As companies navigate a procure-to-pay (P2P) digitization project, inevitably there will be unknowns and obstacles throughout the process. From establishing clear ownership and identifying processes to automate, to monitoring change and reaping the ROI rewards, the benefits far outweigh the initial uncertainties. But to enjoy the benefits, you cannot overlook common procure-to-pay risks throughout the project implementation.
Lack of Ownership Over P2P digital transformation
While procurement and finance sit within the same company, often they do not share the same business priorities and objectives. A common mistake when beginning a digital transformation project is not establishing clear ownership of the project. While both roles are certainly involved and the input from all relevant stakeholders needs to be considered, if they both own it, neither of them owns it.
In a P2P transformation project, there are two P’s – procure and pay. While P2P includes a string of processes that reaches across many different parts of the organization, a phased approach focusing on either the purchasing initiatives or the payment initiatives will help define whether the project is driven from a procurement perspective or a finance perspective. If both are driving the project, it can create tension and slow down the decision-making, which could ultimately result in loose ends, problems with new process compliance, and the emergence of maverick processes.
The different viewpoints of procurement and finance should be embraced and fully integrated into the evaluation process, but there should be clear ownership and established “checkpoints” along the way.
Managing P2P Adoption and Change
One of the biggest advantages of digitized procure-to-pay solutions is the visibility and ease of communication between your organization and your suppliers – capturing all the data and processes, means that you are all on the same page. However, not all suppliers may be as enthusiastic to embrace a digitized P2P solution, especially if they’ve experienced integration issues or a lack of training/support with other buyers that they work with.
This procure-to-pay risk during project implementation sets the tone for the trust and relationship between you and your suppliers. Even in a mature world that generally embraces digital commerce, suppliers are being asked to conform to a variety of ways of trading electronically. While it is relatively easy to encourage a supplier to accept a purchase order in any format, telling them how to send invoices to you may not be as easy. If they still send paper invoices, there’s not a great deal you can do to stop it, so it’s important that the P2P vendor you choose accepts many invoice formats to accommodate all supplier formats and encourage positive supplier relationships.
In addition to external adoption, beware of internal pushback to change. Change management isn’t easy and people’s reluctance to adapt should be addressed throughout the transformation journey. What can you learn from user hesitation? Can their hesitation be resolved with better communication and/or additional training? Often, reluctance to change connects directly to old, embedded behaviors that are not just habits, but concealed poor practices that likely can be solved with the right solution.
By taking change management seriously and putting controls in place that communicate your business processes, you can eliminate unnecessary confusion and uncertainties that lead to adoption roadblocks later on.
Matching Processes to Technology
A major procure-to-pay risk is trying to tweak a process to fit a certain solution. You absolutely should be thinking about how your processes need to evolve to better support the business and future growth, but you should not be thinking about how the process needs to change just because the solution suggests another way.
Your business processes need to be sound on their own and built around your business so that technology can automate and complement what you do. With the rapid pace of innovation today, technology is constantly changing. Your process should not be reliant on a particular software – rather, your processes should be supported by the technology which is designed in a way that delivers the most value to the business, ensures compliance, reduces risk, and enables employees to do their best work.
Do not bend your process to a specific software solution. Work with the provider to design your ideal future state and evolve your process with the support of technology.
So how can you minimize procure-to-pay risks?
In summary, to minimize risk when evaluating procure-to-pay solutions:
- Establish clear project ownership and communicate and check against project goals throughout the entire process.
- Establish what users will need training and support (i.e., suppliers, buyers, accounting).
- Make sure your P2P solution is designed with your processes in mind to deliver the most value to your business.
To read more about reducing procure-to-pay risk, check out Basware’s eBook “10 Business-Critical Procurement Metrics for the Cost-Conscious CPO” and whitepaper “What’s the Difference? How to Evaluate AP Automation Software.”
Source: basware.com, 23/08/2021, written by Katie Colbourne, Senior Manager, Product Marketing
Recommended reading: White Paper – 10 Ways ERP Fails Procurement