ERP IS NOT ENOUGH FOR EPROCUREMENT. You need a dedicated solution. Here s Why

Transcription

1 ERP IS NOT ENOUGH FOR EPROCUREMENT You need a dedicated solution Here s Why

2 In the next four chapters, we will quickly examine: 1. Differences between a bolt-on ERP module and a dedicated eprocurement solution 2. Signs your company needs an eprocurement solution 3. How the right eprocurement solution can lower costs 4. How to maximize the cost savings of an eprocurement solution 2 esmsolutions.com

3 INTRODUCTION Enterprise Resource Planning (ERP) is not the same as electronic procurement (eprocurement). ERP systems are designed and built to serve the needs of the finance department and the accountants. WHAT IS EPROCUREMENT? eprocurement solutions, on the other hand, work the way your purchasing team works, providing the flexible tools they need through every step of the procure-to-pay process. They also empower employees across the company to lower spending by identifying areas for improved efficiency or new income generation. eprocurement is an online solution you can use to source, contract with and manage suppliers. It provides your employees with an easy, intuitive tool to engage in the procure-to-pay process while giving your procurement department full control over where and how it is allowed to spend. It tracks and analyzes your spending and steers organization-wide spending to preferred suppliers and other compliance targets. Let s start with the differences. eprocurement solutions work the way your purchasing team works, providing the flexible tools they need through every step of the procure-to-pay process. WHO OFFERS IT? The industry is crowded with large ERP systems that offer eprocurement as a bolt-on module. But there are a handful of companies that provide agile, affordable solutions that are designed to meet all of your purchasing team s needs. ERP Doesn t Know eprocurement 3

4 CHAPTER 1: ERP VS. DEDICATED EPROCUREMENT Most ERP systems offer bolt-on procurement modules. On the surface, that sounds great: It s integrated and that s one less supplier you need to engage. But the ERP isn t built for everyone. ERP systems are the operational and financial nervous systems of your organization. They serve a critical role, and based on serving that role well, most of them have grown into sophisticated and complex systems. The downside for the procurement department is that ERP systems have been built from the ground up to cater to the needs of finance and accounting, which serve very different roles in the organization. By comparison, an eprocurement system is designed specifically with procurement activities in mind, including sourcing, contract management, purchasing and spend analytics, while integrating seamlessly with your ERP system. ERP MODULE FOR EPROCUREMENT BUILT FOR FINANCE AND ACCOUNTANTS Requires stand-alone catalogs, supplier portals, e-rfp programs, reverse-auction systems and more. systems and more. COMPLICATED 6+ months to implement; On premise deployment managed internally puts a strain on resources. COMPLEX Even sophisticated users need extensive training. INFLEXIBLE Blocks exceptions and innovations, such as routing for manual approval and creating supplier catalogs. EXPENSIVE ERP systems can costs millions of dollars, plus customizations, upgrades and ongoing maintenance. Don t wait until your ERP is in place to consider the differences between ERP and eprocurement. Make sure your system can meet your organization s spending goals. SPEND-FOCUSED Flattens spending with a reactive approach. 4 esmsolutions.com

5 DEDICATED EPROCUREMENT SOLUTION BUILT FOR PURCHASING TEAMS One system for all of your procurement needs that integrates with your ERP. SIMPLE Up and running in weeks. Software as a service SaaS deployment for minimal impact on internal resources. EASY Intuitive interface any employee can use. HYPER-FLEXIBLE Tailors the entire procure-to-pay process to meet individual organization and departmental needs and spending goals. AFFORDABLE Fraction of the cost of an ERP system. INCOME-GENERATING Analytics identify areas to lower spending and generate new saving opportunities. YOU DON T HAVE TO WAIT FOR ERP TO CONSIDER THE DIFFERENCES BETWEEN ERP AND EPROCUREMENT.

6 1 6 WAYS TO SAVE WITH EPROCUREMENT Time and money. All of the customers that we serve - in higher education, K-12 school systems, government and nonprofits - are short on both. Budget reductions and staff cuts leave them with little flexibility. EPROCUREMENT CAN HELP. It streamlines spend management, allowing users to source, shop and manage contracts from a single online collaborative portal. It also helps them save cold hard cash. CONSIDER THESE ESM CUSTOMERS:»» The California State University system enjoyed positive ROI in less than five months and saw the cost of purchase-order-to-payment drop from $150 to $25.»» At Ivy Tech Community College, with eprocurement, the system reduced the number of office suppliers from 52 to 1 and cut office spend by a whopping 40 percent. Positive ROI 5 40% reduction in office spend 6 esmsolutions.com

