Procure to Pay transformation is the topmost agenda for every CPO. However, no two P2P transformation outcomes are the same. A McKinsey and University of Oxford research suggests that on average, large IT projects run 45% over budget and 7% over time while delivering 56% less value than predicted*. Some can put the whole organization in jeopardy.
Every transformation journey is nothing short of an off-road adventure that can be compelling and challenging at the same time. Even more for Procure to Pay Transformation projects. As there is an additional burden on Procurement to reinforce itself as a value creation center and strategic leader.
With defacto “digital” prefix, P2P transformation could mean a winsome tech stack of process automation, integrated real-time analytics, consumer-ish UX in a cloud-native application. No doubt getting this P2P automation bundle is important, however, the success depends on picking the right objectives, choosing the right approach, and partnering with the right P2P Software vendor. Let us deep-dive into these three unsaid but under-talked parts of P2P vendor conversations.
Learn More: Procure to pay solution
1. Setting the Right Expectations
The difference between ambition and aspiration can be boiled down to the difference between solving high-leverage problems and solving high-visibility problems. Hence, the absolute clarity on what do you want to accomplish i.e., “what are the expected outcomes and by when” can save you from a lot of bottlenecks.
Regardless of where your Procurement function sits on the Maturity Spectrum, P2P vendors like Zycus can leapfrog you to the top of the food chain. But is that what you really want? Probably, you might not need to undergo a complete P2P overhaul. Or you might need only partial automation. Without the above-said clarity, you might rush the adoption of plug-in, piecemeal solutions that will have less impact or sometimes an adverse impact.
Hence your expectation should be tempered by the strategic question “is that the future state that you would want to put time and money at?”
-Do you want to lower PO process costs by X%?
-Do you want to reduce Y% number of FTEs required to manage every billion dollars?
-Or you would like to cut down indirect spend by 50%?
All of these or some of these and in which order?
Then reverse engineer that into strategic and operational goals and milestones. And it goes without saying that there is always a Model-Reality divide, and setting the right expectations from the project will definitely narrow that gap.
Like staying on top of all things procurement? don’t miss out on our upcoming webinar on “Procurement Priorities for 2022: Go from Survive to Thrive” Register here: US/EU/APAC
2. Figuring out the Right Approach
The procurement landscape is littered with many solutions and strategies that promise to deliver but eventually fail. The organizations that succeed are the ones that fully leverage technologies such as Artificial Intelligence (AI), Design Thinking and Process Orchestration to create an integrated P2P platform that connects stakeholders, provides spend transparency, and elevates the procurement function from value-enabler to a strategic business driver.
Also important to note that P2P is no longer an IT-only initiative. P2P transformation project, to be successful, must include all the business stakeholders who are looking for P2P solutions to derive better value from their spend data and platform that impact their decisions.
After the stakeholder buy-in, even with the right vendor and right expectations parity, outcomes go awry due to incorrect approaches. All the marketed approaches out there, can be grouped into two main categories:
–One-off Automated Solutions with Segregated AP
–Fully-automated P2P Suite
The first one is a conventional approach that focuses on identifying areas that need immediate automation. It works well in situations where the baseline maturity of the Procurement function is inadequate for full-scale transformation. In a way, this approach works as a pre-phase for strategic shift and also serves as a wake-up call for an organization to realize how they fare against their peers. Alternatively, you can use this approach to validate the capability of the chosen vendor.
The second approach is what Zycus recommends for most organizations. It helps you to have complete visibility into Spend and Compliance from strategic to tactical level at a single place. The singular platform brings in much-needed streamlining and workflow optimization enhancing inter-departmental collaboration. In fact, comprehensive, cloud-based and centralized procurement P2P solutions like Zycus P2P Suite help procurement function in achieving the actual P2P transformation goals that is to become a strategic value creator and pro-active business driver.
3. Selecting the Right P2P Software Vendor
P2P is an umbrella term that covers all the operational elements of procurement. It’s important to recognize that your P2P solutions should address issues across the entire value chain – both supplier-related and customer-related challenges – so you can focus on creating greater value throughout the extended enterprise. In this background, the P2P transformation journey is no small decision and is a massive undertaking that requires heavy investment and the involvement of many departments.
P2P Software Capabilities
The P2P software suite should offer a set of P2P solutions rich in functionality but with no excess baggage of traditional procurement features. The platform must get you the right data at the right time to raise critical insights for smarter decision-making across the procurement lifecycle. Not limited to reducing cost and eliminating complexity, it should go beyond process automation and be capable to add value through innovative offerings across the supplier ecosystem.
Look for their P2P road map and how is it backed by R&D investment. Parse through their road map to make sense of the future use cases concerning your P2P strategy. Also, ensure to get their promises vetted by social proof – both by customers and analysts community.
Your P2P software provider must have a team of experienced Procurement technology consultants who can help you understand your challenges and how they might be addressed by both existing technologies as well as future solutions aimed specifically at P2P transformation. Hence the project teams should comprise subject matter experts, business analysts, procurement specialists along with product consultants, etc. It is always recommended to have a hybrid team for this kind of cross-functional work.
Make sure they have a solid proof of work and good credentials. In Gartner’s MQ’s lingo, focus on the Y-axis.
Sector-specific Implementation Excellence
Vendors with wide and deep industry experience come with an excellent understanding of the nuances and obvious hiccups. And with almost reflexive solutions to them. In addition, you have a sizeable and relatable reference base of organizations like yours. Not only the implementation gets faster but also eliminates the risk from the project significantly. For example, if you are into Manufacturing and considering Zycus as one of the vendors, you can go and check here.
Compatibility and Less Tech Debt
The success of new P2P solutions depends on how well it can function with your existing sourcing and procurement systems. That is P2P integration and compatibility without demanding a lot of legacy-killing. It includes both suppliers and customers/buyers who need access to P2P data (APIs) that sits within corporate systems (ERPs). These limitations can dictate which P2P solution will provide the best fit for Cognitive procurement, the final frontier of eProcurement.
Quantum of Solace
The result of a successful implementation is not just when you Go-Live with the software within the budget and timeline. It is when you start realizing the value out you had set out to achieve. The P2P project should enhance value and experience for all stakeholders with superior spend insights and a superlative reduction in procurement complexity. The ultimate goal for every Procurement should be to become Cognitive procurement, the catchphrase for the convergence of digital technologies and industry 4.0. We, at Zycus, believe that “Principles endure, formulas don’t“, hence the blog gives you a set of guiding principles abstracted from 100s of P2P transformation engagements.