10 Apr 2012 Surround strategies – one small step in technology, one giant leap for purchase to pay

When we wrote that e-procurement was getting interesting here we didn’t anticipate that it would be one of the most read Purchasing Insight articles of 2012. There is obviously an appetite amongst purchasing professionals for this topic and now there’s a new report that you need to get your hands on.

The promises of the 90s were never fulfilled. For many organizations, it’s as difficult and as painful to buy anything in 2012 as it was in 1995. The problem is that the the leaders amongst the e-procurement vendors: Ariba, SAP and Oracle, are all victims of their own success. They can each deliver world class, user friendly applications that deliver compliance and ease of use but the reality is, this is rarely implemented. To varying degrees they are each bloated, bogged down in detail and they only really meet the needs of the simplistic use cases like MRO.

So is it time to discard these solutions? Far from it according to Jason Busch, the author of the Spend Matters report “Surround Strategies” to Get More From Existing eProcurement and P2P Investments”. Despite their limitations, they each retain significant value and by adopting a “surround strategy” a quantum change in benefit can be delivered from an incremental investment.

I won’t steal Jason’s thunder. The report is a cracking read for anyone interested in extracting further value from a P2P investment and I would recommend that you download it here if you haven’t already. But I do want to add a little something because I whole heartedly agree with Jason’s surround strategy strengths but there’s another reason why this is a great approach.

Using contextual selling in a P2P business case

We used to call it the “three card trick”. It’s a sales technique and like most sales techniques, not that subtle but very effective. Offer a potential customer three options: large, small, or medium. Cheap, expensive or moderate cost. Delivered in 7 days for free, immediate (but expensive) motor cycle courier or next day delivery for a small charge. Everyone buys the middle option.

There’s a more sophisticated term that marketers use – “contextual selling” – and we’re all suckers for it. In a restaurant, given a choice between a $10, $15 and $25 bottle of wine – assuming they’re all acceptable – I’d probably go for the $15 bottle. In another restaurant, offered the same $15 and $25 bottle but together with a $35 bottle I’d probably go for the $25. The context within which the offer is made effects our choice. We are helpless to resist and retailers exploit this human behavior all the time.

Now use this contextual selling approach when you build a P2P business case. Present three scenarios. The dreadful scenario of doing nothing: The CFO will be implicated as culpable in a range of P2P frauds if controls aren’t put in place. The expensive scenario: we need to upgrade our ERP system at a cost of $3.5 million. Or the third scenario – employ a “surround strategy”, build on existing technology platform and make incremental investments in complimentary solutions to build the controls and deliver the benefits we need.