7 HERE ARE SIX WAYS TO SAVE WITH EPROCUREMENT. MEET YOUR MANDATES WITH EPROCUREMENT 1. NO MORE MAVERICK SPEND: eprocurement reduces off-contract spend by making approved vendors easily accessible in an intuitive e-commerce portal. More often, organizations, particularly publicly funded ones that also rely on grants and other funding, must meet spend requirements that go beyond lowest cost. 2. PRICE COMPARISONS: eprocurement lets users quickly compare prices across all of an organization s approved vendors so they always know they re getting the best price with every order. Some must seek out sustainable products, such as recycled paper or LED light bulbs. Others are required to turn more often to minority and women-owned businesses or locally owned firms for goods and services. 3. FREE MONEY: eprocurement increases rebates from approved vendors and P-cards as more dollars are funneled through the marketplace. eprocurement helps users to direct spend toward these mandates and others to ensure targets are met and they remain in compliance with all of their funding requirements. 4. CHEAPER PRICES: eprocurement provides increased visibility into an organization s spend, allowing for more bargaining power during negotiations with vendors. 5. PO COST CUTS: eprocurement s automation lets users cut purchase order costs - even more dramatically when a P-card is in use. CUSTOMER STORY: At Portland State University, green purchasing is a must. On Portland State s ESM marketplace, users can click around approved vendors, such as Amazon, Staples and a local shop, and search for green paper products, for instance, to price compare. Once they ve found the best price, it only takes a couple of clicks to purchase or send the order for approval. 6. TIME MANAGEMENT: eprocurement strips away time-consuming manual processes, such as shuttling around paper purchase orders or physically walking to another office for approvals, so users can focus on more strategic initiatives. ERP Doesn t Know eprocurement 7

8 CHAPTER 2: 4 SIGNS YOU NEED EPROCUREMENT Whether you re just starting to consider an ERP system or you re months into the implementation process, consider all of your options. Bolt-on eprocurement modules are not designed to meet the needs of your purchasing team and spending goals. Also, often viewed as an after-the-fact add-on option, eprocurement modules in an ERP system tend to be rolled out at the conclusion of the core rollout. So, in the end, you could wait years for an eprocurement module that will not live up to your needs. Consider moving ahead with a dedicated eprocurement solution sooner rather than later as the learning curve for your organization will be minimal. What s more, you can achieve payback on this module within mere months and start driving savings back into the organization. HERE ARE SIGNS YOU NEED A DEDICATED SOLUTION: 1 YOU ARE BEING ASKED TO DO MORE WITH LESS. Demands on your procurement team s knowledge and time are constantly increasing, while available resources are shrinking. Beyond the core procurement function, you are on the front lines for contract management as well because it is the procurement department that will have to answer for purchases that are made off-contract. On top of this, more and more procurement departments have to manage extraneous functions such as travel. The result is an interrupt-driven environment with most procurement professionals moving from fire drill to fire drill. SOUND FAMILIAR? 1. BEING ASKED TO DO MORE WITH LESS. 2. NO VISIBILITY TO SPENDING INFORMATION. 3. HARD TO SEE WHERE YOU CAN DRIVE SPEND TO MAXIMIZE BUYING POWER. 4. AN ERP IMPLEMENTATION IS IMMINENT. 8 esmsolutions.com

9 2 THERE S NO VISIBILITY TO SPENDING INFORMATION. You use multiple applications logging in and out of one application after another to source, procure and approve purchases. You manage multiple logins and passwords. You lack a single dashboard to manage suppliers, contracts, open orders and more. To say that real-time data isn t available would be an understatement. Extracts from the ERP are difficult or the data does not exist. As a result you spend untold hours trying to make sense of it all with labor intensive spreadsheet management. 3 IT S HARD TO SEE WHERE YOU CAN DRIVE SPEND TO MAXIMIZE BUYING POWER. Without a single source of data for all spend, contract, and supplier-related information, it s hard to access actionable information or make informed decisions. Even if you identify key performance indicators, you need a human resource (that you probably don t have any more) to analyze them if you want to create strategic change. 4 AN ERP IMPLEMENTATION IS IMMINENT OR IN PROCESS. Believe it or not, an ongoing or imminent ERP implementation is indication that it is an ideal time to look seriously at eprocurement. An ERP solution will eventually get rid of a lot of paper, drive down costs and improve efficiency, but there isn t a direct line from ERP to lowered spending. That is the domain of the purchasing department, which is probably not intimately involved in the ERP implementation anyway. So, in a matter of weeks, you could be driving incremental cost savings back into your organization to help offset the cost of other expenditures, such as your ERP system. CONSIDER MOVING AHEAD WITH A DEDICATED EPROCUREMENT SOLUTION SOONER RATHER THAN LATER ERP Doesn t Know eprocurement 9

