Purchasing Insight

Purchase to Pay, Purchasing & Procurement Process, Electronic Invoicing

Browsing Posts tagged Procurement Software

Have you heard about the internet fridge? The one that detects that you’re running low on semi skimmed and sends an email to the grocery store to get you topped up? Well you should have. It’s been announced as the next big thing every couple of years for at least the last 15. I saw a prototype in London in 1996. It’s never taken off and it never will. continue reading…

Purchase to Pay, P2P and Dynamic Discounting

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.

Purchase to Pay, P2PAccording to Forrester, reported by Purchasing.com, spend on procurement software will increase markedly in 2010 following a stagnant 2009. The areas high-lighted to enjoy increased revenue are:

  • Supplier Risk and Performance Management
  • Automated spend analysis
  • Contract Life-cycle Management
  • Services Procurement
  • Supplier Networks

Consolidation in the Procurement Software Market

There is also talk of acquisitions with SAP, Oracle, Ariba, Basware, BravoSolution and Emptoris all identified as potential suitors.

Looks like it’s going to be an interesting year.





It’s well known that the biggest challenge in implementing procurement software successfully is managing the change in people’s behaviours. Some environments are worse than others of course. Implementing procurement software in an office environment where everyone uses a computer familiar with a browser based GUI for common business applications is not really a challenge. But try implementing procurement software where the approver is standing in the middle of a construction site or on a busy factory floor. What if your approver is always on the road? It’s in environments like these where the dinosaurs thrive and where it can be difficult to move from paper based processes.
There are solutions of course. Laptops and VPNs have allowed users to operate remotely for years extending the reach of the enterprise application and computerised business processes and handheld devices have evolved to become robust and sturdy suitable for the most demanding conditions in the field – at a price. And this is were the problem lies. At $1,000 a pop, a handheld device compared to a requisition pad is never going to be acceptable. It’s not just been with procurement software. There’s a number of business applications that could be rolled out to inhospitable environment using a handheld device but the perceived need for an indestructible device has meant that price destroys the business case and the dinosaurs continue to roam.

Procurement Software on Your iPhone

Funny that. Because there’s been no such problem with the mobile phone. You don’t hear the dinosaur saying “I’d use a mobile phone but it needs to be clad in a titanium based alloy and coated in rubber to withstand knocks of up to 3.0 on the Richter scale…” No. They just use them and if they fall in a muddy puddle they pick ‘em up, wipe ‘em down and use them again. And if they break – they get a new one.
Coupa is already marketing their iPhone capability and we’ll no doubt see more and more smart phone applications being used to extend the reach of enterprise applications.
About time too!



In a world where sophisticated procurement software and supply chain technology has helped industry squeeze almost every drop of inefficiency out of its supply chain operations, where do you look for further savings when the going gets really tough? The Purchase to Pay cycle (P2P) is one of of the operational areas of any organization that can deliver some significant savings and it’s good to see that some of the leading players in this space are proving it with positive financial results even within today’s markets.

Basware, one of the global leaders in purchase-to-pay solutions with more than 1,500 customers and 850,000 users in over 50 countries around the world, has reported a record turnover of 93 million Euros for 2009 and, despite the challenging market situation throughout 2009, full year net sales grew by 7.6 percent.

This bodes well for the solution vendors but even better for organizations that apply it. We think that there will be significant growth in the application of P2P and financial supply chain technology in 2010 as businesses seek to further embed operational efficiency.

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Supply Chain management can be like spinning plates – spin as many as you can and just make sure that the ones that drop are the ones that count least. But it’s a fairly exact science in the 21st century and armed procurement software that will feed us with data, reports and dashboards a business can ensure that accurate demand forecasts inform demand planning to ensure regular and undisrupted supply, minimal inventory, happy customers and a profitable business.

Procurement Software

Procurement Software

But underlying successful planning is a set of assumed and prioritised risks together with associated mitigation strategies. What happens if one day the wind changes and those basic assumptions become invalid or your priorities turn on their head?

In a recent Research Brief from Aberdeen, they report that the top “Supply Chain Disruption Events” changed from “Supplier Capacity did not meet demand” in 2008 to “Reduction in Customer demand” 2009 and it illustrates the importance of being able to change rapidly from a growth position in the good times to a defensive position when times get tough – Agile Supply Chain Management

It’s not just the risks associated with day to day and week to week fluctuations in supply and demand that need to be mitigated if you are to manage supply chain risk successfully. Businesses need to keep a weather eye on, not just on their supply chains, not just on their local market or even their industry but also on the global economic backdrop. It can fundamentally effect your key risk management assumptions.

Cloud Computing clouds procurement softwareIt isn’t new to point out that there’s been a big change to our desktops over the last 20 years. Desktop doesn’t even mean desktop anymore. A desk top used to be the surface you’d lean on to use a pen – now it’s your computer workspace. Our work environment has evolved beyond recognition and the new generation of talent knows no different. The computer touches us in most of our daily lives and I for one would not want to be without access to high speed internet – even on vacation.

But something else has happened beyond the penetration into our daily lives of google, twitter and facebook. In our professional lives we have, willingly or otherwise, become geeks. The industrial strength applications, that tie our supply chains together, the ERP systems, the procurement software, eProcurement and eSourcing modules have made us more efficient and more profitable have, necessarily, become an extension of our work. In addition to our existing set of acronyms and industry jargon we casually and confidently drop concepts like extensibility, web services and VMware into business conversations. We’ve had to become conversant with this stuff. But at what point do we say “enough”, stop half-understanding the technology and refocus on our core work?

The answer is in the clouds – and it’s now

Google “cloud computing” and you’ll find presentations on youtube, web pages and pdfs explaining what cloud computing is. They’ll tell you it’s about outsourcing, Software as a Service (SaaS), “on demand” computing and any number of other definitions. Its’ not really well defined but it’s none of the above.

Cloud computing means things just work. You want a light on? Click a switch and the light is on.  You don’t need to be an electrician. Why, in the 21stcentury, when we want to know how much we spend in a particular category, do we need to become experts in SAP or Oracle reporting or whatever procurement software we use? Cloud computing will eliminate all of this. And we don’t need to know how or why, it just will.

And that’s the way it should be.

Cloud computing will not revolutionize anything. The revolution has already happened. Cloud computing represents the latest stage in the evolution of business that will – at last – allow business to do business and leave the infrastructure development and maintenance to someone else.