How do you know if you’re getting enough value from your P2P system?

One of the Best Practice KPI’s that helps answer this question is the amount of Spend going through your system. Using a KPI Dashboard, companies can easily track the dollars being managed by spend category. Best Practice companies typically run over 90% of their “P.O. Spend” through their system.

Unfortunately, many companies have a weak or non-existent P.O. process. As a result they typically have difficulty gaining contract compliance, and are unable to successfully automate the invoice matching process.

Other companies have a decent P.O. process but have difficulty getting receipts processed on a timely basis (if at all). Eventually people stop using the system in this environment. This results in “Under-Managed Spend.”

Good P2P systems can combat these problems by providing automated email reminders to people to process receipts, by enabling two-way matching (vs. three-way matching), or by comparing Non-PO Invoices to existing contracts. These three techniques help increase the usage of P2P systems.

Of course there is no substitute for good management and documented processes. At the end of the day, this is how Best Practice companies increase “Spend Under Management.”

P2P Nirvana is right around the corner!

As an end-user/manager of your P2P process, you’ve been told this many times … wait for the next version of our ERP System. Wait for the “new and improved” SaaS P2P System. Wait, Wait, Wait.

Why, Why, Why?

You feel a responsibility to you and your company to improve the P2P process, manage spend, and cut costs. So why wait?

IBM and later Microsoft made an “art form” out of convincing their users to wait. Now Ariba and SAP are taking a page out of their playbook by trying to “force” customers to upgrade to the latest release of their software after waiting for GA. Jason Busch blogged about this in the Spend Matters October 15th posting, “So you’ve evaluated SAP SRM and you’re not sold.”

Debbie Wilson from Gartner addressed this very subject on October 19th in her blog posting, “Answering Ariba’s 9r1 Upgrade Call.” Of course, there are several problems with waiting. First, it is difficult to increase spend under management when you know you’ll be changing to a new version of the software…the user interface will be different, end-users will have to be re-trained, etc.

Rather than upgrading to the new version, consider switching to another vendor with a proven platform, solid customer references, and a lower cost. Spend Matters (Jason Busch) and Gartner (Debbie Wilson) suggested this as a viable alternative.

If you’re still not sure, consider a subscription or term license where you can gain access to your data at the end of the term.

It may sound risky, but when compared to waiting for a new, unproven platform it can start to look like a very good alternative … and it can save you money!

Also, what’s to say the new version you’ve been waiting for will really address your issues. As Mac said to PC in the latest Apple TV commercial …“I’ve heard that before!”

As we like to say: “Progressive Improvement beats the hell out of Postponed Perfection.”

Recently, our “Carrot and the Stick” series was featured as a topic of discussion on Debbie Wilson, Research Director for Gartner Inc.’s blog (View Debbie’s post Not the Carrot, the Stick!) — as a follow-up, we would like to comment:

“We have customers and prospects that say things like, ‘We can’t dictate to our end users.’ The reason vary from ‘our people are very entrepreneurial’ to ‘we can’t make Partners do anything they don’t want to do!’

I do get your point that avoiding the Expense Reporting system is not an option in almost every company I know, so why should eProcurement be any different?

Here’s the difference…First, the CFO and his/her staff have tons of clout in every company. If the CFO wants something, it will be done. Unfortunately we run into many CFO’s who a) don’t have the Procurement organization reporting to them and/or b) don’t understand the complexities of Procurement and wish to stay ‘above the fray.’

Why is this the case? After all, the eProcurement system controls far more expense and capital dollars than the Expense Management system in most companies.

When CFO’s are truly committed to eProcurement and Procure-to-Pay systems, they pay tremendous dividends…and it all falls right to the bottom line.

Enlightened CFO’s understand this and can use the carrot or the stick, depending on their style, to achieve the same result.

If the CFO’s not committed, and the eProcurement Executive Sponsor lacks clout, the carrot may be the only viable option available.”