Tag Archives: procurement business benefit

How to Make Sure You’re Not Being Sold Smoke And Mirrors

Can you spot the difference between theoretical and real ROI? Basware’s Eric Wilson gives the run-down on preventing value leakage in Purchase-to Pay. 

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Buying enterprise software is no easy undertaking – there’s a lot of factors to consider, multiple stakeholders to please and a lot of due diligence that must happen to ensure you can get the ROI that is being promised. Unfortunately, in the world of Purchase to Pay (P2P), most systems available today cannot truly deliver the ROI that is being touted across marketing channels and promised by sales reps because of inherent limitations in the solution.

So, how can you be sure that you are looking at real numbers when comparing P2P solutions and not some fabricated figure that is only attainable on paper?

Ask these two questions

There are two primary questions you should ask when reviewing solutions and providers:

  1. Is the ROI real, or is it fabricated?

Often what happens in the solution seeking process is that a business case is written, either by an internal person, or a consultant, or a solution provider.  The business case includes all kinds of detail about the cost savings and efficiencies the company will achieve by implementing the solution. In the case of P2P, these cost savings are in things like reducing off-contract spend, negotiating better pricing, taking advantage of terms discounts, eliminating paper from the process, reducing or redeploying accounts payable (AP) processing headcount, and similar cost efficiencies. But there are real obstacles to achieving the level of savings being promised, and organisations need to choose a provider that can meet those challenges with real answers (more on overcoming these obstacles later).

2. Will the solution continue providing value in the future, or will it be a short-term win that sends you searching for a replacement system in a few short years?

Too often we are only looking five inches in front of our face when making a technology investment decision. The organisation is only looking at the current problem, not the long-term value. Little functional enhancements in P2P may offer some incremental value, but are not what the future of P2P is about. The future of P2P is all about deriving more value from centrally capturing and leveraging all that transactional data, all those POs and invoices, across millions of organisations. The future of P2P (and even today to a large extent) is about using applications sitting on top of that transactional data to create a competitive advantage. Apps like these will empower you to answer questions like: How am I doing against industry benchmarks? Are there opportunities for better leveraging spend in buying groups to get better pricing? Can I fund company growth initiatives through working capital optimization solutions?

Find out if the solution can process 100% of your transactions

Back to the obstacles we mention above – where do those come from and how can you overcome these challenges? Obstacles arise because of one simple factor: all the cost efficiencies in the business plan are assuming you get 100% of your purchasing and accounts payable (AP) transactions running through the system, and most P2P systems cannot accomplish that level of automation.

You must choose a provider that can help you achieve:

  • 100% Supplier On-Boarding

First, you have to get all of your suppliers connected to your P2P system.  If you don’t, you can’t access all available terms discounts; you can’t truly eliminate paper; you can’t achieve all of the supply chain efficiencies from the business case. Most P2P systems are only designed to connect to the sophisticated suppliers, who can send XML or EDI transactions. What about that long tail of mid-size and small suppliers, who aren’t that technologically advanced? What about those suppliers that still send paper invoices? You must have a solution for connecting them to your P2P system, and it has to be easy for them to do so.

  • 100% User Adoption

Secondly, all your procurement must be processed through the P2P solution, which means the end users have to use it – not just some of the end users, or most of the end users, but truly all of your end users have to be putting 100% of their purchasing through the system. You can’t achieve that status by mandating it, and you can’t even achieve it by having a procurement system that is “user friendly.” The P2P system has to actually be designed to fit seamlessly into the way that end user is already doing their job. In other words, employees use the procurement system because it is truly the easiest way to get the stuff they need, not because it’s been mandated by the procurement department.

  • 100% Spend Visibility

Lastly, all your invoices – for both direct and indirect spend – must be running through the P2P system. This is very rare in the reality of most P2P systems. Most P2P systems are only good at automating the invoices that originated from the indirect procurement solution. What about all your direct invoices? What about all your non-PO invoices, facilities invoices, invoices generated from manufacturing? If the P2P system can’t effectively handle 100% of your invoicing transactions, your ROI just got reduced tremendously, or perhaps even eliminated. The AP side of the P2P system must be a true AP transaction hub for all your invoices, regardless of type of invoice.

