The Important Role of Procure-To-Pay Technology in Your Move to Strategic Sourcing

Transcription

1 Financial Savings Management Spend Analysis esourcing Contract Management Supplier Management The Important Role of Procure-To-Pay Technology in Your Move to Strategic Sourcing Wednesday, June 27 3:00 PM BST/10:00 AM EST 2011 Zycus Inc. All rights reserved

2 Duncan Jones Vice President, Principal Analyst, Sourcing & Vendor Management, Forrester Research, Inc. Duncan primarily contributes to Forrester's offerings for Sourcing & Vendor Management Professionals. He is a leading expert on software pricing and licensing and helps clients understand and address the effect of technology changes on software contracts. By researching enterprises' experience in dealing with large software vendors, including their negotiation successes and the problems they encountered later in the relationship, Duncan helps clients create and execute sound negotiation strategies and get advantageous software license and maintenance agreements. He is also a leading expert on epurchasing technologies, such as eprocurement, esourcing, and electronic invoice presentment and payment (EIPP), and he advises clients on their application strategy in this area, how to make good choices between alternative solution providers, and how to get the best results from implementation.

3 Bikash Mohanty Associate Director, Product Management Zycus Inc. Bikash Mohanty heads the product management for P2P solutions at Zycus, a leading provider of Procurement Performance Solutions. A thought leader and innovator in the field of procurement, Bikash has been a key strategist at all the stages of the product lifecycle, from conceptualization to growth. Bikash commands 10+ years of experience in product marketing and product management across NA, Europe and APAC with 8 years experience in Product marketing & Product Strategy. At Zycus, Bikash helps Global 1000 companies achieve their procurement and supply chain objectives and streamline procurement processes. Bikash holds a BE and MBA.

4 Key Areas of Discussion Role of Procure-To-Pay Technology in reducing the organization s maverick spend Innovative Technology Driven Guided Buying Use cases for driving purchasing compliance

5 Brute force alone won t make people use your eprocurement system

6 Agenda How Potential Savings Can Leak Away Maximizing Adoption of Your P2P Solution Summary Recommendations

7 eprocurement Can Deliver Several Business Benefits Delivering sourcing savings to the bottom line, by directing purchases to approved suppliers and contracts Reducing expenditure via greater visibility and more effective control Lowering administration costs, though process automation and optimization

8 The Business Case Depends On You Achieving Four Objectives Supplier Adoption Category Coverage User Adoption Project Business Case Controls Effectiveness

9 Potential Savings Leak Away More Expensive Suppliers Lost Rebates & Discounts Over-Specified Items Incorrect Prices

10 Which option do you think people will choose? I need some widgets, now! I can pick who I want to use I get what I need, when I need it Signing off the invoice is easier than raising a PO Requisition Manager Finance I have to use an unfamiliar supplier I can t find the widget I need in the new online CEO CPO Category buyer catalogue I have to wait days for my PO to be issued Supplier I don t know if the supplier has received it, or agreed to deliver immediately

11 Agenda How Potential Savings Can Leak Away Maximizing Adoption of Your P2P Solution Summary Recommendations

12 Select the product that will best help you achieve the project s goals Use formal objective decision criteria Consider the pros and cons of going with your ERP incumbent Who can best help you: drive high user and supplier adoption? support broad category coverage? enable effective controls?

13 Your eprocurement Solution Should Be Easy To Use Systems of Engagement - Flexible, Intuitive, Mobile Search catalogue Approve requisition Confirm price & delivery Receive goods or services Submit invoice Approve invoice (difference) Systems of Record Robust, Internally Consistent, Static Purchase Order Approved Invoice

14 Usability is Vital - Users Expect B2C Features Easy search Comparison Filters Tailored process Peer reviews

15 But you don t want them to use actual B2C sites Upsell Cross-sell Drive impulse buying Extensive catalogue

16 Make the Right Way Easy, & the Wrong Way Hard Eliminate non-essential approvals Give managers a good mobile UI Integrate with suppliers Keep users informed about their PO s progress Work with reluctant adopters to address their concerns Measure & report compliance A PO raised after the fact is a fail Track maverick buyers and make compliance a performance goal Delay payment if there is no PO

17 Agenda How Potential Savings Can Leak Away Maximizing Adoption of Your P2P Solution Summary Recommendations

18 Turn No, because into Yes, if No because: I can pick who I want to use I get what I need, when I need it Signing off the invoice is easier than raising a PO Yes, if: Requisition Manager Finance The sourcing strategy includes my suppliers selection criteria (e.g. local service level) CEO CPO Category buyer The online catalogue remembers my preferences, and helps me find what I need The PO is in the supplier s system within 24 hours Supplier I don t see the invoice if it matches the PO

