, according to Mr. Shah, also became easier to ensure.

It was extremely time-consuming in the previous manual setting because a person requesting the purchase had to find the approver and confirm the budget in person – and any mistake could result in unbudgeted spending. Going into the red in the budget meant that finances had to be shifted, and the whole purchasing process could stretch for weeks longer than it should.

Now, using Precoro’s budgeting functionality, employees can see available resources immediately and, if needed, request a budget shift before raising the purchase order. It’s a significant change from the previous setup and it took employees some time to get used to using this feature. However, the procurement department now has a golden rule — you cannot raise a PO if there is insufficient budget for your purchase.

The I&M Bank finance team now reviews budgets for each general ledger code and uploads them to Precoro. This way, employees have a clear understanding of current budget amounts for particular types of goods or services they need to order. At the same time, internal financial analysts can look at the data on orders from Precoro and evaluate how efficiently the budgets are utilized.

“It is ridiculously easy to upload the budget [into Precoro] once we have prepared it. We just have to make sure it’s correct.”
Rajen Satish Shah, I&M Finance Manager

Support

Another benefit, that Mr. Shah highlights on behalf of I&M Bank procurement and finance teams, is the responsiveness of Precoro’s customer success (CS) team.

“Pretty much anytime we dropped an email, we received a quick response…. I'd have to count the number of times it's taken, maybe, 24 hours for a response. It never takes that long.” — Mr. Shah, I&M Finance Manager.

Accessibility of an experienced customer success team helped to build a special level of trust in the software. Straightforward communication and realistic estimates from Precoro’s CS team allowed I&M Bank staff to achieve security in terms of planning and expectations. Even if some feature could not be developed right away, the support team would acknowledge it and put the request into the pipeline for developers to look at.

“There are no false promises; at any point in time you pretty much know where you stand. And that helps. That's also been something that we've been very grateful for.”
Rajen Satish Shah, I&M Finance Manager

Workflow upgrade

I&M Bank has recently implemented a new purchase approval workflow, which meant that the existing set up in Precoro had to be changed to comply with the new requirements. I&M Bank reached out to its Customer Success Manager, Olena, who promptly took the lead in assessing the requirements and the changes that would be required in the system.

Precoro formed a dedicated team to assist I&M Bank with the process change. Weekly meetings were held between I&M Bank and Precoro to ensure that the required changes were harmonized and the newly adjusted approval workflow would be seamless once live. “The Precoro team was always available to give us valuable suggestions and offer a helping hand,” Mr. Shah highlighted.

Due to the significant adjustments needed, employees were unable to use Precoro for two working days while the changes were implemented. However, since I&M Bank had decided in advance on the changeover date, its employees were prepared.

As promised by the Precoro team, the system was again available for use with implemented changes as per the Bank’s requirements. While the process flow had changed, I&M Bank users did not have any difficulty using the system. In order to further minimize any impact from the changes, Precoro held training sessions for all users to familiarize them with the new workflow. The Precoro team also received feedback from various users to evaluate the impact of the implemented changes.

The assistance and guidance from Precoro was invaluable to ensure that the Bank’s requirements were met. In close cooperation, both parties ensured smooth change and no business disruption!

I&M Bank’s Future Plans for Precoro

While Precoro has been a great help for I&M Bank procurement, there is no limit to perfection. There are still some features that I&M Bank would like to see implemented by Precoro.

First of all, I&M Bank needs to set up a custom Precoro API connectivity for the bank’s accounting system. That should streamline documentation flow between the procurement and financial departments, minimize manual inputs, and therefore probability of human errors.

The second request concerns taxation. In some cases, the software does not properly reflect the tax paid by the bank, specifically in situations when the bank needs to incorporate reverse charges into the orders and invoices within Precoro. Fixing this would help avoid discrepancies between the invoices they receive and the payment slips after they’ve paid with the tax added.

Two Thumbs Up for Precoro

The best way for us to judge how significant Precoro was for I&M Bank was to ask a simple question: would you recommend Precoro to companies of similar size and in a similar situation as you?

“Yes. Most definitely.” Mr. Shah’s answer was swift and certain.

He pointed out that the ease of use – not having to go through rigorous training – played a big role in the organization’s satisfaction with Precoro. The software already had a lot of the process controls that I&M Bank wanted and expected, and it offered ambient security protocol. Finally, the bank found Precoro to be very cost-effective compared to some other players on the market.

“We would always be recommending [Precoro] to anyone.”

Before Precoro

• Fully manual procurement process
• Overwhelming amount of hard copies
• Approval delays
• Difficulties in tracking and retrieving documents
• Complications with ensuring budget compliance

After Precoro

• Automated procurement process
• Digitized documents
• Instant approvals
• Complete overview of orders and document statuses
• Digitally archived documents
• Compliance with budgets