08 Nov The uncomfortable truth about P2P in the cloud
We usually speak in positive terms but when we talk about P2P we are really discussing ugly realities like waste, inefficiency and fraud. We can look at the grass roots level to identify and rectify root causes but more often than not, the problems are higher up the food chain.
“Best Practice Out of the Box” is a big promise. The truth is, it can rarely be delivered.
For an organisation that has no existing established P2P processes, a cloud solution can deliver “Best Practice Out of the Box”. And because there’s a clean sheet of paper, change management is a walk in the park.
But nothing is as easy as it sounds and the blank sheet of paper in reality has as many problems and as many hidden traps and minefields as the most established and sophisticated organisation.
But more importantly, the clean sheet of paper can signal a danger that should ring some very big alarm bells.
“Best Practice Out of the Box” is a big promise. The truth is, it can rarely be delivered. That is unless it is understood.
First things first. There’s no such thing as a blank piece of paper. When an organisation says it has no existing P2P processes – this is untrue. What they really mean is that their existing processes are not standardised and they are not written down.
It’s likely that finance, the 2P end of the P2P process, is reasonably robust. A business that has no proper controls on how it pays suppliers either runs out of money because it pays too easily or has impossible relationships with supplier because they don’t pay at all. It is normally the P2 end of the process that is informal. And this is where the problems can begin.
Informal and undocumented processes often disguise hidden strengths and weaknesses. Sometimes the controls in place are actually very robust and processes perfectly efficient. The problem is that they are all known and understood by a small number of people who keep their knowledge inside their heads. This makes them difficult to understand and even harder to modify.
Or perhaps the established ways of working conceal unconventional, perhaps unethical or even fraudulent practice. Perks, in many organisations are seen as part of the job.
Either way, these situations create big change management challenges. The secretive expert is valued in the organisation and jealously guards the power they have in owning the procurement process and the guardian of the perks is not going to give them up lightly. Add to this the mountain of introducing new technology where none exists and you can see that the “blank piece of paper” is often no easy win.
But these change management challenges are actually quite familiar. You sometimes need to take a step back and look at the bigger picture to really understand where the problems lie.
The uncomfortable truth about P2P in the cloud
To properly understand the big issue you need to ask the question: “Why the blank paper?” Why is it that there are no existing documented P2P processes in place? Is it really because the details of the informal processes are a closely guarded secret? Is it because the P2P perks are being protected? Or are no standardised or documented processes for other parts of the business too?
Is the lack of any good P2P practice a convenient and deliberate oversight at a corporate level or is it simply incompetence?
Instead of looking at an operational level to identify home-spun business processes and petty pilfering – take a look higher up at the corporate governance hierarchy. Ask if the governance structures are robust, how and why is it that informal self-serving practices being tolerated? Could it be that there is a company-wide informality and change is generally seen as a threat to a comfortable status quo?
And ask why it is that people at low levels in the organisation are given inappropriate levels of purchase approval and autonomy. Is empowerment a sign of maturity? That people are trusted is a good thing right? Or is it simply poor management? And if the organisation’s management is weak in matters relating to P2P – where else is it weak? Are they able to manage change projects or IT projects – or any project for that matter?
In other words, in a mature organisation, is the lack of any good P2P practice a convenient and deliberate oversight at a corporate level or is it simply incompetence?
Instead of looking at a blank piece of paper and seeing a relatively straightforward project – see a business that needs help – not just in P2P but potentially in other forms of corporate governance and recognise that they might not welcome critical observations.
No organisation should be shocked, affronted or offended by gentle suggestions of limited competence or lax oversight – indeed, a defensive response only highlights further the potential issues. It is not an admission of failure to accept that there is room for improvement and neither is it shameful to accept that corporate culture can become a little bit too cosy over time.
There are two main reasons why an organisation has no P2P processes in place. Either it’s immature and simply hasn’t got there yet – in which case, implementing P2P is a matter of taking something that is probably good and improving it.
It is not an admission of failure to accept that there is room for improvement and neither is it shameful to accept that corporate culture can become a little bit too cosy over time.
Or, it could be that the organisation is mature and has tried and failed to implement P2P. In this case, it could be a matter of taking something that is broken and fixing it.
Implementing P2P in either case using preconfigured best practice is perfectly possible. Indeed, 9 times out of 10, it the right way to go. But “Best Practice Out of the Box” isn’t always easy especially when it’s not only P2P that needs fixing.