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.”

I’ll start by saying everyone implementing a P2P system should start the project using “The Carrot” approach described in the previous post.

This means at some point in the implementation (after the education and training has been completed and the system is live), you may need to turn up the heat and let people know you expect them to use the system.

Here are some tips:

• Remove other alternatives for end-users
  • Don’t allow end-users to call or visit the Purchasing Department to place orders.
• Don’t accept emails or paper Requisitions
  • Make sure you give end-users adequate warning (one month) and repeat the warning several times.
• Continue to help “technologically challenged” end-users until they grasp the system
• Integrate the use of P-Cards in your P2P system so the P-Card number becomes part of the order and can be used by the supplier for billing purposes
• Set lower limits on the use of P-Cards
  • Perhaps a $500 maximum would be appropriate.
• Let suppliers know that in order for them to get paid, they will need to have an authorized, valid PO Number on their invoice
  • One company went so far as to say to all suppliers that if they don’t see a PO Number on an invoice, “The next shipment is free.”

Another approach is to tell end-users if they don’t receive proper authorization before placing an order, their personal credit card will be charged when the invoice comes in.

All of these tactics are a bit heavy-handed, but can be necessary to get people’s attention.

Possibly the most effective method in “The Stick” is to have a Manager / Director / VP pay a personal visit to the worst offenders and ask them why they aren’t using the system. This has been used effectively by a number of our clients over the years, and provides a great motivation for the typical end-user.

So consider “The Carrot” first, followed by “The Stick,” after the system has been live for three to six months.

A great KPI (Key Performance Indicator) that many of our customers use is the number of “After-the-Fact PO’s” for each department. This highlights the number of invoices that are received where the Purchase Order is generated after the invoice is received. Many companies target and achieve less than 2% for this KPI. Since you “cannot control what you do not measure,” this type of measurement is essential to guarantee compliance and maximum spend under management.