The Purchase to Pay Surge

Posted by Pete Loughlin in Hackett, Purchase to Pay 10 May 2017

There appears to be a new wave in Purchase to Pay. I’ve probably said this many times before but there are signs that P2P is becoming a big deal again.

At the turn of the century (and it’s now safe to use that expression without it being confused with the early 1900s) e-procurement was big business. B2B e-commerce generally was a focus of investment for many large businesses as well as governments. After the dot com crash things got a little quieter and just as things might have picked up, along came the global financial crisis in 2008. During that period, I was a consultant in the P2P space and my perspective was admittedly quite narrow. The market being quiet was a reflection of me being quiet. I didn’t walk around with my eyes closed but my interpretation of the market was fairly subjective. I started to pay attention to the wider market when I established Purchasing Insight – after all, I was quiet, I had to do something. Since then my view is more objective and I think I can say with some certainty that there really is a new wind behind P2P.

The Hackett Group have been specialising in Purchase to Pay for longer than any firm I know and they’re known for their authoritative benchmark studies. More recently they have been developing their implementation capabilities and they appear to be putting some serious investment into this area. Earlier today I saw two press releases from them both announcing acquisitions. The first of Jibe Consulting, a 90 strong implementation business in the USA and a second, Aecus Limited, a BPO and RPA (Robotic Process Automation) consultancy in Europe. This says to me that I’m not the only one that believes P2P is on the up.

This is what I think is happening.

First, people understand Purchase to Pay. 20 years ago, it was a specialist interest; now it is mainstream and people can articulate the reasons to implement robust P2P in layman’s language. P2P is about controls. Without controls in your purchasing process you leave yourself exposed to the risk of corporate fraud that could bring your business down. Why would you not implement it? It would be like not insuring your warehouse.

“If I knew then what I know now, how would I implement P2P?” Big business is having another go at it and this time to get it right. Those that invested in the early 2,000s now have systems that are barely fit for purpose. An ERP based e-procurement system implemented and upgraded faithfully for the last 15 years looks distinctly archaic today when compared to a contemporary cloud application like Coupa.

Finally, the millennials. The people who don’t remember a world before the mobile phone and the internet are now influencers, managers and decision makers. Ask them to join your business to make a difference and give them old tools to work with, they’ll go elsewhere. Why wouldn’t they? Their personal lives are driven by more sophisticated technology than the aged applications that most business are run with today. If you are to recruit and retain the best talent in today’s world, 20th century thinking just isn’t good enough.

This surge will continue. The implementation businesses and consultancy firms can’t find enough trained resource to meet demand at the moment. They will continue to invest in growing that skill base. There will be more acquisitions as means to fast track that strategy and more of the older P2P environment will be scrapped and rebuilt afresh.

Pete Loughlin can be found on twitter @peteloughlin

  • Doug Hudgeon May 11, 2017 at 11:42 pm /

    Hi Pete,

    I reckon the surge also stems in part from companies getting more mature in their ability to integrate with trading partners. There’s no reason these days for two large trading partners to not fully automate their ordering, billing and payment processes. As they get experience doing this with their major partners, the case for extending this with smaller partners becomes less risky and easier to make.

    Doug

  • Pete Loughlin May 12, 2017 at 5:10 am /

    I think you make a great point Doug. It now only requires an incremental investment for suppliers to take on a new digital customer

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