Analytics and P2P (Cost Savings and Working Capital Improvement): A New Spend Matters Compass Brief

Over the long weekend, we released the latest paper in the Spend Matters Compass Series on Analytics and Spend Visibility. The free research brief, Analytics and P2P: Using Spending and Payment Insights to Drive Savings and Working Capital Management Strategies, provides pragmatic advice for companies looking to drive additional returns from their P2P environment. In addition to offering commentary and analysis focused on helping companies drive savings through better analysis of P2P information, the report features recent Hackett benchmark information in the area of P2P effectiveness and efficiency, e-invoicing and working capital / discount management approaches. Overall, it's a drink-from-the-fire-hose type of analysis, rich in information and intelligence, which should appeal to companies both looking to jumpstart their P2P efforts and/or take their current systems, savings and working capital strategies to the next level.

The Spend Matters Compass Series study suggests that the most powerful approach in defining an ideal future transactional buying and P2P state comes not from what we've expected to achieve in the past, but what we can challenge ourselves to quantify, benchmark, define and measure in the future. Put another way, rather than simply implement P2P (e.g., eProcurement, EIPP, T&E, etc.) systems and related analytical tools to pursue and measure the previously bulleted activities, organizations should first understand both what's possible from a quantitative improvement standpoint and where they are today. The analysis provides tactical direction for understanding P2P savings and working capital management strategies both broadly and on a category basis as well as expert benchmarks to help companies get more from their efforts.

Understanding P2P metrics, benchmarks and an organization's current standing can help us answer the following types of questions, all of which are fundamental to procurement strategy and execution:

  • What are we really trying to do from a P2P systems implementation perspective -- and how should we rank our priorities?
  • What types of benefits can we expect from reduced labor costs versus other areas?
  • How will our suppliers react to the system, and can we expect added (or reduced) costs from new operating models?
  • What is our definition of success around compliance and how do we plan to baseline and measure it?
  • What is our plan to drive adoption and tie upstream and downstream procurement activities together alongside working capital and finance objectives?

Among other conclusions the paper makes, we suggest that companies investing in the right sets of technology can drive significantly disproportionate returns when it comes to getting the most out of their overall P2P programs (including both eProcurement and invoice automation) as well as spend analytics. After reading this Spend Matters Compass Series brief, readers will take away a set of key benchmarks (e.g., order processing and invoice processing costs, impact of electronic invoicing, impact of electronic invoicing on early payment discounts) as well as specific strategies for looking at more complicated P2P information sets (e.g., legal spend, T&E spend, etc.).

Among the final recommendations we make in the analysis, Spend Matters suggests that after sharing benchmark insights and specific category P2P analytics strategy, companies should:

  • Create budgets and business plans based on overall business impact rather than just category cost savings or labor efficiency gains
  • Leverage the right toolset to radically alter -- versus simply fix -- broken processes
  • Put significant effort into evaluating the right set of technologies and associated solutions (e.g., supplier networks) as early as possible in the process
  • Leverage third-party services firms not just for systems selection and implementation, but for process knowledge transfer until the core underlying processes are fixed

Regardless of whether you're running -- or considering -- an SAP SRM, Oracle, Ariba, Basware or other procurement or invoice management environment, P2P benchmarking and analytics efforts are invaluable for maximizing business and shareholder returns. Any organization to looking to save more, spend less and improve cash management by leveraging P2P data-driven approaches should download this complimentary research report today.

- Jason Busch

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