How to Integrate your P2P Process into a Shared Services Model

The benefits of developing your procure-to-pay process (P2P) into a centralised shared services centre are well documented, but with so much recent innovation in technology and best practice, SSON re-examines the risks and rewards of P2P integration for you and your business. Understanding Perceptions of P2P Many companies already have a P2P system, but one which lacks the visibility and actionable feedback necessary to make them efficient. These kinds of systems encourage significant wastefulness by retaining manual processes, maintaining inaccurate master vendor databases, performing duplicate and/or incorrect payments as well as overlooking internal controls and vendor compliance. Businesses stuck with this kind of system often find themselves in a dilemma whereby they know that their P2P process is wasteful, but are unwilling to commit significant resources to improve it for fear of disrupting the system. A survey1 of companies looking to improve their P2P system revealed that: 69% of purchasing officers prefer to use instant payment systems as opposed to invoices. 60% of procurement officers desire advanced search functions as part of their P2P solution 83% of suppliers intend to spend capital and time deploying or enhancing their e-commerce solutions within six months, including P2P elements. HOWEVER just under half (49%) of B2B customers prefer to procure products online. Overcoming Obstacles to P2P Modernisation In order to get businesses on-board with investing in an improved P2P system, it must be demonstrated that the new system will create an integrated end-to-end process internally, as well as connecting the client and supplier. The system must also be shown to be user friendly, efficient and have the capability to provide greater visibility and feedback through accurate data analytics. One way of ensuring this is done, is to tailor the new system to address each part of the P2P "6-pillar process": Order Management: developing a stable, repeatable and easily understandable procurement and invoicing policy Contract Management:maintaining service level/master purchase agreement with frequent vendors Strategic Sourcing:searching for new vendors/suppliers Vendor Management:continual assessment of vendor approval/vendor performance Demand Management:Providing procurement professionals with tools to engage internal stakeholders and fully understand the demand pipeline in short, medium and long term Spend Management:using comprehensive data analytics for cost reduction and improved service delivery Getting buy-in for modernising the P2P process also requires a solid understanding and appreciation of the key concerns experienced on both the client and supplier sides: Decision Making: Making a firm commitment to a new P2P model can be difficult since the decision will have far-reaching consequences. This means that reaching a decision can take months or even years. To help this process, advocates of P2P modernisation need to take the complexity of the decision into account and demonstrate that their proposed system has the necessary flexibility to accommodate the client’s range of suppliers, however wide that range may be. Integration Difficulties: Seamless supply management through back-end Enterprise Resource Planning (ERP) applications is at the heart of an efficient P2P process as it cuts out many of the resource-consuming back office functions. However, integration issues can occur when the implementation takes place across many different company locations with different legacy systems to accommodate. Therefore it is essential to foresee these potential difficulties prior to implementation as well as during subsequent ERP software updates and upgrades. Many companies have found that cloud-based (SaaS) P2P solutions can be vital in overcoming the difficulties posed by multiple locations and legacy systems. However, SaaS solutions are not always feasible due to various concerns including security. Regardless, any P2P solution must take integration issues into account and allow for an implementation which is as standardised as possible across the entire enterprise. Difficulties Connecting with Preferred Suppliers: Effective integration with back-end systems is critical, but connecting with the majority of the client’s preferred suppliers is the final link in the P2P chain. While many organisations make the effort to integrate a few of their largest suppliers through point-to-point technologies (EDI, etc.) it is a complex and resource-consuming process to connect with the majority of their indirect spend suppliers. So much so that it may appear unnecessary to the client and unlikely to provide a desirable ROI. Ideally, your P2P solution should allow for a client to on-board all of its suppliers in mass deployment fashion. This can be achieved by leveraging a supplier network, a centralized "hub" to connect buyers and suppliers, whereby supplier connections can be made through integrations or via web portals, all connecting through the hub. Adopting P2P Innovations Automation: One of the key trends in improving P2P solutions, automation offers the parent company greater levels of control while eliminating wasteful and/or inaccurate manual processes. Integration of third-party systems (Ariba, Fieldglass, Concur) means that the field of P2P automation remains flexible and bespoke solutions tailored to specific clients remain possible. However, any automation efforts must be user-friendly, compatible with existing CRM and have a speedy adoption period in order to appeal to the client and ease the decision-making process. Enhancing Payment Accuracy: the following strategies can effectively be deployed: Eliminating excess manual processes:Automation of invoicing/payment processes to eliminate time-consuming manual input and the potential for duplicate/inaccurate payments. Maintaining accurate master vendor databases: Scanning for duplicate vendors with zero activity and other errors attached to a large and unwieldy vendor database. Overseeing internal controls and vendor compliance: Reducing vendor errors when creating purchases and invoices. Improving reporting capabilities by eliminating unnecessary data. Analytics: Providing a versatile and well-implemented P2P solution that continually adds value to the parent organisation requires the support of analytics that combat inefficiencies within the system and provide valuable insights regarding the transaction cycle. Analytics can help achieve this in the following ways: Improving Cash Flow Analysis of transactional data patterns: Reduces misallocated funding and unlocks it for more productive uses. Detection of fraudulent activities:Counters long and short-term losses. Example:One leading ATM technology company used Accenture to extract key data for analysis to identify duplicate or erroneous payments, optimise payment terms and effect process improvement. The benefits were immediate and sustainable with as much as $4.5 million in improvements to the company’s available cash2. Transforming Your P2P The changing face of global business and the evolving competitive landscape requires a more efficient P2P process to support operations and enable faster, more accurate transactions. However making this a reality requires shared services operators to emphatically prove that their proposed P2P system will translate into solid ROI once implemented. This means identifying complexities in the existing system and battling through management objections in order to create a reliable, efficient process that can provide actionable insights through various stages of the transaction cycle. Footnotes: 1. Analyzing procure-to-pay options among B2B enterprises, The Strategic Sourceror 2. Using Analytics to Improve Procure-to-Pay, Accenture

How to Integrate your P2P Process into a Shared Services Model

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How to Integrate your P2P Process into a Shared Services Model

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