So, what does all of this culminate to in the end? One word: data. If the system you choose can deliver real ROI, you begin building a critical asset – a data set of all your financial data in one single location. Then, you can begin using innovative add-ons, like predictive/prescriptive analytics, robotics, artificial intelligence, etc. and see that ROI multiply.

Interested in getting started with Basware? Register for our weekly demo to see how Basware can help you build the business case for real ROI.

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7 Key Objectives for Procurement Success

Global procurement professionals are attempting to find new ways to create cost savings, as well as create value. Help is at hand with these 7 key objectives for success.

Key Objectives

ProcureCon Europe is back for it’s 17th consecutive year, answering your challenges in procurement and the future direction of the industry.

As businesses emerge from the recent recession into a fragmented ecosystem, a normal approach to creating value through cost saving is no longer relevant.

Instead, businesses are tasking procurement to effect enterprise-wide change, including implementing process improvement, and operating beyond the contract with suppliers to co-create value, and exploring payment innovation.

ProcureCon Europe has put together seven key procurement objectives you can’t afford to ignore, in order to create an efficient, cost saving and interactive procurement department.

#7: Talent Development

Talent development obtained the least amount of votes in our survey. However, there are few procurement executives who would argue against the importance of having a plan in place to develop the procurement leaders of the future.

#6: Responsible Sourcing

How is this made, and where does it come from? These are important questions on the lips of both procurement professionals and the general public.

Although perhaps less in the spotlight than it was 18 months ago, especially in the public sector, responsible sourcing remains a central pillar for Indirect Procurement.

#5: Taking Advantage of Digitisation

Organisations are rapidly digitising across the board. Procurement is attempting to make the most of the operational advantages implicit in this change.

The move to digitise in many cases means completely overhauling established business processes. This presents a significant opportunity for improvement, and is an essential element of a successful future for Indirect Procurement.

#4: Innovation in Services

Procurement seeks to lead innovation in the way that an organisation uses services, from HR, to IT, Marketing and beyond.

This is an area in which Procurement has the potential to add real value. The fresh availability of external services can mean easy, and comparatively cheap, solutions with minimal risk, which is great for growing companies.

#3: Operational Efficiency

While driving down costs can be done by negotiating better deals, there is also some considerable importance placed on increasing operational efficiency. Doing so means making better use of available resources and ultimately saving money.

#2: Value Delivery

Just like beauty, value is often in the eye of the beholder. That being said, those with a progressive approach to indirect procurement increasingly look to consistently add tangible value to the categories in which they work, and actively measure themselves on their ability to do so.

#1: Cost Leadership

Perhaps unsurprisingly the number one area of importance for Indirect Procurement is in the area of cost leadership. A strong stance on cost leadership can help to drive significant improvement to the bottom line. This is key when Indirect Procurement is expected to demonstrate its ability to drive meaningful savings.

Agility and Technology

These 7 key procurement objectives provides companies with guidance, in order to have an effective procurement department.

However, procurement must stay agile. Factors such as innovation and digitisation are constantly changing. Procurement professionals, particularly those in growing companies, should be taking advantage of available technology to further their reach.

The ProcureCon event series brings together a unique blend of Procurement, Purchasing and Supply Chain experts from across all industries to share their experiences and knowledge with a team of people who truly embrace the strategically important field of Procurement.

Find out more about how ProcureCon Europe is helping procurement professionals to solve their main challenges at on the event website. You can also follow ProcureCon Europe on LinkedIn and Twitter.

Creating our Vision: Why Procurement Needs an Avenger

Procurement needs a vision to help it overcome the challenges facing it. And this is why Procurement needs to be an Avenger rather than an ageing Godfather to survive.Procurement Vision & Avenger

Since being asked to attend the Big Ideas Summit 2016, I’ve been thinking about my own big ideas. I’ve drawn on my own experience, reviewed the ideas submitted in 2015 and for the 2016 summit, and read a range of materials, including the book ‘Thinking the Unthinkable’ which I would highly recommend to everybody.

