May 22, 2019
Investing in an E-Procurement system is a very important strategic decision for a company. It offers the opportunity to increase operational efficiencies, control spend, increase visibility and drive savings. Making this decision involves choosing the best platform for the right price at the right time to meet the company’s short-term and long-term strategic goals – all while staying within budget and resource constraints. This is no easy task.
This is why companies often face an additional decision around selecting an appropriate deployment model: to implement the full Procure to Pay (P2P) process or carry out a partial deployment like Procure to Receipt (P2R). While this decision must ultimately account for the business particulars, below are some general guidelines to consider.
Generally, a full P2P deployment is recommended. It offers benefits that can only be achieved by having a complete P2P system.
One of the main benefits of having a full P2P model is that users will have one system to make requests, get approvals, create receipts and receive invoices. This means that employees will have process continuity within one system which allows them to get what they need faster and more efficiently. They also have the ability to leverage the full suite of features that a P2P system has to offer, including centralized reporting.
A new E-Procurement system not only impacts internal stakeholders, it also impacts the supplier base. With a P2P model, suppliers will be able to receive purchase orders and send invoices through one central system for one seamless process. This will help drive better supplier relationships and help enforce purchasing policies with the supplier (i.e. a “no PO, no pay” policy).
Global Scalability and Consistency
For global companies, a full P2P deployment also offers the opportunity to drive consistency and standardization across the globe through one core purchasing design that leverages the P2P platform. Often, global companies will find that different regions are using different invoicing systems. A P2R deployment means that companies will need to understand and accommodate for the different invoicing systems involved in each phase of a global procurement transformation project. With a P2P deployment, you avoid all that.
If not P2P – why not?
In most cases, if a company chooses to not implement a full P2P E-Procurement system, it is for two reasons: cost and/or resource availability.
In spite of the benefits of having a full P2P system, implementing the P2P model does carry extra costs. If facing a tight budget, companies might find it in their best interests to implement a P2R process instead of a full P2P system to avoid additional invoice-related integration build costs, additional business process design/implementation costs or additional licensing costs for invoicing. Companies may also do this due to existing contracts or licensing agreements with third party service providers that are part of the current state purchasing process.
The other major reason companies might choose P2R is resource constraints. We all know that companies have conflicting priorities – different projects pulling resources in different directions. Sometimes these priorities make it difficult to secure the right resources at the right time for the scope of a P2P procurement transformation. In this case, companies might choose to start with a P2R deployment and add the invoicing component at a later date as part of a long-term strategy.
In general, full P2P systems offer companies the highest rate of benefit. Your company may choose to do a P2R implementation to obtain your short-term goals, but we recommend that after you implement and begin seeing the benefits of your P2R program, that you look into the possibility of a full P2P implementation.
Any form of procurement transformation will yield powerful results, but a full P2P system is the best way to fully unlock the highest return on your investment.
By: Miguel Ortega, Consultant