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Procure to Pay Systems - Critical for CPOs to Deliver Value?

4C P2P Breakfast DebateApril 2012

tracking of goods. Moreover, for Finance, there aresubstantial headcount benefits associated withautomating the processing of invoices.

Many P2P projects fail due to ineffectiveimplementation. 4C have identified four pillars ofsuccessfully introducing a P2P system. Firstly thesolution has to be user friendly and easier thanpicking up the phone. The system must be builtaround quality content, delivered by Procurement.There must also be a policy in place to provide supportfor users and finally there is no "one size fits all"approach. Not every requisition should go throughProcurement and a range of controlled channels, e.g.purchase cards should be available.

Before an implementation strategy is laid out, the casefor change needs to be made internally. A robustBenefits Management method must be employed toensure benefits are quantified and made cashablewhere possible. This entails understanding the currentoperation, baselining key metrics, such as Requisitionand PO cycle time, and forecasting improvements.

The cultural challenges associated with implementingany IT system are often underestimated. A wellplanned benefits case will allow finance teams to

With businesses constantly on the lookout forinnovative ways to cut costs, procure to pay, or P2P,systems are often touted as possible cost savingsolutions. There are, however, those who believetheir implementation is a waste of money. Webrought together a wide selection of professionalsfrom various industries to debate this issue.

Industry expert, Mike Crowley, argued that the cost ofmost P2P solutions did not outweigh the benefits,whereas Phil Joss, Senior Manager at 4C Associates,debated that P2P systems are critical for deliveringvalue. The session took place at The Paramount,Centre Point, London.

The Case For P2P System ImplementationThe benefits of a full P2P system are vast. Efficientlyimplemented P2P systems deliver a wide range ofcashable and non-cashable benefits and should forman integral part of any successful business. Amongstthese, and the most useful for procurement, is accessto accurate and up-to-date spend data. This ensuresgreater control of company spending by enabling theenforcement of contract compliance.

Additional benefits for users of P2P systems, includeuser searchable e-catalogues and enabling the

Release cash Reduce cost Manage risk Improve ROI

T: +44 (0)20 7605 1600 E: info@4cassociates.com W: www.4cassociates.com

Q&AThe floor questioned Joss's description of a P2P system.Many felt that what was described did not reflect whatwas available on the market. Joss responded thatalthough current systems are not as user friendly asthey could be, providers are looking to produce morefunctional interfaces. Oracle was mentioned as onecompany working in the domain and looking toAmazon for inspiration.

When asked where he had gone wrong whenimplementing a P2P system in the past, Crowleyexplained that the cultural aspects of the corporationand the scale of the change required should have beengiven greater consideration. As it turned out, in thecase described, manual governance was actually easierto implement and procurement instigated a processwhich required board approval for certain levels ofspending. Crowley found the best practice was to firstget the governance in order and then implement P2Pas a natural extension.

4C Associates has the insight, technology andexperience to drive rapid profit improvement.We offer specialist consulting, technology andmanaged services to transform your costs. Weapply industry and functional expertise to deliverexceptional benefits.

Our team works with leading organisations across arange of cost categories including Direct Materials,Services, Marketing, IT, HR, Logistics, SupplyChain, Property and FM. We apply deep practicalknowledge, combined with process and changeskills, to deliver reduced costs and increased profits.

To discuss how we can transform your costs pleasecontact us at:

Tel: 0207 605 1600Web: www.4cassociates.comEmail: Petra.urhofer@4cassociates.com

ResultsInterestingly, in a room of mainly procurementprofessionals, the majority of attendees voted against"P2P Systems, Critical to Deliver Value?".

Organisations must guard against complacency whenintroducing P2P systems; the cultural change andimpact across the business should never beunderestimated. The deployment of a robust BenefitsManagement method should be part of the overallchange management strategy.

"A great Procurement team won't need aP2P system and you wouldn’t want amediocre team trying to implement it."

Before deciding to implement a full P2P system,businesses should consider less disruptive strategies.Procurement should look at ensuring financialsupport, securing governance over the commitment orordering processes, enforcing the need forprocurement references for payment requests andmaking purchase orders mandatory, before evenconsidering implementing a blanket change.

"P2P can add value but the difficulty lies inbringing the company culture round toseeing it."

P2P is not an answer in itself and implementing a full-scale process in one move will often prove moreproblematic than beneficial. The best way to increaseefficiency is to work through the identifiable issuesbefore attempting a general restructure. Logically P2Pshould work, however, organisations are rarely builton logic and each has a unique way of working.

“It is difficult to argueagainst P2P systems, onceimplemented they offermany benefits.”

The case against P2P ImplementationOn paper, procure to pay makes sense and can delivera range of benefits. A properly implemented systemreduces cost, drives compliance and generatesengagement, however, in reality implementation isproblematic and expensive. A full P2Pimplementation rarely delivers benefits in excess of itshigh costs. Procurement will often find itself in asituation where logic gives way to corporate cultureand much time and energy will be used trying to winover the organisation.

Numerous elements need to be taken intoconsideration before deciding to force a system on anorganisation. These include inflexible companyculture, the difficulties of linking P2P and finance, andgeneral indifference.

proactively reduce budgets toensure budget holders areincentivised to deliver againstclear targets.