We'd like to welcome b-pack's Julien Nadaud to Spend Matters. We recently interviewed Julien on what he thinks of how European countries and companies have adopted eProcurement, invoicing and related P2P capabilities in different ways than Americans based on regional, business and cultural nuances. This is part one of a two-part interview series. We also look forward to featuring a review of b-pack's Spend Management solutions once we complete our analysis and reference checks in the coming weeks.
Spend Matters: Why in some countries -- especially those in Europe -- are companies focusing on automation when it comes to procurement processes?
Julien: In Europe, the cost of labor and therefore the cost of operation are very high because of regulation and social taxes. In addition, the legal number of hours a worker is supposed to work is very low (we take a lot of vacation, and work few hours a week). But companies are still competing with the rest of the world on a globalized market level. The only way to keep afloat is to improve global efficiency, and purchase-to-pay automation and optimization is a clear winner in that field, allowing companies to significantly increase their productivity.
In addition, labor regulation and worker protection is very important in Europe, but this has the side effect of lowering company flexibility. To compensate, companies are using a lot of temporary labor (a lot of service orders), but in general, they just try to avoid hiring people they do not absolutely need. Executives look at any solution to avoid non-operational tasks, such as administrative tasks, and again, automation is what has been found as the most effective way of doing so.
Moreover, many purchasers are doing procurement instead of doing purchasing, and so are operations, instead of doing business. Procurement is a very good candidate for automation in countries where all low value added services have been replaced by machines because of high labor cost.
Spend Matters: What is different about France in particular?
Julien: Most French executives come from engineering school. This is particularly true in very large corporations where polytechnique or École des mines and other elitist schools are very well represented. In these schools, they learn how to put the world in a bottle of equations. Therefore, when they think about ways to improve company efficiency, they are more comfortable with operation automation than increasing sales.
Spend Matters: Have you seen focuses on different areas of automation in Europe such as eProcurement / requisitioning vs. invoicing and payment? Are the drivers the same for automation across these areas?
Julien: Invoicing and payment usually come to mind first, because the process is much simpler than procurement. In addition, executives have a highly regarded relationship with finance and are therefore directly concerned with invoicing automation.
But when companies start thinking of automating the invoice process, they find that most of the cost and complexity comes from the matching, which is directly related to procurement. That's why procurement automation is the only way to perform efficient invoicing, accounting and payment.
Another trend comes from companies that have implemented centralized purchasing departments. These companies needed to organize and dematerialized procurement in order to feed these departments with data, while negotiated contract and catalogs needed to be available to users. This brought requisition and PO automation based on contracts, catalogs and commodities. This trend drives towards invoice automation as the next and obvious step.
Check back soon for Part 2 of this interview, and Spend Matters would again like to thank b-pack's Julien Nadaud for sharing his thoughts.