Spend Matters Perspectives: Getting Past the Downstream Limitations of ERP SRM and Procurement

In the past few months, I've had the chance to talk to a lot of companies investigating ways of improving working capital management and overall A/P efficiency by targeting the "second P" in P2P. Curiously, many of these discussions have centered on the need to build procurement and finance alignment and strategy before implementing an automation solution. But in these chats, I've also learned about the rapid efficiency gains that some organizations have been able to implement strictly through technology without even addressing process and alignment as a first element -- something that in today's climate of rapid cost reduction requirements does not go unnoticed. These discussions started me thinking about how many organizations are not even moderately aware of the opportunities that downstream payables and invoice automation capabilities present. In other words, it's clearly a case of the "haves" and "have-nots" at the moment. Moreover, their ERP providers are not necessarily making their SRM or procurement customers aware of what's possible either, given the limitations of the current solution portfolios they own (vs. resell).

This led me to the conclusion that it would be worth writing a Spend Matters Perspective that would help companies identify savings and working capital management opportunities that SAP SRM, Oracle and other ERP providers alone do not enable.

After completing the research for this paper, I concluded that the state of ERP in the payables and invoice automation arena is very similar to where eProcurement was six or seven years ago. At that point, both SAP and Oracle had either rudimentary solutions or resold partner solutions (e.g., Commerce One in the case of SAP, in certain cases). Flash forward over half a decade later and a range of ERP providers have viable eProcurement solutions that hold their own in many areas. But in my view, they are still behind the times when it comes to payables and invoice automation. In fact, the ERP capabilities situation in this area feels very similar to what it did for eProcurement years ago, yet the need for solutions today has never been greater.

After all, in the current climate, companies are not just looking for ways to streamline the requisitioning and purchasing process to drive both internal and supplier compliance during the buying process. They are also looking to gain greater control over their precious working capital and to identify new savings (and even profit) opportunities by tackling activities that require new levels of procurement and finance visibility and collaboration. These activities broadly fit into what we can call the invoice automation EIPP (electronic invoicing presentment and payment) and supply chain finance areas. It is in these downstream procurement areas where companies must look to supplement existing and future ERP investments with other initiatives and solutions to achieve savings and working capital management returns. If you are curious to read more about the potential of payables and invoice automation in the context of ERP procurement and SRM, you can download this Perspective and others by clicking here: here.

Jason Busch

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