Having reflected on all this information, I’ve got a couple of ideas of my own that I look forward to discussing with you all in person next Thursday. Before then, I have one that I want to offer for discussion amongst the Procurious community.

My big idea is simple. Procurement is simply not thinking big enough! As a function, we appear constrained and timid in our outlook, believing ideas that have been circulating over the last decade to be the strategic answers that will propel us forward into the next decade.  Procurement must demonstrate greater ambition towards its future role than it does today. 

We need a Procurement Vision!

it-took-35-hours-every-day-to-transform-paul-bettany-into-the-vision-character-for-the-avengers-sequel

Just as The Vision emerged in The Avengers to defeat Ultron, Procurement needs its own vision to help guide it through the challenges it faces.

Procurement’s vision needs to be ambitious and practical, demonstrating to the senior leaders of an organisation a clear sense of purpose and direction that shows how Procurement will benefit the organisation.

If this vision exists, I believe that initiatives such as SRM, Innovation, Collaboration and Big Data, all areas that have been discussed in countless articles in recent years, will realise their intended benefits, as their aims and objectives will have been clearly explained and understood by all participants to support the most successful possible implementation.

If no vision exists, how can we succeed? It may seem simple, but clearly articulating this vision can prove difficult for organisations. I am shocked when I talk to organisations today to hear that they are unable to tell me their organisational objectives or why they implemented a particular solution. Colour simply drains from the faces of individuals when asking them to try to quantify some form of business benefit achieved from an investment in a particular solution or project.

When I speak at Universities and business schools around the World, the role of Procurement is confused. Students are unclear on what it actually represents, whilst academics provide a wide range of explanations of what Procurement is, usually including it as a minor topic within Supply Chain discussions.

Unless Procurement Leaders, be they Public, Private or in connected areas such as media, show a clear sense of direction and unity on what Procurement is, the function could easily disappear.

Remember the scene from ‘The Godfather Part 3’ where Michael utters what are probably the most memorable lines from that film:

Pull me back in

Michael and the Corleone family have allowed themselves to become constrained by the expectations that others have for them.  Any intent to move forward is being hampered by the legacies and expectations from their past.

Procurement faces a similar challenge. If it lacks a vision on its future direction, it runs the risk of always being portrayed as a back office compliance function, simply ensuring adherence to purchase orders. Please don’t misunderstand me. These are important activities that need to be done properly. My point is that when no vision exists, attempts to implement new strategic initiatives will be thwarted, because organisations may not allow us to move beyond the self-imposed boundaries that Procurement has established for itself.

A limited historic scope for Procurement will not inspire the next generation of potential talents to come and work within our function. When talking about Procurement at Universities and Business Schools, current students already assume a number of our historic activities to have been automated and are certainly not seeking to join organisations if their immediate future is spent ensuring contractual compliance or managing tail-spend.

The next generation is interested in how Procurement shapes Sustainable Sourcing strategies, how Procurement supports top-line growth initiatives and how Procurement provides a platform to a wider career in an organisation.

Creating the Vision

How can we create this vision? A simple idea would be to imagine that Procurement did not yet exist. How would you create it today? What would you want to include in its remit? Where do you believe you should focus your biggest minds, and what could be automated?

Clarifying how Procurement will operate both in the short and longer term within your organisation will start to create a vision behind which your team can unite and move together. This will require Leadership to seek new opportunities for Procurement to drive and manage opportunities. It may require Procurement Leadership to conduct some ‘skunk-work’ initiatives, dedicating resources to ideas that they believe will benefit the organisation in the medium to long term.

I believe that establishing a vision is equally applicable to both Public and Private Sectors. I remember witnessing some of the earliest work on sustainable sourcing, ethical purchasing and talent diversity emerging in the public sector and student unions.

Procurement has the ability to devise a very bright future in terms of areas of responsibility and contribution to organisational growth. Let us ensure that we build the future we want to participate in, rather than face a future whose boundaries and expectations have already been determined for us.

Mark will be discussing procurement vision and clarifying the role of procurement during one of our panel discussions at the Big Ideas Summit on April 21st.

There’s still time for you to get involved with Big Ideas, by visiting www.bigideassummit.com, joining our Procurious group, and Tweeting your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.