10 CHAPTER 3: HOW EPROCUREMENT LOWERS COSTS eprocurement provides a documented process that guides you through each procurement step. You increase the process visibility, internal controls and consistency of purchases for your organization. The right eprocurement system will: MAKE BIDDING EASY. You should be able to invite suppliers to participate in a bidding process without picking up the phone. Make sure you can create supplier contracts based on your organization s requirements. Easier bidding means more suppliers, more competition, lower prices, better terms and generally more benefits to your organization. LOWER SPENDING. Create contracted catalogs and prices, which centralize spending and ensure enterprise-wide spending compliance. Virtually overnight, you ll move from chasing paper to controlling spend, enforcing limits and tracking your overall organizational spend. TRACK CONTRACTS WITH EASE. A comprehensive eprocurement system allows you to consolidate, manage and archive your contracts electronically. You ll stay in compliance with negotiated contracts, as well as with federal, state and local requirements. And you ll ditch the hundreds of spreadsheets you ve been using to track contracts and their expiration dates. INSIGHTFUL ANALYTICS. You should be able to access reports instantly from your desktop or tablet. Get statistics on your organization-wide spend and respond to audits in mere minutes. Analyze spend based on supplier, commodity type and more to see where you can make changes to reduce costs. INTEGRATION POSSIBLE: ESM KNOWS YOUR ERP ESM works closely with customers to ensure that an integration with any ERP or financial system or record is complete. With more than 17 years of experience, ESM has integrated with ERP solutions from many vendors, including: and many others, including custom or home-grown systems. 10esmsolutions.com

11 WE CAN DO ALL OF IT WITH ONE LOGIN AND PASSWORD... IT S MORE CUSTOMER FRIENDLY. ~ Kevin Stevens Director Of Procurement Services University of Alabama CUSTOMER STORY: The University of Alabama recently implemented ESM Purchase with Banner integration. Now, purchase order information can be passed between Banner and ESM. Both contract and off-contract purchases can be placed through the more intuitive ESM system. ERP Doesn t Know eprocurement 11

12 CHAPTER 4: THE WHY S AND THE HOW S SUMMARIZED WHY BOTHER WITH EPROCUREMENT? Reduction in maverick spend Reduction in requisition-toorder cost That s easy! Independent Research shows eprocurement provides these benefits to organizations 1 : 35 % Improvement in spend under management 41 % 48 % HOW SHOULD WE PROCEED WITH EPROCUREMENT? To achieve optimal results, follow these best practices: To lead the effort, tap an executive who can call on the strengths of department heads, management peers, and stakeholders to drive end-user adoption. Integrate eprocurement with your finance and accounts payable systems. SET GOALS TO GAUGE SUCCESS. Best-in-class enterprises have reached these benchmarks using eprocurement: 75 % 80 % 25 % Spend under management control On-contract spend Maverick spend reduction Reduction in requisition-to-order cycle 1-2 DAYS Reduction in transaction costs 30 % 1 E-Procurement: Trials and Triumphs, Aberdeen Group, October 31, esmsolutions.com

13 CONCLUSION Change can be hard. When you are living through the difficulty of an ERP implementation or about to embark on one - the idea of adding another application to the mix is daunting. And when your ERP provider is telling you its system has an eprocurement module, it s easy to let it go and hope for the best. they need to never break a sweat in the face of pushy sales calls or price negotiations by guiding them through every step of the procure-to-pay process. They also empower employees across the company to lower spending by identifying areas for improved efficiency or new income generation. That perspective won t pay off in the long run. It will cost your organization money to wait six months or longer for your ERP system to be implemented, particularly when procurement is not part of the critical path of the project. By comparison, you can implement a best-of-breed eprocurement solution in weeks rather than months or even years. eprocurement solutions work the way your purchasing team works, providing the flexible tools Invest 30 minutes to speak with an eprocurement expert to see how long it will take to achieve your goals with a dedicated solution. Before long, you ll be reporting cost savings to your leadership team, rather than the savings you anticipate months from now with an ERP system that hasn t shown you the money and maybe never will. You can implement a best-of-breed eprocurement solution in weeks rather than months or even years ADDITIONAL RESOURCES: 5 Steps to Map Your eprocurement Strategy 15 Essential Characteristics of Successful eprocurement Automation 6 Keys to Successful eprocurement Adoption ERP Doesn t Know eprocurement 13

14 ESM SOLUTIONS We give you complete spending control through our bidding, purchase, analytics and contract management tools. We integrate with your financial system and deploy rapidly for maximum cost savings. To date, we estimate our cost savings to be over $45 million. At the same time, we have generated over a million dollars in revenue. ~ Purchasing Manager, Baltimore County Public Schools HAVE QUESTIONS? Contact us to set up a demo With ESM, organizations can automate the procureto-pay process with a suite of cloud-based, mobile solutions that can be tailored to your specific business needs and requirements. Implementation is easy. Adoptions rates are high. Integration is key. And you get the benefits of more savings, improved visibility and better control. Contact ESM to learn more about how our suite of spend management solutions can help your organization now. Phone: info@esmsolutions.com Online: 14esmsolutions.com

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