Explaining Procure-to-Pay to I.T.: "Here there be Suppliers"

Early cartographers used to mark unexplored areas of their maps with statements like, "here there be monsters". I sometimes think modern-day I.T. organizations tasked with mapping the requirements for Procure-to-Pay designate whole swaths of territory belonging to the needs of suppliers in similar ways.

Caveat first! The discussion below about I.T. is a gross stereotype based on direct experiences over 20 years with folks in that role at a number of companies large and small. Well, maybe it's a moderately informed stereotype. Anyway, the I.T. folks I know continue to evolve in their approach and the following is my way of encouraging the evolution underway.

The gross stereotype is that I.T. wants a simple, one-vendor approach to the processes in spend management and particularly in the Procure-to-Pay space. I've suffered severe head-trauma from beating my head against the SAP-only philosophy at some companies -- and Oracle-only at others. Basically "good times" but boiling it all down, I think the reasons were about "one-throat-to-choke", easier integration, a unified UI for users, and the political pull of that one vendor or their consulting surrogates.

All very compelling, but such inside-the-firewall thinking neglects the other half of the Procure-to-Pay equation: suppliers! They don't have your ERP system, won't do what your I.T. wants and insist upon running their own show. And there's just so many of them!

"What to do about Suppliers" should be a key issue in any Procure-to-Pay re-engineering discussion. As Procurement (or A.P.) folks, most of your day is spent interacting with suppliers so it's up to you to represent their importance in the equation. With suppliers now included, frame the discussion with the four fundamentals upon which Procure-to-Pay initiatives succeed or fail:

Integration is the ERP vendor's favorite issue because only their solutions integrate well with the core ERP systems. But integration to suppliers is overwhelmingly more difficult and requires a fundamental re-thinking of the approach (way beyond a supplier "portal' to be sure).

Adoption is the bane of many an implementation. It is hard enough for employees to adopt even though you give them little choice, but consider adoption among suppliers! Only a simple and truly useful solution will succeed here.

Process Integrity ensures compliance to contracts and processes and is only gained by integral process flows through Procure-to-Pay; including suppliers along the way.

Category Complexity means there's just a lot of different things to buy and expert companies that sell them. If it was all easy and simple, you'd have a couple huge suppliers, but the reality is that a supplier-sensitive solution is necessary to flex with all that complexity.

The key point is to keep suppliers top of mind in any requirements for a Procure-to-Pay transformation. For the same reason Finance should consider Procure-to-Pay as a sub-ledger, I.T. should consider Procure-to-Pay for integration rather than assimilation.

All is not lost however, I've seen I.T. departments realize their lack of complete control over suppliers while acknowledging the need to nevertheless engage them for best practices spend management. This is a much easier requirement to map when not saddled with the one-vendor constraint. Happy trails.

Paul Noël

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