So, your organization has made the transformation from a paper-based, zero-control system to the latest fresh off-the-shelf procurement platform. You finished ahead of schedule and managed not to incite a revolt among your stakeholders. You even have a fully “live” system. You should be on cloud nine.
However, a dark cloud is looming on the horizon—adoption. In order to fully realize your return on investment (ROI), your organization must continue to increase adoption across all spend categories.
The math is simple: Adoption + spend throughput = savings.
Enabling spend can be a daunting task, however. Each category may consist of several supplier types, and one may have features and attributes that require several enablement approaches. Additionally, supplier connection types will require specific roll out processes, attributes and concerns for both the suppliers and the internal stakeholders.
Prior to moving to a value-based assessment, the primary measure of success for a procure-to-pay (P2P) deployment was meeting the “live” date while remaining under budget. Transitioning from a licensing business model to a subscription business model will help the client and the software provider realize that measurable ROI attainment is essential to success. In order to realize savings and efficiencies from a P2P platform, all stakeholders must be included in the equation. Without a healthy supplier base, the procurement and accounts payable lose any efficiencies necessary to eliminate costs. Conversely, suppliers with only one connection to their customer base also suffer from the inability to take advantage of exponential decrease in days sales outstanding (DSO).
The goal of an organization should be to maximize connectivity while minimizing time to ROI. To do this, the client needs to focus on enabling suppliers that provide the user population access to the necessary goods and services. Internal stakeholders see integrators as disruptors and don’t run to embrace the change. The project team usually focuses on attacking the easiest spend first.
While this is a good start, it usually heralds the end of the process because there is no roadmap to ensure that additional content is enabled. Without a roadmap, critical mass is often lost and ROI is unattainable. Metrics need to be established in order to measure success.
A consistent way of ensuring success is by leveraging a category enablement plan (CEP). A CEP should take the following into consideration:
In Scope Categories—These categories should be aligned by level of complexity, business process groups and amount of spend. Once categorized, they should be ranked by amount of spend and complexity. This sets the foundation of the plan.
Suppliers—The best rule of thumb for supplier enablement is to match suppliers to the appropriate categories. Be careful of focusing on getting all of your suppliers enabled. Frankly, that goal is unattainable and unnecessary because it is the wrong metric. Instead, focus on enabling suppliers that account for most of the categories’ spend. Use the 80/20 rule here: 80 percent of your spend is comprised of 20 percent of your supplier base. Focus on these key suppliers for faster ROI.
Previously Enabled Content—Most companies will have used a point-to-point vendor system to buy specific items. By ensuring this content is enabled early in the process, you are able to provide a large footprint of the P2P system throughout your organization. An ancillary benefit is the ability to turn off expensive EDI connections that will become obsolete.
Lastly, once you have your plan in place, it is critical that you get internal stakeholder buy in. This can be done by mocking up the category processes and demonstrating these early and often. You will also uncover information that may affect your plan and have the ability to uncover critical requirements that need to be passed onto the deployment team.
If you follow these simple guidelines, you will be able to transition your organization from one that has little control over its spend to an organization that buys in the most efficient manner. This has the effect of allowing your stakeholders to be more effective and increases the satisfaction of buyers and suppliers.
Loyd Hawkins is global vice president, supplier management, at Elemica.