Spend Matters' research crank keeps on turning at a faster and faster clip. Today, we're excited to announce what we believe is one of our more thoughtful analyses looking at the P2P and eProcurement market: Surround Strategies to Get More From Existing ERP, eProcurement and P2P Investments. In this paper, we suggest that companies of all sizes are increasingly looking to deploy surround strategies to get more from existing ERP, eProcurement and P2P investments. While one could argue the era of "rip and replace" hasn't yet hit procurement technology -- this sector is too young for it, really -- there's an increasingly popular roadmap that companies are following which focuses on how to get more from existing or planned deployments by augmenting their current investments (e.g., ERP and Ariba Buyer/P2P).
Procurement organizations can now employ a range of supplemental solutions as a strategic extension of current systems to truly optimize spend under management. Our research suggests that certain demographic characteristics determine relevance for pursuing surround strategy approaches. In looking at previous P2P investments, companies that have licensed (or rented) tools such as Ariba Buyer, Ariba P2P, Basware, Oracle eBusiness Suite, PeopleSoft SRM, SAP SRM or have home-grown P2P tools are prime candidates if they are looking to:
- Get more from existing assets without writing off previous investments
- Gain leverage in managing incumbent vendors in the future (maintenance fees, network fees, etc.)
- Achieve a new level of results (e.g., procurement savings, compliance, general systems ROI) in a short time frame
We suggest five general approaches to surround an existing eProcurement or P2P investment:
- Invest in a new user experience layer that creates a usability buffer and potentially adds new capability
- Augment existing eProcurement or P2P investments with third-party tools or solutions in targeted areas that improve the basic capability of the system itself
- Invest in complementary technology that goes beyond original capabilities
- Work with a third-party solutions provider that will provide technology and more services-driven capabilities
- Purchase new solutions that gradually consume their hosts
While we explore each of these areas in detail in the paper itself, we also argue that the decision to pursue a surround strategy should not be taken lightly. Before evaluating potential tools and partners, we recommend that organizations take a detailed inventory of what systems and tools they already have and what results they have achieved -- forecast vs. realized. It's also critical to understand any previously committed to (or planned) upgrade roadmaps.
The next step is for procurement to lead an analysis considering business prioritization needs (e.g., quantifying compliance, savings or working capital goals) and then conduct a business gap analysis based on the current ability to serve the business through a P2P environment. Only at this stage are organizations ready for a technical/product gap analysis that will eventually include shortlisting providers in the different "surround" areas that we explore in the paper in depth.
This Compass analysis also includes four specific use cases that highlight real-world examples of surround approaches and the environments that led to them based on composite sketches of companies Spend Matters has recently interviewed. It concludes with a number of lessons learned and recommendations for pursuing surround strategies. For example, as one of seven concluding recommendations, we suggest that organizations use surround strategies to think about the needs of frontline business users.
In this regard, procurement teams should make the entire process of evaluation (and tool selection) based around the experience of how an individual frontline user will interact with tools to drive a desired outcome or series of outcomes (e.g., easier ordering for them, higher levels of compliance for procurement). Even though procurement and IT types evaluating tools would rarely describe themselves as empathetic as a first priority, they should be in this case if they want to achieve the maximum returns.
If you have any type of existing P2P deployment -- ERP or otherwise -- we're certain you'll take away at least one key lesson learned from Surround Strategies to Get More From Existing ERP, eProcurement and P2P Investments. We encourage you to download this free Compass research brief today. Readers should take note that within the next sixty days, our research will only be available to qualified practitioners free of charge.