Is this the most challenging environment for Purchase to Pay?

Posted by Pete Loughlin in Procurement Process, Purchase to Pay, Purchase to Pay Process 23 Sep 2016

There’s a common approach to implementing purchase to pay processes and technologies – standardisation; no PO no pay; my way or no way; any colour you like as long as it’s black.

Site LogoAutomation and standardisation have become second nature to many but Henry Ford’s aphorism, a succinct description of one of the constraints of mass production, is beginning to feel a little tired. If everything is the same, we can make lots of them and that means we can make them cheaper and that means we can sell more and make more money. And this did make sense 100 years ago but in an ever increasingly sophisticated age, it doesn’t.

Look at a modern automotive production line today – every car that comes off the end is customised individually to the requirements of the buyer. Whether it’s the exterior colour, the upholstery, the sound system, you can have anything you like and this time, they mean it. And the same should apply to business processes – because every business has different requirements. Enterprise software needs to be adaptable. The one size fits all approach to generic process like procurement aren’t good enough.

Of course there has always been the ability to adapt software like there was the ability to choose a few colours for your car in the 1980s but the flexibility was never enough and didn’t recognise the really unique aspects of some industries.

I came across a great example of this when I spoke recently to Bogdan Tomassini-Büchner from digitalpurchaseorder.com. Bogdan is having success in rolling out purchasing solutions in specialist industry verticals especially construction, hospitality and interestingly, entertainment – movie making specifically.

So how do P2P processes work on a movie set? I speculated that there would be lots of of expensive equipment hired. “Not really the point” said Bogdan. “It’s complete chaos. You’re hiring lots of people for a short time at short notice, there’s no time, there’s no money – even for multi-million dollar projects – buying stuff is a nightmare.” What most of us understand as a purchase workflow approval process simply can’t operate in this sort of situation but despite that, things need to get done and get done properly. And it is this kind of unique complexity that digitalpurchaseorder.com is designed to address.

I’m seeing this more and more – mass customization isn’t just a consumer thing – it’s an enterprise software thing too with more and more fine tuning to applications to meet the needs of specialist industries. Rather than asking business to change to meet the constraints of the software, business can increasingly expect the software to adapt to meet their needs.

Standardisation is a good thing. Fewer variations to a set of processes makes them easier to administer, train and maintain. It makes technology more straight forward to configure. It makes P2P easier to understand. But let’s not get too carried away – business is there for a reason and the reason is very rarely P2P. Purchase to pay processes sit squarely behind processes that serve the customer most effectively. A restaurant needs satisfied, happy customers that leave good reviews on TripAdvisor. If that means buying a load of red roses from the florist next door on Valentine’s day funded from petty cash – so what! We should always remember why we’re in business and not let the tail wag the dog.

Pete Loughlin can be found on twitter @peteloughlin

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