19 Summary Recommendations If you re just starting: If you re further along: Build a business case, and ensure that drives the selection process Focus on getting user and supplier adoption Start somewhere you can get a quick win Persuade Finance to repeal their counter-productive edicts Make the right way easier and the wrong way harder Find juicier carrots and bigger sticks Its not an exception, it s a systemic problem

20 Poll Question What are the key benefits of implementing a P2P solution? Streamlining buying process Gaining visibility into the procurement process Ensuring compliance to set processes Realizing negotiated savings from the suppliers

21 Agenda Ensuring purchasing compliance/ controls through Artificial Intelligence technology- A use case approach Ease of use Beyond UI and Navigation

22 Common Pitfalls - Lack of Compliance A case of workflow violation Workflow for Hazardous Chemicals Requester Requesting for Acetone- A hazardous chemical Reporting manager (Approver) Category manager (Go/ No Go) Director Procurement - Direct materials Enter item description: Acetone Antiseptics Select the item category: View Organization Procurement Policy Standard Workflow Buyer (procurement) Select supplier: Spectrum Chemicals Reporting manager (Approver) Buyer (procurement)

23 Common Pitfalls - Lack of Compliance A Case of Workflow Violation - Impact Unable to track spend for hazardous Vs Non-hazardous chemical categories Goods receipt process went for toss Budgets for the following year got impacted

24 Common Pitfalls - Lack of Compliance Budget Re-routing Requester Requesting for Sandwiches Budget check Enter item description: View Organization Procurement Policy Sandwiches Select the item category: Prepared and Preserved Food Select supplier: Snacks and Food Error: Do you Budget wish to exceeded continue? Approval workflow will be redirected to budget owner

25 Common Pitfalls - Lack of Compliance Budget Re-routing Requester Requesting for Sandwiches Budget check Enter item description: View Organization Procurement Policy Sandwiches Budget Cleared Select the item category: Bread and Bakery Products Select supplier: Snacks and Food

26 Common Pitfalls - Lack of Compliance A Case of Budget re-routing- Impact Inaccurate spend tracking Budget forecast

27 Common Pitfalls - Lack of Compliance A Case of Convenient Suppliers over Preferred Supplier

28 Case for Non-Preferred Supplier Requester Actual Requirement: electric screw driver for use in hard-to-reach places Searches: screw driver Poor item description Incorrect Category Maverick Spend Enter item description: Electric screw drivers Select item category: Screw driver Select supplier: Mitchell Bros Tool Supplies Co. View Organization Procurement Policy User picks wrong category Details such as narrow-nose, 40 lb-in torque not captured User selects non-preferred supplier eprocurement ERP MIS Analytics Downstream Applications

29 The Omnipresence of Category Code The Inability of Tool to Suggest Most Appropriate Category Code Preferred suppliers Category code Accounting (GL codes) Business workflow Goods receipt process Taxes

30 Guided buying leveraging Artificial Intelligence Technology Actual Requirement: electric screw driver for use in hard-to-reach places Searches: screw driver Requester Guided Buying With Autoclass & eforms Also classifies catalog and punch-out items Poor item description Incorrect Category Maverick Spend Enriched item description Correct Category Coding Preferred Vendor routing P2P Solution Suggest Help Category the the requester specific right suppliers eforms select the to to capture right the requester category details ERP MIS Analytics Downstream Applications

31 The Power of Guided Buying Requester Creating requisitions by adding catalog, punch-out & free-text items Without Guided Buying and AI-based classification Guided Buying Real-time classification & eforms Incl. catalog & punch-out items Poor, Unstructured Desc. Wrong Category Classification Non-preferred Supplier selected No Procurement Policy Quality, Structured Data Correct Category Coding Preferred Supplier Routing Policy enforcement Garbage-In, Garbage Out Lost sourcing opportunities Maverick spend Non-compliance Accurate & granular view of spend Sourcing opportunities revealed Maverick spend avoided Contract & policy compliance

32 Summary Ensure P2P software application is easy to use- Beware of feature overkill While evaluating ease of use, go beyond cosmetics Best is Use it and then decide

33 Contact Details Duncan Jones Vice President, Principal Analyst Sourcing & Vendor Management, Forrester Research Bikash Mohanty Director, Product Management, Zycus Inc. Zycus Inc. 103, Carnegie Center Suite 117 Princeton, NJ Phone: Zycus Inc. All rights reserved

34 Thank You