03 May 2010 Purchase to Pay Pitfalls – Procurement Software
The selection of procurement software is no – absolutely not – a technical decision.
The successful implementation of Purchase to Pay Processes in a global environment has many challenges. In a short series of items, Purchasing Insight discusses some of the pitfalls. In the second, we look at the procurement software options, the challenges in making the right choice, integration issues and some pointers towards the right route.
Procurement Software
The selection of procurement software is far from straight forward. Although every organization considers itself to be special or different, in reality, there’s no such thing as unique from a P2P perspective. All organizations do more or less the same things. And if you are looking to accommodate the idiosyncrasies that do make your organization unique, you can be sure you at too low a level of detail.
This makes the first choice easy. Build or buy? Purchase to Pay and procurement software are not at the bleeding edge. In 2010, the market is mature and there is a wide range of solutions. The option to build (or adapt an existing solution) should not be in your list of options.
So what are the options? It is usually a safe assumption that the choice of finance system is separate from the selection of a Purchase to Pay system. (Finance systems are a fundamental part of the foundation of an organization that spans much wider than procurement and supply chain.)
The Options
Use you ERP Vendors Module
Some ERP vendors’ procurement and P2P modules are best in class even in isolation from their core finance systems, SAP and Oracle being good examples. But it’s not quite as simple as that. SAP is especially strong in a manufacturing environment but for a financial services company for whom procurement processes are fundamentally different it would SAP would be an unusual choice.
The key benefit of following the finance system lead is integration. Vendor master data may already exist. Version upgrades are a non-issue and there are no interfaces to be managed. The key question however is does it deliver the P2P benefits you want? Great integration doesn’t help if you can’t get suppliers to adopt your purchasing processes.
Third Party Vendors
If your finance system is second tier or lower or is not specific to your industry, third party vendors are a likely optimum choice. Ariba is amongst the best in class for eprocurement and esourcing but will also accomodate electronic invoicing, EIPP and Dynamic Discounting and with a proven track record of implementing alongside a wide range of finance systems Ariba should be included in most short lists.
But also look at the new kids on the block. Coupa for example is a cloud based service that is seeing some success competing with Ariba in the SMB space. Specilialst vendors such as Basware with an einvoicing heritage are extending their reach and should be including in the mix.
A summary of Purchase to Pay Software is here.
Summary
There’s an adage in investment circles: “I can guarantee I can double your money (I just can’t tell you how long it will take)”. It’s like that with Procurement Software and all business software – it will do what ever you want it to do – it’s just a matter of time and money and in business it’s the time and the money that count. The selection of the right procurement software is not about headline cost and it’s not – absolutely not – a technical decision.
