Another week, another schedule full of catch-up’s over coffee with colleagues and the ever-present question of Procure-2-Pay’s (P2P) value again raises its head.
To be honest, I’m not surprised, but I am disheartened as all the good work done by commercial teams is often undone as the final mile is poorly navigated, that being how do we operationalise the contract through P2P. I often refer to this as the “sugar-hit of sourcing”, you know the high from getting that signature on the deal before we move on to the next one, without closing the P2P loop.
That said and before we start the conversation, I’d like to ask you to think through a number of key questions.
- Is your organisation’s spend being effectively managed to enable effective growth?
- Have you achieved the right balance between governance and efficiency to contain the leakage across your organisations spend with third parties?
- Are you manually processing a high volume of low value invoices?
P2P solutions have come a long way in recent years. They are no longer large complicated black-boxes which no-one understands. Just think of eBay and Amazon. Yes, you’ve guessed it, they too are P2P systems and the reason they work is because of their simplicity. No complex training courses required to understand on how to both navigate, request and place orders.
Their simplicity is why P2P is no longer restricted to the big budgets and procurement teams of large corporations. P2P is now a critical lever in enabling companies, big, mid and small, to gain an advantage over their competitors. But there is still a lot of hype around these systems, and I’d like to cover off and dispel some of the misconceptions about the relevance of P2P solutions by discussing:
- P2P solutions only benefit large corporations with a procurement function
- P2P solutions are costly
- P2P solutions are too complex and have extensive implementation programs
P2P solutions only benefit large corporations with a procurement function
P2P solutions are not new. They became popular with large corporations in the late 90s, who were looking to extend already large investments in their Enterprise Resource Planning (ERP) systems into additional modules that catered for their high number of procurement transactions.
The key business drivers for these large corporates included tangible savings through indirect spend optimisation and negotiated supplier pricing, as well as soft savings achieved through digitisation and process automation.
There is absolutely no good reason for best practice procurement to be limited to large organisations with a procurement function. Whoever you are though, be that a large, mid-market or small organisation, your focus is on establishing and maintaining growth and customer service excellence, whilst doing so in an effective and efficient manner. This heightens the importance of spend management and process excellence.
Your needs change as your business evolves and the opportunities and challenges your business will face on that journey will also evolve. A few questions I like to get you to think through are:
- How do you control and manage spend as you grow geographically across sites, states & geographies?
- How do you improve visibility of your spend to review and drive purchasing behaviour?
- How do you enforce spend limits of operational staff?
- How do you achieve procurement best practice without a procurement function?
- How do you access deals and preferential pricing that might not otherwise be available?
These opportunities and challenges can be easily tapped into through using a viable P2P solution, all scalable for your organisational needs.
P2P solutions are costly
The emergence of cloud based P2P technology solutions has lowered the barriers to entry with the up-front commitment of substantial licensing fees and infrastructure costs a thing of the past. There is no need for expensive on-site hardware and people to maintain and upgrade the software with P2P solution costs typically based on the number of users of the system, which covers all future improvements and upgrades with minimal disruption to the organisation. Options on an innocence to excellence maturity scale are available for large, mid-size and small organisations and the competition amongst the providers is strong.
P2P solutions are too complex and have extensive implementation programs
Cloud based P2P solutions no longer require an extensive implementation program to align to an organisation’s specific requirements. An ‘instance’ can be created in the cloud and configured for your company within a short period of time. The solutions come pre-configured with ‘best practice’ procurement processes, pre-enabled supplier catalogues and pre-built ERP integration. Supplier enablement now becomes the primary activity during a dramatically reduced P2P implementation timeframe.
The strong focus of some P2P vendors on improving the user experience has resulted in ‘walk-up’ user interfaces that require minimal, or no training. This is all the more important in a society of technology users with ever increasing expectations on usability, functionality and seamless cross device support.
So, you’ve been ticking off the mental checklist and now you’re asking yourself, what are the 3 things I should do next?
STEP 1. Understand the possible benefits by completing a business case
Understanding the potential value and savings with the adoption of a P2P solution is a relatively straightforward exercise. Some of the key tactics to adopt in the creation of a business case include not overcomplicating it, avoid double counting of savings, and overall be pragmatic and conservative in your estimates. It is also important to realise the value of the often neglected soft, or intangible, savings.
STEP 2. Get an idea of P2P solution landscape and supplier enablement strategies
The proliferation of P2P solution vendors has created a landscape of healthy competition. Of course the ERP vendors have grown into this space through acquisition and rebranding. However it is in the pure play area of the market where you can find the most suitable solution.
Be sure to check the supplier enablement available with each P2P solution vendor, along with the suppliers already adopted and trading on their platform / marketplace. This could have a material reduction in implementation effort and change management required to communicate with your key suppliers, who may already be trading electronically with your competitors.
STEP 3. Prepare your organisation for a procurement revolution and start realising the savings
The introduction of a P2P solution into your organisation should not be viewed as the silver bullet to all of your external spend problems. Understand your wider network of systems. Efficient workflows drive a significant component of the benefits, so you need to understand process, policy, delegations of authority and integration points.
Supplier enablement is key to delivering value, but consideration also needs to be given to effective program management, operational redesign and finally, communications and change management will ensure all employees involved in buying transition to using the P2P tool.
In closing the final point worth adding is we are all on an evolving journey and technology is certainly here to stay. There are plenty of opportunities to further enable the business to deliver effective value add to your organisations bottom line through the use of an effective P2P solution that meets the needs of your business both now and in the future as you continue to grow and evolve.
A version of this article was originally published by Ben Smith on procurementandsupply.com